N-CSR 1 c61396nvcsr.txt FORM N-CSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act File Number 811-5696 RIVERSOURCE GLOBAL SERIES, INC. (Exact name of registrant as specified in charter) 50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474 (Address of principal executive offices) (Zip code) Scott R. Plummer - 5228 Ameriprise Financial Center, Minneapolis, MN 55474 (Name and address of agent for service) Registrant's telephone number, including area code: (612) 671-1947 Date of fiscal year end: October 31 Date of reporting period: October 31, 2010 ITEM 1. REPORTS TO STOCKHOLDERS. ANNUAL REPORT Annual Report and Prospectus (COLUMBIA MANAGEMENT LOGO) COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND (FORMERLY KNOWN AS RIVERSOURCE ABSOLUTE RETURN CURRENCY AND INCOME FUND) -------------------------------------------------------------------------------- ANNUAL REPORT FOR THE PERIOD ENDED OCTOBER 31, 2010 (Prospectus also enclosed) COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND SEEKS TO PROVIDE SHAREHOLDERS WITH POSITIVE ABSOLUTE RETURN. This annual report includes a prospectus that describes in detail the Fund's objective, investment strategy, risks, sales charges, fees and other matters of interest. Please read the prospectus carefully before you invest or send money. NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE TABLE OF CONTENTS -------------------------------------------------------------- Your Fund at a Glance.............. 3 Manager Commentary................. 5 The Fund's Long-term Performance... 10 Fund Expenses Example.............. 12 Portfolio of Investments........... 14 Statement of Assets and Liabilities...................... 20 Statement of Operations............ 21 Statements of Changes in Net Assets........................... 22 Financial Highlights............... 24 Notes to Financial Statements...... 30 Report of Independent Registered Public Accounting Firm........... 45 Federal Income Tax Information..... 47 Board Members and Officers......... 48 Proxy Voting....................... 53
SEE THE FUND'S PROSPECTUS FOR RISKS ASSOCIATED WITH INVESTING IN THE FUND. -------------------------------------------------------------------------------- 2 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT YOUR FUND AT A GLANCE ---------------------------------------------------------- FUND SUMMARY -------------------------------------------------------------------------------- > Columbia Absolute Return Currency and Income Fund (the Fund) Class A shares gained 0.71% (excluding sales charge) for the 12 months ended Oct. 31, 2010. > The Fund outperformed its benchmark, the Citigroup 3-Month U.S. Treasury Bill Index, which rose 0.12% during the same period. ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2010) --------------------------------------------------------------------------------
SINCE INCEPTION 1 YEAR 3 YEARS 06/15/06 ------------------------------------------------------------------ Columbia Absolute Return Currency and Income Fund Class A (excluding sales charge) +0.71% +0.09% +2.81% ------------------------------------------------------------------ Citigroup 3-month U.S. Treasury Bill Index (unmanaged) +0.12% +0.90% +2.20% ------------------------------------------------------------------
(See "The Fund's Long-term Performance" for Index descriptions) 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 columbiamanagement.com or calling 800.345.6611. The 3.00% sales charge applicable to Class A shares of the Fund is not reflected in the table above. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in fees and expenses. The Fund's returns reflect the effect of fee waivers/expense reimbursements, if any. Without such waivers/reimbursements, the Fund's returns would be lower. See the Average Annual Total Returns table for performance of other share classes of the Fund. The index does not reflect the effects of sales charges, expenses and taxes. It is not possible to invest directly in an index. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 3 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------
AT OCT. 31, 2010 SINCE Without sales charge 1 YEAR 3 YEARS INCEPTION Class A (inception 6/15/06) +0.71% +0.09% +2.81% ------------------------------------------------------------------ Class B (inception 6/15/06) +0.00%* -0.64% +2.12% ------------------------------------------------------------------ Class C (inception 6/15/06) -0.10% -0.66% +2.10% ------------------------------------------------------------------ Class I (inception 6/15/06) +1.10% +0.47% +3.23% ------------------------------------------------------------------ Class W (inception 12/1/06) +0.71% +0.03% +2.30% ------------------------------------------------------------------ Class Z (inception 9/27/10) N/A N/A -0.88%** ------------------------------------------------------------------ With sales charge Class A (inception 6/15/06) -2.32% -0.92% +2.09% ------------------------------------------------------------------ Class B (inception 6/15/06) -5.00% -1.59% +1.70% ------------------------------------------------------------------ Class C (inception 6/15/06) -1.10% -0.66% +2.10% ------------------------------------------------------------------
Class A share performance reflects the maximum initial sales charge of 3.00%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second year 4%; third and fourth years 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I, Class W and Class Z shares. Class I is available to qualifying institutional investors only. Class W shares are offered through qualifying discretionary accounts. Class Z shares are offered to certain eligible investors. *Rounds to less than 0.01%. **Not annualized. -------------------------------------------------------------------------------- 4 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT MANAGER COMMENTARY ------------------------------------------------------------ Effective Sept. 27, 2010, RiverSource Absolute Return Currency and Income Fund was renamed Columbia Absolute Return Currency and Income Fund. Dear Shareholders, Columbia Absolute Return Currency and Income Fund (the Fund) Class A shares gained 0.71% (excluding sales charge) for the 12 months ended Oct. 31, 2010. The Fund outperformed its benchmark, the Citigroup 3-month U.S. Treasury Bill Index (Citigroup Index), which rose 0.12% during the same period. SIGNIFICANT PERFORMANCE FACTORS We use a two-part investment process to seek to achieve the Fund's investment objective. The first component consists of investments in primarily high quality, short-term fixed income securities with minimal interest rate risk. This component seeks to build a base of consistent income. These short-term investments are also designated, as necessary, to cover obligations invested in through the second component of our process, which is based on a proprietary quantitative currency model. PORTFOLIO BREAKDOWN(1) (at Oct. 31, 2010) -------------------------------------------------------------------------------- Asset-Backed 2.9% ------------------------------------------------ Commercial Mortgage-Backed 1.6% ------------------------------------------------ FDIC-Insured Debt(2) 2.3% ------------------------------------------------ Financials 1.3% ------------------------------------------------ Foreign Government 1.2% ------------------------------------------------ Industrials 2.6% ------------------------------------------------ Residential Mortgage-Backed 0.0%* ------------------------------------------------ Other(3) 88.1% ------------------------------------------------
* Rounds to less than 0.1% (1) Portfolio holdings include industry sectors that can be comprised of securities in several industries. Please refer to the section entitled "Portfolio of Investments" for a complete listing. No single industry exceeded 25% of portfolio assets. Percentages indicated are based upon total investments. The Fund's composition is subject to change. (2) Debt guaranteed under the FDIC's Temporary Liquidity Guarantee Program (TLGP). (3) Cash & Cash Equivalents. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 5 MANAGER COMMENTARY (continued) ------------------------------------------------ The model uses various fundamental and technical factors, including current and historical data, to rank the anticipated value of nine different currencies from developed countries, relative to the U.S. dollar. Based on these rankings, we enter into long forward currency contracts for the three most attractive currencies and enter into short forward currency contracts for the three least attractive currencies, all relative to the U.S. dollar. The Fund experiences profits or losses to the extent the values of the currencies appreciate or depreciate relative to the U.S. dollar. During the annual period, we were able to generate positive total return from both the Fund's investment in short-term fixed income securities and our proprietary quantitative currency model. The Fund's positioning in the Australian dollar, New Zealand dollar, Norwegian krone, British pound, and Swedish krona benefited its results for the 12 months ended Oct. 31, 2010. On the other hand, positioning in the Canadian dollar, Swiss franc, Japanese yen, and the euro detracted from Fund performance. QUALITY BREAKDOWN(1) (at Oct. 31, 2010) -------------------------------------------------------------------------------- AAA rating 8.2% ------------------------------------------------ AA rating 1.0% ------------------------------------------------ A rating 2.7% ------------------------------------------------ Non-investment grade 0.0%* ------------------------------------------------ A1/P1/F1 short-term securities 88.1% ------------------------------------------------
* Rounds to less than 0.1%. (1) Percentages indicated are based upon total fixed income securities. Ratings apply to the underlying holdings of the Fund and not the Fund itself. Whenever possible, the Standard and Poor's rating is used to determine the credit quality of a security. Standard and Poor's rates the creditworthiness of corporate bonds, with 15 categories, ranging from AAA (highest) to D (lowest). Ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. If Standard and Poor's doesn't rate a security, then Moody's rating is used. Columbia Management Investment Advisers, LLC (formerly known as RiverSource Investments, LLC) (the Investment Manager), rates a security using an internal rating system when Moody's doesn't provide a rating. Rating for 0.1% of the bond portfolio assets were determined through internal analysis. For short-term securities, A1/P1/F1 represents the rating designation with the highest quality within the Standard and Poor's, Moody, and Fitch short-term credit rating scales, respectively. -------------------------------------------------------------------------------- 6 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- OUR CURRENT INVESTMENT STRATEGY We run our quantitative model weekly and reset currency positions as needed, applying the output of this model on a systematic basis. We generally seek neutral exposure to the U.S. dollar, the base currency. In our view, remaining neutral to the U.S. dollar as part of our strategy helps control overall volatility. We also use an externally developed but fully integrated, risk management system to help us monitor and mitigate market risk. We believe the Fund is designed to do well in either rising or falling U.S. dollar environments. OUR FUTURE STRATEGY We intend to stay disciplined to our systematic investment strategy. Through the use of our proprietary quantitative model, which determines the Fund's positions in forward foreign currency contracts relative to the U.S. dollar, we will continue to seek an absolute return that is unrelated to general movements in the U.S. dollar and other types of financial assets. Overall, we will continue to seek to generate positive total returns from the income produced by the Fund's investments in short-term debt obligations, plus the gains, or minus the losses, resulting from the fluctuations in the values of various foreign currencies relative to the U.S. dollar. The Fund does not actually take ownership of foreign currencies or sell actual foreign currencies. Rather, forward currency contracts are used to gain comparable currency exposure. Because the establishment of the Fund's forward foreign currency contracts requires little cash outlay, the Fund's assets will consist primarily of short-term investment grade U.S. dollar-denominated assets (if unrated, securities will be of comparable During the annual period, we were able to generate positive total return from both the Fund's investment in short-term fixed income securities and our proprietary quantitative currency model. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 7 MANAGER COMMENTARY (continued) ------------------------------------------------ quality, as determined by the investment manager). Currently, a significant majority of the underlying portfolio is invested in Columbia Short-Term Cash Fund in an effort to reduce volatility. Nicolas Pifer, CFA(R) Portfolio Manager Any specific securities mentioned are for illustrative purposes only and are not a complete list of securities that have increased or decreased in value. The views expressed in this statement reflect those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Columbia Management Investment Advisers, LLC* (the Investment Manager) or any subadviser to the Fund or any other person in the Investment Manager or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and the Investment Manager disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for the Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of the Fund. * Effective May 1, 2010, RiverSource Investments, LLC became known as Columbia Management Investment Advisers, LLC. -------------------------------------------------------------------------------- 8 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT THIS PAGE LEFT BLANK INTENTIONALLY THE FUND'S LONG-TERM PERFORMANCE ----------------------------------------------- The chart on the facing page illustrates the total value of an assumed $10,000 investment in Columbia Absolute Return Currency and Income Fund Class A shares (from 06/15/06 to 10/31/10) as compared to the performance of the Citigroup 3- month U.S. Treasury Bill Index. In comparing the Fund's Class A shares to this index, you should take into account the fact that the Fund's performance reflects a maximum sales charge of 3.00%, while such charges are not reflected in the performance of the index. Returns for the Fund include the reinvestment of any distributions paid during each period. The performance information shown represents past performance and is not a guarantee of future results. The table below and the chart on the facing page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 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 or visiting columbiamanagement.com. Also see "Past Performance" in the Fund's current prospectus. COMPARATIVE RESULTS --------------------------------------------------------------------------------
Results at Oct. 31, 2010 SINCE INCEPTION 1 YEAR 3 YEARS 6/15/06 COLUMBIA ABSOLUTE RETURN AND CURRENCY INCOME FUND (INCLUDES SALES CHARGE) Class A Cumulative value of $10,000 $9,769 $9,727 $10,949 --------------------------------------------------------------------------------- Average annual total return -2.32% -0.92% +2.09% --------------------------------------------------------------------------------- CITIGROUP 3-MONTH U.S. TREASURY BILL INDEX(1) Cumulative value of $10,000 $10,012 $10,271 $10,980 --------------------------------------------------------------------------------- Average annual total return +0.12% +0.90% +2.20% ---------------------------------------------------------------------------------
Results for other share classes can be found on page 4. -------------------------------------------------------------------------------- 10 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- (VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND LINE GRAPH)
COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME CITIGROUP 3-MONTH FUND CLASS U.S. TREASURY A (INCLUDES BILL SALES CHARGE) INDEX(1) ----------------- ----------------- 6/15/06 $ 9,700 $10,000 7/06 9,697 10,060 10/06 9,930 10,186 1/07 10,226 10,314 4/07 10,513 10,441 7/07 10,655 10,569 10/07 10,918 10,690 1/08 10,729 10,788 4/08 10,535 10,848 7/08 10,631 10,891 10/08 10,856 10,937 1/09 10,817 10,952 4/09 10,719 10,958 7/09 10,773 10,962 10/09 10,872 10,966 1/10 10,981 10,969 4/10 10,981 10,971 7/10 11,047 10,975 10/10 10,949 10,980
(1) The Citigroup 3-month U.S. Treasury Bill Index, an unmanaged index, represents the performance of three-month Treasury bills. The index reflects reinvestment of all distributions and changes in market prices. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 11 FUND EXPENSES EXAMPLE ---------------------------------------------------------- (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (i) transaction costs, including sales charges (loads) on purchase payments; and (ii) ongoing costs, which may include management fees; distribution and service (Rule 12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the ongoing expenses of any funds in which the Fund invests (also referred to as "acquired funds"), including affiliated and non- affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the ongoing expenses charged by acquired funds using the expense ratio of each of the acquired funds as of the acquired fund's most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period indicated and held until Oct. 31, 2010. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses for each class. You may use the information in this line, together with the amount you 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 result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for each class and an assumed rate of return of 5% per year before expenses, which is not the actual return for the class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. -------------------------------------------------------------------------------- 12 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED MAY 1, 2010(a) OCT. 31, 2010 THE PERIOD(b) EXPENSE RATIO ------------------------------------------------------------------------------------------- Class A ------------------------------------------------------------------------------------------- Actual(c) $1,000 $ 997.00 $ 7.47 1.50% ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,017.45 $ 7.54 1.50% ------------------------------------------------------------------------------------------- Class B ------------------------------------------------------------------------------------------- Actual(c) $1,000 $ 993.90 $11.18 2.25% ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,013.71 $11.30 2.25% ------------------------------------------------------------------------------------------- Class C ------------------------------------------------------------------------------------------- Actual(c) $1,000 $ 992.90 $11.18 2.25% ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,013.71 $11.30 2.25% ------------------------------------------------------------------------------------------- Class I ------------------------------------------------------------------------------------------- Actual(c) $1,000 $ 999.00 $ 5.48 1.10% ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,019.45 $ 5.54 1.10% ------------------------------------------------------------------------------------------- Class W ------------------------------------------------------------------------------------------- Actual(c) $1,000 $ 997.00 $ 7.62 1.53% ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,017.30 $ 7.70 1.53% ------------------------------------------------------------------------------------------- Class Z ------------------------------------------------------------------------------------------- Actual(d) $1,000 $ 991.20 $ 1.34 1.54% ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,017.25 $ 7.75 1.54% -------------------------------------------------------------------------------------------
(a) The beginning account value for Class Z is as of Sept. 27, 2010 (when shares became available) for actual expense calculations. (b) Expenses are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). Actual expenses for Class Z are equal to the annualized expense ratio for the class as indicated above, multiplied by the average account value over the period, multiplied by 32/365 (to reflect the number of days in the period). (c) Based on the actual return for the six months ended Oct. 31, 2010: -0.30% for Class A, -0.61% for Class B, -0.71% for Class C, -0.10% for Class I and -0.30% for Class W. (d) Based on the actual return for the period from Sept. 27, 2010 (when shares became available) to Oct. 31, 2010 of -0.88% for Class Z. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 13 PORTFOLIO OF INVESTMENTS ------------------------------------------------------- OCT. 31, 2010 (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
BONDS (9.7%) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(a) SUPRANATIONAL (1.2%)(c) Inter-American Development Bank Senior Unsecured 03-16-11 0.492% $2,000,000(g) $2,001,972 ------------------------------------------------------------------------------------- ASSET-BACKED (2.8%) Countrywide Home Equity Loan Trust Series 2005-H Class 2A (FGIC) 12-15-35 0.496 128,746(e,g) 51,371 Northstar Education Finance, Inc. Series 2007-1 Class A2 01-29-46 0.308 750,000(g) 684,375 SLM Student Loan Trust Series 2005-5 Class A2 10-25-21 0.368 730,941(g) 728,115 SLM Student Loan Trust Series 2005-8 Class A2 07-25-22 0.378 982,004(g) 979,900 SLM Student Loan Trust Series 2006-A Class A2 12-15-20 0.372 971,010(g) 963,006 SLM Student Loan Trust Series 2006-C Class A2 09-15-20 0.342 711,702(g) 702,137 SLM Student Loan Trust Series 2007-2 Class A2 07-25-17 0.288 869,606(g) 862,742 --------------- Total 4,971,646 ------------------------------------------------------------------------------------- COMMERCIAL MORTGAGE-BACKED (1.7%)(f) GS Mortgage Securities Corp. II Series 2007-EOP Class A2 03-06-20 0.383 1,200,000(d,g) 1,149,103 GS Mortgage Securities Corp. II Series 2007-EOP Class A3 03-06-20 0.433 1,770,000(d,g) 1,669,049 --------------- Total 2,818,152 ------------------------------------------------------------------------------------- RESIDENTIAL MORTGAGE-BACKED (--%)(f) Downey Savings & Loan Association Mortgage Loan Trust CMO Series 2006-AR2 Class 2AB1 11-19-37 0.346 3,070(g) 3,054 ------------------------------------------------------------------------------------- BANKING (1.2%) The Royal Bank of Scotland PLC Government Liquid Guaranteed 05-11-12 1.098 2,000,000(c,d,g) 2,010,680 ------------------------------------------------------------------------------------- BROKERAGE (0.1%) Lehman Brothers Holdings, Inc. Senior Unsecured 10-22-08 0.000 640,000(b,h) 136,000 ------------------------------------------------------------------------------------- CONSTRUCTION MACHINERY (2.7%) John Deere Capital Corp. Senior Unsecured 01-18-11 0.989 4,500,000(g) 4,506,960 ------------------------------------------------------------------------------------- TOTAL BONDS (Cost: $17,156,833) $16,448,464 ------------------------------------------------------------------------------------- FDIC-INSURED DEBT (2.4%)(i) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(a) U.S. AGENCIES Bank of America Corp. FDIC Government Guaranty 06-22-12 0.490% $2,000,000(g) $2,008,498 General Electric Capital Corp. FDIC Government Guaranty 03-11-11 0.373 2,000,000(g) 2,001,558 ------------------------------------------------------------------------------------- TOTAL FDIC-INSURED DEBT (Cost: $4,000,000) $4,010,056 -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 14 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
MONEY MARKET FUND (88.7%) SHARES VALUE(a) Columbia Short-Term Cash Fund, 0.241% 150,791,858(j) $150,791,858 ------------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $150,791,858) $150,791,858 ------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $171,948,691)(k) $171,250,378 =====================================================================================
INVESTMENTS IN DERIVATIVES FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS OPEN AT OCT. 31, 2010
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED COUNTERPARTY EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION ------------------------------------------------------------------------------------------ HSBC Securities Nov. 10, 2010 16,127,000 16,580,706 $194,431 $-- (USA), Inc. (CHF) (USD) ------------------------------------------------------------------------------------------ UBS Securities Nov. 10, 2010 17,617,000 24,096,885 -- (411,846) (EUR) (USD) ------------------------------------------------------------------------------------------ UBS Securities Nov. 10, 2010 186,000 259,727 964 -- (EUR) (USD) ------------------------------------------------------------------------------------------ Goldman, Sachs & Nov. 10, 2010 3,345,818,000 40,532,667 -- (1,047,677) Co. (JPY) (USD) ------------------------------------------------------------------------------------------ State Street Bank Nov. 10, 2010 24,742,291 25,674,000 382,150 -- & Trust Company (USD) (AUD) ------------------------------------------------------------------------------------------ State Street Bank Nov. 10, 2010 15,908,916 16,023,000 -- (228,894) & Trust Company (USD) (AUD) ------------------------------------------------------------------------------------------ HSBC Securities Nov. 10, 2010 16,469,170 96,065,000 -- (71,758) (USA), Inc. (USD) (NOK) ------------------------------------------------------------------------------------------ Barclays Bank PLC Nov. 10, 2010 24,719,605 163,779,000 -- (210,061) (USD) (SEK) ------------------------------------------------------------------------------------------ Total $577,545 $(1,970,236) ------------------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS AUD -- Australian Dollar CHF -- Swiss Franc CMO -- Collateralized Mortgage Obligation EUR -- European Monetary Unit JPY -- Japanese Yen NOK -- Norwegian Krone SEK -- Swedish Krona
-------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 15 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED) (a) Securities are valued by using policies described in Note 2 to the financial statements. (b) Non-income producing. For long-term debt securities, item identified is in default as to payment of interest and/or principal. (c) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in U.S. dollar currency unless otherwise noted. At Oct. 31, 2010, the value of foreign securities, excluding short- term securities, represented 2.36% of net assets. (d) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security may be determined to be liquid under guidelines established by the Fund's Board of Directors. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At Oct. 31, 2010, the value of these securities amounted to $4,828,832 or 2.84% of net assets. (e) The following abbreviation is used in the portfolio security description to identify the insurer and/or guarantor of the issue: FGIC -- Financial Guaranty Insurance Company
(f) Mortgage-backed securities represent direct or indirect participations in, or are secured by and payable from, mortgage loans secured by real property, and include single- and multi-class pass-through securities and collateralized mortgage obligations. These securities may be issued or guaranteed by U.S. government agencies or instrumentalities, or by private issuers, generally originators and investors in mortgage loans, including savings associations, mortgage bankers, commercial banks, investment bankers and special purpose entities. The maturity dates shown represent the original maturity of the underlying obligation. Actual maturity may vary based upon prepayment activity on these obligations. Unless otherwise noted, the coupon rates presented are fixed rates. (g) Interest rate varies either based on a predetermined schedule or to reflect current market conditions; rate shown is the effective rate on Oct. 31, 2010. (h) This position is in bankruptcy. (i) This debt is guaranteed under the FDIC's (Federal Deposit Insurance Corporation) Temporary Liquidity Guarantee Program (TLGP) and is backed by the full faith and credit of the United States. (j) Affiliated Money Market Fund - See Note 7 to the financial statements. The rate shown is the seven-day current annualized yield at Oct. 31, 2010. (k) At Oct. 31, 2010, the cost of securities for federal income tax purposes was $171,948,691 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $58,603 Unrealized depreciation (756,916) ---------------------------------------------------------- Net unrealized depreciation $(698,313) ----------------------------------------------------------
-------------------------------------------------------------------------------- 16 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- FAIR VALUE MEASUREMENTS Generally accepted accounting principles (GAAP) require 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. 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 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 (to include NAV for open-end mutual funds). 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 Fund Administrator, 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 rely on one or more significant unobservable inputs and/or significant assumptions by the Fund Administrator. Inputs used in valuations may -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 17 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- FAIR VALUE MEASUREMENTS (CONTINUED) include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data. The following table is a summary of the inputs used to value the Fund's investments as of Oct. 31, 2010:
FAIR VALUE AT OCT. 31, 2010 --------------------------------------------------------------- LEVEL 1 LEVEL 2 QUOTED PRICES OTHER LEVEL 3 IN ACTIVE SIGNIFICANT SIGNIFICANT MARKETS FOR OBSERVABLE UNOBSERVABLE DESCRIPTION(A) IDENTICAL ASSETS INPUTS(B) INPUTS TOTAL -------------------------------------------------------------------------------------------- Bonds Foreign Government Obligations & Agencies $-- $2,001,972 $-- $2,001,972 Asset-Backed Securities -- 4,971,646 -- 4,971,646 Commercial Mortgage- Backed Securities -- 2,818,152 -- 2,818,152 Residential Mortgage- Backed Securities -- 3,054 -- 3,054 Corporate Debt Securities -- 6,653,640 -- 6,653,640 -------------------------------------------------------------------------------------------- Total Bonds -- 16,448,464 -- 16,448,464 -------------------------------------------------------------------------------------------- Other FDIC-Insured Debt Securities -- 4,010,056 -- 4,010,056 Affiliated Money Market Fund 150,791,858 -- -- 150,791,858 -------------------------------------------------------------------------------------------- Total Other 150,791,858 4,010,056 -- 154,801,914 -------------------------------------------------------------------------------------------- Investments in Securities 150,791,858 20,458,520 -- 171,250,378 Derivatives(c) Assets Forward Foreign Currency Exchange Contracts -- 577,545 -- 577,545 Liabilities Forward Foreign Currency Exchange Contracts -- (1,970,236) -- (1,970,236) -------------------------------------------------------------------------------------------- Total $150,791,858 $19,065,829 $-- $169,857,687 --------------------------------------------------------------------------------------------
(a) See the Portfolio of Investments for all investment classifications not indicated in the table. (b) There were no significant transfers between Levels 1 and 2 during the period. (c) Derivative instruments are valued at unrealized appreciation (depreciation). -------------------------------------------------------------------------------- 18 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS (i) The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (Commission) for the first and third quarters of each fiscal year on Form N-Q; (ii) The Fund's Forms N-Q are available on the Commission's website at http://www.sec.gov; (iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC (information on the operations of the Public Reference Room may be obtained by calling 800.SEC.0330); and (iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q, can be obtained without charge, upon request, by calling 800.345.6611. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 19 STATEMENT OF ASSETS AND LIABILITIES -------------------------------------------- OCT. 31, 2010
ASSETS Investments in securities, at value Unaffiliated issuers (identified cost $21,156,833) $ 20,458,520 Affiliated money market fund (identified cost $150,791,858) 150,791,858 -------------------------------------------------------------------------------------- Total investments in securities (identified cost $171,948,691) 171,250,378 Capital shares receivable 274,424 Dividends and accrued interest receivable 39,715 Receivable for investment securities sold 936,846 Unrealized appreciation on forward foreign currency exchange contracts 577,545 -------------------------------------------------------------------------------------- Total assets 173,078,908 -------------------------------------------------------------------------------------- LIABILITIES Capital shares payable 584,520 Payable for investment securities purchased 393,385 Unrealized depreciation on forward foreign currency exchange contracts 1,970,236 Accrued investment management services fees 4,157 Accrued distribution fees 1,020 Accrued transfer agency fees 14,312 Accrued administrative services fees 374 Other accrued expenses 91,765 -------------------------------------------------------------------------------------- Total liabilities 3,059,769 -------------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $170,019,139 -------------------------------------------------------------------------------------- REPRESENTED BY Capital stock -- $.01 par value $ 169,805 Additional paid-in capital 172,248,377 Accumulated net investment loss (8,707) Accumulated net realized gain (loss) (299,332) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (2,091,004) -------------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $170,019,139 --------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE Class A $62,208,913 6,219,687 $10.00(1) Class B $ 1,006,359 102,217 $ 9.85 Class C $ 4,702,587 478,184 $ 9.83 Class I $38,718,422 3,837,044 $10.09 Class W $63,368,675 6,341,968 $ 9.99 Class Z $ 14,183 1,405 $10.09 -----------------------------------------------------------------------------
(1) The maximum offering price per share for Class A is $10.31. The offering price is calculated by dividing the net asset value by 1.0 minus the maximum sales charge of 3.00%. The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 20 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT STATEMENT OF OPERATIONS -------------------------------------------------------- YEAR ENDED OCT. 31, 2010
INVESTMENT INCOME Income: Interest $ 186,608 Income distributions from affiliated money market fund 392,201 ------------------------------------------------------------------------------ Total income 578,809 ------------------------------------------------------------------------------ Expenses: Investment management services fees 1,811,957 Distribution fees Class A 209,776 Class B 13,998 Class C 60,110 Class W 191,732 Transfer agency fees Class A 130,467 Class B 2,288 Class C 9,534 Class R4 4 Class R5 4 Class W 148,469 Administrative services fees 162,872 Plan administration services fees -- Class R4 21 Compensation of board members 6,058 Custodian fees 4,877 Printing and postage 60,520 Registration fees 72,194 Professional fees 40,340 Other 14,098 ------------------------------------------------------------------------------ Total expenses 2,939,319 ------------------------------------------------------------------------------ Investment income (loss) -- net (2,360,510) ------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions 26,935 Foreign currency transactions 7,249,532 ------------------------------------------------------------------------------ Net realized gain (loss) on investments 7,276,467 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (2,799,721) ------------------------------------------------------------------------------ Net gain (loss) on investments and foreign currencies 4,476,746 ------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations $ 2,116,236 ------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 21 STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
YEAR ENDED OCT. 31, 2010 2009 OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ (2,360,510) $ (3,979,874) Net realized gain (loss) on investments 7,276,467 (11,823,260) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies (2,799,721) 9,397,281 ----------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 2,116,236 (6,405,853) ----------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A -- (3,686) Class I -- (38,612) Class R4 -- (1) Class R5 -- (2) Net realized gain Class A -- (1,035,644) Class B -- (22,568) Class C -- (55,949) Class I -- (1,077,400) Class R4 -- (115) Class R5 -- (51) Class W -- (1,582,466) ----------------------------------------------------------------------------------------- Total distributions -- (3,816,494) -----------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 22 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, 2010 2009 CAPITAL SHARE TRANSACTIONS Proceeds from sales Class A shares $ 16,677,282 $ 77,249,711 Class B shares 432,110 1,997,878 Class C shares 768,647 4,071,796 Class I shares 14,194,788 22,509,441 Class R4 shares -- 11,804 Class W shares 22,211,948 37,138,223 Class Z shares 14,224 N/A Reinvestment of distributions at net asset value Class A shares -- 1,016,629 Class B shares -- 22,416 Class C shares -- 48,467 Class I shares -- 1,115,956 Class R4 shares -- 61 Class W shares -- 1,582,439 Conversions from Class B to Class A Class A shares 359,706 613,986 Class B shares (359,706) (613,986) Payments for redemptions Class A shares (69,908,500) (138,504,444) Class B shares (1,096,703) (2,582,407) Class C shares (3,691,116) (5,828,137) Class I shares (4,817,932) (192,632,580) Class R4 shares (10,199) (22,927) Class R5 shares (9,694) -- Class W shares (46,679,746) (251,615,251) ----------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions (71,914,891) (444,420,925) ----------------------------------------------------------------------------------------- Total increase (decrease) in net assets (69,798,655) (454,643,272) Net assets at beginning of year 239,817,794 694,461,066 ----------------------------------------------------------------------------------------- Net assets at end of year $170,019,139 $ 239,817,794 ----------------------------------------------------------------------------------------- Accumulated net investment loss/excess of distributions over net investment income $ (8,707) $ (7,797) -----------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 23 FINANCIAL HIGHLIGHTS ---------------------------------------------------------- The following tables are 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. For periods ended 2007 and after, per share net investment income (loss) amounts are calculated based on average shares outstanding during the period. Total returns assume reinvestment of all dividends and distributions. Total returns do not reflect payment of sales charges, if any, and are not annualized for periods of less than one year.
YEAR ENDED OCT. 31, CLASS A ------------------------------------------------------ PER SHARE DATA 2010 2009 2008 2007 2006(a) Net asset value, beginning of period $9.93 $9.97 $10.58 $10.09 $9.98 --------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.12) (.08) .15 .41 .12 Net gains (losses) (both realized and unrealized) .19 .09 (.22) .57 .11 --------------------------------------------------------------------------------------------------------- Total from investment operations .07 .01 (.07) .98 .23 --------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- (.00)(b) (.18) (.39) (.12) Distributions from realized gains -- (.05) (.36) (.10) -- --------------------------------------------------------------------------------------------------------- Total distributions -- (.05) (.54) (.49) (.12) --------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.00 $9.93 $9.97 $10.58 $10.09 --------------------------------------------------------------------------------------------------------- TOTAL RETURN .71% .15% (.57%) 9.96%(c) 2.37% --------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(e) Gross expenses prior to expense waiver/reimbursement 1.47% 1.38% 1.39% 1.36% 1.59%(f) --------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(g) 1.47% 1.38% 1.39% 1.36% 1.37%(f) --------------------------------------------------------------------------------------------------------- Net investment income (loss) (1.19%) (.83%) 1.50% 3.98% 3.89%(f) --------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $62 $114 $176 $9 $10 --------------------------------------------------------------------------------------------------------- Portfolio turnover rate --% 16% 39% 36% 12% ---------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 24 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS B ------------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006(a) Net asset value, beginning of period $9.85 $9.96 $10.58 $10.09 $9.97 ---------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.19) (.16) .04 .34 .09 Net gains (losses) (both realized and unrealized) .19 .10 (.18) .59 .12 ---------------------------------------------------------------------------------------------------------- Total from investment operations .00 (.06) (.14) .93 .21 ---------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- -- (.12) (.34) (.09) Distributions from realized gains -- (.05) (.36) (.10) -- ---------------------------------------------------------------------------------------------------------- Total distributions -- (.05) (.48) (.44) (.09) ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $9.85 $9.85 $9.96 $10.58 $10.09 ---------------------------------------------------------------------------------------------------------- TOTAL RETURN .00%(d) (.56%) (1.35%) 9.38%(c) 2.16% ---------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(e) Gross expenses prior to expense waiver/reimbursement 2.23% 2.14% 2.16% 2.10% 2.38%(f) ---------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(g) 2.23% 2.14% 2.16% 2.10% 2.16%(f) ---------------------------------------------------------------------------------------------------------- Net investment income (loss) (1.95%) (1.59%) .38% 3.26% 3.11%(f) ---------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $1 $2 $3 $-- $-- ---------------------------------------------------------------------------------------------------------- Portfolio turnover rate --% 16% 39% 36% 12% ----------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 25 FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------
YEAR ENDED OCT. 31, CLASS C ------------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006(a) Net asset value, beginning of period $9.84 $9.95 $10.57 $10.09 $9.97 ---------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.19) (.16) .06 .34 .09 Net gains (losses) (both realized and unrealized) .18 .10 (.20) .58 .12 ---------------------------------------------------------------------------------------------------------- Total from investment operations (.01) (.06) (.14) .92 .21 ---------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- -- (.12) (.34) (.09) Distributions from realized gains -- (.05) (.36) (.10) -- ---------------------------------------------------------------------------------------------------------- Total distributions -- (.05) (.48) (.44) (.09) ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $9.83 $9.84 $9.95 $10.57 $10.09 ---------------------------------------------------------------------------------------------------------- TOTAL RETURN (.10%) (.56%) (1.31%) 9.37%(c) 2.16% ---------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(e) Gross expenses prior to expense waiver/reimbursement 2.22% 2.14% 2.15% 2.12% 2.38%(f) ---------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(g) 2.22% 2.14% 2.15% 2.12% 2.16%(f) ---------------------------------------------------------------------------------------------------------- Net investment income (loss) (1.94%) (1.60%) .66% 3.42% 3.11%(f) ---------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $5 $8 $9 $-- $-- ---------------------------------------------------------------------------------------------------------- Portfolio turnover rate --% 16% 39% 36% 12% ----------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 26 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS I ------------------------------------------------------ PER SHARE DATA 2010 2009 2008 2007 2006(a) Net asset value, beginning of period $9.98 $9.98 $10.59 $10.10 $9.98 --------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.08) (.04) .21 .44 .13 Net gains (losses) (both realized and unrealized) .19 .10 (.24) .59 .12 --------------------------------------------------------------------------------------------------------- Total from investment operations .11 .06 (.03) 1.03 .25 --------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- (.01) (.22) (.44) (.13) Distributions from realized gains -- (.05) (.36) (.10) -- --------------------------------------------------------------------------------------------------------- Total distributions -- (.06) (.58) (.54) (.13) --------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.09 $9.98 $9.98 $10.59 $10.10 --------------------------------------------------------------------------------------------------------- TOTAL RETURN 1.10% .56% (.25%) 10.49%(c) 2.56% --------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(e) Gross expenses prior to expense waiver/reimbursement 1.07% 1.01% 1.03% 1.07% 1.34%(f) --------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(g) 1.07% 1.01% 1.03% 1.07% 1.12%(f) --------------------------------------------------------------------------------------------------------- Net investment income (loss) (.79%) (.40%) 2.10% 4.30% 4.37%(f) --------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $39 $29 $202 $122 $68 --------------------------------------------------------------------------------------------------------- Portfolio turnover rate --% 16% 39% 36% 12% ---------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 27 FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------
YEAR ENDED OCT. 31, CLASS W ------------------------------------------ PER SHARE DATA 2010 2009 2008 2007(h) Net asset value, beginning of period $9.92 $9.97 $10.58 $10.13 --------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.12) (.08) .11 .36 Net gains (losses) (both realized and unrealized) .19 .08 (.19) .55 --------------------------------------------------------------------------------------------- Total from investment operations .07 .00 (.08) .91 --------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- -- (.17) (.36) Distributions from realized gains -- (.05) (.36) (.10) --------------------------------------------------------------------------------------------- Total distributions -- (.05) (.53) (.46) --------------------------------------------------------------------------------------------- Net asset value, end of period $9.99 $9.92 $9.97 $10.58 --------------------------------------------------------------------------------------------- TOTAL RETURN .71% .04% (.66%) 9.21%(c) --------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(e) Total expenses 1.51% 1.46% 1.50% 1.54%(f) --------------------------------------------------------------------------------------------- Net investment income (loss) (1.23%) (.86%) 1.09% 3.88%(f) --------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $63 $87 $304 $-- --------------------------------------------------------------------------------------------- Portfolio turnover rate --% 16% 39% 36% ---------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 28 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED CLASS Z OCT. 31, PER SHARE DATA 2010(i) Net asset value, beginning of period $10.18 ------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.01) Net gains (losses) (both realized and unrealized) (.08) ------------------------------------------------------------- Total from investment operations (.09) ------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- Distributions from realized gains -- ------------------------------------------------------------- Total distributions -- ------------------------------------------------------------- Net asset value, end of period $10.09 ------------------------------------------------------------- TOTAL RETURN (.88%) ------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(e) Total expenses 1.54%(f) ------------------------------------------------------------- Net investment income (loss) (1.20%)(f) ------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- ------------------------------------------------------------- Portfolio turnover rate --% -------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For the period from June 15, 2006 (when shares became available) to Oct. 31, 2006. (b) Rounds to less than $0.01 per share. (c) During the year ended Oct. 31, 2007, Ameriprise Financial reimbursed the Fund for a loss on a trading error. Had the Fund not received this reimbursement, total return figures would have been lower by 0.05%. (d) Rounds to less than 0.01%. (e) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. (f) Annualized. (g) The Investment Manager and its affiliates agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds). (h) For the period from Dec. 1, 2006 (when shares became available) to Oct. 31, 2007. (i) For the period from Sept. 27, 2010 (when shares became available) to Oct. 31, 2010. The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 29 NOTES TO FINANCIAL STATEMENTS ------------------------------------------------- 1. ORGANIZATION Columbia Absolute Return Currency and Income Fund (formerly known as RiverSource Absolute Return Currency and Income Fund) (the Fund) is a series of RiverSource Global Series, Inc. (the Corporation) and is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, open-end management investment company. The Corporation has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Corporation's Board of Directors (the Board). The Fund offers Class A, Class B, Class C, Class I, Class W and Class Z shares. - Class A shares are offered with a front-end sales charge, which may be waived under certain circumstances. - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares one month after the completion of the eighth year of ownership if originally purchased in a RiverSource fund on or after May 21, 2005 or originally purchased in a Seligman fund on or after June 13, 2009. Class B shares originally purchased in a RiverSource fund prior to May 21, 2005 will convert to Class A shares in the ninth calendar year of ownership. Class B shares originally purchased in a Seligman fund prior to June 13, 2009 will convert to Class A shares in the month prior to the ninth year of ownership. Effective Sept. 7, 2010, the Fund no longer accepts investments from new or existing investors in the Fund's Class B shares, except that (i) dividend and/or capital gain distributions may continue to be reinvested in Class B shares of the Fund and (ii) shareholders invested in Class B shares of the Fund may exchange those shares for Class B shares of other Columbia, RiverSource, Seligman and Threadneedle funds offering such shares. - Class C shares may be subject to a CDSC on shares redeemed within one year of purchase. - Class I shares are not subject to sales charges and are available only to the Columbia Family of Funds. - Class W shares are offered without a front-end sales charge or CDSC and are offered through qualifying discretionary accounts. - Class Z shares are offered without a front-end sales charge or CDSC to certain eligible investors. Class Z shares became effective Sept. 27, 2010. At Aug. 27, 2010, all Class R4 and Class R5 shares were liquidated. The shares in these classes had consisted solely of seed capital from Columbia Management Investment Advisers, LLC (formerly known as RiverSource Investments, LLC) (the Investment Manager). -------------------------------------------------------------------------------- 30 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- At Oct. 31, 2010, the Investment Manager and affiliated funds-of-funds owned 100% of Class I shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration services fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. VALUATION OF SECURITIES All securities are valued at the close of business of the New York Stock Exchange (NYSE). Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price from the primary exchange. Debt securities are generally traded in the over-the-counter market and are valued by an independent pricing service using an evaluated bid. When market quotes are not readily available, the pricing service, in determining fair values of debt securities, takes into consideration such factors as current quotations by broker/dealers, coupon, maturity, quality, type of issue, trading characteristics, and other yield and risk factors it deems relevant in determining valuations. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. The procedures adopted by the Board generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign securities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the NYSE and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the NYSE, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 31 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- Financial, Inc. (Ameriprise Financial), parent company of the Investment Manager, as administrator to the Fund, will fair value foreign securities pursuant to procedures adopted by the Board, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the NYSE. The fair value of a security is likely to be different from the quoted or published price, if available. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates. Typically, those maturing in 60 days or less that originally had maturities of more than 60 days at acquisition date are valued at amortized cost using the market value on the 61st day before maturity. Short-term securities maturing in 60 days or less at acquisition date are valued at amortized cost. Amortized cost is an approximation of market value. Investments in money market funds are valued at net asset value. FOREIGN CURRENCY TRANSLATIONS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the Statement of Operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. 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. FEDERAL TAXES The Fund's policy is to comply with Subchapter M of the Internal Revenue Code that applies to regulated investment companies and to distribute substantially all -------------------------------------------------------------------------------- 32 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- of its taxable income (which includes net short-term capital gains) to shareholders. No provision for income or excise taxes is thus required. Management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Generally, the tax authorities can examine all tax returns filed for the last three years. FOREIGN CAPITAL GAINS TAXES Realized gains in certain countries may be subject to foreign taxes at the Fund level, at rates ranging from approximately 10% to 15%. The Fund pays such foreign taxes on net realized gains at the appropriate rate for each jurisdiction. DIVIDENDS TO SHAREHOLDERS Dividends from net investment income, declared and payable monthly, when available, are reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are normally distributed along with the last income dividend of the calendar year. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities. Interest income, including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. 3. 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 other assets, such as securities, currencies, commodities or indices. Derivative instruments may be used to maintain cash reserves while maintaining exposure to certain other assets, to offset anticipated declines in values of investments, 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 obligation under the terms of the contract, the potential for an illiquid secondary market 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. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 33 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- The Fund and any counterparty are required to maintain an agreement that requires the Fund and that counterparty to monitor (on a daily basis) the net fair value of all derivatives entered into pursuant to the contract between the Fund and such counterparty. If the net fair value of such derivatives between the Fund and that counterparty exceeds a certain threshold (as defined in the agreement), the Fund or the counterparty (as the case may be) is required to post cash and/or securities as collateral. Fair values of derivatives presented in the financial statements are not netted with the fair value of other derivatives or with any collateral amounts posted by the Fund or any counterparty. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS Forward foreign currency exchange contracts are agreements between two parties to buy and sell a currency at a set price on a future date. These contracts are intended to be used to minimize the exposure to foreign exchange rate fluctuations during the period between the trade and settlement dates of the contract. The Fund utilized forward foreign currency exchange contracts to shift investment exposure from one currency to another and to implement a long/short currency trading strategy that, when combined with underlying U.S. dollar cash instruments in the Fund, is designed to produce an absolute return profile with moderate risk. The market values of forward foreign currency exchange contracts fluctuate with changes in foreign currency exchange rates. The Fund will record a realized gain or loss when the forward foreign currency exchange contract is closed. The use of forward foreign currency exchange contracts does not eliminate fluctuations in the prices of the Fund's portfolio securities. The risks of forward foreign currency contracts include movement in the values of the foreign currencies relative to the U.S. dollar (or other foreign currencies) and the possibility that counterparties will not complete their contractual obligations, which may be in excess of the amount reflected, if any, in the Statement of Assets and Liabilities. EFFECTS OF DERIVATIVE TRANSACTIONS ON 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; the impact of derivative transactions on the Fund's operations over the period including realized gains or losses and unrealized gains or losses. The derivative schedules following the Portfolio of Investments present additional information regarding derivative instruments outstanding at the end of the period, if any. -------------------------------------------------------------------------------- 34 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- FAIR VALUES OF DERIVATIVE INSTRUMENTS AT OCT. 31, 2010
ASSET DERIVATIVES LIABILITY DERIVATIVES ------------------------------- ------------------------------------- STATEMENT OF ASSETS STATEMENT OF ASSETS RISK EXPOSURE AND LIABILITIES AND LIABILITIES CATEGORY LOCATION FAIR VALUE LOCATION FAIR VALUE ------------------------------------------------------------------------------------------- Unrealized Unrealized appreciation on depreciation on forward foreign forward foreign Foreign exchange currency exchange currency exchange contracts contracts $577,545 contracts $1,970,236 -------------------------------------------------------------------------------------------
EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCT. 31, 2010
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME -------------------------------------------------------------------------- FORWARD FOREIGN RISK EXPOSURE CATEGORY CURRENCY EXCHANGE CONTRACTS -------------------------------------------------------------------------- Foreign exchange contracts $7,249,532 --------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED IN INCOME -------------------------------------------------------------------------- FORWARD FOREIGN RISK EXPOSURE CATEGORY CURRENCY EXCHANGE CONTRACTS -------------------------------------------------------------------------- Foreign exchange contracts $(3,023,337) --------------------------------------------------------------------------
VOLUME OF DERIVATIVE ACTIVITY FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS The gross notional amount of contracts outstanding was approximately $163.3 million at Oct. 31, 2010. The monthly average gross notional amount for these contracts was $197.1 million for the year ended Oct. 31, 2010. The fair value of such contracts at Oct. 31, 2010 is set forth in the table above. 4. EXPENSES AND SALES CHARGES INVESTMENT MANAGEMENT SERVICES FEES Under an Investment Management Services Agreement, the Investment Manager determines which securities will be purchased, held or sold. The management fee is an annual fee that is equal to a percentage of the Fund's average daily net assets that declines from 0.89% to 0.70% as the Fund's net assets increase. The management fee for the year ended Oct. 31, 2010 was 0.89% of the Fund's average daily net assets. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 35 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- ADMINISTRATIVE SERVICES FEES Under an Administrative Services Agreement, the Fund pays Ameriprise Financial an annual fee for administration and accounting services equal to a percentage of the Fund's average daily net assets that declines from 0.08% to 0.05% as the Fund's net assets increase. The fee for the year ended Oct. 31, 2010 was 0.08% of the Fund's average daily net assets. OTHER FEES Other expenses are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited administrative services to the Fund and the Board. For the year ended Oct. 31, 2010, other expenses paid to this company were $493. COMPENSATION OF BOARD MEMBERS Under a Deferred Compensation Plan (the Plan), the board members who are not "interested persons" of the Fund as defined under the 1940 Act may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or certain other 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 Plan. TRANSFER AGENCY FEES Under a Transfer Agency Agreement, Columbia Management Investment Services Corp. (formerly known as RiverSource Service Corporation) (the Transfer Agent) is responsible for providing transfer agency services to the Fund. Prior to Sept. 7, 2010, the Transfer Agent received annual account-based service fees from Class A, Class B and Class C shares that varied by class and annual asset-based service fees based on the Fund's average daily net assets attributable to Class W shares. In addition, the Transfer Agent charged an annual fee per inactive account and received reimbursement from the Fund for certain out-of-pocket expenses. Under a new Transfer Agency Agreement effective Sept. 7, 2010, the Transfer Agent has contracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. The Transfer Agent receives monthly account-based service fees based on the number of open accounts and is reimbursed by the Fund for the fees and expenses the Transfer Agent pays to financial intermediaries that maintain omnibus accounts with the Fund subject to an annual limitation (that varies by class) that is a percentage of the average aggregate value of the Fund's -------------------------------------------------------------------------------- 36 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- shares maintained in each such omnibus account (other than omnibus accounts for which American Enterprise Investment Services, Inc. is the broker of record or accounts where the beneficial shareholder is a customer of Ameriprise Financial Services, Inc., which are paid a per account fee). The Transfer Agent pays the fees of BFDS for services as sub-transfer agent and is not entitled to reimbursement for such fees from the Fund. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses and may also retain, as additional compensation for its services, fees for wire, telephone and redemption orders, Individual Retirement Account ("IRA") trustee agent fees and account transcript fees due to the Transfer Agent from shareholders of the Fund and credits (net of bank charges) earned with respect to balances in accounts the Transfer Agent maintains in connection with its services to the Fund. For the year ended Oct. 31, 2010, the Fund's effective transfer agent fee rates as a percentage of average daily net assets of each class were as follows: Class A.............................................. 0.16% Class B.............................................. 0.16 Class C.............................................. 0.16 Class W.............................................. 0.19 Class Z.............................................. 0.06*
* Annualized. Class I shares do not pay transfer agent fees. DISTRIBUTION FEES The Fund has an agreement with Columbia Management Investment Distributors, Inc. (formerly known as RiverSource Fund Distributors, Inc.) (the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund paid a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A and Class W shares and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. For Class B and Class C shares, of the 1.00% fee, up to 0.75% is reimbursed for distribution expenses. The amount of distribution expenses incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $58,000 and $19,000 for Class B and Class C shares, respectively. These amounts are based on the most recent information available as of July 31, 2010, and may be recovered from future payments under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution fee is reduced. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 37 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- SALES CHARGES Sales charges, including front-end and CDSCs, received by the Distributor for distributing Fund shares were $14,395 for Class A, $205 for Class B and $1,540 for Class C for the year ended Oct. 31, 2010. 5. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $0 and $16,507,982, respectively, for the year ended Oct. 31, 2010. Realized gains and losses are determined on an identified cost basis. 6. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated were as follows:
YEAR ENDED OCT. 31, 2010 2009 ------------------------------------------------------------------ CLASS A Sold 1,663,071 7,828,875 Converted from Class B(a) 35,650 62,397 Reinvested distributions -- 103,312 Redeemed (6,983,449) (14,115,766) ------------------------------------------------------------------ Net increase (decrease) (5,284,728) (6,121,182) ------------------------------------------------------------------ CLASS B Sold 43,555 202,702 Reinvested distributions -- 2,280 Converted to Class A(a) (36,151) (62,780) Redeemed (110,895) (264,660) ------------------------------------------------------------------ Net increase (decrease) (103,491) (122,458) ------------------------------------------------------------------ CLASS C Sold 77,784 414,719 Reinvested distributions -- 4,936 Redeemed (373,130) (597,391) ------------------------------------------------------------------ Net increase (decrease) (295,346) (177,736) ------------------------------------------------------------------ CLASS I Sold 1,414,313 2,280,706 Reinvested distributions -- 113,149 Redeemed (476,312) (19,747,663) ------------------------------------------------------------------ Net increase (decrease) 938,001 (17,353,808) ------------------------------------------------------------------
-------------------------------------------------------------------------------- 38 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, 2010 2009 ------------------------------------------------------------------ CLASS R4 Sold -- 1,202 Reinvested distributions -- 6 Redeemed (1,000) (2,336) ------------------------------------------------------------------ Net increase (decrease) (1,000) (1,128) ------------------------------------------------------------------ CLASS R5 Redeemed (942) -- ------------------------------------------------------------------ Net increase (decrease) (942) -- ------------------------------------------------------------------ CLASS W Sold 2,221,309 3,773,483 Reinvested distributions -- 160,817 Redeemed (4,647,352) (25,660,216) ------------------------------------------------------------------ Net increase (decrease) (2,426,043) (21,725,916) ------------------------------------------------------------------ CLASS Z(b) Sold 1,405 N/A ------------------------------------------------------------------ Net increase (decrease) 1,405 N/A ------------------------------------------------------------------
(a) Automatic conversion of Class B shares to Class A shares based on the original purchase date. (b) For the period from Sept. 27, 2010 (when shares became available) to Oct. 31, 2010. 7. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in Columbia Short-Term Cash Fund (formerly known as RiverSource Short-Term Cash Fund), a money market fund established for the exclusive use of certain funds managed by the Investment Manager and other institutional clients of the Investment Manager. The cost of the Fund's purchases and proceeds from sales of shares of Columbia Short-Term Cash Fund aggregated $49,274,330 and $100,244,235, respectively, for the year ended Oct. 31, 2010. The income distributions received with respect to the Fund's investment in Columbia Short-Term Cash Fund can be found in the Statement of Operations and the Fund's invested balance in Columbia Short-Term Cash Fund at Oct. 31, 2010, can be found in the Portfolio of Investments. 8. BANK BORROWINGS The Fund has entered into a revolving credit facility with a syndicate of banks led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility became effective on Oct. 14, 2010, replacing a prior credit facility. The credit facility agreement, which is a collective agreement between the Fund and certain other funds -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 39 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- managed by the Investment Manager, severally and not jointly, permits collective borrowings up to $300 million. The borrowers shall have the right, upon written notice to the Administrative Agent, to request an increase of up to $200 million in the aggregate amount of the credit facility from new or existing lenders, provided that the aggregate amount of the credit facility shall at no time exceed $500 million. Participation in such increase by any existing lender shall be at such lender's sole discretion. Interest is charged to each fund based on its borrowings at a rate equal to the sum of the federal funds rate plus (i) 1.25% per annum plus (ii) if one-month LIBOR exceeds the federal funds rate, the amount of such excess. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.10% per annum. Prior to Oct. 14, 2010, the credit facility agreement, which was a collective agreement between the Fund and certain other funds managed by the Investment Manager, severally and not jointly, permitted collective borrowings up to $300 million. The Fund also paid a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.10% per annum, in addition to an upfront fee equal to its pro rata share of 0.04% of the amount of the credit facility. The Fund had no borrowings during the year ended Oct. 31, 2010. 9. FEDERAL TAX INFORMATION Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of foreign currency transactions. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Fund. In the Statement of Assets and Liabilities, as a result of permanent book-to-tax differences, excess of distributions over net investment income has been decreased by $2,359,600 resulting in a net reclassification adjustment to decrease paid-in capital by $2,359,600. The tax character of distributions paid for the years indicated was as follows:
YEAR ENDED OCT. 31, 2010 2009 --------------------------------------------------------------- Ordinary income.............................. $-- $1,060,104 Long-term capital gain....................... -- 2,756,390
-------------------------------------------------------------------------------- 40 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- At Oct. 31, 2010, the components of distributable earnings on a tax basis were as follows: Undistributed ordinary income.................... $ -- Undistributed accumulated long-term gain......... $ -- Accumulated realized loss........................ $(1,692,023) Unrealized appreciation (depreciation)........... $ (707,020)
For federal income tax purposes, the Fund had a capital loss carry-over of $1,692,023 at Oct. 31, 2010, that if not offset by capital gains will expire in 2017. For the year ended Oct. 31, 2010, $4,253,130 of capital loss carry-over was utilized. It is unlikely the Board will authorize a distribution of any net realized capital gains until the available capital loss carry-over has been offset or expires. There is no assurance that the Fund will be able to utilize all of its capital loss carry-over before it expires. 10. RISKS RELATING TO CERTAIN INVESTMENTS FOREIGN CURRENCY RISK The Fund's exposure to foreign currencies subjects the Fund to constantly changing exchange rates and the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of short positions, that the U.S. dollar will decline in value relative to the currency being sold forward. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates and economic or political developments in the U.S. or abroad. As a result, the Fund's exposure to foreign currencies may reduce the returns of the Fund. Trading of foreign currencies also includes the risk of clearing and settling trades which, if prices are volatile, may be difficult. GEOGRAPHIC CONCENTRATION RISK The Fund may be particularly susceptible to economic, political or regulatory events affecting companies and countries within the specific geographic region in which the Fund focuses its investments. Currency devaluations could occur in countries that have not yet experienced currency devaluation to date, or could continue to occur in countries that have already experienced such devaluations. As a result, the Fund may be more volatile than a more geographically diversified fund. COUNTERPARTY RISK The risk that a counterparty to a financial instrument entered into by the Fund or held by a special purpose or structured vehicle becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties. The Fund may experience significant delays in obtaining any recovery in a bankruptcy or other -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 41 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund will typically enter into financial instrument transactions with counterparties whose credit rating is investment grade, or, if unrated, determined to be of comparable quality by the Investment Manager. 11. SUBSEQUENT EVENTS Management has evaluated Fund related events and transactions that occurred during the period from the date of the Statement of Assets and Liabilities through the date of issuance of the Fund's financial statements. There were no events or transactions that occurred during the period that materially impacted the amounts or disclosures in the Fund's financial statements. 12. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc. was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company (now known as legacy RiverSource) mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota (the District Court). In response to defendants' motion to dismiss the complaint, the District Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. Summary judgment was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit) on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary judgment and remanded to the District Court for further proceedings. On August 6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court (the Supreme Court), asking the Supreme Court to stay the District Court proceedings while the Supreme Court considers and rules in a case captioned Jones v. Harris Associates, which involves issues of law similar to those presented in the Gallus case. On March 30, 2010, the Supreme Court issued its ruling in Jones v. Harris Associates, and on April 5, 2010, the Supreme Court vacated the Eighth Circuit's decision in the Gallus case and remanded the case to -------------------------------------------------------------------------------- 42 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- the Eighth Circuit for further consideration in light of the Supreme Court's decision in Jones v. Harris Associates. On June 4, 2010, the Eighth Circuit remanded the Gallus case to the District Court for further consideration in light of the Supreme Court's decision in Jones v. Harris Associates. On Dec. 9, 2010, the District Court reinstated its July 9, 2007 summary judgment order in favor of the defendants. In December 2005, without admitting or denying the allegations, American Express Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc. (Ameriprise Financial)), entered into settlement agreements with the Securities and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC) related to market timing activities. As a result, AEFC was censured and ordered to cease and desist from committing or causing any violations of certain provisions of the Investment Advisers Act of 1940, the Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million and civil money penalties of $7 million. AEFC also agreed to retain an independent distribution consultant to assist in developing a plan for distribution of all disgorgement and civil penalties ordered by the SEC in accordance with various undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its affiliates have cooperated with the SEC and the MDOC in these legal proceedings, and have made regular reports to the funds' Boards of Directors/Trustees. Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Funds. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 43 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- 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 ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------ TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Columbia Absolute Return Currency and Income Fund (formerly known as RiverSource Absolute Return Currency and Income Fund) (the Fund) (one of the portfolios constituting the RiverSource Global Series, Inc.) as of October 31, 2010, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights of the Fund for the period ended October 31, 2006, were audited by other auditors whose report dated December 20, 2006, expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2010, by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 45 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued) ----------- In our opinion, the financial statements and financial highlights audited by us as referred to above present fairly, in all material respects, the financial position of Columbia Absolute Return Currency and Income Fund of the RiverSource Global Series, Inc. at October 31, 2010, 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 then ended, and the financial highlights for each of the four years in the period then ended, in conformity with U.S. generally accepted accounting principles. -s- Ernst & Young LLP Minneapolis, Minnesota December 20, 2010 -------------------------------------------------------------------------------- 46 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT FEDERAL INCOME TAX INFORMATION ------------------------------------------------- (UNAUDITED) Fiscal year ended Oct. 31, 2010 The Fund designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 47 BOARD MEMBERS AND OFFICERS ----------------------------------------------------- Shareholders elect a Board that oversees the Fund's operations. The Board appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following is a list of the Fund's Board members. Each Board member oversees 145 Columbia, RiverSource, Seligman and Threadneedle funds. Under current Board policy, members generally serve until the next Board meeting after he or she reaches the mandatory retirement age established by the Board, or the fifteenth anniversary of the first Board meeting they attended as members of the Board. INDEPENDENT BOARD MEMBERS
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None 901 S. Marquette Ave. 1/11/06 Attorney Minneapolis, MN 55402 Age 56 ------------------------------------------------------------------------------------------------------------------------------ Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None 901 S. Marquette Ave. 7/11/07 Leadership (consulting company) Minneapolis, MN 55402 Age 56 ------------------------------------------------------------------------------------------------------------------------------ Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None 901 S. Marquette Ave. 11/1/04 University; former Dean, McCallum Graduate School of Minneapolis, MN 55402 Business, Bentley University Age 60 ------------------------------------------------------------------------------------------------------------------------------ Anne P. Jones Board member since Attorney and Consultant None 901 S. Marquette Ave. 3/1/85 Minneapolis, MN 55402 Age 75 ------------------------------------------------------------------------------------------------------------------------------ Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries, 901 S. Marquette Ave. since 1/1/07, College Inc. (manufactures Minneapolis, MN 55402 Board member irrigation systems) Age 71 since 1/1/02 ------------------------------------------------------------------------------------------------------------------------------ John F. Maher Board member Retired President and Chief Executive Officer and None 901 S. Marquette Ave. since 12/10/08 former Director, Great Western Financial Corporation Minneapolis, MN 55402 (financial services), 1986-1997 Age 67 ------------------------------------------------------------------------------------------------------------------------------ Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None 901 S. Marquette Ave. 11/1/04 real estate and asset management company) Minneapolis, MN 55402 Age 58 ------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 48 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- INDEPENDENT BOARD MEMBERS (CONTINUED)
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ Leroy C. Richie Board member Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc. 901 S. Marquette Ave. since 11/11/08 President and General Counsel, Automotive Legal (digital imaging); Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil Age 69 and gas exploration and production); OGE Energy Corp. (energy and energy services) ------------------------------------------------------------------------------------------------------------------------------ Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera 901 S. Marquette Ave. 11/13/02 since 2003 (biotechnology); former President, Aquila Pharmaceuticals, Minneapolis, MN 55402 Biopharmaceuticals Inc. Age 66 (biotechnology); Healthways, Inc. (health management programs) ------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 49 BOARD MEMBERS AND OFFICERS (continued) ----------------------------------------- BOARD MEMBER AFFILIATED WITH THE INVESTMENT MANAGER*
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ William F. Truscott Board member Chairman of the Board, Columbia Management Investment None 53600 Ameriprise since 11/7/01, Advisers, LLC (formerly RiverSource Investments, LLC) Financial Center Vice President since since May 2010 (previously President, Chairman of the Minneapolis, MN 55474 2002 Board and Chief Investment Officer, 2001-April 2010); Age 50 Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Chief Executive Officer, U.S. Asset Management & President -- Annuities, Ameriprise Financial, Inc. since May 2010 (previously President -- U.S. Asset Management and Chief Investment Officer, 2005-April 2010 and Senior Vice President -- Chief Investment Officer, 2001-2005); Director, President and Chief Executive Officer, Ameriprise Certificate Company since 2006; Director, Columbia Management Investment Distributors, Inc. (formerly RiverSource Fund Distributors, Inc.) since May 2010 (previously Chairman of the Board and Chief Executive Officer, 2008-April 2010); Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006 ------------------------------------------------------------------------------------------------------------------------------
* Interested person (as defined under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the investment manager or Ameriprise Financial. The SAI has additional information about the Fund's Board members and is available, without charge, upon request by calling 800.345.6611; contacting your financial intermediary; or visiting columbiamanagement.com. -------------------------------------------------------------------------------- 50 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- 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. In addition to Mr. Truscott, who is Vice President, the Fund's other officers are: FUND OFFICERS
NAME, POSITION HELD ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION AGE LENGTH OF SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------- J. Kevin Connaughton President since Senior Vice President and General Manager -- Mutual One Financial Center 5/1/10 Fund Products, Columbia Management Investment Advisers, Boston, MA 02111 LLC since May 2010; President, Columbia Funds since Age 46 2009 (previously Senior Vice President and Chief Financial Officer, June 2008 -- January 2009); President, Atlantic Funds and Nations Funds since 2009; Managing Director of Columbia Management Advisors, LLC, December 2004 -- April 2010; Treasurer, Columbia Funds, October 2003 -- May 2008; Treasurer, the Liberty Funds, Stein Roe Funds and Liberty All-Star Funds, December 2000 -- December 2006 -------------------------------------------------------------------------------------------------------- Amy K. Johnson Vice President since Senior Vice President and Chief Operating Officer, 5228 Ameriprise Financial 12/5/06 Columbia Management Investment Advisers, LLC (formerly Center Minneapolis, MN RiverSource Investments, LLC) since May 2010 55474 (previously Chief Administrative Officer, 2009 -- April Age 45 2010 and Vice President -- Asset Management and Trust Company Services, 2006-2009 and Vice President -- Operations and Compliance, 2004-2006); Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010 -------------------------------------------------------------------------------------------------------- Jeffrey P. Fox Treasurer since Chief Financial Officer, Columbia Management Investment 105 Ameriprise 7/10/02 Distributors, Inc. (formerly RiverSource Fund Financial Center Distributors, Inc.) and of Seligman Data Corp. since Minneapolis, MN 55474 2008; Vice President -- Investment Accounting, Age 55 Ameriprise Financial, Inc. since 2002; Chief Financial Officer, RiverSource Distributors, Inc. since 2006 -------------------------------------------------------------------------------------------------------- Scott R. Plummer Vice President, Chief Legal Officer and Assistant Secretary, Columbia 5228 Ameriprise Financial General Counsel and Management Investment Advisers, LLC (formerly Center Secretary since RiverSource Investments, LLC) since June 2005; Vice Minneapolis, MN 55474 12/5/06 President and Lead Chief Counsel -- Asset Management, Age 51 Ameriprise Financial, Inc. since May 2010 (previously Vice President and Chief Counsel -- Asset Management, 2005-April 2010 and Vice President -- Asset Management Compliance, 2004-2005); Senior Vice President, Secretary and Chief Legal Officer, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Vice President, Chief Counsel and Assistant Secretary, Columbia Management Investment Distributors, Inc. (formerly RiverSource Fund Distributors, Inc.) since 2008; Vice President, General Counsel and Secretary, Ameriprise Certificate Company since 2005; Chief Counsel, RiverSource Distributors, Inc. since 2006 --------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 51 BOARD MEMBERS AND OFFICERS (continued) ----------------------------------------- FUND OFFICERS (CONTINUED)
NAME, POSITION HELD ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION AGE LENGTH OF SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------- Michael A. Jones Vice President since Director and President, Columbia Management Investment 100 Federal Street 5/1/10 Advisers, LLC since May 2010; President and Director, Boston, MA 02110 Columbia Management Investment Distributors, Inc. since Age 51 May 2010; Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Manager, Chairman, Chief Executive Officer and President, Columbia Management Advisors, LLC, 2007 -- April 2010; Chief Executive Officer, President and Director, Columbia Management Distributors, Inc., 2006 -- April 2010; former Co-President and Senior Managing Director, Robeco Investment Management -------------------------------------------------------------------------------------------------------- Colin Moore Vice President since Chief Investment Officer, Columbia Management One Financial Center 5/1/10 Investment Advisers, LLC since May 2010; Senior Vice Boston, MA 02111 President, Atlantic Funds, Columbia Funds and Nations Age 52 Funds since May 2010; Manager, Managing Director and Chief Investment Officer, Columbia Management Advisors, LLC, 2007 -- April 2010; Head of Equities, Columbia Management Advisors, LLC, 2002 -- Sept. 2007 -------------------------------------------------------------------------------------------------------- Linda Wondrack Chief Compliance Vice President and Chief Compliance Officer, Columbia One Financial Center Officer since 5/1/10 Management Investment Advisers, LLC since May 2010; Boston, MA 02111 Chief Compliance Officer, Columbia Funds since 2007; Age 46 Senior Vice President and Chief Compliance Officer, Atlantic Funds and Nations Funds since 2007; Director (Columbia Management Group, LLC and Investment Product Group Compliance), Bank of America, June 2005 -- April 2010 -------------------------------------------------------------------------------------------------------- Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial, 2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer and Center since 11/9/05 and Identity Theft Prevention Officer, Columbia Management Minneapolis, MN 55474 Identity Theft Investment Distributors, Inc. (formerly RiverSource Age 46 Prevention Officer Fund Distributors, Inc.) since 2008; Anti-Money since 2008 Laundering Officer, Ameriprise Financial, Inc. since 2005; Compliance Director, Ameriprise Financial, Inc., 2004-2008 --------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 52 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT PROXY VOTING ------------------------------------------------------------------ The policy of the Board 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 columbiamanagement.com; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting columbiamanagement.com; or searching the website of the SEC at www.sec.gov. -------------------------------------------------------------------------------- COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND -- 2010 ANNUAL REPORT 53 COLUMBIA ABSOLUTE RETURN CURRENCY AND INCOME FUND (formerly known as RiverSource Absolute Return Currency and Income Fund) P.O. Box 8081 Boston, MA 02266-8081 COLUMBIAMANAGEMENT.COM This report must be accompanied or preceded by the Fund's current prospectus. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC. (C)2010 Columbia Management Investment Advisers, LLC. All (COLUMBIA MANAGEMENT LOGO) rights reserved. S-6502 J (12/10)
Annual Report and Prospectus (COLUMBIA MANAGEMENT LOGO) COLUMBIA EMERGING MARKETS BOND FUND (FORMERLY KNOWN AS RIVERSOURCE EMERGING MARKETS BOND FUND) -------------------------------------------------------------------------------- ANNUAL REPORT FOR THE PERIOD ENDED OCTOBER 31, 2010 (Prospectus also enclosed) COLUMBIA EMERGING MARKETS BOND FUND SEEKS TO PROVIDE SHAREHOLDERS WITH HIGH TOTAL RETURN THROUGH CURRENT INCOME AND, SECONDARILY, THROUGH CAPITAL APPRECIATION. This annual report includes a prospectus that describes in detail the Fund's objective, investment strategy, risks, sales charges, fees and other matters of interest. Please read the prospectus carefully before you invest or send money. NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE TABLE OF CONTENTS -------------------------------------------------------------- Your Fund at a Glance.............. 3 Manager Commentary................. 5 The Fund's Long-term Performance... 12 Fund Expenses Example.............. 14 Portfolio of Investments........... 17 Statement of Assets and Liabilities...................... 25 Statement of Operations............ 27 Statements of Changes in Net Assets........................... 29 Financial Highlights............... 31 Notes to Financial Statements...... 38 Report of Independent Registered Public Accounting Firm........... 58 Federal Income Tax Information..... 60 Board Members and Officers......... 61 Proxy Voting....................... 66
-------------------------------------------------------------------------------- 2 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT YOUR FUND AT A GLANCE ---------------------------------------------------------- FUND SUMMARY -------------------------------------------------------------------------------- > Columbia Emerging Markets Bond Fund (the Fund) Class A shares gained 20.75% (excluding sales charge) for the 12 months ended October 31, 2010. > The Fund outperformed its benchmark, the J.P. Morgan Emerging Markets Bond Index-Global (J.P. Morgan EMBI-Global), which rose 17.70% for the 12-month period. > The Fund also outperformed its peer group, as represented by the Lipper Emerging Markets Debt Funds Index, which advanced 18.27% for the same period. ANNUALIZED TOTAL RETURNS (for period ended October 31, 2010) --------------------------------------------------------------------------------
SINCE INCEPTION 1 YEAR 3 YEAR 2/16/06 ------------------------------------------------------------------ Columbia Emerging Markets Bond Fund Class A (excluding sales charge) +20.75% +10.20% +9.74% ------------------------------------------------------------------ J.P. Morgan EMBI-Global (unmanaged) +17.70% +9.95% +9.20% ------------------------------------------------------------------ Lipper Emerging Markets Debt Funds Index (unmanaged) +18.27% +7.70% +8.22% ------------------------------------------------------------------
(See "The Fund's Long-term Performance" for Index descriptions) 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 columbiamanagement.com or calling 800.345.6611. The 4.75% sales charge applicable to Class A shares of the Fund is not reflected in the table above. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in fees and expenses. The Fund's returns reflect the effect of fee waivers/expense reimbursements, if any. Without such waivers/reimbursements, the Fund's returns would be lower. See the Average Annual Total Returns table for performance of other share classes of the Fund. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. It is not possible to invest directly in an index. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 3 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------
AT OCTOBER 31, 2010 SINCE Without sales charge 1 YEAR 3 YEARS INCEPTION Class A (inception 2/16/06) +20.75% +10.20% +9.74% ----------------------------------------------------------------- Class B (inception 2/16/06) +19.76% +9.34% +8.91% ----------------------------------------------------------------- Class C (inception 2/16/06) +19.87% +9.40% +8.91% ----------------------------------------------------------------- Class I (inception 2/16/06) +21.19% +10.66% +10.17% ----------------------------------------------------------------- Class R4 (inception 2/16/06) +20.75% +10.50% +9.96% ----------------------------------------------------------------- Class W (inception 12/1/06) +20.68% +10.21% +10.00% ----------------------------------------------------------------- Class Z (inception 9/27/10) N/A N/A +2.68%* ----------------------------------------------------------------- With sales charge Class A (inception 2/16/06) +15.02% +8.43% +8.61% ----------------------------------------------------------------- Class B (inception 2/16/06) +14.76% +8.50% +8.60% ----------------------------------------------------------------- Class C (inception 2/16/06) +18.87% +9.40% +8.91% -----------------------------------------------------------------
Class A share performance reflects the maximum initial sales charge of 4.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second year 4%; third and fourth years 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I, Class R4, Class W and Class Z shares. Class I and Class R4 are available to qualifying institutional investors only. Class W shares are offered through qualifying discretionary accounts. Class Z shares are available to certain eligible investors. * Not annualized. PORTFOLIO STATISTICS -------------------------------------------------------------------------------- Weighted average life(1) 11.4 years -------------------------------------- Effective duration(2) 6.9 years --------------------------------------
(1) WEIGHTED AVERAGE LIFE measures a bond's maturity, which takes into consideration the possibility that the issuer may call the bond before its maturity date. (2) EFFECTIVE DURATION measures the sensitivity of a security's price to parallel shifts in the yield curve (the graphical depiction of the levels of interest rates from two years out to 30 years). Positive duration means that as rates rise, the price decreases, and negative duration means that as rates rise, the price increases. -------------------------------------------------------------------------------- 4 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT MANAGER COMMENTARY ------------------------------------------------------------- Effective September 27, 2010, RiverSource Emerging Markets Bond Fund was renamed Columbia Emerging Markets Bond Fund. At October 31, 2010, approximately 33% of the Fund's shares were owned in aggregate by affiliated funds-of-funds managed by Columbia Management Investment Advisers, LLC (Columbia Management). As a result of asset allocation decisions by Columbia Management, it is possible Columbia Emerging Markets Bond Fund may experience relatively large purchases or redemptions from affiliated funds-of- funds (see page 30, Class I capital share transactions for related activity during the most recent fiscal period). Columbia Management seeks to minimize the impact of these transactions by structuring them over a reasonable period of time. Columbia Emerging Markets Bond Fund may experience increased expenses as it buys and sells securities as a result of purchases or redemptions by affiliated funds-of-funds. For more information on the Fund's expenses, see the discussions beginning on pages 14 and 47. Dear Shareholders, Columbia Emerging Markets Bond Fund (the Fund) Class A shares gained 20.75% (excluding sales charge) for the 12 months ended October 31, 2010. The Fund outperformed its benchmark, the J.P. Morgan Emerging Markets Bond Index-Global (J.P. Morgan EMBI-Global), which rose 17.70%. The Fund also outperformed the Lipper Emerging Markets Debt Funds Index, representing the Fund's peer group, which advanced 18.27%, during the same period. COUNTRY BREAKDOWN(1) (at October 31, 2010) ---------------------------------------------------------------------
Argentina 7.1% ------------------------------------------------ Brazil 10.7% ------------------------------------------------ Cayman Islands 0.6% ------------------------------------------------ Colombia 5.6% ------------------------------------------------ Croatia 1.0% ------------------------------------------------ Dominican Republic 2.7% ------------------------------------------------ El Salvador 1.5% ------------------------------------------------ Indonesia 12.3% ------------------------------------------------ Kazakhstan 2.6% ------------------------------------------------ Lithuania 1.1% ------------------------------------------------ Mexico 8.9% ------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 5 MANAGER COMMENTARY (continued) ------------------------------------------------- COUNTRY BREAKDOWN(1) (at October 31, 2010) (continued) ---------------------------------------------------------------------
Netherlands 1.1% ------------------------------------------------ Peru 3.6% ------------------------------------------------ Philippines 2.8% ------------------------------------------------ Qatar 2.2% ------------------------------------------------ Russian Federation 12.0% ------------------------------------------------ Trinidad and Tobago 1.2% ------------------------------------------------ Turkey 7.0% ------------------------------------------------ Ukraine 1.3% ------------------------------------------------ United Kingdom 1.2% ------------------------------------------------ Uruguay 3.1% ------------------------------------------------ Venezuela 6.7% ------------------------------------------------ Other(2) 3.7% ------------------------------------------------
(1) Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan). The Fund's composition is subject to change. (2) Cash & Cash Equivalents. SIGNIFICANT PERFORMANCE FACTORS Emerging market bonds had a strong performance over the last year, but it has been choppy at times, with some periods of significant volatility. The first four months of the period began quietly enough, with the J.P. QUALITY BREAKDOWN(1) (at October 31, 2010) ---------------------------------------------------------------------
AA rating 1.6% ------------------------------------------------ A rating 5.5% ------------------------------------------------ BBB rating 36.7% ------------------------------------------------ BB rating 41.1% ------------------------------------------------ B rating 12.4% ------------------------------------------------ Non-rated 2.7% ------------------------------------------------
(1) Percentages indicated are based upon total fixed income securities (excluding Investments of Cash Collateral Received for Securities on Loan and Cash & Cash Equivalents). Ratings apply to the underlying holdings of the Fund and not the Fund itself. Whenever possible, the Standard and Poor's rating is used to determine the credit quality of a security. Standard and Poor's rates the creditworthiness of corporate bonds, with 15 categories, ranging from AAA (highest) to D (lowest). Ratings from AA to CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. If Standard and Poor's doesn't rate a security, then Moody's rating is used. Columbia Management Investment Advisers, LLC (formerly known as RiverSource Investments, LLC) (the Investment Manager) rates a security using an internal rating system when Moody's doesn't provide a rating. -------------------------------------------------------------------------------- 6 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- Morgan EMBI-Global trading within a small 1-2% range. Performance picked up dramatically in February, with index spreads (differential in yields between emerging market bonds and those of comparable Treasuries) compressing about 80 basis points (a basis point equals 1/100 of a percentage point) over the next two months and hitting their lowest level of the year on April 15 at 242 basis points (their lowest level since the onset of the financial crisis). April and May saw a significant bout of volatility, generated by solvency and banking system concerns focused on Greece, Ireland, Portugal and Spain (European Union peripheral countries). In early May, a E110 billion European Union (EU)/International Monetary Fund (IMF) sponsored rescue package for Greece was announced, and a companion contingency aid program for the other peripheral countries (E750 billion European Financial Stability Facility) was created, but not immediately activated. Equally important, all of these countries announced a significant acceleration in their fiscal adjustment efforts. This served to relieve immediate concerns that the panic focused on the EU peripherals would spread to larger EU countries and create another round of generalized global financial panic. With the financial rescue, contagion concerns receded and the focus shifted back to fiscal adjustment policy implementation. While the EU rescue packages did stabilize near-term default concerns and reduced contagion, it was a negative confidence shock to the U.S. economy and U.S. financial markets. U.S. growth, which was generating some upward momentum in the first half, stalled out in the third quarter and financial markets fell. This highlighted what we believe is the continued dual speed nature of the global recovery: cyclically driven, rapid recoveries in emerging markets and slow, fragile recoveries in developed markets (U.S., EU, Japan), held back by an overhang of bad assets and bank problems. Emerging Asia and Latin America are leading the global recovery, enjoying 6-10% growth rates, rapidly closing their output gaps, and even making moves to tighten monetary policy. The sub-par nature of the U.S. recovery pushed the Federal Reserve System (the Fed) to move away from a commitment to keep rates low for the foreseeable future, to rising speculation about additional moves the Fed might take to stimulate faster growth. Broader financial markets -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 7 MANAGER COMMENTARY (continued) ------------------------------------------------- regained some stability after the April panic, driven by confidence in the EU support plan, better corporate earnings results, and continued strong emerging market growth. This environment of better equity performance, low U.S. rates, and speculation about additional monetary easing created a trend toward a weaker U.S. dollar and higher commodity prices, which proved to be an ideal environment for risk assets. These factors helped drive strong performance during the period, with the J.P. Morgan EMBI-Global rising about 13% during the last five months of the period. Exposure to local currencies and rates contributed to the Fund's performance the most during the annual period, as several emerging market currencies appreciated against the U.S. dollar. Fund positions in bonds denominated in the Indonesian rupiah, Uruguayan peso and Colombian peso particularly boosted Fund results. Further contributing to the Fund's outperformance was the decline in interest rates in these same markets, which caused local asset prices to rise. Also, the average yields on these markets' local assets were higher than that of the J.P. Morgan EMBI-Global, thus boosting the Fund's relative results. Country and issue selection helped the Fund's performance as well. Investment overweights in Indonesia, Colombia, Uruguay and Peru and underweight positions in Brazil and Mexico were especially beneficial. There were no major detractors from the Fund's performance during the annual period. Only modestly detracting from results were underweighted allocations to the bonds of Panama and the Philippines, which outpaced the J.P. Morgan EMBI- Global during the annual period. CHANGES TO THE FUND'S PORTFOLIO We increased the portfolio's exposure to emerging market currencies, as these currencies benefitted from U.S. dollar weakness and better growth outlooks. Moreover, emerging market currencies denominated local debt can offer a better way to gain exposure to favored countries with developed local markets, compared to U.S. dollar debt which, in many cases, offers limited upside. -------------------------------------------------------------------------------- 8 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- We also substituted more quasi-sovereign agency debt for sovereign debt and we maintained only a modest exposure to emerging market corporate bonds. Within the portfolio's exposure to corporate bonds, we sought to focus holdings on commodity-oriented issues, such as those issued by oil and metals and mining companies. At the end of the period, the Fund had its most significant overweight allocations to the bond markets of Indonesia, Argentina, Russia and Qatar. Conversely, the Fund had its largest underweight exposures in the bond markets of Lebanon, Turkey, Mexico and the Philippines. OUR FUTURE STRATEGY Going forward, we believe there continues to be upside potential in emerging market debt, but returns are likely to be more modest than during the most recent annual period, given the level of U.S. Treasury yields and the significant tightening in emerging market spreads since June 2010. Increased issuance from emerging market governments and corporations anticipated over the near term may also serve as a brake to the near-term performance of emerging markets. We believe, the largest external risks to emerging market bonds are: renewed concerns about peripheral European countries, questions about the strength of recoveries in developed markets, imbalances caused by the dual speed nature of the global recovery, U.S. monetary policy in the midst of very low U.S. Treasury yields and questions about how abundant global liquidity has boosted the value of all fixed income assets. Exposure to local currencies and rates contributed to the Fund's performance the most during the annual period, as several emerging market currencies appreciated against the U.S. dollar. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 9 MANAGER COMMENTARY (continued) ------------------------------------------------- Emerging markets have had a run of strong performance over the last two years. Much of this reflects the sector's stronger economic growth and solvency trends relative to developed markets. Abundant global liquidity and a generally supportive environment for all fixed income assets has certainly been an additional performance tailwind. A reversal in this external environment would be an impediment to near-term performance. We do not anticipate making any major changes in the Fund's strategy or portfolio allocations. As always, we continue to monitor several important factors. Among them are the creditworthiness of each country, the strength of its economic policies and the soundness of its fundamentals. Using our top-down investment approach, we intend to continually reevaluate these factors as we seek to identify individual securities that present attractive value opportunities. Nicholas Pifer, CFA(R) James Carlen, CFA(R) Portfolio Manager Portfolio Manager
Any specific securities mentioned are for illustrative purposes only and are not a complete list of securities that have increased or decreased in value. The views expressed in this statement reflect those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Columbia Management Investment Advisers, LLC* (the Investment Manager) or any subadviser to the Fund or any other person in the Investment Manager or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and the Investment Manager disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for the Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of the Fund. * Effective May 1, 2010, RiverSource Investments, LLC became known as Columbia Management Investment Advisers, LLC. -------------------------------------------------------------------------------- 10 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT THIS PAGE LEFT BLANK INTENTIONALLY THE FUND'S LONG-TERM PERFORMANCE ----------------------------------------------- The chart on the facing page illustrates the total value of an assumed $10,000 investment in Columbia Emerging Markets Bond Fund Class A shares (from 2/16/06 to 10/31/10) as compared to the performance of the J.P. Morgan Emerging Markets Bond Index-Global (J.P. Morgan EMBI-Global) and the Lipper Emerging Markets Debt Funds Index. In comparing the Fund's Class A shares to these indices, you should take into account the fact that the Fund's performance reflects the maximum initial sales charge of 4.75%, while such charges are not reflected in the performance of the indices. Returns for the Fund include the reinvestment of any distributions paid during each period. The performance information shown represents past performance and is not a guarantee of future results. The table below and the chart on the facing page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 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 or visiting columbiamanagement.com. Also see "Past Performance" in the Fund's current prospectus. COMPARATIVE RESULTS --------------------------------------------------------------------------------
Results at October 31, 2010 SINCE INCEPTION 1 YEAR 3 YEARS 2/16/06 COLUMBIA EMERGING MARKETS BOND FUND (INCLUDES SALES CHARGE) Class A Cumulative value of $10,000 $11,502 $12,747 $14,747 --------------------------------------------------------------------------------- Average annual total return +15.02% +8.43% +8.61% --------------------------------------------------------------------------------- J.P. MORGAN EMBI-GLOBAL(1) Cumulative value of $10,000 $11,770 $13,291 $15,127 --------------------------------------------------------------------------------- Average annual total return +17.70% +9.95% +9.20% --------------------------------------------------------------------------------- LIPPER EMERGING MARKETS DEBT FUNDS INDEX(2) Cumulative value of $10,000 $11,827 $12,492 $14,497 --------------------------------------------------------------------------------- Average annual total return +18.27% +7.70% +8.22% ---------------------------------------------------------------------------------
Results for other share classes can be found on page 4. -------------------------------------------------------------------------------- 12 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- (VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN COLUMBIA EMERGING MARKETS BOND FUND LINE GRAPH)
COLUMBIA EMERGING MARKETS BOND FUND CLASS LIPPER EMERGING A (INCLUDES J.P. MORGAN MARKETS DEBT SALES CHARGE) EMBI-GLOBAL(1) FUNDS INDEX(2) ----------------- -------------- --------------- 2/16/06 $ 9,525 $10,000 $10,000 4/06 9,446 9,908 9,987 7/06 9,507 10,022 10,041 10/06 10,025 10,532 10,564 1/07 10,259 10,704 10,845 4/07 10,761 11,089 11,293 7/07 10,521 10,740 10,938 10/07 11,021 11,382 11,604 1/08 10,975 11,507 11,544 4/08 10,986 11,599 11,570 7/08 10,801 11,516 11,530 10/08 7,887 9,205 8,783 1/09 8,854 10,252 9,153 4/09 9,859 11,074 10,004 7/09 11,149 12,005 11,259 10/09 12,214 12,853 12,256 1/10 12,510 13,077 12,478 4/10 13,277 13,675 13,246 7/10 13,856 14,294 13,649 10/10 14,747 15,127 14,497
(1) The J.P. Morgan EMBI-Global, an unmanaged index, is based on U.S. dollar- denominated debt instruments issued by emerging market sovereign and quasi- sovereign entities, such as Brady bonds, Eurobonds and loans. The index reflects reinvestment of all distributions and changes in market prices. (2) The Lipper Emerging Markets Debt Funds Index includes the 10 largest emerging markets debt funds tracked by Lipper Inc. The index's returns include reinvested dividends. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 13 FUND EXPENSES EXAMPLE ---------------------------------------------------------- (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (i) transaction costs, including sales charges (loads) on purchase payments; and (ii) ongoing costs, which may include management fees; distribution and service (Rule 12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the ongoing expenses of any funds in which the Fund invests (also referred to as "acquired funds"), including affiliated and non- affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the ongoing expenses charged by acquired funds using the expense ratio of each of the acquired funds as of the acquired fund's most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period indicated and held until October 31, 2010. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses for each class. You may use the information in this line, together with the amount you 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 result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for each class and an assumed rate of return of 5% per year before expenses, which is not the actual return for the class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. -------------------------------------------------------------------------------- 14 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED MAY 1, 2010(a) OCT. 31, 2010 THE PERIOD(b) EXPENSE RATIO ------------------------------------------------------------------------------------------- Class A ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,110.70 $ 6.89(d) 1.31%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,018.40 $ 6.59(d) 1.31%(d) ------------------------------------------------------------------------------------------- Class B ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,105.60 $10.92(d) 2.08%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,014.56 $10.45(d) 2.08%(d) ------------------------------------------------------------------------------------------- Class C ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,106.20 $10.82(d) 2.06%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,014.66 $10.35(d) 2.06%(d) ------------------------------------------------------------------------------------------- Class I ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,112.80 $ 4.85(d) .92%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,020.34 $ 4.63(d) .92%(d) ------------------------------------------------------------------------------------------- Class R4 ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,110.30 $ 6.42(d) 1.22%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,018.85 $ 6.14(d) 1.22%(d) ------------------------------------------------------------------------------------------- Class W ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,110.40 $ 7.16(d) 1.36%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,018.15 $ 6.84(d) 1.36%(d) ------------------------------------------------------------------------------------------- Class Z ------------------------------------------------------------------------------------------- Actual(e) $1,000 $1,026.80 $ 0.86(d) .97%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,020.09 $ 4.89(d) .97%(d) -------------------------------------------------------------------------------------------
(a) The beginning account value for Class Z is as of September 27, 2010 (when shares became available) for actual expense calculations. (b) Expenses are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). Actual expenses for Class Z are equal to the annualized expense ratio for the class as indicated above, multiplied by the average account value over the period, multiplied by 32/365 (to reflect the number of days in the period). -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 15 FUND EXPENSES EXAMPLE (continued) ---------------------------------------------- (c) Based on the actual return for the six months ended October 31, 2010: +11.07% for Class A, +10.56% for Class B, +10.62% for Class C, +11.28% for Class I, +11.03% for Class R4 and +11.04% for Class W. (d) Columbia Management Investment Advisers, LLC (formerly known as RiverSource Investments, LLC) (the Investment Manager) and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until December 31, 2011, unless sooner terminated at the sole discretion of the Fund's Board, such that net expenses (excluding fees and expenses of acquired funds), will not exceed 1.28% for Class A, 2.03% for Class B, 2.03% for Class C, 0.83% for Class I, 1.13% for Class R4, 1.28% for Class W and 1.03% for Class Z. Any amounts waived will not be reimbursed by the Fund. This change is effective January 1, 2011. Had this change been in place for the entire six month period ended October 31, 2010, the actual expenses paid would have been $6.74 for Class A, $10.66 for Class B, $10.66 for Class C, $4.37 for Class I, $5.95 for Class R4, $6.73 for Class W and $0.92 for Class Z; the hypothetical expenses paid would have been $6.44 for Class A, $10.20 for Class B, $10.20 for Class C, $4.18 for Class I, $5.69 for Class R4, $6.44 for Class W and $5.19 for Class Z. (e) Based on the actual return for the period from September 27, 2010 (when shares became available) to October 31, 2010 of +2.68% for Class Z. -------------------------------------------------------------------------------- 16 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT PORTFOLIO OF INVESTMENTS ------------------------------------------------------- Columbia Emerging Markets Bond Fund OCTOBER 31, 2010 (Percentages represent value of investments compared to net assets)
COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE CORPORATE BONDS & NOTES (26.0%) BRAZIL (2.5%) Banco Cruzeiro do Sul SA Subordinated Notes (a) 09/22/20 8.875% $2,500,000 $2,617,483 Marfrig Overseas Ltd. (a) 11/16/16 9.625% 1,130,000 1,221,812 Marfrig Overseas Ltd. (a)(b) 05/04/20 9.500% 800,000 856,759 Morgan Stanley Senior Unsecured (a) 05/03/17 10.090% BRL 2,100,000 1,195,868 ----------- Total 5,891,922 ---------------------------------------------------------------------------------------- DOMINICAN REPUBLIC (1.4%) Cerveceria Nacional Dominicana C por A (a) 03/27/12 16.000% 3,450,000 3,212,813 ---------------------------------------------------------------------------------------- INDONESIA (4.0%) Majapahit Holding BV (a) 06/28/17 7.250% 1,150,000 1,344,063 08/07/19 8.000% 2,100,000 2,606,625 01/20/20 7.750% 2,900,000 3,562,871 Majapahit Holding BV (a)(b) 10/17/16 7.750% 1,630,000 1,931,550 ----------- Total 9,445,109 ---------------------------------------------------------------------------------------- KAZAKHSTAN (2.5%) KazMunaiGaz Finance Sub BV (a) 07/02/18 9.125% 2,595,000 3,182,119 05/05/20 7.000% 1,850,000 1,973,988 Kazakhstan Temir Zholy Finance BV (a) 10/06/20 6.375% 800,000 832,226 ----------- Total 5,988,333 ---------------------------------------------------------------------------------------- NETHERLANDS (1.1%) Lukoil International Finance BV (a) 11/05/19 7.250% 2,400,000 2,607,299 ---------------------------------------------------------------------------------------- PERU (0.9%) Banco de Credito del Peru Subordinated Notes (a)(c) 10/15/22 7.170% PEN 6,000,000 2,206,576 ---------------------------------------------------------------------------------------- PHILIPPINES (2.7%) Power Sector Assets & Liabilities Management Corp. (a)(b) Government Guaranteed 05/27/19 7.250% 2,750,000 3,351,563 12/02/24 7.390% 2,500,000 3,107,057 ----------- Total 6,458,620 ---------------------------------------------------------------------------------------- QATAR (1.2%) Qtel International Finance Ltd. (a) 10/19/25 5.000% 1,200,000 1,175,983 Qtel International Finance Ltd. (a)(b) 02/16/21 4.750% 1,600,000 1,598,270 ----------- Total 2,774,253 ---------------------------------------------------------------------------------------- RUSSIAN FEDERATION (7.3%) Gaz Capital SA for Gazprom (a) Senior Unsecured 11/22/16 6.212% 3,750,000 3,998,438 08/16/37 7.288% 2,950,000 3,200,750 Gaz Capital SA for Gazprom (a)(b) Senior Unsecured 04/11/18 8.146% 850,000 982,813 Gazprom Via Gaz Capital SA Senior Unsecured (a) 03/07/22 6.510% 1,300,000 1,360,125 TNK-BP Finance SA (a) 03/13/18 7.875% 2,625,000 2,969,748 TransCapitalInvest Ltd. for OJSC AK Transneft Senior Unsecured (a) 08/07/18 8.700% 3,680,000 4,626,503 ----------- Total 17,138,377 ---------------------------------------------------------------------------------------- UKRAINE (1.3%) MHP SA (a) 04/29/15 10.250% 2,928,000 3,071,098 ---------------------------------------------------------------------------------------- UNITED KINGDOM (1.1%) Vedanta Resources PLC Senior Unsecured (a)(b) 07/18/18 9.500% 2,500,000 2,689,128 ---------------------------------------------------------------------------------------- TOTAL CORPORATE BONDS & NOTES (Cost: $55,248,710) $61,483,528 ----------------------------------------------------------------------------------------
See accompanying Notes to Financial Statements. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 17 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE FOREIGN GOVERNMENT OBLIGATIONS (68.0%) ARGENTINA (7.0%) Argentina Bonos Senior Unsecured 09/12/13 7.000% $3,950,000 $3,886,086 10/03/15 7.000% 2,600,000 2,485,600 04/17/17 7.000% 2,250,000 2,010,375 Argentina Government International Bond Senior Unsecured(d) 12/15/35 0.000% 16,450,000 2,187,850 Fideicomiso Financiero Chubut Regalias Hidrocarburiferas Senior Secured 07/01/20 7.750% 1,300,000 1,280,500 Provincia de Buenos Aires (a) 10/05/15 11.750% 2,000,000 2,021,383 Provincia de Cordoba Senior Unsecured (a) 08/17/17 12.375% 2,450,000 2,566,375 ----------- Total 16,438,169 ---------------------------------------------------------------------------------------- BRAZIL (8.0%) Banco Nacional de Desenvolvimento Economico e Social Senior Unsecured (a) 06/16/18 6.369% 1,450,000 1,663,875 Brazil Notas do Tesouro Nacional 01/01/12 10.000% BRL 489,500 2,928,862 01/01/13 10.000% BRL 1,006,100 5,905,473 Brazilian Government International Bond Senior Unsecured 01/07/41 5.625% 2,800,000 3,097,500 Petrobras International Finance Co. -- Pifco 03/15/19 7.875% 3,200,000 4,044,425 Petrobras International Finance Co. -- Pifco (b) 01/20/40 6.875% 1,000,000 1,157,084 ----------- Total 18,797,219 ---------------------------------------------------------------------------------------- CAYMAN ISLANDS (0.6%) Government of the Cayman Islands Senior Unsecured (a) 11/24/19 5.950% 1,300,000 1,391,000 ---------------------------------------------------------------------------------------- COLOMBIA (5.4%) Bogota Distrito Capital Senior Unsecured (a) 07/26/28 9.750% COP 1,377,000,000 1,076,591 Colombia Government International Bond 10/22/15 12.000% COP 2,093,000,000 1,532,165 09/18/37 7.375% 2,400,000 3,204,000 Senior Unsecured 04/14/21 7.750% COP 1,911,000,000 1,262,476 Columbia Government International Bond Senior Unsecured (b) 01/18/41 6.125% 3,600,000 4,111,268 Ecopetrol SA Senior Unsecured (b) 07/23/19 7.625% 700,000 861,000 Republic of Colombia 06/28/27 9.850% COP 1,000,000,000 812,929 ----------- Total 12,860,429 ---------------------------------------------------------------------------------------- CROATIA (1.0%) Croatia Government International Bond Senior Unsecured (a) 07/14/20 6.625% 2,000,000 2,265,000 ---------------------------------------------------------------------------------------- DOMINICAN REPUBLIC (1.3%) Dominican Republic International Bond Senior Unsecured (a) 05/06/21 7.500% 2,700,000 3,081,375 ---------------------------------------------------------------------------------------- EL SALVADOR (1.5%) El Salvador Government International Bond (a) 04/10/32 8.250% 750,000 889,688 06/15/35 7.650% 1,810,000 2,056,612 Senior Unsecured 01/24/23 7.750% 460,000 535,900 ----------- Total 3,482,200 ---------------------------------------------------------------------------------------- INDONESIA (8.0%) Indonesia Government International Bond (a) Senior Unsecured 10/12/35 8.500% 650,000 940,875 01/17/38 7.750% 3,500,000 4,707,500 Indonesia Treasury Bond Senior Unsecured 10/15/14 11.000% IDR 6,000,000,000 777,744 07/15/17 10.000% IDR 10,000,000,000 1,302,505 09/15/19 11.500% IDR 29,400,000,000 4,158,404 11/15/20 11.000% IDR 9,000,000,000 1,246,212 06/15/21 12.800% IDR 12,800,000,000 1,964,294 07/15/22 10.250% IDR 29,000,000,000 3,859,311 ----------- Total 18,956,845 ----------------------------------------------------------------------------------------
See accompanying Notes to Financial Statements. -------------------------------------------------------------------------------- 18 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED) LITHUANIA (1.1%) Lithuania Government International Bond (a) Senior Unsecured 09/14/17 5.125% $1,150,000 $1,178,750 02/11/20 7.375% 1,200,000 1,401,259 ----------- Total 2,580,009 ---------------------------------------------------------------------------------------- MEXICO (8.7%) Mexican Bonos 12/17/15 8.000% MXN 19,400,000 1,745,667 12/15/16 7.250% MXN 33,010,000 2,898,949 12/14/17 7.750% MXN 39,100,000 3,534,163 Pemex Project Funding Master Trust 03/01/18 5.750% 1,550,000 1,740,174 01/21/21 5.500% 1,500,000 1,630,800 Pemex Project Funding Master Trust (b) 06/15/35 6.625% 4,304,000 4,773,859 06/15/38 6.625% 2,000,000 2,229,522 Petroleos Mexicanos 05/03/19 8.000% 1,600,000 2,056,160 ----------- Total 20,609,294 ---------------------------------------------------------------------------------------- PERU (2.5%) Peru Enhanced Pass-Through Finance Ltd. Senior Secured Zero Coupon (a)(d) 05/31/18 0.000% 5,064,228 4,177,988 Peruvian Government International Bond Senior Unsecured (b) 03/14/37 6.550% 1,500,000 1,841,250 ----------- Total 6,019,238 ---------------------------------------------------------------------------------------- QATAR (0.9%) Qatar Government International Bond Senior Unsecured (a) 01/20/40 6.400% 1,000,000 1,155,000 Qatari Diar Finance QSC Government Guaranteed (a) 07/21/20 5.000% 1,000,000 1,046,637 ----------- Total 2,201,637 ---------------------------------------------------------------------------------------- RUSSIAN FEDERATION (4.4%) Russian Foreign Bond -- Eurobond (a) Senior Unsecured 04/29/20 5.000% 3,500,000 3,643,500 Russian Foreign Bond -- Eurobond (a)(c) 03/31/30 7.500% 5,737,845 6,856,725 ----------- Total 10,500,225 ---------------------------------------------------------------------------------------- TRINIDAD AND TOBAGO (1.2%) Petroleum Co of Trinidad & Tobago Ltd. Senior Unsecured (a) 08/14/19 9.750% 2,300,000 2,885,728 ---------------------------------------------------------------------------------------- TURKEY (6.9%) Turkey Government International Bond Senior Unsecured 03/15/15 7.250% 1,100,000 1,306,250 11/07/19 7.500% 2,025,000 2,564,156 06/05/20 7.000% 1,300,000 1,612,000 03/30/21 5.625% 1,850,000 2,067,375 03/17/36 6.875% 3,800,000 4,569,500 05/30/40 6.750% 3,500,000 4,147,500 ----------- Total 16,266,781 ---------------------------------------------------------------------------------------- URUGUAY (3.0%) Uruguay Government International Bond 04/05/27 4.250% UYU 87,773,426 4,805,507 Uruguay Government International Bond Senior Unsecured 03/21/36 7.625% 1,783,939 2,363,719 ----------- Total 7,169,226 ---------------------------------------------------------------------------------------- VENEZUELA (6.5%) Petroleos de Venezuela SA 04/12/17 5.250% 8,600,000 5,074,000 Senior Unsecured 10/28/16 5.125% 3,400,000 1,908,501 Venezuela Government International Bond Senior Unsecured 10/08/14 8.500% 794,000 668,945 Venezuela Government International Bond (a) Senior Unsecured 05/07/23 9.000% 5,450,000 3,652,045 Venezuela Government International Bond (a)(b) 02/26/16 5.750% 4,289,500 3,056,269 03/31/38 7.000% 1,800,000 1,008,000 ----------- Total 15,367,760 ---------------------------------------------------------------------------------------- TOTAL FOREIGN GOVERNMENT OBLIGATIONS (Cost: $137,864,933) $160,872,135 ----------------------------------------------------------------------------------------
See accompanying Notes to Financial Statements. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 19 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
ISSUER SHARES VALUE MONEY MARKET FUND (3.7%) Columbia Short-Term Cash Fund, 0.241% (e)(f) 8,618,153 $8,618,153 ---------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $8,618,153) $8,618,153 ----------------------------------------------------------------------
EFFECTIVE PAR/ ISSUER YIELD PRINCIPAL VALUE INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (2.9%) REPURCHASE AGREEMENTS (2.9%) Deutsche Bank AG (g) dated 10/29/10, matures 11/01/10, repurchase price $6,724,429 0.230% $6,724,300 $6,724,300 ------------------------------------------------------------------------- TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (Cost: $6,724,300) $6,724,300 ------------------------------------------------------------------------- TOTAL INVESTMENTS (Cost: $208,456,096) $237,698,116 OTHER ASSETS & LIABILITIES, NET (1,314,431) ------------------------------------------------------------------------- NET ASSETS $236,383,685 =========================================================================
Principal amounts are denominated in United States Dollars unless otherwise noted. NOTES TO PORTFOLIO OF INVESTMENTS (a) Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At October 31, 2010, the value of these securities amounted to $114,741,603 or 48.54% of net assets. (b) At October 31, 2010, security was partially or fully on loan. (c) Variable rate security. The interest rate shown reflects the rate as of October 31, 2010. (d) Zero coupon bond. (e) Investments in affiliates during the year ended October 31, 2010:
SALES COST/ DIVIDENDS BEGINNING PURCHASE PROCEEDS REALIZED ENDING OR INTEREST ISSUER COST COST FROM SALES GAIN/LOSS COST INCOME VALUE --------------------------------------------------------------------------------------------------------- Columbia Short- Term Cash Fund $24,305,531 $116,644,304 $132,331,682 $-- $8,618,153 $21,680 $8,618,153
(f) The rate shown is the seven-day current annualized yield at October 31, 2010. See accompanying Notes to Financial Statements. -------------------------------------------------------------------------------- 20 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED) (g) The table below represents securities received as collateral for repurchase agreements. This collateral, which is generally high quality short-term obligations, is deposited with the Fund's custodian and, pursuant to the terms of the repurchase agreement, must have an aggregate market value greater than or equal to the repurchase price plus accrued interest at all times. The value of securities and/or cash held as collateral for repurchase agreements is monitored on a daily basis to ensure the existence of the proper level of collateral.
DEUTSCHE BANK AG (0.230%) SECURITY DESCRIPTION VALUE ----------------------------------------------------------- Fannie Mae Pool $6,858,786 ----------------------------------------------------------- Total market value of collateral securities $6,858,786 -----------------------------------------------------------
CURRENCY LEGEND BRL Brazilian Real COP Colombian Peso IDR Indonesian Rupiah MXN Mexican Peso PEN Peru Nuevos Soles UYU Uruguay Pesos
INVESTMENTS IN DERIVATIVES CREDIT DEFAULT SWAP CONTRACTS OUTSTANDING AT OCTOBER 31, 2010
BUY PROTECTION UNAMORTIZED PERIODIC PAY PREMIUM PAYMENTS REFERENCE EXPIRATION FIXED NOTIONAL MARKET (PAID) RECEIVABLE UNREALIZED UNREALIZED COUNTERPARTY ENTITY DATE RATE AMOUNT VALUE RECEIVED (PAYABLE) APPRECIATION DEPRECIATION -------------------------------------------------------------------------------------------------------------------------------- JPMorgan Chase CDX Emerging June 20, 2013 2.65% $2,000,000 $(29,003) $(217,758) $(19,433) $-- $(266,194) Bank Markets Index
CREDIT DEFAULT SWAP CONTRACTS OUTSTANDING AT OCTOBER 31, 2010
SELL PROTECTION UNAMORTIZED PERIODIC RECEIVE PREMIUM PAYMENTS REFERENCE EXPIRATION FIXED NOTIONAL MARKET (PAID) RECEIVABLE UNREALIZED UNREALIZED COUNTERPARTY ENTITY DATE RATE AMOUNT VALUE RECEIVED (PAYABLE) APPRECIATION DEPRECIATION -------------------------------------------------------------------------------------------------------------------------------- Merril Lynch CDX Emerging June 20, 2013 2.65% $2,000,000 $29,003 $-- $19,433 $48,436 $-- Intl Markets Index
See accompanying Notes to Financial Statements. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 21 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- FAIR VALUE MEASUREMENTS Generally accepted accounting principles (GAAP) require 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. 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 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 (to include NAV for open-end mutual funds). 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 Fund Administrator, 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 rely on one or more significant unobservable inputs and/or significant assumptions by the Fund Administrator. Inputs used in See accompanying Notes to Financial Statements. -------------------------------------------------------------------------------- 22 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- FAIR VALUE MEASUREMENTS (CONTINUED) valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data. The following table is a summary of the inputs used to value the Fund's investments as of October 31, 2010:
FAIR VALUE AT OCTOBER 31, 2010 ---------------------------------------------------------------- LEVEL 1 LEVEL 2 QUOTED PRICES OTHER LEVEL 3 IN ACTIVE SIGNIFICANT SIGNIFICANT MARKETS FOR OBSERVABLE UNOBSERVABLE DESCRIPTION(A) IDENTICAL ASSETS INPUTS(b) INPUTS TOTAL -------------------------------------------------------------------------------------------- Corporate Bonds & Notes Banking $-- $2,617,483 $2,206,576 $4,824,059 All Other Industries -- 56,659,469 -- 56,659,469 Foreign Government Obligations -- 155,413,647 5,458,488 160,872,135 -------------------------------------------------------------------------------------------- Total Bonds -- 214,690,599 7,665,064 222,355,663 -------------------------------------------------------------------------------------------- Other Affiliated Money Market Fund(c) 8,618,153 -- -- 8,618,153 Investments of Cash Collateral Received for Securities on Loan -- 6,724,300 -- 6,724,300 -------------------------------------------------------------------------------------------- Total Other 8,618,153 6,724,300 -- 15,342,453 -------------------------------------------------------------------------------------------- Investments in Securities 8,618,153 221,414,899 7,665,064 237,698,116 Derivatives(d) Assets Swap Contracts -- 48,436 -- 48,436 Liabilities Swap Contracts -- (48,436) -- (48,436) -------------------------------------------------------------------------------------------- Total $8,618,153 $221,414,899 $7,665,064 $237,698,116 --------------------------------------------------------------------------------------------
(a) See the Portfolio of Investments for all investment classifications not indicated in the table. (b) There were no significant transfers between Levels 1 and 2 during the period. (c) Money market fund that is a sweep investment for cash balances in the Fund at October 31, 2010. (d) Derivative instruments are valued at unrealized appreciation (depreciation). See accompanying Notes to Financial Statements. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 23 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- FAIR VALUE MEASUREMENTS (CONTINUED) The following table is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value.
FOREIGN CORPORATE BONDS GOVERNMENT & NOTES OBLIGATIONS TOTAL --------------------------------------------------------------------------------- Balance as of October 31, 2009 $2,703,228 $5,251,716 $7,954,944 Accrued discounts/premiums 1,502 177,912 179,414 Realized gain (loss) -- 284,798 284,798 Change in unrealized appreciation (depreciation)* 191,485 (886) 190,599 Sales (907,371) (1,538,802) (2,446,173) Purchases 3,430,545 1,283,750 4,714,295 Transfers into Level 3 -- -- -- Transfers out of Level 3 (3,212,813) -- (3,212,813) --------------------------------------------------------------------------------- Balance as of October 31, 2010 $2,206,576 $5,458,488 $7,665,064 ---------------------------------------------------------------------------------
* Change in unrealized appreciation (depreciation) relating to securities held at October 31, 2010 was $145,688, which is comprised of Corporate Bonds & Notes of $146,574 and Foreign Government Obligations of $(886). Transfers in and/or out of Level 3 are determined based on the fair value at the beginning of the period for security positions held throughout the period. HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS (i) The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (Commission) for the first and third quarters of each fiscal year on Form N-Q; (ii) The Fund's Forms N-Q are available on the Commission's website at http://www.sec.gov; (iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC (information on the operations of the Public Reference Room may be obtained by calling 800.SEC.0330); and (iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q, can be obtained without charge, upon request, by calling 800.345.6611. See accompanying Notes to Financial Statements. -------------------------------------------------------------------------------- 24 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT STATEMENT OF ASSETS AND LIABILITIES -------------------------------------------- OCTOBER 31, 2010
ASSETS Investments, at value Unaffiliated issuers* (identified cost $193,113,643) $222,355,663 Affiliated issuers (identified cost $8,618,153) 8,618,153 Investment of cash collateral received for securities on loan (identified cost $6,724,300) 6,724,300 ------------------------------------------------------------------------------- Total investments (identified cost $208,456,096) 237,698,116 Cash 74,375 Foreign currency (identified cost $755,693) 773,856 Unrealized appreciation on swap contracts 48,436 Premiums paid on outstanding credit default swap contracts 217,758 Receivable for: Capital shares sold 1,776,664 Dividends 1,449 Interest 3,157,541 Reclaims 157,852 Expense reimbursement due from Investment Manager 153 ------------------------------------------------------------------------------- Total assets 243,906,200 ------------------------------------------------------------------------------- LIABILITIES Due upon return of securities on loan 6,724,300 Unrealized depreciation on swap contracts 266,194 Payable for: Investments purchased 104,057 Capital shares purchased 310,613 Investment management fees 4,632 Distribution fees 1,216 Transfer agent fees 13,634 Administration fees 515 Plan administration fees 1 Other expenses 97,353 ------------------------------------------------------------------------------- Total liabilities 7,522,515 ------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $236,383,685 -------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 25 STATEMENT OF ASSETS AND LIABILITIES (continued) -------------------------------- OCTOBER 31, 2010
REPRESENTED BY Capital stock -- $ .01 par value $ 202,285 Additional paid-in capital 211,396,096 Undistributed net investment income 1,960,121 Accumulated realized loss (6,227,958) Unrealized appreciation (depreciation) on: Investments 29,242,020 Foreign currency translations 28,879 Swap contracts (217,758) ------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $236,383,685 ------------------------------------------------------------------------------- *Value of securities on loan $ 6,586,271 ------------------------------------------------------------------------------- Net assets Class A $ 76,725,071 Class B $ 3,568,837 Class C $ 3,622,183 Class I $ 78,153,644 Class R4 $ 124,205 Class W $ 74,066,903 Class Z $ 122,842 Shares outstanding Class A 6,563,738 Class B 305,715 Class C 310,872 Class I 6,684,022 Class R4 10,632 Class W 6,343,020 Class Z 10,506 Net asset value per share Class A(a) $ 11.69 Class B $ 11.67 Class C $ 11.65 Class I $ 11.69 Class R4 $ 11.68 Class W $ 11.68 Class Z $ 11.69 -------------------------------------------------------------------------------
(a) The maximum offering price per share for Class A is $12.27. The offering price is calculated by dividing the net asset value by 1.0 minus the maximum sales charge of 4.75%. The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 26 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT STATEMENT OF OPERATIONS -------------------------------------------------------- YEAR ENDED OCTOBER 31, 2010
NET INVESTMENT INCOME Income: Interest $20,247,837 Dividends from affiliates 21,680 Income from securities lending -- net 5,036 Foreign taxes withheld (19,848) ------------------------------------------------------------------------------ Total income 20,254,705 ------------------------------------------------------------------------------ Expenses: Investment management fees 1,777,437 Distribution fees Class A 120,941 Class B 30,560 Class C 14,021 Class W 265,437 Transfer agent fees Class A 89,055 Class B 6,173 Class C 2,605 Class R4 33 Class W 208,319 Class Z 2 Administration fees 197,667 Plan administration fees Class R4 119 Compensation of board members 7,374 Custodian fees 47,725 Printing and postage fees 65,980 Registration fees 85,865 Professional fees 38,161 Other 64,359 ------------------------------------------------------------------------------ Total expenses 3,021,833 Fees waived or expenses reimbursed by Investment Manager and its affiliates (34,703) ------------------------------------------------------------------------------ Total net expenses 2,987,130 ------------------------------------------------------------------------------ Net investment income 17,267,575 ------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 27 STATEMENT OF OPERATIONS (continued) -------------------------------------------- YEAR ENDED OCTOBER 31, 2010
REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Investments $12,158,484 Foreign currency transactions 88,747 Forward foreign currency exchange contracts (36,522) Swap contracts (89,634) ------------------------------------------------------------------------------ Net realized gain 12,121,075 Net change in unrealized appreciation (depreciation) on: Investments 15,776,821 Foreign currency translations 11,810 Swap contracts 83,501 ------------------------------------------------------------------------------ Net change in unrealized appreciation 15,872,132 ------------------------------------------------------------------------------ Net realized and unrealized gain 27,993,207 ------------------------------------------------------------------------------ Net increase in net assets resulting from operations $45,260,782 ------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 28 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
YEAR ENDED OCTOBER 31, 2010 2009 CHANGE IN NET ASSETS RESULTING FROM OPERATIONS Net investment income $ 17,267,575 $ 11,540,815 Net realized gain (loss) 12,121,075 (17,850,581) Net change in unrealized appreciation 15,872,132 83,465,430 --------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 45,260,782 77,155,664 --------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A (3,468,335) (713,409) Class B (188,340) (70,961) Class C (95,014) (14,643) Class I (6,006,584) (3,796,231) Class R4 (3,651) (1,021) Class W (6,686,304) (5,505,562) Class Z (776) -- --------------------------------------------------------------------------------------------- Total distributions to shareholders (16,449,004) (10,101,827) --------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions (51,715,619) 11,510,561 --------------------------------------------------------------------------------------------- Total increase (decrease) in net assets (22,903,841) 78,564,398 Net assets at beginning of year 259,287,526 180,723,128 --------------------------------------------------------------------------------------------- Net assets at end of year $236,383,685 $259,287,526 --------------------------------------------------------------------------------------------- Undistributed net investment income $ 1,960,121 $ 781,377 ---------------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 29 STATEMENTS OF CHANGES IN NET ASSETS (continued) -------------------------------
YEAR ENDED OCTOBER 31, 2010 2009 ------------------------- ------------------------- SHARES DOLLARS ($) SHARES DOLLARS ($) CAPITAL STOCK ACTIVITY CLASS A SHARES Subscriptions 5,657,021 62,561,564 3,173,284 29,094,965 Conversions from Class B 81,014 908,215 31,953 305,470 Distributions reinvested 281,492 3,104,397 76,058 683,747 Redemptions (2,617,094) (28,225,287) (1,490,957) (11,853,498) ----------------------------------------------------------------------------------------------------------------------- Net increase 3,402,433 38,348,889 1,790,338 18,230,684 ----------------------------------------------------------------------------------------------------------------------- CLASS B SHARES Subscriptions 208,306 2,275,298 153,167 1,423,379 Distributions reinvested 16,340 179,177 7,818 67,114 Conversions to Class A (81,158) (908,215) (31,986) (305,470) Redemptions (71,810) (777,477) (62,140) (536,960) ----------------------------------------------------------------------------------------------------------------------- Net increase 71,678 768,783 66,859 648,063 ----------------------------------------------------------------------------------------------------------------------- CLASS C SHARES Subscriptions 275,492 3,112,848 49,606 476,438 Distributions reinvested 7,455 82,552 1,458 12,821 Redemptions (42,014) (467,211) (8,248) (74,221) ----------------------------------------------------------------------------------------------------------------------- Net increase 240,933 2,728,189 42,816 415,038 ----------------------------------------------------------------------------------------------------------------------- CLASS I SHARES Subscriptions 878,050 9,440,113 5,204,021 50,883,356 Distributions reinvested 550,588 6,005,808 449,432 3,795,741 Redemptions (5,018,570) (53,789,204) (4,633,781) (37,808,587) ----------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (3,589,932) (38,343,283) 1,019,672 16,870,510 ----------------------------------------------------------------------------------------------------------------------- CLASS R4 SHARES Subscriptions 9,071 101,123 55 454 Distributions reinvested 257 2,907 65 553 Redemptions (934) (10,710) (4) (33) ----------------------------------------------------------------------------------------------------------------------- Net increase 8,394 93,320 116 974 ----------------------------------------------------------------------------------------------------------------------- CLASS W SHARES Subscriptions 2,099,887 22,301,741 4,123,883 37,492,530 Distributions reinvested 614,502 6,685,949 659,389 5,505,342 Redemptions (7,690,751) (84,422,562) (8,276,964) (67,652,580) ----------------------------------------------------------------------------------------------------------------------- Net decrease (4,976,362) (55,434,872) (3,493,692) (24,654,708) ----------------------------------------------------------------------------------------------------------------------- CLASS Z SHARES Subscriptions 10,441 122,597 -- -- Distributions reinvested 65 758 -- -- ----------------------------------------------------------------------------------------------------------------------- Net increase 10,506 123,355 -- -- ----------------------------------------------------------------------------------------------------------------------- TOTAL NET INCREASE (DECREASE) (4,832,350) (51,715,619) (573,891) 11,510,561 -----------------------------------------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 30 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT FINANCIAL HIGHLIGHTS ----------------------------------------------------------- The following tables are 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. For periods ended 2007 and after, per share net investment income (loss) amounts are calculated based on average shares outstanding during the period. Total returns assume reinvestment of all dividends and distributions. Total returns do not reflect payment of sales charges, if any, and are not annualized for periods of less than one year.
YEAR ENDED OCT. 31, CLASS A ---------------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006(a) Net asset value, beginning of period $10.35 $7.05 $10.57 $10.16 $9.98 ------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income .76 .53 .61 .59 .33 Net realized and unrealized gain (loss) on investments 1.32 3.22 (3.43) .39 .18 ------------------------------------------------------------------------------------------------------------- Total from investment operations 2.08 3.75 (2.82) .98 .51 ------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (.74) (.45) (.61) (.55) (.33) Net realized gains -- -- (.09) (.02) -- ------------------------------------------------------------------------------------------------------------- Total distributions to shareholders (.74) (.45) (.70) (.57) (.33) ------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.69 $10.35 $7.05 $10.57 $10.16 ------------------------------------------------------------------------------------------------------------- TOTAL RETURN 20.75% 54.87% (28.44%) 9.94% 5.25% ------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(b) Expenses prior to fees waived or expenses reimbursed 1.37% 1.37% 1.41% 1.33% 1.81%(c) ------------------------------------------------------------------------------------------------------------- Net expenses after fees waived or expenses reimbursed(d) 1.31% 1.27% 1.40% 1.33% 1.39%(c) ------------------------------------------------------------------------------------------------------------- Net investment income 6.93% 5.85% 6.31% 5.61% 5.20%(c) ------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in thousands) $76,725 $32,726 $9,671 $4,674 $11,663 ------------------------------------------------------------------------------------------------------------- Portfolio turnover 38% 62% 82% 41% 32% -------------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 31 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
YEAR ENDED OCT. 31, CLASS B -------------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006(a) Net asset value, beginning of period $10.34 $7.05 $10.55 $10.16 $9.97 ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income .67 .46 .55 .52 .28 Net realized and unrealized gain (loss) on investments 1.31 3.22 (3.42) .37 .19 ----------------------------------------------------------------------------------------------------------- Total from investment operations 1.98 3.68 (2.87) .89 .47 ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (.65) (.39) (.54) (.48) (.28) Net realized gains -- -- (.09) (.02) -- ----------------------------------------------------------------------------------------------------------- Total distributions to shareholders (.65) (.39) (.63) (.50) (.28) ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.67 $10.34 $7.05 $10.55 $10.16 ----------------------------------------------------------------------------------------------------------- TOTAL RETURN 19.76% 53.60% (28.85%) 8.94% 4.80% ----------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(b) Expenses prior to fees waived or expenses reimbursed 2.13% 2.15% 2.19% 2.13% 2.62%(c) ----------------------------------------------------------------------------------------------------------- Net expenses after fees waived or expenses reimbursed(d) 2.08% 2.04% 2.17% 2.13% 2.20%(c) ----------------------------------------------------------------------------------------------------------- Net investment income 6.20% 5.28% 5.61% 4.90% 4.51%(c) ----------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in thousands) $3,569 $2,420 $1,178 $1,147 $510 ----------------------------------------------------------------------------------------------------------- Portfolio turnover 38% 62% 82% 41% 32% -----------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 32 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS C -------------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006(a) Net asset value, beginning of period $10.32 $7.04 $10.54 $10.15 $9.97 ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income .67 .45 .55 .53 .28 Net realized and unrealized gain (loss) on investments 1.32 3.22 (3.42) .36 .18 ----------------------------------------------------------------------------------------------------------- Total from investment operations 1.99 3.67 (2.87) .89 .46 ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (.66) (.39) (.54) (.48) (.28) Net realized gains -- -- (.09) (.02) -- ----------------------------------------------------------------------------------------------------------- Total distributions to shareholders (.66) (.39) (.63) (.50) (.28) ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.65 $10.32 $7.04 $10.54 $10.15 ----------------------------------------------------------------------------------------------------------- TOTAL RETURN 19.87% 53.57% (28.88%) 8.94% 4.75% ----------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(b) Expenses prior to fees waived or expenses reimbursed 2.14% 2.13% 2.18% 2.13% 2.61%(c) ----------------------------------------------------------------------------------------------------------- Net expenses after fees waived or expenses reimbursed(d) 2.06% 2.03% 2.16% 2.13% 2.19%(c) ----------------------------------------------------------------------------------------------------------- Net investment income 6.14% 5.06% 5.64% 5.00% 4.46%(c) ----------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in thousands) $3,622 $722 $191 $169 $39 ----------------------------------------------------------------------------------------------------------- Portfolio turnover 38% 62% 82% 41% 32% -----------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 33 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
YEAR ENDED OCT. 31, CLASS I ------------------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006(a) Net asset value, beginning of period $10.35 $7.05 $10.57 $10.16 $9.98 ---------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income .77 .57 .69 .65 .35 Net realized and unrealized gain (loss) on investments 1.35 3.22 (3.46) .38 .17 ---------------------------------------------------------------------------------------------------------------- Total from investment operations 2.12 3.79 (2.77) 1.03 .52 ---------------------------------------------------------------------------------------------------------------- LESS DIVIDENDS TO SHAREHOLDERS FROM: Net investment income (.78) (.49) (.66) (.60) (.34) Net realized gains -- -- (.09) (.02) -- ---------------------------------------------------------------------------------------------------------------- Total distributions to shareholders (.78) (.49) (.75) (.62) (.34) ---------------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.69 $10.35 $7.05 $10.57 $10.16 ---------------------------------------------------------------------------------------------------------------- TOTAL RETURN 21.19% 55.52% (28.08%) 10.38% 5.44% ---------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(b) Expenses prior to fees waived or expenses reimbursed 0.92% 0.88% 0.91% 0.93% 1.52%(c) ---------------------------------------------------------------------------------------------------------------- Net expenses after fees waived or expenses reimbursed(d) 0.92% 0.85% 0.91% 0.93% 1.10%(c) ---------------------------------------------------------------------------------------------------------------- Net investment income 7.13% 6.59% 6.89% 6.14% 5.70%(c) ---------------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in thousands) $78,154 $106,359 $65,282 $147,109 $47,400 ---------------------------------------------------------------------------------------------------------------- Portfolio turnover 38% 62% 82% 41% 32% ----------------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 34 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS R4 -------------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006(a) Net asset value, beginning of period $10.35 $7.05 $10.56 $10.16 $9.98 ----------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income .72 .54 .67 .60 .34 Net realized and unrealized gain (loss) on investments 1.35 3.23 (3.43) .39 .18 ----------------------------------------------------------------------------------------------------------- Total from investment operations 2.07 3.77 (2.76) .99 .52 ----------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (.74) (.47) (.66) (.57) (.34) Net realized gains -- -- (.09) (.02) -- ----------------------------------------------------------------------------------------------------------- Total distributions to shareholders (.74) (.47) (.75) (.59) (.34) ----------------------------------------------------------------------------------------------------------- Net asset value, end of period $11.68 $10.35 $7.05 $10.56 $10.16 ----------------------------------------------------------------------------------------------------------- TOTAL RETURN 20.75% 55.14% (27.98%) 9.97% 5.36% ----------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(b) Expenses prior to fees waived or expenses reimbursed 1.27% 1.18% 1.22% 1.24% 1.67%(c) ----------------------------------------------------------------------------------------------------------- Net expenses after fees waived or expenses reimbursed(d) 1.22% 1.11% 0.97% 1.24% 1.25%(c) ----------------------------------------------------------------------------------------------------------- Net investment income 6.52% 6.31% 6.82% 5.75% 5.37%(c) ----------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in thousands) $124 $23 $15 $16 $14 ----------------------------------------------------------------------------------------------------------- Portfolio turnover 38% 62% 82% 41% 32% -----------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 35 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
YEAR ENDED OCT. 31, CLASS W ------------------------------------------------ PER SHARE DATA 2010 2009 2008 2007(e) Net asset value, beginning of period $10.34 $7.05 $10.55 $10.24 --------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income .75 .53 .56 .57 Net realized and unrealized gain (loss) on investments 1.32 3.21 (3.36) .28 --------------------------------------------------------------------------------------------------- Total from investment operations 2.07 3.74 (2.80) .85 --------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (.73) (.45) (.61) (.52) Net realized gains -- -- (.09) (.02) --------------------------------------------------------------------------------------------------- Total distributions to shareholders (.73) (.45) (.70) (.54) --------------------------------------------------------------------------------------------------- Net asset value, end of period $11.68 $10.34 $7.05 $10.55 --------------------------------------------------------------------------------------------------- TOTAL RETURN 20.68% 54.69% (28.29%) 8.49% --------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(b) Expenses prior to fees waived or expenses reimbursed 1.37% 1.33% 1.35% 1.33%(c) --------------------------------------------------------------------------------------------------- Net expenses after fees waived or expenses reimbursed(d) 1.37% 1.30% 1.35% 1.33%(c) --------------------------------------------------------------------------------------------------- Net investment income 6.93% 6.18% 6.08% 5.86%(c) --------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in thousands) $74,067 $117,037 $104,386 $37,921 --------------------------------------------------------------------------------------------------- Portfolio turnover 38% 62% 82% 41% ---------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 36 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED CLASS Z OCT. 31, PER SHARE DATA 2010(f) Net asset value, beginning of period $11.47 ------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income .07 Net realized and unrealized gain on investments .24 ------------------------------------------------------------- Total from investment operations .31 ------------------------------------------------------------- LESS DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (.09) ------------------------------------------------------------- Net asset value, end of period $11.69 ------------------------------------------------------------- TOTAL RETURN 2.68% ------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(b) Expenses prior to fees waived or expenses reimbursed 1.32%(c) ------------------------------------------------------------- Net expenses after fees waived or expenses reimbursed(d) 0.97%(c) ------------------------------------------------------------- Net investment income 7.36%(c) ------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in thousands) $123 ------------------------------------------------------------- Portfolio turnover 38% -------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS (a) For the period from February 16, 2006 (when shares became available) to October 31, 2006. (b) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. (c) Annualized. (d) The Investment Manager and its affiliates agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds). (e) For the period from December 1, 2006 (when shares became available) to October 31, 2007. (f) For the period from September 27, 2010 (when shares became available) to October 31, 2010. The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 37 NOTES TO FINANCIAL STATEMENTS -------------------------------------------------- OCTOBER 31, 2010 NOTE 1. ORGANIZATION Columbia Emerging Markets Bond Fund (formerly known as RiverSource Emerging Markets Bond Fund) (the Fund), a series of RiverSource Global Series, Inc. (the Corporation), is a non-diversified Fund. The Corporation is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company. FUND SHARES The Corporation has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Corporation's Board of Directors (the Board), and the Fund offers Class A, Class B, Class C, Class I, Class R4, Class W and Class Z shares. All share classes have identical voting, dividend and liquidation rights. Each share class has its own expense structure and sales charges, as applicable. Class A shares are subject to a maximum front-end sales charge of 4.75% based on the investment amount. Class A shares purchased without an initial sales charge in accounts aggregating $1 million at the time of purchase are subject to a 1.00% contingent deferred sales charge (CDSC) if the shares are sold within within 18 months of purchase, charged as follows: 1.00% CDSC if redeemed within 12 months of purchase, and 0.50% CDSC if redeemed more than 12, but less than 18, months after purchase. The Fund no longer accepts investments by new or existing investors in the Fund's Class B shares, except in connection with the reinvestment of any dividend and/or capital gain distributions in Class B shares of the Fund and exchanges by existing Class B shareholders of other funds within the Columbia Family of Funds. Class B shares may be subject to a maximum CDSC of 5.00% based upon the holding period after purchase. Class B shares will generally convert to Class A shares eight years after purchase. Class C shares are subject to a 1.00% CDSC on shares redeemed within one year of purchase. Class I shares are not subject to sales charges and are available only to the Columbia Family of Funds. Class R4 shares are not subject to sales charges, however, the class is closed to new investors effective December 31, 2010. Class W shares are not subject to sales charges and are only available to investors purchasing through authorized investment programs managed by investment professionals, including discretionary managed account programs. -------------------------------------------------------------------------------- 38 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- Class Z shares are not subject to sales charges and are available only to certain investors, as described in the Fund's prospectus. Class Z shares became effective September 27, 2010. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The preparation of financial statements in accordance with U.S. generally accepted accounting principles (GAAP) 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. SECURITY VALUATION All securities are valued at the close of business of the New York Stock Exchange (NYSE). Equity securities are valued at the last quoted sales price on the principal exchange or market on which they trade, except for securities traded on the NASDAQ Stock Market, which are valued at the NASDAQ official close price. Unlisted securities or listed securities for which there were no sales during the day are valued at the mean of the latest quoted bid and asked prices on such exchanges or markets. Debt securities are generally traded in the over-the-counter market and are valued by an independent pricing service using an evaluated bid. When market quotes are not readily available, the pricing service, in determining fair values of debt securities, takes into consideration such factors as current quotations by broker/dealers, coupon, maturity, quality, type of issue, trading characteristics, and other yield and risk factors it deems relevant in determining valuations. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. However, many securities markets and exchanges outside the U.S. close prior to the close of the NYSE; therefore, the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the NYSE. Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise Financial), parent company of Columbia Management Investment Advisors, LLC (formerly known as RiverSource Investments, LLC) (the Investment Manager), as administrator to the Fund, will fair value foreign securities pursuant to procedures adopted by the Board, including utilizing a third party pricing service to determine these fair values. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 39 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- OCTOBER 31, 2010 The third party pricing service takes into account multiple factors, including, but not limited to, movements in the U.S. securities markets, certain depositary receipts, futures contracts and foreign exchange rates that have occurred subsequent to the close of the foreign exchange, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the NYSE. The fair value of a security is likely to be different from the quoted or published price, if available. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates fair value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par upon reaching 60 days to maturity. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates. Investments in other open-end investment companies, including money market funds, are valued at net asset value. Swap transactions are valued through an independent pricing service or broker, or if neither is available, through an internal model based upon observable inputs. Foreign currency contracts are marked-to-market daily based upon foreign currency exchange rates provided by a pricing service. The procedures adopted by the Board generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign securities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION The values of all assets and liabilities denominated in foreign currencies are translated into U.S. dollars at that day's exchange rates. Net realized and unrealized gains (losses) on foreign currency transactions and translations include gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. For financial statement purposes, the Fund does not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such -------------------------------------------------------------------------------- 40 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- fluctuations are included with the net realized and unrealized gains (losses) on investments in the Statement of Operations. DERIVATIVE INSTRUMENTS The Fund invests in certain derivative instruments as detailed below to meet its investment objectives. Derivatives are instruments whose values depend on, or are derived from, in whole or in part, the value of one or more other assets, such as securities, currencies, commodities or indices. Derivative instruments may be used to maintain cash reserves while maintaining exposure to certain other assets, to offset anticipated declines in values of investments, 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, credit risk. Derivatives may involve various risks, including the potential inability of the counterparty to fulfill its obligation under the terms of the contract, the potential for an illiquid secondary market 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 Fund and any counterparty are required to maintain an agreement that requires the Fund and that counterparty to monitor (on a daily basis) the net fair value of all derivatives entered into pursuant to the contract between the Fund and such counterparty. If the net fair value of such derivatives between the Fund and that counterparty exceeds a certain threshold (as defined in the agreement), the Fund or the counterparty (as the case may be) is required to post cash and/or securities as collateral. Fair values of derivatives presented in the financial statements are not netted with the fair value of other derivatives or with any collateral amounts posted by the Fund or any counterparty. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS Forward foreign currency exchange contracts are agreements between two parties to buy and sell a currency at a set price on a future date. These contracts are intended to be used to minimize the exposure to foreign exchange rate fluctuations during the period between the trade and settlement dates of the contract. The Fund utilized forward foreign currency exchange contracts in connection with the settlement of purchases and sales of securities. The market values of forward foreign currency exchange contracts fluctuate with changes in foreign currency exchange rates. The Fund will record a realized gain or loss when the forward foreign currency exchange contract is closed. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 41 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- OCTOBER 31, 2010 The use of forward foreign currency exchange contracts does not eliminate fluctuations in the prices of the Fund's portfolio securities. The risks of forward foreign currency contracts include movement in the values of the foreign currencies relative to the U.S. dollar (or other foreign currencies) and the possibility that counterparties will not complete their contractual obligations, which may be in excess of the amount reflected, if any, in the Statement of Assets and Liabilities. CREDIT DEFAULT SWAP CONTRACTS Credit default swaps are agreements in which one party pays fixed periodic payments to a counterparty in consideration for a guarantee from the counterparty to make a specific payment should a specified negative credit event(s) take place. The Fund entered into credit default swap transactions to increase or decrease its credit exposure to an index. As the purchaser of a credit default swap contract, the Fund purchases protection by paying a periodic interest rate on the notional amount to the counterparty. The interest amount is accrued daily as a component of unrealized appreciation (depreciation) and is recorded as a realized loss upon payment. If a credit event as specified in the contract occurs, the Fund may have the option either to deliver the reference obligation to the seller in exchange for a cash payment of its par amount, or to receive a net cash settlement equal to the par amount less an agreed-upon value of the reference obligation as of the date of the credit event. The difference between the value of the obligation or cash delivered and the notional amount received will be recorded as a realized gain (loss). As the seller of a credit default swap contract, the Fund sells protection to a buyer and will generally receive a periodic interest rate on the notional amount. The interest amount is accrued daily as a component of unrealized appreciation (depreciation) and is recorded as a realized gain upon receipt of the payment. If a credit event as specified in the contract occurs, the Fund may either be required to accept the reference obligation from the buyer in exchange for a cash payment of its notional amount, or to pay the buyer a net cash settlement equal to the notional amount less an agreed-upon value of the reference obligation as of the date of the credit event. The difference between the value of the obligation or cash received and the notional amount paid will be recorded as a realized gain (loss). The maximum potential amount of undiscounted future payments the Fund could be required to make as the seller of protection under a credit default swap contract is equal to the notional amount of the reference obligation. Notional amounts of all credit default swap contracts outstanding for which the Fund is the seller of protection, if any, are disclosed in the Credit Default Swap Contracts -------------------------------------------------------------------------------- 42 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- Outstanding schedule following the Portfolio of Investments. These potential amounts may be partially offset by any recovery values of the respective reference obligations or premiums received upon entering into the agreement. As a protection seller, the Fund bears the risk of loss from the credit events specified in the contract. Although specified events are contract specific, credit events are generally defined as bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default, or repudiation/moratorium. For credit default swap contracts on credit indices, quoted market prices and resulting market values serve as an indicator of the current status of the payment/performance risk. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the reference entity's credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the contract. Market values for credit default swap contracts in which the Fund is the seller of protection, if any, are disclosed in the Credit Default Swap Contracts Outstanding schedule following the Portfolio of Investments. The notional amounts and market values of credit default swap contracts are not recorded in the financial statements. Any premium paid or received by the Fund upon entering into a credit default swap contract is recorded as an asset or liability, respectively, and amortized daily as a component of realized gain (loss) in the Statement of Operations. Credit default swap contracts are valued daily, and the change in value is recorded as unrealized appreciation (depreciation) until the termination of the swap, at which time a realized gain (loss) is recorded. Credit default swap contracts can involve greater risks than if a fund had invested in the reference obligation directly since, in addition to general market risks, credit default swaps are subject to counterparty credit risk, leverage risk, hedging risk, correlation risk and liquidity risk. The Fund will enter into credit default swap transactions only with counterparties that meet certain standards of creditworthiness. 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; the impact of derivative transactions on the Fund's operations over the period including realized gains or losses and unrealized gains or losses. The derivative schedules following the Portfolio of Investments present additional information regarding derivative instruments outstanding at the end of the period, if any. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 43 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- OCTOBER 31, 2010 FAIR VALUES OF DERIVATIVE INSTRUMENTS AT OCTOBER 31, 2010
ASSET DERIVATIVES LIABILITY DERIVATIVES ------------------------------- ------------------------------- STATEMENT OF ASSETS STATEMENT OF ASSETS RISK EXPOSURE AND LIABILITIES AND LIABILITIES CATEGORY LOCATION FAIR VALUE LOCATION FAIR VALUE ------------------------------------------------------------------------------------------- Unrealized Unrealized appreciation on depreciation on Credit contracts swap transactions $48,436 swap transactions $ 266,194 Premiums paid on outstanding credit default swap contracts (217,758) ------------------------------------------------------------------------------------------- Total $48,436 $ 48,436 -------------------------------------------------------------------------------------------
EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 2010
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME ------------------------------------------------------------------------------ FORWARD FOREIGN CURRENCY EXCHANGE RISK EXPOSURE CATEGORY CONTRACTS SWAPS TOTAL ------------------------------------------------------------------------------ Credit contracts $ -- $(89,634) $ (89,634) ------------------------------------------------------------------------------ Foreign exchange contracts (36,522) -- $ (36,522) ------------------------------------------------------------------------------ Total $(36,522) $(89,634) $(126,156) ------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED IN INCOME ----------------------------------------------------------------------------- FORWARD FOREIGN CURRENCY EXCHANGE RISK EXPOSURE CATEGORY CONTRACTS SWAPS TOTAL ----------------------------------------------------------------------------- Credit contracts $-- $83,501 $83,501 ----------------------------------------------------------------------------- Foreign exchange contracts -- -- $ -- ----------------------------------------------------------------------------- Total $-- $83,501 $83,501 -----------------------------------------------------------------------------
VOLUME OF DERIVATIVE ACTIVITY FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS At October 31, 2010, the Fund had no outstanding forward foreign currency exchange contracts. The monthly average gross notional amount of forward foreign currency exchange contracts opened, and subsequently closed was $710,068 for the year ended October 31, 2010. -------------------------------------------------------------------------------- 44 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- SWAPS The gross notional amount of contracts outstanding was $4.0 million at October 31, 2010. The monthly average gross notional amount for these contracts was $4.0 million for the year ended October 31, 2010. The fair value of such contracts at October 31, 2010 is set forth in the table above. DELAYED DELIVERY SECURITIES & FORWARD SALE COMMITMENTS The Fund may trade securities on other than normal settlement terms, including securities purchased or sold on a "when-issued" basis. This may increase the risk if the other party to the transaction fails to deliver and causes the Fund to subsequently invest at less advantageous prices. The Fund identifies within its portfolio of investments cash or liquid securities in an amount equal to the delayed delivery commitment. The Fund may enter into forward sale commitments to hedge its portfolio positions or to sell mortgage-backed securities it owns under delayed delivery arrangements. Proceeds of forward sale commitments are not received until the contractual settlement date. While a forward sale commitment is outstanding, equivalent deliverable securities or an offsetting forward purchase commitment deliverable on or before the sale commitment date, are used to satisfy the commitment. Unsettled forward sale commitments are valued at the current market value of the underlying securities, generally according to the procedures described under "Valuation of securities" above. The forward sale commitment is "marked-to- market" daily and the change in market value is recorded by the Fund as an unrealized gain or loss. If the forward sale commitment is closed through the acquisition of an offsetting purchase commitment, the Fund realizes a gain or loss. If the Fund delivers securities under the commitment, the Fund realizes a gain or a loss from the sale of the securities based upon the market price established at the date the commitment was entered into. REPURCHASE AGREEMENTS The Fund may engage in repurchase agreement transactions with institutions that the Fund's Investment Manager has determined are creditworthy. The Fund, through its custodian, receives delivery of the underlying securities collateralizing a repurchase agreement. The Investment Manager is responsible for determining that the collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays in or restrictions on the Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 45 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- OCTOBER 31, 2010 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 the accrual basis. Market premium and discount are amortized and accreted, respectively, on all debt securities, unless otherwise noted. Original issue discount is accreted to interest income over the life of the security with a corresponding increase in the cost basis, if any. For convertible securities, premiums attributable to the conversion feature are not amortized. EXPENSES General expenses of the Corporation are allocated to the Fund and other funds of the Corporation 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. 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 taxable income 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 net investment income, capital gains 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 TAX 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. -------------------------------------------------------------------------------- 46 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- Realized gains in certain countries may be subject to foreign taxes at the Fund level, at rates ranging from approximately 10% to 15%. The Fund accrues for such foreign taxes on net realized and unrealized gains at the appropriate rate for each jurisdiction. DISTRIBUTIONS TO SHAREHOLDERS Distributions from net investment income are declared and paid monthly. Net realized capital gains, if any, are distributed along with the income dividend. 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 Fund's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. 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 COMPENSATION PAID TO AFFILIATES INVESTMENT MANAGEMENT FEES Under an Investment Management Services Agreement, the Investment Manager determines which securities will be purchased, held or sold. The management fee is an annual fee that is equal to a percentage of the Fund's average daily net assets that declines from 0.72% to 0.52% as the Fund's net assets increase. The management fee for the year ended October 31, 2010 was 0.72% of the Fund's average daily net assets. ADMINISTRATION FEES Under an Administrative Services Agreement, the Fund pays Ameriprise Financial an annual fee for administration and accounting services equal to a percentage of the Fund's average daily net assets that declines from 0.08% to 0.05% as the Fund's net assets increase. The fee for the year ended October 31, 2010 was 0.08% of the Fund's average daily net assets. OTHER FEES Other expenses are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 47 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- OCTOBER 31, 2010 administrative services to the Fund and the Board. For the year ended October 31, 2010, other expenses paid to this company were $483. COMPENSATION OF BOARD MEMBERS Under a Deferred Compensation Plan (the Plan), the board members who are not "interested persons" of the Fund as defined under the 1940 Act may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or certain other 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 Plan. TRANSFER AGENT FEES Under a Transfer Agency Agreement, Columbia Management Investment Services Corp. (formerly known as RiverSource Service Corporation) (the Transfer Agent) is responsible for providing transfer agency services to the Fund. Prior to September 7, 2010, the Transfer Agent received annual account-based service fees from Class A, Class B and Class C shares which amount varied by class, and annual asset-based service fees based on the Fund's average daily net assets attributable to Class R4 and Class W shares, which amount varied by class. In addition the Transfer Agent charged an annual fee per inactive account and received reimbursement from the Fund for certain out-of-pocket expenses. Under a new Transfer Agency Agreement effective September 7, 2010, the Transfer Agent has contracted with Boston Financial Data Services (BFDS) to serve as sub- transfer agent. The Transfer Agent receives monthly account-based service fees based on the number of open accounts and is reimbursed by the Fund for the fees and expenses the Transfer Agent pays to financial intermediaries that maintain omnibus accounts with the Fund subject to an annual limitation (that varies by class) that is a percentage of the average aggregate value of the Fund's shares maintained in each such omnibus account (other than omnibus accounts for which American Enterprise Investment Services, Inc. is the broker of record or accounts where the beneficial shareholder is a customer of Ameriprise Financial Services, Inc., which are paid a per account fee). The Transfer Agent pays the fees of BFDS for services as sub-transfer agent and is not entitled to reimbursement for such fees from the Fund. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses and may also retain, as additional compensation for its services, fees for wire, telephone and redemption orders, Individual Retirement Account (IRA) trustee agent fees and account transcript fees due to the Transfer Agent from -------------------------------------------------------------------------------- 48 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- shareholders of the Fund and credits (net of bank charges) earned with respect to balances in accounts the Transfer Agent maintains in connection with its services to the Fund. For year ended October 31, 2010, the Fund's effective transfer agent fee rates as a percentage of average daily net assets of each class were as follows: Class A.............................................. 0.18% Class B.............................................. 0.20 Class C.............................................. 0.19 Class R4............................................. 0.07 Class W.............................................. 0.20 Class Z.............................................. 0.05*
* Annualized. Class I shares do not pay transfer agent fees. PLAN ADMINISTRATION FEES Under a Plan Administration Services Agreement with the Transfer Agent, the Fund pays an annual fee at a rate of 0.25% of the Fund's average daily net assets attributable to Class R4 shares for the provision of various administrative, recordkeeping, communication and educational services. DISTRIBUTION FEES The Fund has an agreement with Columbia Management Investment Distributors, Inc. (formerly known as RiverSource Fund Distributors, Inc.) (the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund pays a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A and Class W shares (of which up to 0.25% may be used for shareholder services) and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. For Class B and Class C shares, of the 1.00% fee, up to 0.75% is reimbursed for distribution expenses. The amount of distribution expenses incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $107,000 and $52,000 for Class B and Class C shares, respectively. These amounts are based on the most recent information available as of July 31, 2010, and may be recovered from future payments under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution fee is reduced. SALES CHARGES Sales charges, including front-end and CDSCs, received by the Distributor for distributing Fund shares were $199,954 for Class A, $1,584 for Class B and $1,654 for Class C for the year ended October 31, 2010. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 49 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- OCTOBER 31, 2010 EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES For the year ended October 31, 2010, the Investment Manager and its affiliates waived/reimbursed certain fees and expenses such that net expenses (excluding fees and expenses of acquired funds*), were as follows: Class A.............................................. 1.31% Class B.............................................. 2.08 Class C.............................................. 2.06 Class I.............................................. 0.92 Class R4............................................. 1.22 Class W.............................................. 1.37 Class Z.............................................. 0.97
The waived/reimbursed fees and expenses for the transfer agent fees at the class level were as follows: Class A............................................ $21,328 Class B............................................ 1,348 Class C............................................ 618 Class W............................................ 9
The management fees waived/reimbursed at the Fund level were $11,400. The Investment Manager and its affiliates have contractually agreed to waive certain fees and expenses until December 31, 2010, unless sooner terminated at the sole discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds*), will not exceed the following percentage of the class' average daily net assets: Class A.............................................. 1.31% Class B.............................................. 2.08 Class C.............................................. 2.07 Class I.............................................. 0.92 Class R4............................................. 1.22 Class W.............................................. 1.37 Class Z.............................................. 1.06
Effective January 1, 2011, the Investment Manager and its affiliates have contractually agreed to waive certain fees and reimburse certain expenses until December 31, 2011, unless sooner terminated at the sole discretion of the Board, -------------------------------------------------------------------------------- 50 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- such that net expenses (excluding fees and expenses of acquired funds*), will not exceed the following percentage of the class' average daily net assets: Class A.............................................. 1.28% Class B.............................................. 2.03 Class C.............................................. 2.03 Class I.............................................. 0.83 Class R4............................................. 1.13 Class W.............................................. 1.28 Class Z.............................................. 1.03
* In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. NOTE 4. PORTFOLIO INFORMATION The cost of purchases and proceeds from sales of securities, excluding short- term obligations, aggregated $87,504,965 and $135,844,180, respectively, for the year ended October 31, 2010. NOTE 5. LENDING OF PORTFOLIO SECURITIES The Fund has entered into a Master Securities Lending Agreement (the Agreement) with JPMorgan Chase Bank, National Association (JPMorgan). The Agreement authorizes JPMorgan as lending agent to lend securities to authorized borrowers in order to generate additional income on behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured by cash or U.S. government securities equal to at least 100% of the market value of the loaned securities. Any additional collateral required to maintain those levels due to market fluctuations of the loaned securities is delivered the following business day. Cash collateral received is invested by the lending agent on behalf of the Fund into authorized investments pursuant to the Agreement. The investments made with the cash collateral are listed in the Portfolio of Investments. The values of such investments and any uninvested cash collateral are disclosed in the Statement of Assets and Liabilities along with the related obligation to return the collateral upon the return of the securities loaned. At October 31, 2010, securities valued at $6,586,271 were on loan, secured by cash collateral of $6,724,300 partially or fully invested in short-term securities or other cash equivalents. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 51 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- OCTOBER 31, 2010 Risks of delay in recovery of securities or even loss of rights in the securities may occur should the borrower of the securities fail financially. Risks may also arise to the extent that the value of the securities loaned increases above the value of the collateral received. JPMorgan will indemnify the Fund from losses resulting from a borrower's failure to return a loaned security when due. Such indemnification does not extend to losses associated with declines in the value of cash collateral investments. Loans are subject to termination by the Fund or the borrower at any time, and are, therefore, not considered to be illiquid investments. Pursuant to the Agreement, the Fund receives income for lending its securities either in the form of fees or by earning interest on invested cash collateral, net of negotiated rebates paid to borrowers and fees paid to the lending agent for services provided and any other securities lending expenses. Net income of $5,036 earned from securities lending for the year ended October 31, 2010, is included in the Statement of Operations. The Fund continues to earn and accrue interest and dividends on the securities loaned. NOTE 6. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balances in Columbia Short-Term Cash Fund (formerly known as RiverSource Short-Term Cash Fund), a money market fund established for the exclusive use by the Fund and other affiliated Funds. The income earned by the Fund from such investments is included as "Dividends from affiliates" in the Statement of Operations. As an investing fund, the Fund indirectly bears its proportionate share of the expenses of Columbia Short-Term Cash Fund. NOTE 7. SHAREHOLDER CONCENTRATION At October 31, 2010, the Investment Manager along with affiliated funds-of-funds owned approximately 33% of the outstanding shares of the Fund. Purchase and redemption activity of these accounts may have a significant effect on the operations of the Fund. At October 31, 2010, the Investment Manager along with affiliated funds-of-funds owned 100% of Class I shares. NOTE 8. LINE OF CREDIT The Fund has entered into a revolving credit facility with a syndicate of banks led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for -------------------------------------------------------------------------------- 52 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- other temporary or emergency purposes. The credit facility became effective on October 14, 2010, replacing a prior credit facility. The credit facility agreement, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager, severally and not jointly, permits collective borrowings up to $300 million. The borrowers shall have the right, upon written notice to the Administrative Agent, to request an increase of up to $200 million in the aggregate amount of the credit facility from new or existing lenders, provided that the aggregate amount of the credit facility shall at no time exceed $500 million. Participation in such increase by any existing lender shall be at such lender's sole discretion. Interest is charged to each fund based on its borrowings at a rate equal to the sum of the federal funds rate plus (i) 1.25% per annum plus (ii) if one-month LIBOR exceeds the federal funds rate, the amount of such excess. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.10% per annum. Prior to October 14, 2010, the credit facility agreement, which was a collective agreement between the Fund and certain other funds managed by the Investment Manager, severally and not jointly, permitted collective borrowings up to $300 million. The Fund also paid a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.10% per annum, in addition to an upfront fee equal to its pro rata share of 0.04% of the amount of the credit facility. The Fund had no borrowings during the year ended October 31, 2010. NOTE 9. 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. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended October 31, 2010, permanent and timing book to tax differences resulting primarily from differing treatments for foreign currency transactions, recognition of unrealized appreciation (depreciation) for certain derivative investments, foreign tax credits and losses deferred due to wash sales were identified and permanent differences reclassed among the components of the Fund's net assets in the Statement of Assets and Liabilities as follows: Undistributed net investment income............... $ 360,173 Accumulated net realized loss..................... (360,173)
-------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 53 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- OCTOBER 31, 2010 Net investment income and net realized gains (losses), as disclosed in the Statement of Operations, and net assets were not affected by this reclassification. The tax character of distributions paid during the years indicated was as follows:
YEAR ENDED OCTOBER 31, 2010 2009 ------------------------------------------------------------------ Ordinary income......................... $16,449,004 $10,101,827 Long-term capital gain.................. -- --
At October 31, 2010, the components of distributable earnings on a tax basis were as follows: Undistributed ordinary income.................... $ 1,753,343 Undistributed accumulated long-term gain......... $ -- Accumulated realized loss........................ $(5,545,654) Unrealized appreciation (depreciation)........... $28,577,615
At October 31, 2010, the cost of investments for federal income tax purposes was $209,142,564 and the aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $30,559,279 Unrealized depreciation (2,003,727) -------------------------------------------------------------- Net unrealized appreciation $28,555,552
The following capital loss carryforwards, determined at October 31, 2010, 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:
YEAR OF EXPIRATION AMOUNT ------------------------------------------------------------- 2017............................................. $5,545,654
For the year ended October 31, 2010, $11,611,371 of capital loss carryforward was utilized. It is unlikely the Board will authorize a distribution of any net realized capital gains until the available capital loss carryforward has been offset or expires. There is no assurance that the Fund will be able to utilize all of its capital loss carryforward before it expires. Management of the Fund has concluded that there are no significant uncertain tax positions 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). The Fund's federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. -------------------------------------------------------------------------------- 54 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- NOTE 10. SIGNIFICANT RISKS NON-DIVERSIFICATION RISK The Fund is non-diversified. A non-diversified fund may invest more of its assets in fewer companies than if it were a diversified fund. Because each investment has a greater effect on the Fund's performance, the Fund may be more exposed to the risks of loss and volatility than a fund that invests more broadly. FOREIGN/EMERGING MARKETS RISK Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities. Investing in emerging markets may accentuate these risks. NOTE 11. 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 12. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc. was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company (now known as legacy RiverSource) mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota (the District Court). In response to defendants' motion to dismiss the complaint, the District Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. Summary judgment was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit) on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary judgment and remanded to the District Court for further proceedings. On -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 55 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- OCTOBER 31, 2010 August 6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court (the Supreme Court), asking the Supreme Court to stay the District Court proceedings while the Supreme Court considers and rules in a case captioned Jones v. Harris Associates, which involves issues of law similar to those presented in the Gallus case. On March 30, 2010, the Supreme Court issued its ruling in Jones v. Harris Associates, and on April 5, 2010, the Supreme Court vacated the Eighth Circuit's decision in the Gallus case and remanded the case to the Eighth Circuit for further consideration in light of the Supreme Court's decision in Jones v. Harris Associates. On June 4, 2010, the Eighth Circuit remanded the Gallus case to the District Court for further consideration in light of the Supreme Court's decision in Jones v. Harris Associates. On December 9, 2010, the District Court reinstated its July 9, 2007 summary judgement order in favor of the defendants. In December 2005, without admitting or denying the allegations, American Express Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc. (Ameriprise Financial)), entered into settlement agreements with the Securities and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC) related to market timing activities. As a result, AEFC was censured and ordered to cease and desist from committing or causing any violations of certain provisions of the Investment Advisers Act of 1940, the Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million and civil money penalties of $7 million. AEFC also agreed to retain an independent distribution consultant to assist in developing a plan for distribution of all disgorgement and civil penalties ordered by the SEC in accordance with various undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its affiliates have cooperated with the SEC and the MDOC in these legal proceedings, and have made regular reports to the funds' Boards of Directors/Trustees. Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and -------------------------------------------------------------------------------- 56 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Funds. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 57 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------ TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF COLUMBIA EMERGING MARKETS BOND FUND: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Columbia Emerging Markets Bond Fund (formerly known as RiverSource Emerging Markets Fund) (the Fund) (one of the portfolios constituting the RiverSource Global Series, Inc.) as of October 31, 2010, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights of the Fund for the period ended October 31, 2006, were audited by other auditors whose report dated December 20, 2006, expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2010, by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion. -------------------------------------------------------------------------------- 58 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- In our opinion, the financial statements and financial highlights audited by us as referred to above present fairly, in all material respects, the financial position of Columbia Emerging Markets Bond Fund of the RiverSource Global Series, Inc. at October 31, 2010, 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 then ended, and the financial highlights for each of the four years in the period then ended, in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP Minneapolis, Minnesota December 20, 2010 -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 59 FEDERAL INCOME TAX INFORMATION ------------------------------------------------- (UNAUDITED) The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. The dividends listed below are reported to you on Form 1099-DIV, Dividends and Distributions. Shareholders should consult a tax advisor on how to report distributions for state and local tax purposes. Fiscal year ended October 31, 2010
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for distributions: Qualified Dividend Income for individuals.................... 0.00% Dividends Received Deduction for corporations................ 0.00% U.S. Government Obligations.................................. 0.00% Foreign Taxes Paid........................................... $19,848 Foreign Source Income........................................ $2,547,341
The Fund designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares. -------------------------------------------------------------------------------- 60 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT BOARD MEMBERS AND OFFICERS ----------------------------------------------------- Shareholders elect a Board that oversees the Fund's operations. The Board appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following is a list of the Fund's Board members. Each Board member oversees 145 Columbia, RiverSource, Seligman and Threadneedle funds. Under current Board policy, members generally serve until the next Board meeting after he or she reaches the mandatory retirement age established by the Board, or the fifteenth anniversary of the first Board meeting they attended as members of the Board. INDEPENDENT BOARD MEMBERS
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None 901 S. Marquette Ave. 1/11/06 Attorney Minneapolis, MN 55402 Age 56 ------------------------------------------------------------------------------------------------------------------------------ Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None 901 S. Marquette Ave. 7/11/07 Leadership (consulting company) Minneapolis, MN 55402 Age 56 ------------------------------------------------------------------------------------------------------------------------------ Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None 901 S. Marquette Ave. 11/1/04 University; former Dean, McCallum Graduate School of Minneapolis, MN 55402 Business, Bentley University Age 60 ------------------------------------------------------------------------------------------------------------------------------ Anne P. Jones Board member since Attorney and Consultant None 901 S. Marquette Ave. 3/1/85 Minneapolis, MN 55402 Age 75 ------------------------------------------------------------------------------------------------------------------------------ Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries, 901 S. Marquette Ave. since 1/1/07, College Inc. (manufactures Minneapolis, MN 55402 Board member irrigation systems) Age 71 since 1/1/02 ------------------------------------------------------------------------------------------------------------------------------ John F. Maher Board member Retired President and Chief Executive Officer and None 901 S. Marquette Ave. since 12/10/08 former Director, Great Western Financial Corporation Minneapolis, MN 55402 (financial services), 1986-1997 Age 67 ------------------------------------------------------------------------------------------------------------------------------ Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None 901 S. Marquette Ave. 11/1/04 real estate and asset management company) Minneapolis, MN 55402 Age 58 ------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 61 BOARD MEMBERS AND OFFICERS (continued) ----------------------------------------- INDEPENDENT BOARD MEMBERS (CONTINUED)
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ Leroy C. Richie Board member Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc. 901 S. Marquette Ave. since 11/11/08 President and General Counsel, Automotive Legal (digital imaging); Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil Age 69 and gas exploration and production); OGE Energy Corp. (energy and energy services) ------------------------------------------------------------------------------------------------------------------------------ Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera 901 S. Marquette Ave. 11/13/02 since 2003 (biotechnology); former President, Aquila Pharmaceuticals, Minneapolis, MN 55402 Biopharmaceuticals Inc. Age 66 (biotechnology); Healthways, Inc. (health management programs) ------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 62 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- BOARD MEMBER AFFILIATED WITH THE INVESTMENT MANAGER*
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ William F. Truscott Board member Chairman of the Board, Columbia Management Investment None 53600 Ameriprise since 11/7/01, Advisers, LLC (formerly RiverSource Investments, LLC) Financial Center Vice President since since May 2010 (previously President, Chairman of the Minneapolis, MN 55474 2002 Board and Chief Investment Officer, 2001-April 2010); Age 50 Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Chief Executive Officer, U.S. Asset Management & President -- Annuities, Ameriprise Financial, Inc. since May 2010 (previously President -- U.S. Asset Management and Chief Investment Officer, 2005-April 2010 and Senior Vice President -- Chief Investment Officer, 2001-2005); Director, President and Chief Executive Officer, Ameriprise Certificate Company since 2006; Director, Columbia Management Investment Distributors, Inc. (formerly RiverSource Fund Distributors, Inc.) since May 2010 (previously Chairman of the Board and Chief Executive Officer, 2008-April 2010); Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006 ------------------------------------------------------------------------------------------------------------------------------
* Interested person (as defined under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the investment manager or Ameriprise Financial. The SAI has additional information about the Fund's Board members and is available, without charge, upon request by calling 800.345.6611; contacting your financial intermediary; or visiting columbiamanagement.com. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 63 BOARD MEMBERS 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. In addition to Mr. Truscott, who is Vice President, the Fund's other officers are: FUND OFFICERS
NAME, POSITION HELD ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION AGE LENGTH OF SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------- J. Kevin Connaughton President since Senior Vice President and General Manager -- Mutual One Financial Center 5/1/10 Fund Products, Columbia Management Investment Advisers, Boston, MA 02111 LLC since May 2010; President, Columbia Funds since Age 46 2009 (previously Senior Vice President and Chief Financial Officer, June 2008 -- January 2009); President, Atlantic Funds and Nations Funds since 2009; Managing Director of Columbia Management Advisors, LLC, December 2004 -- April 2010; Treasurer, Columbia Funds, October 2003 -- May 2008; Treasurer, the Liberty Funds, Stein Roe Funds and Liberty All-Star Funds, December 2000 -- December 2006 -------------------------------------------------------------------------------------------------------- Amy K. Johnson Vice President since Senior Vice President and Chief Operating Officer, 5228 Ameriprise Financial 12/5/06 Columbia Management Investment Advisers, LLC (formerly Center Minneapolis, MN RiverSource Investments, LLC) since May 2010 55474 (previously Chief Administrative Officer, 2009 -- April Age 45 2010 and Vice President -- Asset Management and Trust Company Services, 2006-2009 and Vice President -- Operations and Compliance, 2004-2006); Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010 -------------------------------------------------------------------------------------------------------- Jeffrey P. Fox Treasurer since Chief Financial Officer, Columbia Management Investment 105 Ameriprise 7/10/02 Distributors, Inc. (formerly RiverSource Fund Financial Center Distributors, Inc.) and of Seligman Data Corp. since Minneapolis, MN 55474 2008; Vice President -- Investment Accounting, Age 55 Ameriprise Financial, Inc. since 2002; Chief Financial Officer, RiverSource Distributors, Inc. since 2006 -------------------------------------------------------------------------------------------------------- Scott R. Plummer Vice President, Chief Legal Officer and Assistant Secretary, Columbia 5228 Ameriprise Financial General Counsel and Management Investment Advisers, LLC (formerly Center Secretary since RiverSource Investments, LLC) since June 2005; Vice Minneapolis, MN 55474 12/5/06 President and Lead Chief Counsel -- Asset Management, Age 51 Ameriprise Financial, Inc. since May 2010 (previously Vice President and Chief Counsel -- Asset Management, 2005-April 2010 and Vice President -- Asset Management Compliance, 2004-2005); Senior Vice President, Secretary and Chief Legal Officer, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Vice President, Chief Counsel and Assistant Secretary, Columbia Management Investment Distributors, Inc. (formerly RiverSource Fund Distributors, Inc.) since 2008; Vice President, General Counsel and Secretary, Ameriprise Certificate Company since 2005; Chief Counsel, RiverSource Distributors, Inc. since 2006 --------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 64 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- FUND OFFICERS (CONTINUED)
NAME, POSITION HELD ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION AGE LENGTH OF SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------- Michael A. Jones Vice President since Director and President, Columbia Management Investment 100 Federal Street 5/1/10 Advisers, LLC since May 2010; President and Director, Boston, MA 02110 Columbia Management Investment Distributors, Inc. since Age 51 May 2010; Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Manager, Chairman, Chief Executive Officer and President, Columbia Management Advisors, LLC, 2007 -- April 2010; Chief Executive Officer, President and Director, Columbia Management Distributors, Inc., 2006 -- April 2010; former Co-President and Senior Managing Director, Robeco Investment Management -------------------------------------------------------------------------------------------------------- Colin Moore Vice President since Chief Investment Officer, Columbia Management One Financial Center 5/1/10 Investment Advisers, LLC since May 2010; Senior Vice Boston, MA 02111 President, Atlantic Funds, Columbia Funds and Nations Age 52 Funds since May 2010; Manager, Managing Director and Chief Investment Officer, Columbia Management Advisors, LLC, 2007- April 2010; Head of Equities, Columbia Management Advisors, LLC, 2002-Sept. 2007 -------------------------------------------------------------------------------------------------------- Linda Wondrack Chief Compliance Vice President and Chief Compliance Officer, Columbia One Financial Center Officer since 5/1/10 Management Investment Advisers, LLC since May 2010; Boston, MA 02111 Chief Compliance Officer, Columbia Funds since 2007; Age 46 Senior Vice President and Chief Compliance Officer, Atlantic Funds and Nations Funds since 2007; Director (Columbia Management Group, LLC and Investment Product Group Compliance), Bank of America, June 2005 -- April 2010 -------------------------------------------------------------------------------------------------------- Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial, 2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer and Center since 11/9/05 and Identity Theft Prevention Officer, Columbia Management Minneapolis, MN 55474 Identity Theft Investment Distributors, Inc. (formerly RiverSource Age 46 Prevention Officer Fund Distributors, Inc.) since 2008; Anti-Money since 2008 Laundering Officer, Ameriprise Financial, Inc. since 2005; Compliance Director, Ameriprise Financial, Inc., 2004-2008 --------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT 65 PROXY VOTING ------------------------------------------------------------------- The policy of the Board 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 columbiamanagement.com; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting columbiamanagement.com; or searching the website of the SEC at www.sec.gov. -------------------------------------------------------------------------------- 66 COLUMBIA EMERGING MARKETS BOND FUND -- 2010 ANNUAL REPORT COLUMBIA EMERGING MARKETS BOND FUND (formerly known as RiverSource Emerging Markets Bond Fund) P.O. Box 8081 Boston, MA 02266-8081 COLUMBIAMANAGEMENT.COM This report must be accompanied or preceded by the Fund's current prospectus. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC. (C)2010 Columbia Management Investment Advisers, LLC. All (COLUMBIA MANAGEMENT LOGO) rights reserved. S-6398 G (12/10)
Annual Report and Prospectus (COLUMBIA MANAGEMENT LOGO) COLUMBIA EMERGING MARKETS OPPORTUNITY FUND (FORMERLY KNOWN AS THREADNEEDLE EMERGING MARKETS FUND) -------------------------------------------------------------------------------- ANNUAL REPORT FOR THE PERIOD ENDED OCTOBER 31, 2010 (Prospectus also enclosed) COLUMBIA EMERGING MARKETS OPPORTUNITY FUND SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH. This annual report includes a prospectus that describes in detail the Fund's objective, investment strategy, risks, sales charges, fees and other matters of interest. Please read the prospectus carefully before you invest or send money. NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE TABLE OF CONTENTS -------------------------------------------------------------- Your Fund at a Glance.............. 3 Manager Commentary................. 6 The Fund's Long-term Performance... 12 Fund Expenses Example.............. 14 Portfolio of Investments........... 17 Statement of Assets and Liabilities...................... 27 Statement of Operations............ 29 Statements of Changes in Net Assets........................... 30 Financial Highlights............... 32 Notes to Financial Statements...... 41 Report of Independent Registered Public Accounting Firm........... 59 Federal Income Tax Information..... 61 Board Members and Officers......... 62 Proxy Voting....................... 67
SEE THE FUND'S PROSPECTUS FOR RISKS ASSOCIATED WITH INVESTING IN THE FUND. -------------------------------------------------------------------------------- 2 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT YOUR FUND AT A GLANCE ---------------------------------------------------------- FUND SUMMARY -------------------------------------------------------------------------------- > Columbia Emerging Markets Opportunity Fund (the Fund) Class A shares gained 26.70% (excluding sales charge) for the 12 months ended Oct. 31, 2010. > The Fund outperformed its benchmark, the Morgan Stanley Capital International (MSCI) Emerging Markets Index (MSCI Index), which advanced 23.89% for the 12- month period. > The Fund also outperformed its peer group, as represented by the Lipper Emerging Markets Funds Index, which increased 26.39% for the same period. ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2010) --------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS -------------------------------------------------------------------- Columbia Emerging Markets Opportunity Fund Class A (excluding sales charge) +26.70% -5.85% +14.12% +12.89% -------------------------------------------------------------------- MSCI Index (unmanaged) +23.89% -3.70% +15.28% +14.96% -------------------------------------------------------------------- Lipper Emerging Markets Funds Index (unmanaged) +26.39% -4.75% +13.27% +14.06% --------------------------------------------------------------------
(See "The Fund's Long-term Performance" for Index descriptions) 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 columbiamanagement.com or calling 800.345.6611. The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the table above. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in fees and expenses. The Fund's returns reflect the effect of fee waivers/expense reimbursements, if any. Without such waivers/reimbursements, the Fund's returns would be lower. See the Average Annual Total Returns table for performance of other share classes of the Fund. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. It is not possible to invest directly in an index. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 3 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------
AT OCT. 31, 2010 SINCE Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION* Class A (inception 11/13/96) +26.70% -5.85% +14.12% +12.89% N/A ------------------------------------------------------------------------- Class B (inception 11/13/96) +25.82% -6.55% +13.27% +12.04% N/A ------------------------------------------------------------------------- Class C (inception 6/26/00) +25.67% -6.57% +13.27% +12.05% N/A ------------------------------------------------------------------------- Class I (inception 3/4/04) +27.45% -5.35% +14.69% N/A +15.11% ------------------------------------------------------------------------- Class R** (inception 8/3/09) +26.36% N/A N/A N/A +24.86% ------------------------------------------------------------------------- Class R4 (inception 11/13/96) +26.99% -5.51% +14.44% +13.17% N/A ------------------------------------------------------------------------- Class R5 (inception 08/1/08) +27.36% N/A N/A N/A +4.39% ------------------------------------------------------------------------- Class W (inception 09/27/10) N/A N/A N/A N/A +5.63%*** ------------------------------------------------------------------------- Class Z (inception 09/27/10) N/A N/A N/A N/A +5.63%*** ------------------------------------------------------------------------- With sales charge Class A (inception 11/13/96) +19.42% -7.69% +12.77% +12.23% N/A ------------------------------------------------------------------------- Class B (inception 11/13/96) +20.82% -7.28% +13.03% +12.04% N/A ------------------------------------------------------------------------- Class C (inception 6/26/00) +24.67% -6.57% +13.27% +12.05% N/A -------------------------------------------------------------------------
Class A share performance reflects the maximum initial sales charge of 5.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second year 4%; third and fourth years 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I, Class R, Class R4, Class R5, Class W and Class Z shares. Class I, Class R, Class R4 and Class R5 shares are available to qualifying institutional investors only. Class W shares are offered through qualifying discretionary accounts. Class Z shares are available to certain eligible investors. *For classes with less than 10 years performance. **Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. ***Not annualized. -------------------------------------------------------------------------------- 4 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- MORNINGSTAR STYLE BOX(TM) --------------------------------------------------------------------------------
Equity Style Value Blend Growth X Large Medium Size Small
The Morningstar Style Box(TM) is based on the fund's portfolio holdings as of period end. The vertical axis shows the market capitalization of the stocks owned, and the horizontal axis shows investment style (value, blend, or growth). Information shown is based on the most recent data provided by Morningstar. (C)2010 Morningstar, Inc. All rights reserved. The information contained herein is proprietary to Morningstar and/or its content providers, may not be copied or distributed and 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. Past performance is no guarantee of future results. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 5 MANAGER COMMENTARY ------------------------------------------------------------- Effective Sept. 27, 2010, Threadneedle Emerging Markets Fund was renamed Columbia Emerging Markets Opportunity Fund. Effective September 2010, Vanessa Donegan and Rafael Polatinsky assumed day-to-day management of the Fund. Threadneedle International Limited (Threadneedle) an affiliate of the Investment Manager, and an indirect wholly-owned subsidiary of Ameriprise Financial, Inc., is the subadviser to the Fund. Dear Shareholders, Columbia Emerging Markets Opportunity Fund Class A shares gained 26.70% (excluding sales charge) for the 12 months ended Oct. 31, 2010. The Fund outperformed its benchmark, the Morgan Stanley Capital COUNTRY BREAKDOWN(1) (at Oct. 31, 2010) ---------------------------------------------------------------------
Brazil 18.2% ------------------------------------------------ China 14.5% ------------------------------------------------ Egypt 0.5% ------------------------------------------------ Hong Kong 2.7% ------------------------------------------------ Hungary 1.0% ------------------------------------------------ India 7.9% ------------------------------------------------ Indonesia 4.2% ------------------------------------------------ Luxembourg 1.2% ------------------------------------------------ Malaysia 1.9% ------------------------------------------------ Mexico 3.8% ------------------------------------------------ Poland 1.3% ------------------------------------------------ Russia 7.0% ------------------------------------------------ South Africa 7.1% ------------------------------------------------ South Korea 12.6% ------------------------------------------------ Taiwan 8.7% ------------------------------------------------ Thailand 2.1% ------------------------------------------------ Turkey 2.4% ------------------------------------------------ United Kingdom 1.2% ------------------------------------------------ United States 1.2% ------------------------------------------------ Other(2) 0.5% ------------------------------------------------
(1) Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan). The Fund's composition is subject to change. (2) Cash & Cash Equivalents. -------------------------------------------------------------------------------- 6 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- International (MSCI) Emerging Markets Index (MSCI Index), which advanced 23.89% for the same period. The Fund's peer group, the Lipper Emerging Markets Funds Index, gained 26.39% for the same period. SIGNIFICANT PERFORMANCE FACTORS The emerging equity markets were collectively very strong performers for the past year, particularly in U.S. dollar terms. Fears of a double-dip global recession negatively affected these markets at mid-year, but emerging market equities rallied strongly during the final months of the period as recession fears eased and global risk appetite recovered. Economic data from China suggest increased likelihood of a soft landing there, while other major economies such as Brazil and India continue to deliver healthy growth. During the period, emerging market equities received significant foreign fund inflows from investors attracted by robust growth and relatively healthy fundamentals. The Fund benefited from an emphasis on strongly performing Brazil, an overweight in South Africa and an underweight in China. Conversely, having larger-than- benchmark positions in Hungary and Russia detracted from relative return. Stock selection in Russia was quite strong. Positioning in the consumer discretionary sector was a significant driver TOP TEN HOLDINGS(1) (at Oct. 31, 2010) ---------------------------------------------------------------------
Vale SA, ADR (Brazil) 3.2% ------------------------------------------------ Petroleo Brasileiro SA, ADR (Brazil) 2.6% ------------------------------------------------ Samsung Electronics Co., Ltd. (South Korea) 2.5% ------------------------------------------------ China Construction Bank Corp., Series H (China) 2.1% ------------------------------------------------ Sberbank of Russia (Russia) 2.0% ------------------------------------------------ Itau Unibanco Holding SA, ADR (Brazil) 1.9% ------------------------------------------------ Hon Hai Precision Industry Co., Ltd. (Taiwan) 1.7% ------------------------------------------------ America Movil SAB de CV, Series L, ADR (Mexico) 1.6% ------------------------------------------------ OGX Petroleo e Gas Participacoes SA (Brazil) 1.5% ------------------------------------------------ Taiwan Semiconductor Manufacturing Co., Ltd. (Taiwan) 1.4% ------------------------------------------------
(1) Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan and Cash & Cash Equivalents). For further detail about these holdings, please refer to the section entitled "Portfolio of Investments." Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 7 MANAGER COMMENTARY (continued) ------------------------------------------------- of the Fund's favorable results. Specifically, the portfolio had meaningful holdings of consumer discretionary stocks in Brazil. The Fund had a larger-than- benchmark weighting in consumer discretionary stocks throughout the year and this sector performed very well, benefiting from healthy local demand. CHANGES TO THE FUND'S PORTFOLIO Over the course of the year, the Fund's weightings in the industrials, materials and consumer discretionary sectors increased. We potentially see attractive opportunities in these sectors if increased infrastructure spending and strong consumer demand continue to drive earnings higher. Weightings in the energy, telecommunication services and consumer staples sectors decreased. From a geographic allocation perspective, over the course of the year, the Fund's weightings in Hong Kong and Brazil were reduced. Toward the end of the period, we added to the Fund's holdings in Asia. Economic data coming out of China have improved, enhancing our overall outlook for Asian equities. China has managed to slow its economy without a recession, a positive for the entire region because so many countries have trade surpluses with China. We believe that as long as China is growing, interregional trade should remain strong. We added to the Fund's holdings in China, India, and a little bit in Korea. In Korea, we avoided technology stocks, but found opportunities among industrial stocks that can benefit from activity in China. We funded the increase in Asia by taking some profits in Russia and Mexico, following strong relative performance. OUR FUTURE STRATEGY As of Oct. 31, 2010, the Fund's allocation to Latin America is larger than that of the MSCI Index, with the primary emphasis on Brazil. The Fund's weighting in Russia is also larger than that of the MSCI Index. The Asian weighting is smaller than that of the MSCI Index, but larger than it was at the beginning of the fiscal year. Within Asia, the Fund is underweight in Taiwan, Malaysia, China and Korea, relative to the MSCI Index, while its weighting in Indonesia is larger and its allocation to India is about equal to the index. In terms of sector weightings, the Fund's consumer discretionary and financials weightings are larger than those of the MSCI Index, with the -------------------------------------------------------------------------------- 8 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- overweight in consumer discretionary still concentrated mainly in Brazil. Within financials, the Fund has emphasis on banks in Indonesia, Brazil, Hungary, Turkey and Mexico, while de-emphasizing insurance, diversified financial companies and real estate. We see emerging market banks as a way to attempt to capitalize on increased consumer spending in emerging countries. The Fund's weightings in telecommunications services, utilities, energy and consumer staples are smaller than those of the MSCI Index. A key reason for the energy underweight is that we have not found compelling opportunities among Russian oil stocks. Telecommunications, utilities and consumer staples are more defensive sectors that tend to outperform when things aren't going so well. Now that investors' risk appetite has improved and we're seeing earnings upgrades across the emerging markets, we are less optimistic about the growth of these sectors. China is evolving from a source of cheap labor toward a goal of being a world class manufacturing economy. This requires greater emphasis on areas such as automation and alternative energy. We have focused on companies across the emerging markets that we believe can benefit from this evolution. For example, Brazil now exports substantial amounts to China. In fact, Latin America is a major beneficiary of growth in Asia. We think it can be more productive to tap into the China growth theme through stocks in other regions, which may be more reasonably priced than Chinese stocks. We believe strong consumer demand will continue to drive economic growth in the emerging markets. The Fund will continue to invest in companies that we believe may benefit from consumer demand trends and in companies that can benefit from rising infrastructure spending. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 9 MANAGER COMMENTARY (continued) ------------------------------------------------- In general, emerging market countries have low ratios of debt compared to gross domestic product, emerging market consumers tend to have low personal debt and many emerging economies have healthy banking sectors. All of these support healthy domestic and intra-regional demand. The Fund will continue to invest in companies that we believe may benefit from consumer demand trends and in companies that can benefit from rising infrastructure spending. Vanessa Donegan Rafael Polatinsky, CFA(R) Portfolio Manager Portfolio Manager
Any specific securities mentioned are for illustrative purposes only and are not a complete list of securities that have increased or decreased in value. The views expressed in this statement reflect those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Columbia Management Investment Advisers, LLC* (the Investment Manager) or any subadviser to the Fund or any other person in the Investment Manager or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and the Investment Manager disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for the Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of the Fund. * Effective May 1, 2010, RiverSource Investments, LLC became known as Columbia Management Investment Advisers, LLC. -------------------------------------------------------------------------------- 10 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT THIS PAGE LEFT BLANK INTENTIONALLY THE FUND'S LONG-TERM PERFORMANCE ----------------------------------------------- The chart on the facing page illustrates the total value of an assumed $10,000 investment in Columbia Emerging Markets Opportunity Fund Class A shares (from 11/1/00 to 10/31/10) as compared to the performance of the Morgan Stanley Capital International (MSCI) Emerging Markets Index and the Lipper Emerging Markets Funds Index. In comparing the Fund's Class A shares to these indices, you should take into account the fact that the Fund's performance reflects the maximum initial sales charge of 5.75%, while such charges are not reflected in the performance of the indices. Returns for the Fund include the reinvestment of any distributions paid during each period. The performance information shown represents past performance and is not a guarantee of future results. The table below and the chart on the facing page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 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 or visiting columbiamanagement.com. Also see "Past Performance" in the Fund's current prospectus. COMPARATIVE RESULTS --------------------------------------------------------------------------------
Results at Oct. 31, 2010 1 YEAR 3 YEARS 5 YEARS 10 YEARS COLUMBIA EMERGING MARKETS OPPORTUNITY FUND (INCLUDES SALES CHARGE) Class A Cumulative value of $10,000 $11,942 $7,866 $18,241 $31,688 ------------------------------------------------------------------------------------------ Average annual total return +19.42% -7.69% +12.77% +12.23% ------------------------------------------------------------------------------------------ MSCI EMERGING MARKETS INDEX(1) Cumulative value of $10,000 $12,389 $8,930 $20,356 $40,306 ------------------------------------------------------------------------------------------ Average annual total return +23.89% -3.70% +15.28% +14.96% ------------------------------------------------------------------------------------------ LIPPER EMERGING MARKETS FUNDS INDEX(2) Cumulative value of $10,000 $12,639 $8,641 $18,645 $37,271 ------------------------------------------------------------------------------------------ Average annual total return +26.39% -4.75% +13.27% +14.06% ------------------------------------------------------------------------------------------
Results for other share classes can be found on page 4. -------------------------------------------------------------------------------- 12 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- (VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN COLUMBIA EMERGING MARKETS OPPORTUNITY FUND LINE GRAPH)
COLUMBIA EMERGING MARKETS OPPORTUNITY FUND CLASS LIPPER EMERGING A (INCLUDES MSCI EMERGING MARKETS FUNDS SALES CHARGE) MARKETS INDEX(1) INDEX(2) ------------------- ---------------- ------------------ 11/1/00 $ 9,425 $10,000 $10,000 9,621 10,632 10,516 8,269 9,274 9,224 7,857 8,611 8,735 10/01 7,230 7,653 7,779 8,720 9,433 9,453 9,249 10,230 10,319 7,916 8,604 8,768 10/02 7,838 8,299 8,333 8,034 8,539 8,624 7,857 8,792 8,934 9,033 10,583 10,519 10/03 10,698 12,345 12,364 12,003 13,878 14,003 11,687 13,503 13,659 11,113 13,062 13,263 10/04 12,420 14,740 15,032 14,165 16,934 17,172 13,986 16,749 16,915 15,897 19,206 19,260 10/05 16,374 19,802 19,988 21,274 25,262 25,311 22,789 27,281 27,311 20,517 24,742 24,708 10/06 22,571 26,815 26,905 25,354 29,800 29,834 26,847 32,250 32,134 29,835 37,346 36,313 10/07 37,965 45,137 43,131 31,245 36,850 36,334 33,442 40,541 38,888 29,338 35,818 34,288 10/08 16,028 19,762 18,795 14,380 18,442 16,884 17,837 23,224 20,959 23,200 29,882 27,293 10/09 25,010 32,536 29,487 25,578 33,317 30,398 28,437 36,588 33,429 28,568 35,930 33,115 10/10 31,688 40,306 37,271
(1) The Morgan Stanley Capital International (MSCI) Emerging Markets Index, an unmanaged market capitalization-weighted index, is designed to measure equity market performance in the global emerging markets. The index reflects reinvestment of all distributions and changes in market prices. (2) The Lipper Emerging Markets Funds Index includes the 30 largest emerging markets funds tracked by Lipper Inc. The index's returns include net reinvested dividends. The Fund's performance is currently measured against this index for purposes of determining the performance incentive adjustment. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 13 FUND EXPENSES EXAMPLE ---------------------------------------------------------- (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (i) transaction costs, including sales charges (loads) on purchase payments; and (ii) ongoing costs, which may include management fees; distribution and service (Rule 12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the ongoing expenses of any funds in which the Fund invests (also referred to as "acquired funds"), including affiliated and non- affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the ongoing expenses charged by acquired funds using the expense ratio of each of the acquired funds as of the acquired fund's most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period indicated and held until Oct. 31, 2010. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses for each class. You may use the information in this line, together with the amount you 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 result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for each class and an assumed rate of return of 5% per year before expenses, which is not the actual return for the class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. -------------------------------------------------------------------------------- 14 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED MAY 1, 2010(a) OCT. 31, 2010 THE PERIOD(b) EXPENSE RATIO ------------------------------------------------------------------------------------------- Class A ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,114.30 $10.38(d) 1.97%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,015.11 $ 9.90(d) 1.97%(d) ------------------------------------------------------------------------------------------- Class B ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,110.50 $14.42(d) 2.74%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,011.27 $13.74(d) 2.74%(d) ------------------------------------------------------------------------------------------- Class C ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,109.50 $14.36(d) 2.73%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,011.32 $13.69(d) 2.73%(d) ------------------------------------------------------------------------------------------- Class I ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,117.80 $ 7.76(d) 1.47%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,017.60 $ 7.39(d) 1.47%(d) ------------------------------------------------------------------------------------------- Class R ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,113.50 $11.80(d) 2.24%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,013.76 $11.25(d) 2.24%(d) ------------------------------------------------------------------------------------------- Class R4 ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,116.60 $ 9.45(d) 1.79%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,016.01 $ 9.00(d) 1.79%(d) ------------------------------------------------------------------------------------------- Class R5 ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,117.60 $ 8.18(d) 1.55%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,017.20 $ 7.80(d) 1.55%(d) ------------------------------------------------------------------------------------------- Class W ------------------------------------------------------------------------------------------- Actual(e) $1,000 $1,056.30 $ 1.70(d) 1.89%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,015.51 $ 9.50(d) 1.89%(d) -------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 15 FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED MAY 1, 2010(a) OCT. 31, 2010 THE PERIOD(b) EXPENSE RATIO ------------------------------------------------------------------------------------------- Class Z ------------------------------------------------------------------------------------------- Actual(e) $1,000 $1,056.30 $ 1.41 1.56% ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,017.15 $ 7.85 1.56% -------------------------------------------------------------------------------------------
(a) The beginning account values for Class W and Class Z are as of Sept. 27, 2010 (when shares became available) for actual expense calculations. (b) Expenses are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). Actual expenses for Class W and Class Z are equal to the annualized expense ratio for the class as indicated above, multiplied by the average account value over the period, multiplied by 32/365 (to reflect the number of days in the period). (c) Based on the actual return for the six months ended Oct. 31, 2010: +11.43% for Class A, +11.05% for Class B, +10.95% for Class C, +11.78% for Class I, +11.35% for Class R, +11.66% for Class R4 and +11.76% for Class R5. (d) Columbia Management Investment Advisers, LLC (formerly known as RiverSource Investments, LLC) (the Investment Manager) and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Dec. 31, 2011, unless sooner terminated at the sole discretion of the Fund's Board, such that net expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment, will not exceed 1.85% for Class A, 2.60% for Class B, 2.60% for Class C, 1.41% for Class I, 2.10% for Class R, 1.71% for Class R4, 1.46% for Class R5, 1.85% for Class W and 1.60% for Class Z. Any amounts waived will not be reimbursed by the Fund. This change is effective Jan. 1, 2011. Had this change been in place for the entire six month period ended Oct. 31, 2010, the actual expenses paid would have been $9.86 for Class A, $13.73 for Class B, $13.78 for Class C, $7.55 for Class I, $11.17 for Class R, $9.13 for Class R4, $7.81 for Class R5 and $1.67 for Class W; the hypothetical expenses paid would have been $9.40 for Class A, $13.09 for Class B, $13.14 for Class C, $7.19 for Class I, $10.65 for Class R, $8.70 for Class R4, $7.44 for Class R5 and $9.30 for Class W. The actual and hypothetical expenses paid for Class Z would have been the same as those expenses presented in the table above. (e) Based on the actual return for the period from Sept. 27, 2010 (when shares became available) to Oct. 31, 2010: +5.63% for Class W and +5.63% for Class Z. -------------------------------------------------------------------------------- 16 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT PORTFOLIO OF INVESTMENTS ------------------------------------------------------ OCT. 31, 2010 (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
COMMON STOCKS (96.7%)(c) ISSUER SHARES VALUE(a) BRAZIL (16.5%) Anhanguera Educacional Participacoes SA Unit 360,000 $7,035,555 Banco Santander Brasil SA, ADR 688,099 9,908,626 BM&FBovespa SA 1,046,900 8,738,546 Fibria Celulose SA, ADR 364,486(b) 6,546,169 Itau Unibanco Holding SA, ADR 536,586 13,178,552 Localiza Rent a Car SA 424,903 7,040,864 Lojas Renner SA 218,000 8,656,864 MRV Engenharia e Participacoes SA 469,400 4,572,975 OGX Petroleo e Gas Participacoes SA 800,700(b) 10,477,726 Petroleo Brasileiro SA, ADR 523,794 17,871,851 Vale SA, ADR 676,756 21,750,938 --------------- Total 115,778,666 ------------------------------------------------------------------------------------- CHINA (14.3%) Bank of China Ltd., Series H 12,124,000(e) 7,257,820 China Construction Bank Corp., Series H 14,944,000 14,247,988 China National Building Material Co., Ltd., Series H 1,440,000 3,511,289 China Shenhua Energy Co., Ltd., Series H 1,245,500 5,543,769 China Yurun Food Group Ltd. 1,483,000 5,768,604 CNOOC Ltd. 2,488,000 5,155,113 CNOOC Ltd., ADR 39,726 8,299,555 Dongfang Electric Corp., Ltd., Series H 978,800 4,760,774 Dongfeng Motor Group Co., Ltd., Series H 3,318,000 7,191,640 Hengan International Group Co., Ltd. 462,000 4,351,180 Industrial & Commercial Bank of China, Series H 10,116,000 8,143,960 New Oriental Education & Technology Group, ADR 58,295(b) 6,259,134 PetroChina Co., Ltd., Series H 4,178,000 5,099,198 Ping An Insurance Group Co. of China Ltd., Series H 662,500 7,132,709 Tencent Holdings Ltd. 341,800 7,827,313 --------------- Total 100,550,046 ------------------------------------------------------------------------------------- EGYPT (0.5%) Orascom Construction Industries, GDR 68,351(d) 3,164,651 ------------------------------------------------------------------------------------- HONG KONG (2.7%) Agile Property Holdings Ltd. 3,580,000 4,711,134 China High Speed Transmission Equipment Group Co., Ltd. 2,407,000 4,918,963 China Mobile Ltd. 331,000 3,371,494 China Overseas Land & Investment Ltd. 2,859,797(e) 6,014,023 --------------- Total 19,015,614 ------------------------------------------------------------------------------------- HUNGARY (1.0%) OTP Bank PLC 234,246(b,e) 6,972,681 ------------------------------------------------------------------------------------- INDIA (7.8%) Bharat Heavy Electricals Ltd. 120,394 6,627,564 Housing Development Finance Corp. 92,634 1,433,976
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 17 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) INDIA (CONT.) ICICI Bank Ltd. 344,544 $9,019,801 Infosys Technologies Ltd. 101,202 6,769,656 Jaiprakash Associates Ltd. 1,767,488 4,784,253 Larsen & Toubro Ltd. 111,353 5,082,760 Maruti Suzuki India Ltd. 211,062 7,371,611 Reliance Industries Ltd. 278,120 6,863,006 State Bank of India 94,249 6,684,095 --------------- Total 54,636,722 ------------------------------------------------------------------------------------- INDONESIA (4.1%) Astra International Tbk PT 717,000 4,574,035 Bank Mandiri Tbk PT 6,656,500 5,214,941 Bank Rakyat Indonesia Persero Tbk PT 4,342,500 5,540,515 Bumi Resources Tbk PT 16,717,500 4,163,004 Indofood CBP Sukses Makmur TbK PT 7,140,500(b) 4,555,215 Semen Gresik Persero Tbk PT 4,243,000 4,653,766 --------------- Total 28,701,476 ------------------------------------------------------------------------------------- LUXEMBOURG (1.2%) Evraz Group SA, GDR 155,155(b,d) 4,704,300 Ternium SA, ADR 98,654 3,381,859 --------------- Total 8,086,159 ------------------------------------------------------------------------------------- MALAYSIA (1.8%) Axiata Group Bhd 2,878,800(b) 4,156,210 CIMB Group Holdings Bhd 1,300,800 3,467,406 Genting Bhd 1,587,800 5,330,107 --------------- Total 12,953,723 ------------------------------------------------------------------------------------- MEXICO (3.8%) America Movil SAB de CV, Series L, ADR 189,519 10,851,857 Bolsa Mexicana de Valores SAB de CV 213,600(e) 388,040 Grupo Financiero Banorte SAB de CV, Series O 1,371,600 5,868,859 Grupo Mexico SAB de CV, Series B 1,091,900 3,596,687 Wal-Mart de Mexico SAB de CV, Series V 2,091,500 5,725,589 --------------- Total 26,431,032 ------------------------------------------------------------------------------------- POLAND (1.3%) Bank Pekao SA 77,818 5,089,697 Powszechna Kasa Oszczednosci Bank Polski SA 232,618 3,674,979 --------------- Total 8,764,676 ------------------------------------------------------------------------------------- RUSSIA (6.9%) Eurasia Drilling Co., Ltd., GDR 236,717(d) 6,036,284 LSR Group, GDR 347,584(b,d) 2,954,464 Lukoil OAO, ADR 112,967 6,303,559 MMC Norilsk Nickel, ADR 349,517 6,537,715 Novolipetsk Steel OJSC, GDR 153,817(d) 5,265,156 Sberbank of Russia 4,095,427 13,572,245 X5 Retail Group NV, GDR 176,377(b,d) 7,390,196 --------------- Total 48,059,619 ------------------------------------------------------------------------------------- SOUTH AFRICA (7.0%) Impala Platinum Holdings Ltd. 153,997 4,357,347 Kumba Iron Ore Ltd. 94,730 5,387,847 Mr Price Group Ltd. 429,798 3,909,991 MTN Group Ltd. 318,035 5,726,512 Murray & Roberts Holdings Ltd. 603,720 3,744,294 Naspers Ltd., Series N 122,386 6,432,973 Shoprite Holdings Ltd. 369,891 5,234,092 Standard Bank Group Ltd. 633,681 9,354,395 Truworths International Ltd. 529,442 5,221,257 --------------- Total 49,368,708 -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 18 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) SOUTH KOREA (12.4%) Hyundai Department Store Co., Ltd. 51,866 $5,739,429 Hyundai Engineering & Construction Co., Ltd. 99,984 6,691,787 Hyundai Mobis 35,496 8,833,932 Hyundai Motor Co. 66,158 9,996,497 Kangwon Land, Inc. 178,200 4,189,382 KB Financial Group, Inc. 70,791 3,146,043 LG Chem Ltd. 25,697 7,925,533 LG Electronics, Inc. 49,056 4,320,981 POSCO 15,221 6,250,313 Samsung Electronics Co., Ltd. 25,553 16,920,562 Samsung Engineering Co., Ltd. 39,822 6,353,370 Shinhan Financial Group Co., Ltd. 165,970 6,424,426 --------------- Total 86,792,255 ------------------------------------------------------------------------------------- TAIWAN (8.6%) Acer, Inc. 2,165,163 6,286,801 Cathay Financial Holding Co., Ltd. 3,032,700 4,640,624 Delta Electronics, Inc. 1,778,000 7,346,148 Hon Hai Precision Industry Co., Ltd. 3,041,196 11,522,316 MediaTek, Inc. 190,551 2,396,124 Synnex Technology International Corp. 1,818,569 4,448,862 Taiwan Semiconductor Manufacturing Co., Ltd. 4,831,858 9,910,856 Tripod Technology Corp. 1,936,766 7,432,799 Young Fast Optoelectronics Co., Ltd. 275,577 3,240,282 Yuanta Financial Holding Co., Ltd. 5,137,000 3,229,815 --------------- Total 60,454,627 ------------------------------------------------------------------------------------- THAILAND (2.0%) Bangkok Bank PCL 1,487,075 7,415,467 Siam Commercial Bank PCL 2,000,300 6,861,806 --------------- Total 14,277,273 ------------------------------------------------------------------------------------- TURKEY (2.4%) BIM Birlesik Magazalar AS 134,136 4,607,855 KOC Holding AS 1,454,179 6,851,062 Turkiye Garanti Bankasi AS 884,107 5,341,549 --------------- Total 16,800,466 ------------------------------------------------------------------------------------- UNITED KINGDOM (1.2%) Antofagasta PLC 401,488 8,503,948 ------------------------------------------------------------------------------------- UNITED STATES (1.2%) Southern Copper Corp. 198,071 8,477,439 ------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $559,517,254) $677,789,781 ------------------------------------------------------------------------------------- PREFERRED STOCKS (1.5%)(c) ISSUER SHARES VALUE(a) BRAZIL Itau Unibanco Holding SA 314,600 $7,611,290 Petroleo Brasileiro SA 170,200 2,593,877 ------------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (Cost: $9,479,059) $10,205,167 ------------------------------------------------------------------------------------- MONEY MARKET FUND (0.5%) SHARES VALUE(a) Columbia Short-Term Cash Fund, 0.241% 3,749,862(f) $3,749,862 ------------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $3,749,862) $3,749,862 -------------------------------------------------------------------------------------
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (1.9%) EFFECTIVE PRINCIPAL ISSUER YIELD AMOUNT VALUE(a) REPURCHASE AGREEMENTS(g) Citigroup Global Markets, Inc. dated 10-29-10, matures 11-01-10, repurchase price $4,000,077 0.230% $4,000,000 $4,000,000
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 19 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (CONTINUED) EFFECTIVE PRINCIPAL ISSUER YIELD AMOUNT VALUE(a) REPURCHASE AGREEMENTS (CONT.) Deutsche Bank AG dated 10-29-10, matures 11-01-10, repurchase price $4,581,429 0.230% $4,581,341 $4,581,341 Pershing LLC dated 10-29-10, matures 11-01-10, repurchase price $5,000,133 0.320 5,000,000 5,000,000 --------------- Total 13,581,341 ------------------------------------------------------------------------------------- TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (Cost: $13,581,341) $13,581,341 ------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $586,327,516)(h) $705,326,151 =====================================================================================
SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY The following table represents the portfolio investments of the Fund by industry classifications as a percentage of net assets at Oct. 31, 2010:
PERCENTAGE OF INDUSTRY NET ASSETS VALUE(A) ----------------------------------------------------------------------- Auto Components 1.3% $8,833,932 Automobiles 4.1 29,133,783 Banking 1.1 7,611,290 Capital Markets 0.5 3,229,815 Chemicals 1.1 7,925,533 Commercial Banks 22.3 156,385,851 Computers & Peripherals 0.9 6,286,801 Construction & Engineering 3.6 25,036,862 Construction Materials 1.6 11,119,519 Diversified Consumer Services 1.9 13,294,689 Diversified Financial Services 1.3 9,126,586 Electrical Equipment 2.3 16,307,301 Electronic Equipment, Instruments & Components 4.8 33,990,407 Energy Equipment & Services 0.9 6,036,284 Food & Staples Retailing 3.3 22,957,732 Food Products 1.5 10,323,819 Hotels, Restaurants & Leisure 1.4 9,519,489 Household Durables 1.3 8,893,956 Industrial Conglomerates 1.7 11,635,315 Insurance 1.7 11,773,333 Internet Software & Services 1.1 7,827,313 IT Services 1.0 6,769,656
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 20 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY (CONTINUED)
PERCENTAGE OF INDUSTRY NET ASSETS VALUE(A) ----------------------------------------------------------------------- Media 0.9% $6,432,973 Metals & Mining 11.1 78,213,549 Multiline Retail 2.0 14,396,293 Oil Field Services 0.4 2,593,877 Oil, Gas & Consumable Fuels 9.9 69,776,781 Paper & Forest Products 0.9 6,546,169 Personal Products 0.6 4,351,180 Real Estate Management & Development 1.5 10,725,157 Road & Rail 1.0 7,040,864 Semiconductors & Semiconductor Equipment 4.2 29,227,542 Specialty Retail 1.3 9,131,248 Thrifts & Mortgage Finance 0.2 1,433,976 Wireless Telecommunication Services 3.4 24,106,073 Other(1) 2.5 17,331,203 ----------------------------------------------------------------------- Total $705,326,151 -----------------------------------------------------------------------
(1) Cash & Cash Equivalents The industries identified above are based on the Global Industry Classification Standard (GICS), which was developed by, and is the exclusive property of, Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. INVESTMENTS IN DERIVATIVES FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS OPEN AT OCT. 31, 2010
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED COUNTERPARTY EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION ----------------------------------------------------------------------------------------------------- Citibank Nov. 1, 2010 1,261,364 1,812,000 (USD) (TRY) $3,028 $-- Citibank Nov. 2, 2010 6,200,000 883,321 (ZAR) (USD) -- (2,684) ----------------------------------------------------------------------------------------------------- Total $3,028 $(2,684) -----------------------------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS ADR -- American Depositary Receipt GDR -- Global Depositary Receipt TRY -- Turkish Lira ZAR -- South African Rand
(a) Securities are valued by using policies described in Note 2 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 21 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------ NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED) (d) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security may be determined to be liquid under guidelines established by the Fund's Board of Directors. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At Oct. 31, 2010, the value of these securities amounted to $29,515,051 or 4.21% of net assets. (e) At Oct. 31, 2010, security was partially or fully on loan. See Note 7 to the financial statements. (f) Affiliated Money Market Fund - See Note 8 to the financial statements. The rate shown is the seven-day current annualized yield at Oct. 31, 2010. (g) The table below represents securities received as collateral for repurchase agreements. This collateral, which is generally high quality short-term obligations, is deposited with the Fund's custodian and, pursuant to the terms of the repurchase agreement, must have an aggregate market value greater than or equal to the repurchase price plus accrued interest at all times. The value of securities and/or cash held as collateral for repurchase agreements is monitored on a daily basis to ensure the existence of the proper level of collateral.
CITIGROUP GLOBAL MARKETS, INC. (0.230%) SECURITY DESCRIPTION VALUE(a) ----------------------------------------------------------- Fannie Mae Benchmark REMIC $22,607 Fannie Mae REMICS 1,330,720 Fannie Mae-Aces 29,414 Freddie Mac Reference REMIC 42,879 Freddie Mac REMICS 2,083,244 Government National Mortgage Association 571,136 ----------------------------------------------------------- Total market value of collateral securities $4,080,000 ----------------------------------------------------------- DEUTSCHE BANK AG (0.230%) SECURITY DESCRIPTION VALUE(a) ----------------------------------------------------------- Fannie Mae Pool $4,672,967 ----------------------------------------------------------- Total market value of collateral securities $4,672,967 ----------------------------------------------------------- PERSHING LLC (0.320%) SECURITY DESCRIPTION VALUE(a) ----------------------------------------------------------- Fannie Mae Pool $761,902 Fannie Mae REMICS 353,353 Fannie Mae Whole Loan 5,877 Federal Farm Credit Bank 179,064 Federal Home Loan Banks 65,292 Federal Home Loan Mortgage Corp 8,856 Federal National Mortgage Association 103,207 Freddie Mac Gold Pool 693,495
-------------------------------------------------------------------------------- 22 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
PERSHING LLC (0.320%) (CONTINUED) SECURITY DESCRIPTION VALUE(a) ----------------------------------------------------------- Freddie Mac REMICS $425,825 Ginnie Mae I Pool 645,736 Ginnie Mae II Pool 579,428 Government National Mortgage Association 540,457 United States Treasury Inflation Indexed Bonds 9,752 United States Treasury Note/Bond 727,757 ----------------------------------------------------------- Total market value of collateral securities $5,100,001 -----------------------------------------------------------
(h) At Oct. 31, 2010, the cost of securities for federal income tax purposes was $592,479,655 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $119,491,013 Unrealized depreciation (6,644,517) ----------------------------------------------------------- Net unrealized appreciation $112,846,496 -----------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 23 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------ FAIR VALUE MEASUREMENTS Generally accepted accounting principles (GAAP) require 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. 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 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 (to include NAV for open-end mutual funds). 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 Fund Administrator, 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. Non-U.S. equity securities actively traded in foreign markets may be reflected in Level 2 despite the availability of closing prices, because the Fund evaluates and determines whether those closing prices reflect fair value at the close of the New York Stock Exchange (NYSE) or require adjustment, as described in Note 2 to the financial statements -- Valuation of securities. 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 -------------------------------------------------------------------------------- 24 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- FAIR VALUE MEASUREMENTS (CONTINUED) 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 rely on one or more significant unobservable inputs and/or significant assumptions by the Fund Administrator. Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data. The following table is a summary of the inputs used to value the Fund's investments as of Oct. 31, 2010:
FAIR VALUE AT OCT. 31, 2010 ------------------------------------------------------------------ LEVEL 1 LEVEL 2 QUOTED PRICES OTHER LEVEL 3 IN ACTIVE SIGNIFICANT SIGNIFICANT MARKETS FOR OBSERVABLE UNOBSERVABLE DESCRIPTION(A) IDENTICAL ASSETS(B) INPUTS INPUTS TOTAL ----------------------------------------------------------------------------------------------- Equity Securities Common Stocks $677,789,781 $-- $-- $677,789,781 Preferred Stocks 10,205,167 -- -- 10,205,167 ----------------------------------------------------------------------------------------------- Total Equity Securities 687,994,948 -- -- 687,994,948 ----------------------------------------------------------------------------------------------- Other Affiliated Money Market Fund(c) 3,749,862 -- -- 3,749,862 Investments of Cash Collateral Received for Securities on Loan -- 13,581,341 -- 13,581,341 ----------------------------------------------------------------------------------------------- Total Other 3,749,862 13,581,341 -- 17,331,203 ----------------------------------------------------------------------------------------------- Investments in Securities 691,744,810 13,581,341 -- 705,326,151 Derivatives(d) Assets Forward Foreign Currency Exchange Contracts -- 3,028 -- 3,028 Liabilities Forward Foreign Currency Exchange Contracts -- (2,684) -- (2,684) ----------------------------------------------------------------------------------------------- Total $691,744,810 $13,581,685 $-- $705,326,495 -----------------------------------------------------------------------------------------------
(a) See the Portfolio of Investments for all investment classifications not indicated in the table. (b) Includes certain securities trading outside the U.S. whose values were adjusted at Oct. 31, 2009 as a result of significant market movements following the close of local trading, and were classified as Level 2. Values were not adjusted as of Oct. 31, 2010. Therefore, these investment securities were classified as Level 1 instead of Level 2 at Oct. 31, 2010. The amount of securities transferred out of Level 2 into Level 1 during the period was $268,332,095. Transfers between Levels 1 and 2 are determined based on the fair value at the beginning of the period for security positions held throughout the period. (c) Money market fund that is a sweep investment for cash balances in the Fund at Oct. 31, 2010. (d) Derivative instruments are valued at unrealized appreciation (depreciation). -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 25 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------ HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS (i) The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (Commission) for the first and third quarters of each fiscal year on Form N-Q; (ii) The Fund's Forms N-Q are available on the Commission's website at http://www.sec.gov; (iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC (information on the operations of the Public Reference Room may be obtained by calling 800.SEC.0330); and (iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q, can be obtained without charge, upon request, by calling 800.345.6611. -------------------------------------------------------------------------------- 26 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT STATEMENT OF ASSETS AND LIABILITIES ------------------------------------------- OCT. 31, 2010
ASSETS Investments in securities, at value Unaffiliated issuers* (identified cost $568,996,313) $687,994,948 Affiliated money market fund (identified cost $3,749,862) 3,749,862 Investments of cash collateral received for securities on loan (identified cost $13,581,341) 13,581,341 ------------------------------------------------------------------------------- Total investments in securities (identified cost $586,327,516) 705,326,151 Foreign currency holdings (identified cost $10,183,616) 10,052,560 Capital shares receivable 908,377 Dividends and accrued interest receivable 560,453 Receivable for investment securities sold 3,199,418 Unrealized appreciation on forward foreign currency exchange contracts 3,028 ------------------------------------------------------------------------------- Total assets 720,049,987 ------------------------------------------------------------------------------- LIABILITIES Capital shares payable 1,283,236 Payable for investment securities purchased 3,757,867 Payable upon return of securities loaned 13,581,341 Unrealized depreciation on forward foreign currency exchange contracts 2,684 Accrued investment management services fees 20,705 Accrued distribution fees 5,855 Accrued transfer agency fees 16,224 Accrued administrative services fees 1,504 Accrued plan administration services fees 10 Other accrued expenses 452,271 ------------------------------------------------------------------------------- Total liabilities 19,121,697 ------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $700,928,290 ------------------------------------------------------------------------------- REPRESENTED BY Capital stock -- $.01 par value $ 725,498 Additional paid-in capital 572,058,730 Undistributed net investment income 4,930,398 Accumulated net realized gain (loss) 4,348,096 Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 118,865,568 ------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $700,928,290 ------------------------------------------------------------------------------- *Value of securities on loan $ 12,852,751 -------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 27 STATEMENT OF ASSETS AND LIABILITIES (continued) ------------------------------- OCT. 31, 2010 (UNAUDITED)
NET ASSET VALUE PER SHARE NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE Class A $523,288,192 53,653,023 $ 9.75(1) Class B $ 37,312,287 4,319,656 $ 8.64 Class C $ 38,770,335 4,501,173 $ 8.61 Class I $ 84,278,781 8,306,376 $10.15 Class R $ 15,164,872 1,561,399 $ 9.71 Class R4 $ 1,402,320 138,188 $10.15 Class R5 $ 687,416 67,607 $10.17 Class W $ 2,641 271 $ 9.75 Class Z $ 21,446 2,114 $10.14 ------------------------------------------------------------------------------------
(1) The maximum offering price per share for Class A is $10.34. The offering price is calculated by dividing the net asset value by 1.0 minus the maximum sales charge of 5.75%. The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 28 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT STATEMENT OF OPERATIONS ------------------------------------------------------- YEAR ENDED OCT. 31, 2010
INVESTMENT INCOME Income: Dividends $ 14,778,228 Interest 117,856 Income distributions from affiliated money market fund 19,826 Income from securities lending -- net 117,992 Foreign taxes withheld (1,451,529) -------------------------------------------------------------------------- Total income 13,582,373 -------------------------------------------------------------------------- Expenses: Investment management services fees 6,678,651 Distribution fees Class A 1,147,121 Class B 397,712 Class C 344,726 Class R 65,971 Class W 1 Transfer agency fees Class A 1,138,958 Class B 105,639 Class C 88,823 Class R 10,044 Class R4 689 Class R5 358 Administrative services fees 491,606 Plan administration services fees Class R 27,446 Class R4 3,087 Compensation of board members 18,286 Custodian fees 468,000 Printing and postage 110,280 Registration fees 140,720 Professional fees 130,913 Other 345,964 -------------------------------------------------------------------------- Total expenses 11,714,995 -------------------------------------------------------------------------- Investment income (loss) -- net 1,867,378 -------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions 130,106,440 Foreign currency transactions (79,437) -------------------------------------------------------------------------- Net realized gain (loss) on investments 130,027,003 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 16,283,884 -------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies 146,310,887 -------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $148,178,265 --------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 29 STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------
YEAR ENDED OCT. 31, 2010 2009 OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ 1,867,378 $ 1,073,939 Net realized gain (loss) on investments 130,027,003 (79,169,258) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 16,283,884 239,320,659 ---------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 148,178,265 161,225,340 ---------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A (2,568,740) -- Class B (19,695) -- Class C (193,813) -- Class I (693,406) -- Class R (97,017) -- Class R4 (8,976) -- Class R5 (5,301) -- ---------------------------------------------------------------------------------------- Total distributions (3,586,948) -- ----------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 30 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, 2010 2009 CAPITAL SHARE TRANSACTIONS Proceeds from sales Class A shares $ 85,282,805 $ 80,251,128 Class B shares 8,535,966 9,019,008 Class C shares 10,812,054 4,625,001 Class I shares 4,925,169 63,017,867 Class R shares 6,673,201 765,806 Class R4 shares 163,774 436,563 Class R5 shares 2,606 668 Class W shares 2,500 N/A Class Z shares 21,403 N/A Fund merger (Note 11) Class A shares N/A 45,280,067 Class B shares N/A 2,387,255 Class C shares N/A 25,077,963 Class R shares N/A 12,517,198 Class R5 shares N/A 496,500 Reinvestment of distributions at net asset value Class A shares 2,496,135 -- Class B shares 19,165 -- Class C shares 114,627 -- Class I shares 693,280 -- Class R shares 11,505 -- Class R4 shares 8,976 -- Class R5 shares 5,259 -- Conversions from Class B to Class A Class A shares 8,787,572 6,661,382 Class B shares (8,787,572) (6,661,382) Payments for redemptions Class A shares (96,690,846) (95,511,753) Class B shares (9,645,349) (8,184,934) Class C shares (12,720,504) (4,011,594) Class I shares (8,008,374) (7,237,209) Class R shares (6,801,569) (1,958,447) Class R4 shares (249,476) (397,068) Class R5 shares (125) -- ---------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions (14,347,818) 126,574,019 ---------------------------------------------------------------------------------------- Proceeds from regulatory settlements (Note 10) 203,460 458,466 ---------------------------------------------------------------------------------------- Total increase (decrease) in net assets 130,446,959 288,257,825 Net assets at beginning of year 570,481,331 282,223,506 ---------------------------------------------------------------------------------------- Net assets at end of year $700,928,290 $570,481,331 ---------------------------------------------------------------------------------------- Undistributed net investment income $ 4,930,398 $ 582,060 ----------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 31 FINANCIAL HIGHLIGHTS ---------------------------------------------------------- The following tables are intended to help you understand the Fund's financial performance. Certain information reflects financial results for a single share of a class held for periods shown. For periods ended 2007 and after, per share net investment income (loss) amounts are calculated based on average shares outstanding during the period. Total returns assume reinvestment of all dividends and distributions. Total returns do not reflect payment of sales charges, if any, and are not annualized for periods of less than one year.
YEAR ENDED OCT. 31, CLASS A ------------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006 Net asset value, beginning of period $7.74 $4.96 $14.99 $11.32 $8.23 ---------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .03 .02 .08 .04 .01 Net gains (losses) (both realized and unrealized) 2.03 2.75 (7.24) 6.27 3.10 ---------------------------------------------------------------------------------------------------------- Total from investment operations 2.06 2.77 (7.16) 6.31 3.11 ---------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.05) -- (.18) -- (.02) Distributions from realized gains -- -- (2.69) (2.64) -- ---------------------------------------------------------------------------------------------------------- Total distributions (.05) -- (2.87) (2.64) (.02) ---------------------------------------------------------------------------------------------------------- Proceeds from regulatory settlements .00(a) .01 -- -- -- ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $9.75 $7.74 $4.96 $14.99 $11.32 ---------------------------------------------------------------------------------------------------------- TOTAL RETURN 26.70%(b) 56.05%(c) (57.79%) 68.21% 37.85% ---------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Total expenses 1.85% 1.90% 1.87% 1.83% 1.81% ---------------------------------------------------------------------------------------------------------- Net investment income (loss) .34% .38% .78% .31% .19% ---------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $523 $416 $250 $661 $425 ---------------------------------------------------------------------------------------------------------- Portfolio turnover rate 96% 149% 133% 125% 145% ----------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 32 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS B ------------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006 Net asset value, beginning of period $6.87 $4.43 $13.73 $10.63 $7.77 ---------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.03) (.02) .00(a) (.05) (.05) Net gains (losses) (both realized and unrealized) 1.80 2.45 (6.53) 5.79 2.91 ---------------------------------------------------------------------------------------------------------- Total from investment operations 1.77 2.43 (6.53) 5.74 2.86 ---------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.00)(a) -- (.08) -- -- Distributions from realized gains -- -- (2.69) (2.64) -- ---------------------------------------------------------------------------------------------------------- Total distributions (.00)(a) -- (2.77) (2.64) -- ---------------------------------------------------------------------------------------------------------- Proceeds from regulatory settlements .00(a) .01 -- -- -- ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.64 $6.87 $4.43 $13.73 $10.63 ---------------------------------------------------------------------------------------------------------- TOTAL RETURN 25.82%(b) 55.08%(c) (58.08%) 66.95% 36.81% ---------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Total expenses 2.60% 2.68% 2.62% 2.58% 2.57% ---------------------------------------------------------------------------------------------------------- Net investment income (loss) (.42%) (.36%) .02% (.48%) (.55%) ---------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $37 $38 $28 $94 $77 ---------------------------------------------------------------------------------------------------------- Portfolio turnover rate 96% 149% 133% 125% 145% ----------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 33 FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------
YEAR ENDED OCT. 31, CLASS C ------------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006 Net asset value, beginning of period $6.89 $4.44 $13.78 $10.66 $7.79 ---------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.03) (.04) .00(a) (.05) (.06) Net gains (losses) (both realized and unrealized) 1.79 2.48 (6.54) 5.81 2.93 ---------------------------------------------------------------------------------------------------------- Total from investment operations 1.76 2.44 (6.54) 5.76 2.87 ---------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.04) -- (.11) -- -- Distributions from realized gains -- -- (2.69) (2.64) -- ---------------------------------------------------------------------------------------------------------- Total distributions (.04) -- (2.80) (2.64) -- ---------------------------------------------------------------------------------------------------------- Proceeds from regulatory settlements .00(a) .01 -- -- -- ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $8.61 $6.89 $4.44 $13.78 $10.66 ---------------------------------------------------------------------------------------------------------- TOTAL RETURN 25.67%(b) 55.18%(c) (58.15%) 67.03% 36.84% ---------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Total expenses 2.60% 2.60% 2.63% 2.59% 2.58% ---------------------------------------------------------------------------------------------------------- Net investment income (loss) (.43%) (.65%) .03% (.48%) (.57%) ---------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $39 $33 $3 $8 $5 ---------------------------------------------------------------------------------------------------------- Portfolio turnover rate 96% 149% 133% 125% 145% ----------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 34 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS I ------------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006 Net asset value, beginning of period $8.04 $5.12 $15.38 $11.50 $8.35 ---------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .07 .06 .11 .09 .03 Net gains (losses) (both realized and unrealized) 2.12 2.85 (7.45) 6.43 3.16 ---------------------------------------------------------------------------------------------------------- Total from investment operations 2.19 2.91 (7.34) 6.52 3.19 ---------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.08) -- (.23) -- (.04) Distributions from realized gains -- -- (2.69) (2.64) -- ---------------------------------------------------------------------------------------------------------- Total distributions (.08) -- (2.92) (2.64) (.04) ---------------------------------------------------------------------------------------------------------- Proceeds from regulatory settlements .00(a) .01 -- -- -- ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.15 $8.04 $5.12 $15.38 $11.50 ---------------------------------------------------------------------------------------------------------- TOTAL RETURN 27.45%(b) 57.03%(c) (57.63%) 69.07% 38.36% ---------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Total expenses 1.35% 1.26% 1.42% 1.39% 1.35% ---------------------------------------------------------------------------------------------------------- Net investment income (loss) .84% .77% .97% .75% .63% ---------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $84 $69 $-- $56 $41 ---------------------------------------------------------------------------------------------------------- Portfolio turnover rate 96% 149% 133% 125% 145% ----------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 35 FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------
YEAR ENDED OCT. 31, CLASS R* ------------------- PER SHARE DATA 2010 2009(e) Net asset value, beginning of period $7.74 $7.42 ---------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .00(a) (.01) Net gains (losses) (both realized and unrealized) 2.03 .33 ---------------------------------------------------------------------- Total from investment operations 2.03 .32 ---------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.06) -- ---------------------------------------------------------------------- Proceeds from regulatory settlements .00(a) -- ---------------------------------------------------------------------- Net asset value, end of period $9.71 $7.74 ---------------------------------------------------------------------- TOTAL RETURN 26.36%(b) 4.31% ---------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Total expenses 2.13% 2.06%(f) ---------------------------------------------------------------------- Net investment income (loss) .04% (.36%)(f) ---------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $15 $12 ---------------------------------------------------------------------- Portfolio turnover rate 96% 149% ----------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 36 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS R4 ------------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006 Net asset value, beginning of period $8.05 $5.14 $15.32 $11.50 $8.33 ---------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .05 .04 .11 .05 .03 Net gains (losses) (both realized and unrealized) 2.11 2.86 (7.45) 6.41 3.14 ---------------------------------------------------------------------------------------------------------- Total from investment operations 2.16 2.90 (7.34) 6.46 3.17 ---------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.06) -- (.15) -- -- Distributions from realized gains -- -- (2.69) (2.64) -- ---------------------------------------------------------------------------------------------------------- Total distributions (.06) -- (2.84) (2.64) -- ---------------------------------------------------------------------------------------------------------- Proceeds from regulatory settlements .00(a) .01 -- -- -- ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $10.15 $8.05 $5.14 $15.32 $11.50 ---------------------------------------------------------------------------------------------------------- TOTAL RETURN 26.99%(b) 56.62%(c) (57.58%) 68.51% 38.06% ---------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Gross expenses prior to expense waiver/reimbursement 1.65% 1.62% 1.73% 1.65% 1.63% ---------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(g) 1.65% 1.56% 1.47% 1.65% 1.63% ---------------------------------------------------------------------------------------------------------- Net investment income (loss) .51% .72% 1.12% .45% .41% ---------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $1 $1 $1 $2 $6 ---------------------------------------------------------------------------------------------------------- Portfolio turnover rate 96% 149% 133% 125% 145% ----------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 37 FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------
YEAR ENDED OCT. 31, CLASS R5 ------------------------------- PER SHARE DATA 2010 2009 2008(h) Net asset value, beginning of period $8.06 $5.13 $9.32 ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .07 .05 .03 Net gains (losses) (both realized and unrealized) 2.12 2.87 (4.22) ---------------------------------------------------------------------------------- Total from investment operations 2.19 2.92 (4.19) ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.08) -- -- ---------------------------------------------------------------------------------- Proceeds from regulatory settlements .00(a) .01 -- ---------------------------------------------------------------------------------- Net asset value, end of period $10.17 $8.06 $5.13 ---------------------------------------------------------------------------------- TOTAL RETURN 27.36%(b) 57.12%(c) (44.96%) ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Total expenses 1.41% 1.31% 1.47%(f) ---------------------------------------------------------------------------------- Net investment income (loss) .78% .68% 1.57%(f) ---------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $1 $1 $-- ---------------------------------------------------------------------------------- Portfolio turnover rate 96% 149% 133% ----------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 38 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED CLASS W OCT. 31, PER SHARE DATA 2010(i) Net asset value, beginning of period $9.23 -------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.01) Net gains (losses) (both realized and unrealized) .53 -------------------------------------------------------------- Total from investment operations .52 -------------------------------------------------------------- Net asset value, end of period $9.75 -------------------------------------------------------------- TOTAL RETURN 5.63% -------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Total expenses 1.89%(f) -------------------------------------------------------------- Net investment income (loss) (.71%)(f) -------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- -------------------------------------------------------------- Portfolio turnover rate 96% --------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 39 FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------
YEAR ENDED CLASS Z OCT. 31, PER SHARE DATA 2010(i) Net asset value, beginning of period $9.60 ------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.00)(a) Net gains (losses) (both realized and unrealized) .54 ------------------------------------------------------------- Total from investment operations .54 ------------------------------------------------------------- Net asset value, end of period $10.14 ------------------------------------------------------------- TOTAL RETURN 5.63% ------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Total expenses 1.56%(f) ------------------------------------------------------------- Net investment income (loss) (.46%)(f) ------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- ------------------------------------------------------------- Portfolio turnover rate 96% -------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS *() Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. (a) Rounds to less than $0.01 per share. (b) During the year ended Oct. 31, 2010 the Fund received proceeds from a regulatory settlement. Had the Fund not received these proceeds, the total returns would have been lower by 0.03% for classes A, I, R, R4 and R5 and by 0.04% for classes B and C. (c) During the year ended Oct. 31, 2009 the Fund received proceeds from a regulatory settlement. Had the Fund not received these proceeds, the total returns would have been lower by 0.12%. (d) Expense ratios include the impact of a performance incentive adjustment, if any. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. (e) For the period from Aug. 3, 2009 (when shares became available) to Oct. 31, 2009. (f) Annualized. (g) The Investment Manager and its affiliates agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (h) For the period from Aug. 1, 2008 (when shares became available) to Oct. 31, 2008. (i) For the period from Sept. 27, 2010 (when shares became available) to Oct. 31, 2010. The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 40 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT NOTES TO FINANCIAL STATEMENTS -------------------------------------------------- 1. ORGANIZATION Columbia Emerging Markets Opportunity Fund (formerly known as Threadneedle Emerging Markets Fund) (the Fund) is a series of RiverSource Global Series, Inc. (the Corporation) and is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, open-end management investment company. The Corporation has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Corporation's Board of Directors (the Board). The Fund offers Class A, Class B, Class C, Class I, Class R, Class R4, Class R5, Class W and Class Z shares. - Class A shares are offered with a front-end sales charge, which may be waived under certain circumstances. - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares one month after the completion of the eighth year of ownership if originally purchased in a RiverSource fund on or after May 21, 2005 or originally purchased in a Seligman fund on or after June 13, 2009. Class B shares originally purchased in a RiverSource fund prior to May 21, 2005 will convert to Class A shares in the ninth calendar year of ownership. Class B shares originally purchased in a Seligman fund prior to June 13, 2009 will convert to Class A shares in the month prior to the ninth year of ownership. Effective Sept. 7, 2010, the Fund no longer accepts investments from new or existing investors in the Fund's Class B shares, except that (i) dividend and/or capital gain distributions may continue to be reinvested in Class B shares of the Fund and (ii) shareholders invested in Class B shares of the Fund may exchange those shares for Class B shares of other Columbia, RiverSource, Seligman and Threadneedle funds offering such shares. - Class C shares may be subject to a CDSC on shares redeemed within one year of purchase. - Class I shares are not subject to sales charges and are available only to the Columbia Family of Funds. - Class R shares are offered without a front-end sales charge or CDSC to qualifying institutional investors. Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. - Class R4 and Class R5 shares are not subject to sales charges, however, these classes are closed to new investors effective Dec. 31, 2010. - Class W shares are offered without a front-end sales charge or CDSC and are offered through qualifying discretionary accounts. Class W shares became effective Sept. 27, 2010. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 41 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- - Class Z shares are offered without a front-end sales charge or CDSC to certain eligible investors. Class Z shares became effective Sept. 27, 2010. At Oct. 31, 2010, Columbia Management Investment Advisers, LLC (formerly known as RiverSource Investments, LLC) (the Investment Manager) and affiliated funds- of-funds owned 100% of Class I shares, and the Investment Manager owned 100% of Class W shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration services fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. VALUATION OF SECURITIES All securities are valued at the close of business of the New York Stock Exchange (NYSE). Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price from the primary exchange. Debt securities are generally traded in the over-the-counter market and are valued by an independent pricing service using an evaluated bid. When market quotes are not readily available, the pricing service, in determining fair values of debt securities, takes into consideration such factors as current quotations by broker/dealers, coupon, maturity, quality, type of issue, trading characteristics, and other yield and risk factors it deems relevant in determining valuations. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. The procedures adopted by the Board generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign securities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. -------------------------------------------------------------------------------- 42 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- Many securities markets and exchanges outside the U.S. close prior to the close of the NYSE and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the NYSE, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise Financial), parent company of the Investment Manager, as administrator to the Fund, will fair value foreign securities pursuant to procedures adopted by the Board, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the NYSE. The fair value of a security is likely to be different from the quoted or published price, if available. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates. Typically, those maturing in 60 days or less that originally had maturities of more than 60 days at acquisition date are valued at amortized cost using the market value on the 61st day before maturity. Short-term securities maturing in 60 days or less at acquisition date are valued at amortized cost. Amortized cost is an approximation of market value. Investments in money market funds are valued at net asset value. FOREIGN CURRENCY TRANSLATIONS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the Statement of Operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. At Oct. 31, 2010, foreign currency holdings consisted of multiple denominations, primarily Brazilian reais. REPURCHASE AGREEMENTS The Fund may enter into repurchase agreements. Generally, securities received as collateral subject to repurchase agreements are deposited with the Fund's custodian and, pursuant to the terms of the repurchase agreement, must have an aggregate market value greater than or equal to the repurchase price plus accrued -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 43 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- interest at all times. The market value of securities held as collateral for repurchase agreements is monitored on a daily basis to ensure the existence of the proper level of collateral. GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. 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. FEDERAL TAXES The Fund's policy is to comply with Subchapter M of the Internal Revenue Code that applies to regulated investment companies and to distribute substantially all of its taxable income (which includes net short-term capital gains) to shareholders. No provision for income or excise taxes is thus required. Management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Generally, the tax authorities can examine all tax returns filed for the last three years. FOREIGN CAPITAL GAINS TAXES Realized gains in certain countries may be subject to foreign taxes at the Fund level, at rates ranging from approximately 10% to 15%. The Fund pays such foreign taxes on net realized gains at the appropriate rate for each jurisdiction. DIVIDENDS TO SHAREHOLDERS An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are normally distributed along with the income dividend. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities. Interest income, including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. -------------------------------------------------------------------------------- 44 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- 3. 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 other assets, such as securities, currencies, commodities or indices. Derivative instruments may be used to maintain cash reserves while maintaining exposure to certain other assets, to offset anticipated declines in values of investments, 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 obligation under the terms of the contract, the potential for an illiquid secondary market 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 Fund and any counterparty are required to maintain an agreement that requires the Fund and that counterparty to monitor (on a daily basis) the net fair value of all derivatives entered into pursuant to the contract between the Fund and such counterparty. If the net fair value of such derivatives between the Fund and that counterparty exceeds a certain threshold (as defined in the agreement), the Fund or the counterparty (as the case may be) is required to post cash and/or securities as collateral. Fair values of derivatives presented in the financial statements are not netted with the fair value of other derivatives or with any collateral amounts posted by the Fund or any counterparty. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS Forward foreign currency exchange contracts are agreements between two parties to buy and sell a currency at a set price on a future date. These contracts are intended to be used to minimize the exposure to foreign exchange rate fluctuations during the period between the trade and settlement dates of the contract. The Fund utilized forward foreign currency exchange contracts to hedge the currency exposure associated with some or all of the Fund's securities. The market values of forward foreign currency exchange contracts fluctuate with changes in foreign currency exchange rates. The Fund will record a realized gain or loss when the forward foreign currency exchange contract is closed. The use of forward foreign currency exchange contracts does not eliminate fluctuations in the prices of the Fund's portfolio securities. The risks of forward foreign currency contracts include movement in the values of the foreign currencies relative to the U.S. dollar (or other foreign currencies) and the possibility that counterparties will not complete their contractual obligations, -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 45 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- which may be in excess of the amount reflected, if any, in the Statement of Assets and Liabilities. EFFECTS OF DERIVATIVE TRANSACTIONS ON 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; the impact of derivative transactions on the Fund's operations over the period including realized gains or losses and unrealized gains or losses. The derivative schedules following the Portfolio of Investments present additional information regarding derivative instruments outstanding at the end of the period, if any. FAIR VALUES OF DERIVATIVE INSTRUMENTS AT OCT. 31, 2010
ASSET DERIVATIVES LIABILITY DERIVATIVES ------------------------------- ------------------------------- STATEMENT OF ASSETS STATEMENT OF ASSETS RISK EXPOSURE AND LIABILITIES AND LIABILITIES CATEGORY LOCATION FAIR VALUE LOCATION FAIR VALUE ------------------------------------------------------------------------------------------- Unrealized Unrealized appreciation on depreciation on forward foreign forward foreign Foreign exchange currency exchange currency exchange contracts contracts $3,028 contracts $2,684 -------------------------------------------------------------------------------------------
EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCT. 31, 2010
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME -------------------------------------------------------------------------- FORWARD FOREIGN RISK EXPOSURE CATEGORY CURRENCY EXCHANGE CONTRACTS -------------------------------------------------------------------------- Foreign exchange contracts $62,120 --------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED IN INCOME -------------------------------------------------------------------------- FORWARD FOREIGN RISK EXPOSURE CATEGORY CURRENCY EXCHANGE CONTRACTS -------------------------------------------------------------------------- Foreign exchange contracts $344 --------------------------------------------------------------------------
VOLUME OF DERIVATIVE ACTIVITY FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS The gross notional amount of contracts outstanding was approximately $2.1 million at Oct. 31, 2010. The monthly average gross notional amount for -------------------------------------------------------------------------------- 46 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- these contracts was $500,000 for the year ended Oct. 31, 2010. The fair value of such contracts at Oct. 31, 2010 is set forth in the table above. 4. EXPENSES AND SALES CHARGES INVESTMENT MANAGEMENT SERVICES FEES Under an Investment Management Services Agreement (IMSA), the Investment Manager determines which securities will be purchased, held or sold. The management fee is an annual fee that is equal to a percentage of the Fund's average daily net assets that declines from 1.10% to 0.90% as the Fund's net assets increase. The fee may be adjusted upward or downward by a performance incentive adjustment (PIA) determined monthly by measuring the percentage difference over a rolling 12-month period between the annualized performance of one Class A share of the Fund and the annualized performance of the Lipper Emerging Markets Funds Index. In certain circumstances, the Board may approve a change in the index. The maximum adjustment is 0.12% per year. If the performance difference is less than 0.50%, the adjustment will be zero. The adjustment decreased the management fee by $66,600 for the year ended Oct. 31, 2010. The management fee for the year ended Oct. 31, 2010 was 1.07% of the Fund's average daily net assets, including the adjustment under the terms of the performance incentive arrangement. In September 2010, the Board approved, subject to approval by shareholders, an amended IMSA that would eliminate the Fund's PIA. If approved by Fund shareholders, the IMSA proposal is expected to be effective in the second quarter of 2011. If not approved, the current IMSA will stay in effect including any adjustment under the terms of the PIA. SUBADVISORY AGREEMENT The Investment Manager has a Subadvisory Agreement with Threadneedle International Limited (Threadneedle), an affiliate of the Investment Manager and an indirect wholly-owned subsidiary of Ameriprise Financial, to subadvise the assets of the Fund. The Investment Manager contracts with and compensates Threadneedle to manage the investment of the Fund's assets. ADMINISTRATIVE SERVICES FEES Under an Administrative Services Agreement, the Fund pays Ameriprise Financial an annual fee for administration and accounting services equal to a percentage of the Fund's average daily net assets that declines from 0.08% to 0.05% as the Fund's net assets increase. The fee for the year ended Oct. 31, 2010 was 0.08% of the Fund's average daily net assets. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 47 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- OTHER FEES Other expenses are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited administrative services to the Fund and the Board. For the year ended Oct. 31, 2010, other expenses paid to this company were $801. COMPENSATION OF BOARD MEMBERS Under a Deferred Compensation Plan (the Plan), the board members who are not "interested persons" of the Fund as defined under the 1940 Act may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or certain other 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 Plan. TRANSFER AGENCY FEES Under a Transfer Agency Agreement, Columbia Management Investment Services Corp. (formerly known as RiverSource Service Corporation) (the Transfer Agent) is responsible for providing transfer agency services to the Fund. Prior to Sept. 7, 2010, the Transfer Agent received annual account-based service fees from Class A, Class B and Class C shares that varied by class and annual asset-based service fees based on the Fund's average daily net assets attributable to Class R, Class R4, Class R5 and Class W shares, which amount varied by class. In addition, the Transfer Agent charged an annual fee per inactive account and received reimbursement from the Fund for certain out-of- pocket expenses. Under a new Transfer Agency Agreement effective Sept. 7, 2010, the Transfer Agent has contracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. The Transfer Agent receives monthly account-based service fees based on the number of open accounts and is reimbursed by the Fund for the fees and expenses the Transfer Agent pays to financial intermediaries that maintain omnibus accounts with the Fund subject to an annual limitation (that varies by class) that is a percentage of the average aggregate value of the Fund's shares maintained in each such omnibus account (other than omnibus accounts for which American Enterprise Investment Services, Inc. is the broker of record or accounts where the beneficial shareholder is a customer of Ameriprise Financial Services, Inc., which are paid a per account fee). The Transfer Agent pays the fees of BFDS for services as sub-transfer agent and is not entitled to reimbursement for such fees from the Fund. -------------------------------------------------------------------------------- 48 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- The Transfer Agent also receives reimbursement for certain out-of-pocket expenses and may also retain, as additional compensation for its services, fees for wire, telephone and redemption orders, Individual Retirement Account ("IRA") trustee agent fees and account transcript fees due to the Transfer Agent from shareholders of the Fund and credits (net of bank charges) earned with respect to balances in accounts the Transfer Agent maintains in connection with its services to the Fund. For the year ended Oct. 31, 2010, the Fund's effective transfer agent fee rates as a percentage of average daily net assets of each class were as follows: Class A............................................. 0.25% Class B............................................. 0.27 Class C............................................. 0.26 Class R............................................. 0.08 Class R4............................................ 0.06 Class R5............................................ 0.06 Class W............................................. 0.18* Class Z............................................. 0.17*
* Annualized. Class I shares do not pay transfer agent fees. The Fund and certain other associated investment companies (together, the Guarantors), severally, but not jointly, guaranteed the performance and observance of all terms and conditions of a lease entered into by Seligman Data Corp. (SDC), the former transfer agent of Seligman Emerging Markets Fund, which was acquired by the Fund on Aug. 14, 2009 (see Note 11) including the payment of rent by SDC (the Guaranty). The lease and the Guaranty expire in January 2019. At Oct. 31, 2010, the Fund's total potential future obligation over the life of the Guaranty is $113,654. The liability remaining at Oct. 31, 2010 for non- recurring charges associated with the lease amounted to $56,400 and is included within other accrued expenses in the Statement of Assets and Liabilities. PLAN ADMINISTRATION SERVICES FEES Under a Plan Administration Services Agreement with the Transfer Agent, the Fund pays an annual fee at a rate of 0.25% of the Fund's average daily net assets attributable to Class R4 shares for the provision of various administrative, recordkeeping, communication and educational services. Prior to Sept. 7, 2010, the Fund also paid an annual fee at a rate of 0.25% of the Fund's average daily net assets attributable to Class R shares for such services. DISTRIBUTION FEES The Fund has an agreement with Columbia Management Investment Distributors, Inc. (formerly known as RiverSource Fund Distributors, Inc.) (the Distributor) for -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 49 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund paid a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A and Class W shares, a fee at an annual rate of up to 0.50% of the Fund's average daily net assets attributable to Class R shares (of which up to 0.25% may be used for services) and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. For Class B and Class C shares, of the 1.00% fee, up to 0.75% is reimbursed for distribution expenses. The amount of distribution expenses incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $1,096,000 and $1,496,000 for Class B and Class C shares, respectively. These amounts are based on the most recent information available as of July 31, 2010, and may be recovered from future payments under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution fee is reduced. SALES CHARGES Sales charges, including front-end and CDSCs, received by the Distributor for distributing Fund shares were $691,994 for Class A, $30,267 for Class B and $1,780 for Class C for the year ended Oct. 31, 2010. EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES Effective Jan. 1, 2011, the Investment Manager and its affiliates have contractually agreed to waive certain fees and reimburse certain expenses until Dec. 31, 2011, unless sooner terminated at the sole discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds*), before giving effect to any performance incentive adjustment, will not exceed the following percentage of the class' average daily net assets: Class A.............................................. 1.85% Class B.............................................. 2.60% Class C.............................................. 2.60% Class I.............................................. 1.41% Class R.............................................. 2.10% Class R4............................................. 1.71% Class R5............................................. 1.46% Class W.............................................. 1.85% Class Z.............................................. 1.60%
* In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. -------------------------------------------------------------------------------- 50 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- 5. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $582,592,252 and $594,662,450, respectively, for the year ended Oct. 31, 2010. Realized gains and losses are determined on an identified cost basis. 6. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated were as follows:
YEAR ENDED OCT. 31, 2010 2009(a) ------------------------------------------------------------------- CLASS A Sold 9,964,176 12,649,748 Fund merger N/A 6,283,578 Converted from Class B(b) 1,001,557 927,466 Reinvested distributions 306,274 -- Redeemed (11,395,153) (16,538,001) ------------------------------------------------------------------- Net increase (decrease) (123,146) 3,322,791 ------------------------------------------------------------------- CLASS B Sold 1,130,777 1,590,019 Fund merger N/A 372,602 Reinvested distributions 2,636 -- Converted to Class A(b) (1,128,603) (1,042,154) Redeemed (1,286,309) (1,673,824) ------------------------------------------------------------------- Net increase (decrease) (1,281,499) (753,357) ------------------------------------------------------------------- CLASS C Sold 1,432,742 779,191 Fund merger N/A 3,905,413 Reinvested distributions 15,811 -- Redeemed (1,703,710) (640,121) ------------------------------------------------------------------- Net increase (decrease) (255,157) 4,044,483 ------------------------------------------------------------------- CLASS I Sold 543,572 9,487,877 Reinvested distributions 82,142 -- Redeemed (894,959) (913,814) ------------------------------------------------------------------- Net increase (decrease) (269,245) 8,574,063 ------------------------------------------------------------------- CLASS R(c) Sold 786,016 100,396 Fund merger N/A 1,735,811 Reinvested distributions 1,413 -- Redeemed (806,481) (255,756) ------------------------------------------------------------------- Net increase (decrease) (19,052) 1,580,451 -------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 51 NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
YEAR ENDED OCT. 31, 2010 2009(a) ------------------------------------------------------------------- CLASS R4 Sold 18,130 63,248 Reinvested distributions 1,060 -- Redeemed (28,399) (68,066) ------------------------------------------------------------------- Net increase (decrease) (9,209) (4,818) ------------------------------------------------------------------- CLASS R5 Sold 258 -- Fund merger N/A 66,208 Reinvested distributions 621 -- Redeemed (15) -- ------------------------------------------------------------------- Net increase (decrease) 864 66,208 ------------------------------------------------------------------- CLASS W(d) Sold 271 N/A ------------------------------------------------------------------- Net increase (decrease) 271 N/A ------------------------------------------------------------------- CLASS Z(d) Sold 2,114 N/A ------------------------------------------------------------------- Net increase (decrease) 2,114 N/A -------------------------------------------------------------------
(a) Class R is for the period from Aug. 3, 2009 (when shares became available) to Oct. 31, 2009. (b) Automatic conversion of Class B shares to Class A shares based on the original purchase date. (c) Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. (d) For the period from Sept. 27, 2010 (when shares became available) to Oct. 31, 2010. 7. LENDING OF PORTFOLIO SECURITIES The Fund has entered into a Master Securities Lending Agreement (the Agreement) with JPMorgan Chase Bank, National Association (JPMorgan). The Agreement authorizes JPMorgan as lending agent to lend securities to authorized borrowers in order to generate additional income on behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured by cash or U.S. government securities equal to at least 100% of the market value of the loaned securities. Any additional collateral required to maintain those levels due to market fluctuations of the loaned securities is delivered the following business day. Cash collateral received is invested by the lending agent on behalf of the Fund into authorized investments pursuant to the Agreement. The investments made with the cash collateral are listed in the Portfolio of Investments. The values of such investments and any uninvested cash collateral are disclosed in the Statement of Assets and Liabilities along with the related obligation to return the collateral upon the return of the securities loaned. At Oct. 31, 2010, securities valued at $12,852,751 were on loan, secured by cash collateral of $13,581,341 invested in short-term securities or in cash equivalents. -------------------------------------------------------------------------------- 52 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- Risks of delay in recovery of securities or even loss of rights in the securities may occur should the borrower of the securities fail financially. Risks may also arise to the extent that the value of the securities loaned increases above the value of the collateral received. JPMorgan will indemnify the Fund from losses resulting from a borrower's failure to return a loaned security when due. Such indemnification does not extend to losses associated with declines in the value of cash collateral investments. Loans are subject to termination by the Fund or the borrower at any time, and are, therefore, not considered to be illiquid investments. Pursuant to the Agreement, the Fund receives income for lending its securities either in the form of fees or by earning interest on invested cash collateral, net of negotiated rebates paid to borrowers and fees paid to the lending agent for services provided and any other securities lending expenses. Net income of $117,992 earned from securities lending for the year ended Oct. 31, 2010 is included in the Statement of Operations. The Fund also continues to earn interest and dividends on the securities loaned. 8. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in Columbia Short-Term Cash Fund (formerly known as RiverSource Short-Term Cash Fund), a money market fund established for the exclusive use of certain funds managed by the Investment Manager and other institutional clients of the Investment Manager. The cost of the Fund's purchases and proceeds from sales of shares of Columbia Short-Term Cash Fund aggregated $222,260,427 and $230,996,877, respectively, for the year ended Oct. 31, 2010. The income distributions received with respect to the Fund's investment in Columbia Short-Term Cash Fund can be found in the Statement of Operations and the Fund's invested balance in Columbia Short-Term Cash Fund at Oct. 31, 2010, can be found in the Portfolio of Investments. 9. BANK BORROWINGS The Fund has entered into a revolving credit facility with a syndicate of banks led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility became effective on Oct. 14, 2010, replacing a prior credit facility. The credit facility agreement, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager, severally and not jointly, permits collective borrowings up to $300 million. The borrowers shall have the right, upon written notice to the Administrative Agent, to request an increase of up to $200 million in the aggregate amount of the credit facility from new or existing lenders, -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 53 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- provided that the aggregate amount of the credit facility shall at no time exceed $500 million. Participation in such increase by any existing lender shall be at such lender's sole discretion. Interest is charged to each fund based on its borrowings at a rate equal to the sum of the federal funds rate plus (i) 1.25% per annum plus (ii) if one-month LIBOR exceeds the federal funds rate, the amount of such excess. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.10% per annum. Prior to Oct. 14, 2010, the credit facility agreement, which was a collective agreement between the Fund and certain other funds managed by the Investment Manager, severally and not jointly, permitted collective borrowings up to $300 million. The Fund also paid a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.10% per annum, in addition to an upfront fee equal to its pro rata share of 0.04% of the amount of the credit facility. The Fund had no borrowings during the year ended Oct. 31, 2010. 10. PROCEEDS FROM REGULATORY SETTLEMENTS As a result of settlements of administrative proceedings brought by the Securities and Exchange Commission against unaffiliated third parties relating to market timing and/or late trading of mutual funds, the Fund received $203,460 during the year ended Oct. 31, 2010 and $458,466 during the year ended Oct. 31, 2009, which represented the Fund's portion of the proceeds from the settlements (the Fund was not a party to the proceeding). The proceeds received by the Fund were recorded as an increase to additional paid-in capital. 11. FUND MERGER At the close of business on Aug. 14, 2009, Columbia Emerging Markets Opportunity Fund acquired the assets and assumed the identified liabilities of Seligman Emerging Markets Fund. The merger was completed after shareholders of the acquired fund approved the plan on June 29, 2009. The aggregate net assets of Columbia Emerging Markets Opportunity Fund immediately before the acquisition were $457,623,309 and the combined net assets immediately after the acquisition were $543,382,292. The acquisition was accomplished by a tax-free exchange of 9,437,758 shares of Seligman Emerging Markets Fund valued at $85,758,983. -------------------------------------------------------------------------------- 54 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- In exchange for Seligman Emerging Markets Fund shares, Columbia Emerging Markets Opportunity Fund issued the following number of shares:
SHARES ------------------------------------------------------------- Class A........................................... 6,283,578 Class B........................................... 372,602 Class C........................................... 3,905,413 Class R........................................... 1,735,811 Class R5.......................................... 66,208
The components of Seligman Emerging Markets Fund net assets after adjustments for any permanent book-to-tax differences at the merger date were as follows:
EXCESS OF ACCUMULATED DISTRIBUTIONS TOTAL CAPITAL UNREALIZED NET OVER NET NET ASSETS STOCK APPRECIATION REALIZED LOSS INVESTMENT INCOME --------------------------------------------------------------------------------- $85,758,983 $89,533,507 $17,108,032 $(20,882,556) $--
12. FEDERAL TAX INFORMATION Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of foreign currency transactions, passive foreign investment company (PFIC) holdings, foreign tax credits and losses deferred due to wash sales. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Fund. In the Statement of Assets and Liabilities, as a result of permanent book-to-tax differences, undistributed net investment income has been increased by $6,067,908 and accumulated net realized gain has been decreased by $5,405,982 resulting in a net reclassification adjustment to decrease paid-in capital by $661,926. The tax character of distributions paid for the years indicated was as follows:
YEAR ENDED OCT. 31, 2010 2009 --------------------------------------------------------------- Ordinary income.............................. $3,586,948 $-- Long-term capital gain....................... -- --
-------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 55 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- At Oct. 31, 2010, the components of distributable earnings on a tax basis were as follows: Undistributed ordinary income................... $ 6,903,325 Undistributed accumulated long-term gain........ $ 8,543,463 Unrealized appreciation (depreciation).......... $112,697,274
For the year ended Oct. 31, 2010, $98,285,238 of capital loss carry-over was utilized. It is unlikely the Board will authorize a distribution of any net realized capital gains until the available capital loss carry-over has been offset or expires. There is no assurance that the Fund will be able to utilize all of its capital loss carry-over before it expires. 13. RISKS RELATING TO CERTAIN INVESTMENTS FOREIGN/EMERGING MARKETS RISK Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities. Investing in emerging markets may accentuate these risks. 14. SUBSEQUENT EVENTS Management has evaluated Fund related events and transactions that occurred during the period from the date of the Statement of Assets and Liabilities through the date of issuance of the Fund's financial statements. There were no events or transactions that occurred during the period that materially impacted the amounts or disclosures in the Fund's financial statements. 15. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc. was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company (now known as legacy RiverSource) mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution -------------------------------------------------------------------------------- 56 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota (the District Court). In response to defendants' motion to dismiss the complaint, the District Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. Summary judgment was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit) on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary judgment and remanded to the District Court for further proceedings. On August 6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court (the Supreme Court), asking the Supreme Court to stay the District Court proceedings while the Supreme Court considers and rules in a case captioned Jones v. Harris Associates, which involves issues of law similar to those presented in the Gallus case. On March 30, 2010, the Supreme Court issued its ruling in Jones v. Harris Associates, and on April 5, 2010, the Supreme Court vacated the Eighth Circuit's decision in the Gallus case and remanded the case to the Eighth Circuit for further consideration in light of the Supreme Court's decision in Jones v. Harris Associates. On June 4, 2010, the Eighth Circuit remanded the Gallus case to the District Court for further consideration in light of the Supreme Court's decision in Jones v. Harris Associates. On December 9, 2010, the District Court reinstated its July 9, 2007 summary judgment order in favor of the defendants. In December 2005, without admitting or denying the allegations, American Express Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc. (Ameriprise Financial)), entered into settlement agreements with the Securities and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC) related to market timing activities. As a result, AEFC was censured and ordered to cease and desist from committing or causing any violations of certain provisions of the Investment Advisers Act of 1940, the Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million and civil money penalties of $7 million. AEFC also agreed to retain an independent distribution consultant to assist in developing a plan for distribution of all disgorgement and civil penalties ordered by the SEC in accordance with various undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its affiliates have cooperated with the SEC and the MDOC in these legal proceedings, and have made regular reports to the funds' Boards of Directors/Trustees. Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 57 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Funds. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial. -------------------------------------------------------------------------------- 58 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------ TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF COLUMBIA EMERGING MARKETS OPPORTUNITY FUND: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Columbia Emerging Markets Opportunity Fund (formerly known as Threadneedle Emerging Markets Fund) (the Fund) (one of the portfolios constituting the RiverSource Global Series, Inc.) as of October 31, 2010, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights of the Fund for the period ended October 31, 2006, were audited by other auditors whose report dated December 20, 2006, expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2010, by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 59 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued) ----------- In our opinion, the financial statements and financial highlights audited by us as referred to above present fairly, in all material respects, the financial position of Columbia Emerging Markets Opportunity Fund of the RiverSource Global Series, Inc. at October 31, 2010, 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 then ended, and the financial highlights for each of the four years in the period then ended, in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP Minneapolis, Minnesota December 20, 2010 -------------------------------------------------------------------------------- 60 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT FEDERAL INCOME TAX INFORMATION ------------------------------------------------ (UNAUDITED) The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. The dividends listed below are reported to you on Form 1099-DIV, Dividends and Distributions. Shareholders should consult a tax advisor on how to report distributions for state and local tax purposes. Fiscal year ended Oct. 31, 2010
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for distributions: Qualified Dividend Income for individuals.................... 100.00% Dividends Received Deduction for corporations................ 4.66% U.S. Government Obligations.................................. 0.00% Foreign Taxes Paid........................................... $1,445,054 Foreign Source Income........................................ $10,387,880
The Fund designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 61 BOARD MEMBERS AND OFFICERS ----------------------------------------------------- Shareholders elect a Board that oversees the Fund's operations. The Board appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following is a list of the Fund's Board members. Each Board member oversees 145 Columbia, RiverSource, Seligman and Threadneedle funds. Under current Board policy, members generally serve until the next Board meeting after he or she reaches the mandatory retirement age established by the Board, or the fifteenth anniversary of the first Board meeting they attended as members of the Board. INDEPENDENT BOARD MEMBERS
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST AGE LENGTH OF SERVICE DURING PAST FIVE YEARS 5 YEARS) ------------------------------------------------------------------------------------------------------------------------------ Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None 901 S. Marquette Ave. 1/11/06 Attorney Minneapolis, MN 55402 Age 56 ------------------------------------------------------------------------------------------------------------------------------ Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None 901 S. Marquette Ave. 7/11/07 Leadership (consulting company) Minneapolis, MN 55402 Age 56 ------------------------------------------------------------------------------------------------------------------------------ Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None 901 S. Marquette Ave. 11/1/04 University; former Dean, McCallum Graduate School of Minneapolis, MN 55402 Business, Bentley University Age 60 ------------------------------------------------------------------------------------------------------------------------------ Anne P. Jones Board member since Attorney and Consultant None 901 S. Marquette Ave. 3/1/85 Minneapolis, MN 55402 Age 75 ------------------------------------------------------------------------------------------------------------------------------ Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries, 901 S. Marquette Ave. since 1/1/07, College Inc. (manufactures Minneapolis, MN 55402 Board member irrigation systems) Age 71 since 1/1/02 ------------------------------------------------------------------------------------------------------------------------------ John F. Maher Board member Retired President and Chief Executive Officer and None 901 S. Marquette Ave. since 12/10/08 former Director, Great Western Financial Corporation Minneapolis, MN 55402 (financial services), 1986-1997 Age 67 ------------------------------------------------------------------------------------------------------------------------------ Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None 901 S. Marquette Ave. 11/1/04 real estate and asset management company) Minneapolis, MN 55402 Age 58 ------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 62 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- INDEPENDENT BOARD MEMBERS (CONTINUED)
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST AGE LENGTH OF SERVICE DURING PAST FIVE YEARS 5 YEARS) ------------------------------------------------------------------------------------------------------------------------------ Leroy C. Richie Board member Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc. 901 S. Marquette Ave. since 11/11/08 President and General Counsel, Automotive Legal (digital imaging); Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil Age 69 and gas exploration and production); OGE Energy Corp. (energy and energy services) ------------------------------------------------------------------------------------------------------------------------------ Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera 901 S. Marquette Ave. 11/13/02 since 2003 (biotechnology); former President, Aquila Pharmaceuticals, Minneapolis, MN 55402 Biopharmaceuticals Inc. Age 66 (biotechnology); Healthways, Inc. (health management programs) ------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 63 BOARD MEMBERS AND OFFICERS (continued) ----------------------------------------- BOARD MEMBER AFFILIATED WITH THE INVESTMENT MANAGER*
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST AGE LENGTH OF SERVICE DURING PAST FIVE YEARS 5 YEARS) ------------------------------------------------------------------------------------------------------------------------------ William F. Truscott Board member Chairman of the Board, Columbia Management Investment None 53600 Ameriprise since 11/7/01, Advisers, LLC (formerly RiverSource Investments, LLC) Financial Center Vice President since since May 2010 (previously President, Chairman of the Minneapolis, MN 55474 2002 Board and Chief Investment Officer, 2001-April 2010); Age 50 Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Chief Executive Officer, U.S. Asset Management & President -- Annuities, Ameriprise Financial, Inc. since May 2010 (previously President -- U.S. Asset Management and Chief Investment Officer, 2005-April 2010 and Senior Vice President -- Chief Investment Officer, 2001-2005); Director, President and Chief Executive Officer, Ameriprise Certificate Company since 2006; Director, Columbia Management Investment Distributors, Inc. (formerly RiverSource Fund Distributors, Inc.) since May 2010 (previously Chairman of the Board and Chief Executive Officer, 2008-April 2010); Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006 ------------------------------------------------------------------------------------------------------------------------------
* Interested person (as defined under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the investment manager or Ameriprise Financial. The SAI has additional information about the Fund's Board members and is available, without charge, upon request by calling 800.345.6611; contacting your financial intermediary; or visiting columbiamanagement.com. -------------------------------------------------------------------------------- 64 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- 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. In addition to Mr. Truscott, who is Vice President, the Fund's other officers are: FUND OFFICERS
NAME, POSITION HELD ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION AGE LENGTH OF SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------- J. Kevin Connaughton President since Senior Vice President and General Manager -- Mutual One Financial Center 5/1/10 Fund Products, Columbia Management Investment Advisers, Boston, MA 02111 LLC since May 2010; President, Columbia Funds since Age 46 2009 (previously Senior Vice President and Chief Financial Officer, June 2008 -- January 2009); President, Atlantic Funds and Nations Funds since 2009; Managing Director of Columbia Management Advisors, LLC, December 2004 -- April 2010; Treasurer, Columbia Funds, October 2003 -- May 2008; Treasurer, the Liberty Funds, Stein Roe Funds and Liberty All-Star Funds, December 2000 -- December 2006 -------------------------------------------------------------------------------------------------------- Amy K. Johnson Vice President since Senior Vice President and Chief Operating Officer, 5228 Ameriprise Financial 12/5/06 Columbia Management Investment Advisers, LLC (formerly Center Minneapolis, MN RiverSource Investments, LLC) since May 2010 55474 (previously Chief Administrative Officer, 2009 -- April Age 45 2010 and Vice President -- Asset Management and Trust Company Services, 2006-2009 and Vice President -- Operations and Compliance, 2004-2006); Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010 -------------------------------------------------------------------------------------------------------- Jeffrey P. Fox Treasurer since Chief Financial Officer, Columbia Management Investment 105 Ameriprise 7/10/02 Distributors, Inc. (formerly RiverSource Fund Financial Center Distributors, Inc.) and of Seligman Data Corp. since Minneapolis, MN 55474 2008; Vice President -- Investment Accounting, Age 55 Ameriprise Financial, Inc. since 2002; Chief Financial Officer, RiverSource Distributors, Inc. since 2006 -------------------------------------------------------------------------------------------------------- Scott R. Plummer Vice President, Chief Legal Officer and Assistant Secretary, Columbia 5228 Ameriprise Financial General Counsel and Management Investment Advisers, LLC (formerly Center Secretary since RiverSource Investments, LLC) since June 2005; Vice Minneapolis, MN 55474 12/5/06 President and Lead Chief Counsel -- Asset Management, Age 51 Ameriprise Financial, Inc. since May 2010 (previously Vice President and Chief Counsel -- Asset Management, 2005-April 2010 and Vice President -- Asset Management Compliance, 2004-2005); Senior Vice President, Secretary and Chief Legal Officer, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Vice President, Chief Counsel and Assistant Secretary, Columbia Management Investment Distributors, Inc. (formerly RiverSource Fund Distributors, Inc.) since 2008; Vice President, General Counsel and Secretary, Ameriprise Certificate Company since 2005; Chief Counsel, RiverSource Distributors, Inc. since 2006 --------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 65 BOARD MEMBERS AND OFFICERS (continued) ----------------------------------------- FUND OFFICERS (CONTINUED)
NAME, POSITION HELD ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION AGE LENGTH OF SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------- Michael A. Jones Vice President since Director and President, Columbia Management Investment 100 Federal Street 5/1/10 Advisers, LLC since May 2010; President and Director, Boston, MA 02110 Columbia Management Investment Distributors, Inc. since Age 51 May 2010; Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Manager, Chairman, Chief Executive Officer and President, Columbia Management Advisors, LLC, 2007 -- April 2010; Chief Executive Officer, President and Director, Columbia Management Distributors, Inc., 2006 -- April 2010; former Co-President and Senior Managing Director, Robeco Investment Management -------------------------------------------------------------------------------------------------------- Colin Moore Vice President since Chief Investment Officer, Columbia Management One Financial Center 5/1/10 Investment Advisers, LLC since May 2010; Senior Vice Boston, MA 02111 President, Atlantic Funds, Columbia Funds and Nations Age 52 Funds since May 2010; Manager, Managing Director and Chief Investment Officer, Columbia Management Advisors, LLC, 2007- April 2010; Head of Equities, Columbia Management Advisors, LLC, 2002-Sept. 2007 -------------------------------------------------------------------------------------------------------- Linda Wondrack Chief Compliance Vice President and Chief Compliance Officer, Columbia One Financial Center Officer since 5/1/10 Management Investment Advisers, LLC since May 2010; Boston, MA 02111 Chief Compliance Officer, Columbia Funds since 2007; Age 46 Senior Vice President and Chief Compliance Officer, Atlantic Funds and Nations Funds since 2007; Director (Columbia Management Group, LLC and Investment Product Group Compliance), Bank of America, June 2005 -- April 2010 -------------------------------------------------------------------------------------------------------- Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial, 2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer and Center since 11/9/05 and Identity Theft Prevention Officer, Columbia Management Minneapolis, MN 55474 Identity Theft Investment Distributors, Inc. (formerly RiverSource Age 46 Prevention Officer Fund Distributors, Inc.) since 2008; Anti-Money since 2008 Laundering Officer, Ameriprise Financial, Inc. since 2005; Compliance Director, Ameriprise Financial, Inc., 2004-2008 --------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 66 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT PROXY VOTING ------------------------------------------------------------------ The policy of the Board 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 columbiamanagement.com; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting columbiamanagement.com; or searching the website of the SEC at www.sec.gov. -------------------------------------------------------------------------------- COLUMBIA EMERGING MARKETS OPPORTUNITY FUND -- 2010 ANNUAL REPORT 67 COLUMBIA EMERGING MARKETS OPPORTUNITY FUND (formerly known as Threadneedle Emerging Markets Fund) P.O. Box 8081 Boston, MA 02266-8081 COLUMBIAMANAGEMENT.COM This report must be accompanied or preceded by the Fund's current prospectus. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC. (C)2010 Columbia Management Investment Advisers, LLC. All (COLUMBIA MANAGEMENT LOGO) rights reserved. S-6354 X (12/10)
Annual Report and Prospectus (COLUMBIA MANAGEMENT LOGO) COLUMBIA GLOBAL EQUITY FUND (FORMERLY KNOWN AS THREADNEEDLE GLOBAL EQUITY FUND) -------------------------------------------------------------------------------- ANNUAL REPORT FOR THE PERIOD ENDED OCTOBER 31, 2010 (Prospectus also enclosed) COLUMBIA GLOBAL EQUITY FUND SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH. This annual report includes a prospectus that describes in detail the Fund's objective, investment strategy, risks, sales charges, fees and other matters of interest. Please read the prospectus carefully before you invest or send money. NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE TABLE OF CONTENTS -------------------------------------------------------------- Your Fund at a Glance.................................. 3 Manager Commentary..................................... 6 The Fund's Long-term Performance....................... 12 Fund Expenses Example.................................. 14 Portfolio of Investments............................... 17 Statement of Assets and Liabilities.................... 27 Statement of Operations................................ 29 Statements of Changes in Net Assets.................... 31 Financial Highlights................................... 33 Notes to Financial Statements.......................... 42 Report of Independent Registered Public Accounting Firm................................................. 60 Federal Income Tax Information......................... 62 Board Members and Officers............................. 63 Proxy Voting........................................... 68
SEE THE FUND'S PROSPECTUS FOR RISKS ASSOCIATED WITH INVESTING IN THE FUND. -------------------------------------------------------------------------------- 2 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT YOUR FUND AT A GLANCE ---------------------------------------------------------- FUND SUMMARY -------------------------------------------------------------------------------- > Columbia Global Equity Fund (the Fund) Class A shares gained 15.78% (excluding sales charge) for the 12 months ended Oct. 31, 2010. > The Fund outperformed its benchmark, the Morgan Stanley Capital International (MSCI) All Country World Index, which advanced 14.65% for the 12-month period. > The Fund also outperformed its peer group, as represented by the Lipper Global Funds Index, which rose 15.29% for the same time period. ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2010) --------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS --------------------------------------------------------------------- Columbia Global Equity Fund Class A (excluding sales charge) +15.78% -9.04% +3.25% +0.22% --------------------------------------------------------------------- MSCI All Country World Index (unmanaged) +14.65% -7.05% +4.23% +2.70% --------------------------------------------------------------------- Lipper Global Funds Index (unmanaged) +15.29% -6.34% +3.77% +2.41% ---------------------------------------------------------------------
(See "The Fund's Long-term Performance" for Index descriptions) 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 columbiamanagement.com or calling 800.345.6611. The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the table above. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in fees and expenses. The Fund's returns reflect the effect of fee waivers/expense reimbursements, if any. Without such waivers/reimbursements, the Fund's returns would be lower. See the Average Annual Total Returns table for performance of other share classes of the Fund. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. It is not possible to invest directly in an index. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 3 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------
AT OCT. 31, 2010 SINCE Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION* Class A (inception 5/29/90) +15.78% -9.04% +3.25% +0.22% N/A ------------------------------------------------------------------------- Class B (inception 3/20/95) +15.03% -9.72% +2.46% -0.54% N/A ------------------------------------------------------------------------- Class C (inception 6/26/00) +14.86% -9.73% +2.43% -0.56% N/A ------------------------------------------------------------------------- Class I (inception 8/1/08) +16.32% N/A N/A N/A -0.77% ------------------------------------------------------------------------- Class R** (inception 12/11/06) +16.29% -8.93% N/A N/A -1.79% ------------------------------------------------------------------------- Class R4 (inception 3/20/95) +16.03% -8.84% +3.42% N/A +4.92% ------------------------------------------------------------------------- Class R5 (inception 12/11/06) +16.44% -8.57% N/A N/A -1.31% ------------------------------------------------------------------------- Class W (inception 12/1/06) +15.80% -8.99% N/A N/A -1.54% ------------------------------------------------------------------------- Class Z (inception 9/27/10) N/A N/A N/A N/A +3.94%*** ------------------------------------------------------------------------- With sales charge Class A (inception 5/29/90) +9.13% -10.81% +2.03% -0.37% N/A ------------------------------------------------------------------------- Class B (inception 3/20/95) +10.03% -10.63% +2.10% -0.54% N/A ------------------------------------------------------------------------- Class C (inception 6/26/00) +13.86% -9.73% +2.43% -0.56% N/A -------------------------------------------------------------------------
Class A share performance reflects the maximum initial sales charge of 5.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second year 4%; third and fourth years 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I, Class R, Class R4, Class R5, Class W and Class Z shares. Class I, Class R, Class R4 and Class R5 are available to qualifying institutional investors only. Class W shares are offered through qualifying discretionary accounts. Class Z shares are offered to certain eligible investors. *For classes with less than 10 years performance. **Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. ***Not annualized. -------------------------------------------------------------------------------- 4 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- MORNINGSTAR STYLE BOX(TM) -------------------------------------------------------------------------------- LOGO
Equity Style Value Blend Growth X Large Medium Size Small
The Morningstar Style Box(TM) is based on the fund's portfolio holdings as of period end. The vertical axis shows the market capitalization of the stocks owned, and the horizontal axis shows investment style (value, blend, or growth). Information shown is based on the most recent data provided by Morningstar. (C)2010 Morningstar, Inc. All rights reserved. The information contained herein is proprietary to Morningstar and/or its content providers, may not be copied or distributed and 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. Past performance is no guarantee of future results. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 5 MANAGER COMMENTARY ------------------------------------------------------------- Effective Sept. 27, 2010, Threadneedle Global Equity Fund was renamed Columbia Global Equity Fund. Dear Shareholders, Columbia Global Equity Fund (the Fund) Class A shares gained 15.78% (excluding sales charge) for the 12 months ended Oct. 31, 2010. The Fund outperformed its benchmark, the Morgan Stanley Capital International (MSCI) All Country World Index (MSCI Index), which advanced 14.65% for the 12-month period. The Fund's peer group, as represented by the Lipper Global Funds Index, rose 15.29% over the same time frame. SIGNIFICANT PERFORMANCE FACTORS The MSCI Index delivered a double-digit return as the world, on the whole, moved further from being at the epicenter of the financial crisis, having escaped the worst case scenario many investors feared. COUNTRY BREAKDOWN(1) (at Oct. 31, 2010) ---------------------------------------------------------------------
Australia 0.9% ----------------------------------------------- Belgium 0.6% ----------------------------------------------- Brazil 3.0% ----------------------------------------------- Canada 0.6% ----------------------------------------------- China 1.3% ----------------------------------------------- Denmark 1.0% ----------------------------------------------- Finland 0.8% ----------------------------------------------- France 3.0% ----------------------------------------------- Germany 2.1% ----------------------------------------------- Hong Kong 4.3% ----------------------------------------------- India 1.5% ----------------------------------------------- Indonesia 2.9% ----------------------------------------------- Ireland 0.7% ----------------------------------------------- Italy 0.9% ----------------------------------------------- Japan 7.6% ----------------------------------------------- Mexico 0.9% ----------------------------------------------- Netherlands 2.3% ----------------------------------------------- Panama 0.7% ----------------------------------------------- Poland 0.8% ----------------------------------------------- Portugal 1.1% ----------------------------------------------- Singapore 0.7% ----------------------------------------------- South Africa 1.0% -----------------------------------------------
-------------------------------------------------------------------------------- 6 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- COUNTRY BREAKDOWN(1) (at Oct. 31, 2010) (continued) ---------------------------------------------------------------------
South Korea 3.1% ------------------------------------------------ Switzerland 6.6% ------------------------------------------------ Taiwan 0.5% ------------------------------------------------ United Kingdom 14.1% ------------------------------------------------ United States 36.7% ------------------------------------------------ Other(2) 0.3% ------------------------------------------------
(1) Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan). The Fund's composition is subject to change. (2) Cash & Cash Equivalents. Productivity gains and global economic growth have translated to revenue and profit growth for many companies. Balance sheets appear generally healthy and cash flow has been strong, while companies still trade at valuations we find attractive. During the year, we saw continued divergence between developed and emerging economies. While growth slowed in the developed world, emerging markets grew at a rapid pace, supporting their stock markets, particularly in India and Indonesia. China, however, was an exception as its stock market suffered from high valuations and inflation concerns. TOP TEN HOLDINGS(1) (at Oct. 31, 2010) ---------------------------------------------------------------------
Apple, Inc. (United States) 2.2% ------------------------------------------------ IBM Corp. (United States) 1.9% ------------------------------------------------ Rio Tinto PLC (United Kingdom) 1.8% ------------------------------------------------ Google, Inc., Class A (United States) 1.7% ------------------------------------------------ Tiffany & Co. (United States) 1.6% ------------------------------------------------ State Bank of India, GDR (India) 1.5% ------------------------------------------------ Tullow Oil PLC (United Kingdom) 1.5% ------------------------------------------------ Linde AG (Germany) 1.4% ------------------------------------------------ Asahi Breweries Ltd. (Japan) 1.4% ------------------------------------------------ Samsung Electronics Co., Ltd. (South Korea) 1.4% ------------------------------------------------
(1) Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan and Cash & Cash Equivalents). For further detail about these holdings, please refer to the section entitled "Portfolio of Investments." Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 7 MANAGER COMMENTARY (continued) ------------------------------------------------- The Fund outperformed the MSCI Index primarily due to individual stock selection. Sectors that had a notable positive effect on the Fund's results included industrials, consumer discretionary and materials. Within the consumer discretionary sector, luxury goods companies performed quite well. Companies such as BURBERRY in the U.K., SWATCH in Switzerland and TIFFANY in the U.S. have benefited from growing demand for their products in emerging markets. Within the industrials sector, top contributors included U.K.-based AGGREKO and THE WEIR GROUP. Leading contributors in the materials sector included German industrial gas company LINDE, and metals companies CENTAMIN EGYPT and TALVIVAARA MINING in Finland. Metals companies benefited from inflation fears, which tend to make metals stocks more attractive to investors. CLIFFS NATURAL RESOURCES, a U.S. iron ore company, was also a notable contributor. Detracting from relative return were the Fund's positions in the consumer staples and information technology sectors. Within consumer staples, drug store chain WALGREENS was an underperformer. We bought Walgreens based on a promising turnaround story that has not evolved as well as we had expected. The company reported disappointing earnings results and we sold it during the year. Within the information technology sector, detractors included HOYA, a Japanese optics company, and ASIAINFO-LINKAGE, a Chinese telecommunications software provider. From a regional perspective, the Fund's best results came from the emerging markets and Europe. Having a larger emerging market weighting than the MSCI Index was advantageous. Strong performance from MRV ENGENHARIA, a Brazilian homebuilder, and exposure to banks in Indonesia and India also had a positive effect on relative performance. In Europe, the luxury goods theme was a key contributor. The Fund's weakest region was the U.S., where financials exposure was a negative and information technology holdings, including HEWLETT-PACKARD and DELL, lagged. CHANGES TO THE FUND'S PORTFOLIO Changes generally reflected our efforts to move the Fund's portfolio up the quality curve toward well-run businesses with sustainable growth that we believe are currently trading at attractive valuations. We increased the Fund's exposure to companies in emerging markets, while paying particular attention to valuations. Examples of individual -------------------------------------------------------------------------------- 8 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- purchases in the emerging markets include telecommunications software provider AsiaInfo-Linkage, Chinese outdoor advertising company FOCUS MEDIA, Indonesian bank BANK MANDIRI, and ITAU UNIBANCO and BANCO SANTANDER BRASIL, two Brazilian banks. We funded the increase in emerging markets by decreasing the U.S. allocation. Europe is the Fund's largest regional overweight relative to the MSCI Index. Emphasis there is on global businesses rather than domestic Europe. Within the developed markets, we increased focus on companies returning significant cash to shareholders. Examples include U.S. auto parts retailer ADVANCE AUTO PARTS and waste management company WASTE CONNECTIONS. We increased exposure to the industrials and materials sectors, funding the increases by reducing the consumer staples position. As mentioned above, we sold Walgreens following disappointing earnings results. We also sold Brazilian personal products company NATURA COSMETICS on valuation grounds. We significantly reduced the financials weighting, eliminating Japanese companies SONY FINANCIAL and MITSUBISHI ESTATE, while reducing holdings of OSAKA SECURITIES EXCHANGE. The Fund remained significantly overweight in information technology where we find companies that, in our view, exhibit good growth, strong free cash flow and robust balance sheets. OUR FUTURE STRATEGY In general, we anticipate positive global economic growth. However, we still expect a prolonged low growth trend in developed countries, which are weighed down by both government and private debt. Despite loose fiscal and monetary policy, we Changes generally reflected our efforts to move the Fund's portfolio up the quality curve toward well-run businesses with sustainable growth that we believe are currently trading at attractive valuations. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 9 MANAGER COMMENTARY (continued) ------------------------------------------------- do not think developed countries will be able to deliver strong sustainable economic growth as they come to grips with imbalances in their economies. We are mindful of potential missteps in monetary and fiscal policy as developed countries, particularly the U.S. and parts of Western Europe, address their deficits. Amid continued rapid growth in emerging markets, we are now starting to see inflationary pressures in select countries, which we believe may lead to tighter monetary policies. However, we think these inflationary concerns are cyclical rather than secular. Overall, we currently remain positive about global economic growth and we see good opportunities for profit growth across a number of different companies. We believe we are able to identify a host of well-managed companies with growth businesses, good balance sheets and very attractive valuations. Also, we believe that in a world where inflation risks seem to be rising, equities, as an asset class, appear increasingly attractive. Stephen Thornber Andrew Holliman, CFA(R) Portfolio Manager Deputy Portfolio Manager
Any specific securities mentioned are for illustrative purposes only and are not a complete list of securities that have increased or decreased in value. The views expressed in this statement reflect those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Columbia Management Investment Advisers, LLC* (the Investment Manager) or any subadviser to the Fund or any other person in the Investment Manager or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and the Investment Manager disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for the Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of the Fund. * Effective May 1, 2010, RiverSource Investments, LLC became known as Columbia Management Investment Advisers, LLC. -------------------------------------------------------------------------------- 10 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT THIS PAGE LEFT BLANK INTENTIONALLY THE FUND'S LONG-TERM PERFORMANCE ----------------------------------------------- The chart on the facing page illustrates the total value of an assumed $10,000 investment in Columbia Global Equity Fund Class A shares (from 11/1/00 to 10/31/10) as compared to the performance of the Morgan Stanley Capital International (MSCI) All Country World Index and the Lipper Global Funds Index. In comparing the Fund's Class A shares to these indices, you should take into account the fact that the Fund's performance reflects the maximum initial sales charge of 5.75%, while such charges are not reflected in the performance of the indices. Returns for the Fund include the reinvestment of any distributions paid during each period. The performance information shown represents past performance and is not a guarantee of future results. The table below and the chart on the facing page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 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 or visiting columbiamanagement.com. Also see "Past Performance" in the Fund's current prospectus. COMPARATIVE RESULTS --------------------------------------------------------------------------------
Results at Oct. 31, 2010 1 YEAR 3 YEARS 5 YEARS 10 YEARS COLUMBIA GLOBAL EQUITY FUND (INCLUDES SALES CHARGE) Class A Cumulative value of $10,000 $10,913 $7,094 $11,059 $9,635 ------------------------------------------------------------------------------------------ Average annual total return +9.13% -10.81% +2.03% -0.37% ------------------------------------------------------------------------------------------ MSCI ALL COUNTRY WORLD INDEX(1) Cumulative value of $10,000 $11,465 $8,030 $12,300 $13,047 ------------------------------------------------------------------------------------------ Average annual total return +14.65% -7.05% +4.23% +2.70% ------------------------------------------------------------------------------------------ LIPPER GLOBAL FUNDS INDEX(2) Cumulative value of $10,000 $11,529 $8,217 $12,030 $12,684 ------------------------------------------------------------------------------------------ Average annual total return +15.29% -6.34% +3.77% +2.41% ------------------------------------------------------------------------------------------
Results for other share classes can be found on page 4. -------------------------------------------------------------------------------- 12 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- (VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN COLUMBIA GLOBAL EQUITY FUND LINE GRAPH)
COLUMBIA GLOBAL EQUITY FUND CLASS A MSCI ALL LIPPER GLOBAL (INCLUDES SALES COUNTRY WORLD FUNDS INDEX(2) CHARGE) ($9,635) INDEX(1) ($13,047) ($12,684) ---------------- ------------------ -------------- Nov-00 $ 9,425 $10,000 $10,000 1-Jan 8,866 9,773 9,854 1-Apr 7,753 8,957 9,080 1-Jul 7,097 8,450 8,554 1-Oct 6,141 7,481 7,632 2-Jan 6,429 7,796 7,918 2-Apr 6,298 7,832 8,044 2-Jul 5,394 6,747 6,922 2-Oct 5,133 6,466 6,621 3-Jan 4,962 6,305 6,429 3-Apr 5,224 6,722 6,734 3-Jul 5,696 7,411 7,440 3-Oct 6,049 8,098 8,116 4-Jan 6,496 8,893 8,949 4-Apr 6,365 8,803 8,866 4-Jul 6,287 8,769 8,707 4-Oct 6,758 9,234 9,159 5-Jan 7,340 9,909 9,834 5-Apr 7,235 9,820 9,714 5-Jul 7,854 10,493 10,379 5-Oct 8,210 10,607 10,544 6-Jan 9,433 11,830 11,793 6-Apr 9,803 12,479 12,339 6-Jul 9,367 12,082 11,858 6-Oct 9,935 13,022 12,731 7-Jan 10,667 13,838 13,588 7-Apr 11,094 14,683 14,246 7-Jul 11,507 14,869 14,368 7-Oct 12,799 16,248 15,437 8-Jan 10,995 14,113 13,591 8-Apr 11,277 14,747 13,972 8-Jul 10,033 13,415 12,691 8-Oct 6,970 9,221 9,207 9-Jan 6,314 8,177 8,282 9-Apr 6,759 8,944 8,841 9-Jul 7,920 10,660 10,424 9-Oct 8,321 11,380 11,003 10-Jan 8,433 11,581 11,288 10-Apr 9,141 12,522 12,160 10-Jul 8,692 11,898 11,551 10-Oct 9,635 13,047 12,684
(1) The Morgan Stanley Capital International (MSCI) All Country World Index, an unmanaged index of equity securities, is designed to measure equity market performance in the global developed and emerging markets. The index reflects reinvestment of all distributions and changes in market prices. (2) The Lipper Global Funds Index includes the 30 largest global funds tracked by Lipper Inc. The index's returns include net reinvested dividends. The Fund's performance is currently measured against this index for purposes of determining the performance incentive adjustment. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 13 FUND EXPENSES EXAMPLE ---------------------------------------------------------- (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (i) transaction costs, including sales charges (loads) on purchase payments; and (ii) ongoing costs, which may include management fees; distribution and service (Rule 12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the ongoing expenses of any funds in which the Fund invests (also referred to as "acquired funds"), including affiliated and non- affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the ongoing expenses charged by acquired funds using the expense ratio of each of the acquired funds as of the acquired fund's most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period indicated and held until Oct. 31, 2010. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses for each class. You may use the information in this line, together with the amount you 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 result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for each class and an assumed rate of return of 5% per year before expenses, which is not the actual return for the class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. -------------------------------------------------------------------------------- 14 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED MAY 1, 2010(a) OCT. 31, 2010 THE PERIOD(b) EXPENSE RATIO ------------------------------------------------------------------------------------------------ Class A ------------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,054.00 $ 7.53(d) 1.47%(d) ------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,017.60 $ 7.39(d) 1.47%(d) ------------------------------------------------------------------------------------------------ Class B ------------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,050.70 $11.35(d) 2.22%(d) ------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,013.86 $11.15(d) 2.22%(d) ------------------------------------------------------------------------------------------------ Class C ------------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,051.40 $11.35(d) 2.22%(d) ------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,013.86 $11.15(d) 2.22%(d) ------------------------------------------------------------------------------------------------ Class I ------------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,057.20 $ 4.77(d) .93%(d) ------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,020.29 $ 4.68(d) .93%(d) ------------------------------------------------------------------------------------------------ Class R ------------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,054.60 $ 8.81(d) 1.72%(d) ------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,016.36 $ 8.65(d) 1.72%(d) ------------------------------------------------------------------------------------------------ Class R4 ------------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,056.00 $ 6.30(d) 1.23%(d) ------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,018.80 $ 6.19(d) 1.23%(d) ------------------------------------------------------------------------------------------------ Class R5 ------------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,058.60 $ 5.03(d) .98%(d) ------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,020.04 $ 4.94(d) .98%(d) ------------------------------------------------------------------------------------------------ Class W ------------------------------------------------------------------------------------------------ Actual(c) $1,000 $1,055.80 $ 7.23(d) 1.41%(d) ------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,017.90 $ 7.09(d) 1.41%(d) ------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 15 FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED MAY 1, 2010(a) OCT. 31, 2010 THE PERIOD(b) EXPENSE RATIO ------------------------------------------------------------------------------------------------ Class Z ------------------------------------------------------------------------------------------------ Actual(e) $1,000 $1,039.40 $ 1.21(d) 1.35%(d) ------------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,018.20 $ 6.79(d) 1.35%(d) ------------------------------------------------------------------------------------------------
(a) The beginning account value for Class Z is as of Sept. 27, 2010 (when shares became available) for actual expense calculations. (b) Expenses are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). Actual expenses for Class Z are equal to the annualized expense ratio for the class as indicated above, multiplied by the average account value over the period, multiplied by 32/365 (to reflect the number of days in the period). (c) Based on the actual return for the six months ended Oct. 31, 2010: +5.40% for Class A, +5.07% for Class B, +5.14% for Class C, +5.72% for Class I, +5.46% for Class R, +5.60% for Class R4, +5.86% for Class R5 and +5.58% for Class W. (d) Columbia Management Investment Advisers, LLC (formerly known as RiverSource Investments, LLC) (the Investment Manager) and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Dec. 31, 2011, unless sooner terminated at the sole discretion of the Fund's Board, such that net expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment, will not exceed 1.36% for Class A, 2.11% for Class B, 2.11% for Class C, 0.91% for Class I, 1.61% for Class R, 1.21% for Class R4, 0.96% for Class R5, 1.36% for Class W and 1.11% for Class Z. Any amounts waived will not be reimbursed by the Fund. This change is effective Jan. 1, 2011. Had this change been in place for the entire six month period ended Oct. 31, 2010, the actual expenses paid would have been $6.76 for Class A, $10.58 for Class B, $10.59 for Class C, $4.46 for Class I, $8.04 for Class R, $6.00 for Class R4, $4.72 for Class R5, $6.77 for Class W and $0.99 for Class Z; the hypothetical expenses paid would have been $6.64 for Class A, $10.40 for Class B, $10.40 for Class C, $4.38 for Class I, $7.90 for Class R, $5.89 for Class R4, $4.63 for Class R5, $6.64 for Class W and $5.59 for Class Z. (e) Based on the actual return for the period from Sept. 27, 2010 (when shares became available) to Oct. 31, 2010 of +3.94% for Class Z. -------------------------------------------------------------------------------- 16 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT PORTFOLIO OF INVESTMENTS ------------------------------------------------------- OCT. 31, 2010 (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
COMMON STOCKS (98.9%)(c) ISSUER SHARES VALUE(a) AUSTRALIA (0.9%) Atlas Iron Ltd. 567,790(b) $1,395,937 CSL Ltd. 85,928(d) 2,763,186 --------------- Total 4,159,123 ------------------------------------------------------------------------------------- BELGIUM (0.6%) Ageas 869,347 2,671,836 ------------------------------------------------------------------------------------- BRAZIL (2.9%) Banco Santander Brasil SA, ADR 318,949 4,592,865 Itau Unibanco Holding SA, ADR 100,000 2,456,000 MRV Engenharia e Participacoes SA 258,700 2,520,300 Multiplan Empreendimentos Imobiliarios SA 155,400 3,612,401 --------------- Total 13,181,566 ------------------------------------------------------------------------------------- CANADA (0.6%) Barrick Gold Corp. 52,058 2,503,469 ------------------------------------------------------------------------------------- CHINA (1.3%) AsiaInfo-Linkage, Inc. 167,312(b) 3,717,673 Focus Media Holding Ltd., ADR 88,967(b) 2,201,933 --------------- Total 5,919,606 ------------------------------------------------------------------------------------- DENMARK (1.0%) FLSmidth & Co. A/S 61,886(d) 4,572,857 ------------------------------------------------------------------------------------- FINLAND (0.7%) Talvivaara Mining Co. PLC 350,596(b) 3,159,702 ------------------------------------------------------------------------------------- FRANCE (3.0%) Cie Generale des Etablissements Michelin, Series B 46,892 3,728,515 Euler Hermes SA 42,895(b) 4,037,341 Renault SA 103,610(b) 5,755,294 --------------- Total 13,521,150 ------------------------------------------------------------------------------------- GERMANY (2.1%) Linde AG 44,018 6,335,512 MTU Aero Engines Holding AG 49,958 3,016,586 --------------- Total 9,352,098 ------------------------------------------------------------------------------------- HONG KONG (4.3%) 361 Degrees International Ltd. 2,379,000(d) 2,305,030 Champion REIT 3,714,770(d) 2,046,454 China High Speed Transmission Equipment Group Co., Ltd. 1,426,000 2,914,184 Great Eagle Holdings Ltd. 1,155,377 3,458,231 Sun Hung Kai Properties Ltd. 331,000 5,671,113 The Hongkong & Shanghai Hotels 1,603,500(d) 2,821,796 --------------- Total 19,216,808 ------------------------------------------------------------------------------------- INDIA (1.5%) State Bank of India, GDR 49,382 6,814,716 ------------------------------------------------------------------------------------- INDONESIA (2.9%) Bank Mandiri Tbk PT 4,588,500 3,594,795 Bank Rakyat Indonesia Persero Tbk PT 2,059,000 2,627,040 PT Perusahaan Gas Negara Tbk 7,564,500 3,428,788 Semen Gresik Persero Tbk PT 3,115,500 3,417,112 --------------- Total 13,067,735 -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 17 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) IRELAND (0.7%) Accenture PLC, Class A 71,348 $3,189,969 ------------------------------------------------------------------------------------- ITALY (0.9%) Prysmian SpA 201,423 3,903,742 ------------------------------------------------------------------------------------- JAPAN (7.5%) Asahi Breweries Ltd. 309,600 6,252,019 Canon, Inc. 95,500 4,414,813 Hoya Corp. 193,600 4,527,838 Makita Corp. 121,900 4,287,026 Nippon Electric Glass Co., Ltd. 287,000(d) 3,698,509 Osaka Securities Exchange Co., Ltd. 309 1,555,176 Shin-Etsu Chemical Co., Ltd. 41,900(d) 2,121,816 Ushio, Inc. 151,500(d) 2,524,686 Yamada Denki Co., Ltd. 65,760 4,273,951 --------------- Total 33,655,834 ------------------------------------------------------------------------------------- MEXICO (0.9%) America Movil SAB de CV, Series L, ADR 71,495 4,093,804 ------------------------------------------------------------------------------------- NETHERLANDS (2.3%) Fugro NV-CVA 79,623 5,630,923 ING Groep NV-CVA 426,805(b) 4,554,553 --------------- Total 10,185,476 ------------------------------------------------------------------------------------- PANAMA (0.7%) Copa Holdings SA, Class A 58,793 2,982,569 ------------------------------------------------------------------------------------- POLAND (0.8%) KGHM Polska Miedz SA 80,962 3,638,231 ------------------------------------------------------------------------------------- PORTUGAL (1.1%) Galp Energia SGPS SA, Series B 262,472 5,061,359 ------------------------------------------------------------------------------------- SINGAPORE (0.6%) DBS Group Holdings Ltd. 267,000 2,868,305 ------------------------------------------------------------------------------------- SOUTH AFRICA (1.0%) MTN Group Ltd. 253,973 4,573,016 ------------------------------------------------------------------------------------- SOUTH KOREA (3.1%) Hyundai Department Store Co., Ltd. 17,650 1,953,128 KB Financial Group, Inc. 54,668 2,429,516 NHN Corp. 19,104(b) 3,387,535 Samsung Electronics Co., Ltd. 9,249 6,124,459 --------------- Total 13,894,638 ------------------------------------------------------------------------------------- SWITZERLAND (6.5%) Credit Suisse Group AG 86,723 3,581,884 Nestle SA 77,866 4,264,354 Novartis AG 85,190 4,938,113 Roche Holding AG 20,952 3,076,167 The Swatch Group AG 15,533 5,935,746 Tyco Electronics Ltd. 109,389 3,465,444 Xstrata PLC 193,970 3,758,867 --------------- Total 29,020,575 ------------------------------------------------------------------------------------- TAIWAN (0.5%) Taiwan Semiconductor Manufacturing Co., Ltd. 1,111,000 2,278,825 ------------------------------------------------------------------------------------- UNITED KINGDOM (14.0%) 3i Group PLC 616,624 2,959,912 Aggreko PLC 125,521 3,167,478 Autonomy Corp. PLC 82,934(b) 1,942,659 BG Group PLC 233,327 4,543,981 Burberry Group PLC 279,752 4,567,347 Centamin Egypt Ltd. 1,168,217(b) 3,238,070 Chemring Group PLC 52,677 2,530,284 Ensco PLC, ADR 58,241 2,698,888 HSBC Holdings PLC 294,826 3,066,154 Intercontinental Hotels Group PLC 176,450 3,412,287 Rio Tinto PLC 121,548 7,859,873 Tesco PLC 363,075 2,483,066 The Weir Group PLC 238,825 5,961,614 Tullow Oil PLC 341,718 6,487,879 Ultra Electronics Holdings PLC 102,772 3,064,346 Vodafone Group PLC 1,625,861 4,424,514 --------------- Total 62,408,352 -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 18 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) UNITED STATES (36.5%) Advance Auto Parts, Inc. 42,401 $2,755,217 Aetna, Inc. 78,635 2,348,041 American Tower Corp., Class A 67,074(b) 3,461,689 Apple, Inc. 32,880(b) 9,892,606 Avon Products, Inc. 129,710 3,949,670 Bank of America Corp. 169,292 1,936,700 Cisco Systems, Inc. 256,337(b) 5,852,174 Citigroup, Inc. 1,133,647(b) 4,727,308 Cliffs Natural Resources, Inc. 46,036 3,001,547 Cloud Peak Energy, Inc. 189,039(b) 3,283,607 Dell, Inc. 307,465(b) 4,421,347 Devon Energy Corp. 51,040 3,318,622 Flowserve Corp. 35,728 3,572,800 Gilead Sciences, Inc. 78,205(b) 3,102,392 Google, Inc., Class A 12,411(b) 7,607,819 Hartford Financial Services Group, Inc. 177,637 4,259,735 Henry Schein, Inc. 98,057(b) 5,505,901 Hewlett-Packard Co. 66,954 2,816,085 IBM Corp. 57,718 8,288,305 JPMorgan Chase & Co. 143,242 5,390,197 Laboratory Corp. of America Holdings 61,434(b) 4,995,813 Merck & Co., Inc. 71,048 2,577,621 Micron Technology, Inc. 556,320(b) 4,600,766 Microsoft Corp. 134,388 3,580,096 Norfolk Southern Corp. 89,527 5,505,016 Oracle Corp. 176,247 5,181,662 QUALCOMM, Inc. 80,683 3,641,224 Sirona Dental Systems, Inc. 136,327(b) 5,132,712 The Walt Disney Co. 169,081 6,105,515 Thermo Fisher Scientific, Inc. 98,731(b) 5,076,748 Tiffany & Co. 135,177 7,164,381 Ultra Petroleum Corp. 80,389(b) 3,308,007 Union Pacific Corp. 35,930 3,150,342 Wal-Mart Stores, Inc. 103,007 5,579,889 Waste Connections, Inc. 83,559 3,404,193 WESCO International, Inc. 98,352(b) 4,211,433 --------------- Total 162,707,180 ------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $373,829,916) $442,602,541 -------------------------------------------------------------------------------------
MONEY MARKET FUND (0.2%) SHARES VALUE(a) Columbia Short-Term Cash Fund, 0.241% 1,107,766(e) $1,107,766 ------------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $1,107,766) $1,107,766 -------------------------------------------------------------------------------------
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (3.1%) EFFECTIVE PRINCIPAL ISSUER YIELD AMOUNT VALUE(a) REPURCHASE AGREEMENTS(f) Cantor Fitzgerald & Co. dated 10-29-10, matures 11-01-10, repurchase price $5,000,100 0.240% $5,000,000 $5,000,000 Deutsche Bank AG dated 10-29-10, matures 11-01-10, repurchase price $3,755,678 0.230 3,755,606 3,755,606 G.X. Clarke and Company dated 10-29-10, matures 11-01-10, repurchase price $5,000,133 0.320 5,000,000 5,000,000 --------------- Total 13,755,606 ------------------------------------------------------------------------------------- TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (Cost: $13,755,606) $13,755,606 ------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $388,693,288)(g) $457,465,913 =====================================================================================
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 19 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY The following table represents the portfolio investments of the Fund by industry classifications as a percentage of net assets at Oct. 31, 2010:
PERCENTAGE OF INDUSTRY NET ASSETS VALUE(a) ----------------------------------------------------------------------- Aerospace & Defense 1.9% $8,611,216 Airlines 0.7 2,982,569 Auto Components 0.8 3,728,515 Automobiles 1.3 5,755,294 Beverages 1.4 6,252,019 Biotechnology 1.3 5,865,578 Capital Markets 1.5 6,541,796 Chemicals 1.9 8,457,328 Commercial Banks 6.3 28,449,391 Commercial Services & Supplies 1.5 6,571,671 Communications Equipment 2.1 9,493,398 Computers & Peripherals 3.8 17,130,038 Construction & Engineering 1.0 4,572,857 Construction Materials 0.8 3,417,112 Diversified Financial Services 4.1 18,163,934 Electrical Equipment 2.1 9,342,612 Electronic Equipment, Instruments & Components 2.6 11,691,791 Energy Equipment & Services 1.9 8,329,811 Food & Staples Retailing 1.8 8,062,955 Food Products 1.0 4,264,354 Gas Utilities 0.8 3,428,788 Health Care Equipment & Supplies 1.1 5,132,712 Health Care Providers & Services 2.9 12,849,755 Hotels, Restaurants & Leisure 1.4 6,234,083 Household Durables 0.6 2,520,300 Insurance 2.5 10,968,912 Internet Software & Services 2.5 10,995,354 IT Services 2.6 11,478,274 Life Sciences Tools & Services 1.1 5,076,748 Machinery 3.1 13,821,440 Media 1.9 8,307,448 Metals & Mining 6.3 28,555,696 Multiline Retail 0.4 1,953,128 Office Electronics 1.0 4,414,813 Oil, Gas & Consumable Fuels 5.7 26,003,455 Personal Products 0.9 3,949,670 Pharmaceuticals 2.4 10,591,901 Real Estate Investment Trusts (REITs) 0.5 2,046,454 Real Estate Management & Development 2.8 12,741,745 Road & Rail 1.9 8,655,358 Semiconductors & Semiconductor Equipment 2.9 13,004,050 Software 3.2 14,422,090
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 20 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY (CONTINUED)
PERCENTAGE OF INDUSTRY NET ASSETS VALUE(a) ----------------------------------------------------------------------- Specialty Retail 3.2% $14,193,549 Textiles, Apparel & Luxury Goods 2.9 12,808,123 Trading Companies & Distributors 0.9 4,211,433 Wireless Telecommunication Services 3.7 16,553,023 Other(1) 3.3 14,863,372 ----------------------------------------------------------------------- Total $457,465,913 -----------------------------------------------------------------------
(1) Cash & Cash Equivalents. The industries identified above are based on the Global Industry Classification Standard (GICS), which was developed by, and is the exclusive property of, Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. NOTES TO PORTFOLIO OF INVESTMENTS ADR -- American Depositary Receipt GDR -- Global Depositary Receipt
(a) Securities are valued by using policies described in Note 2 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. (d) At Oct. 31, 2010, security was partially or fully on loan. See Note 7 to the financial statements. (e) Affiliated Money Market Fund -- See Note 8 to the financial statements. The rate shown is the seven-day current annualized yield at Oct. 31, 2010. (f) The table below represents securities received as collateral for repurchase agreements. This collateral, which is generally high quality short-term obligations, is deposited with the Fund's custodian and, pursuant to the terms of the repurchase agreement, must have an aggregate market value greater than or equal to the repurchase price plus accrued interest at all times. The value of securities and/or cash held as collateral for repurchase agreements is monitored on a daily basis to ensure the existence of the proper level of collateral.
CANTOR FITZGERALD & CO. (0.240%) SECURITY DESCRIPTION VALUE(a) ------------------------------------------------------------ Fannie Mae Grantor Trust $257 Fannie Mae Interest Strip 80,068 Fannie Mae Pool 622,893 Fannie Mae Principal Strip 14,504 Fannie Mae REMICS 749,932 Fannie Mae Whole Loan 12,350 Federal National Mortgage Association 30,240 FHLMC Multifamily Structured Pass Through Certificates 197 FHLMC Structured Pass Through Securities 5,785
-------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 21 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
CANTOR FITZGERALD & CO. (CONTINUED) SECURITY DESCRIPTION VALUE(a) ------------------------------------------------------------ Freddie Mac Coupon Strips $545 Freddie Mac Non Gold Pool 301,102 Freddie Mac Reference REMIC 4,195 Freddie Mac REMICS 326,995 Freddie Mac Strips 173,135 Ginnie Mae I Pool 674,256 Ginnie Mae II Pool 1,266,511 Government National Mortgage Association 439,728 United States Treasury Inflation Indexed Bonds 50,639 United States Treasury Strip Coupon 261,625 United States Treasury Strip Principal 85,043 ------------------------------------------------------------ Total market value of collateral securities $5,100,000 ------------------------------------------------------------ DEUTSCHE BANK AG (0.230%) SECURITY DESCRIPTION VALUE(a) ------------------------------------------------------------ Fannie Mae Pool $3,830,718 ------------------------------------------------------------ Total market value of collateral securities $3,830,718 ------------------------------------------------------------ G.X. CLARKE AND COMPANY (0.320%) SECURITY DESCRIPTION VALUE(a) ------------------------------------------------------------ Fannie Mae Discount Notes $4,794 Fannie Mae Interest Strip 2,260 Federal Farm Credit Bank 411,390 Federal Home Loan Bank Discount Notes 2,000 Federal Home Loan Banks 893,531 Federal Home Loan Mortgage Corp 790,564 Federal National Mortgage Association 1,099,221 Freddie Mac Discount Notes 15,836 Freddie Mac Strips 16,681 Resolution Funding Corp Interest Strip 10 Tennessee Valley Authority 57,587 United States Treasury Inflation Indexed Bonds 386,055 United States Treasury Note/Bond 1,097,374 United States Treasury Strip Coupon 246,662 United States Treasury Strip Principal 76,065 ------------------------------------------------------------ Total market value of collateral securities $5,100,030 ------------------------------------------------------------
-------------------------------------------------------------------------------- 22 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED) (g) At Oct. 31, 2010, the cost of securities for federal income tax purposes was $396,446,415 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $68,467,290 Unrealized depreciation (7,447,792) ----------------------------------------------------------- Net unrealized appreciation $61,019,498 -----------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 23 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- FAIR VALUE MEASUREMENTS Generally accepted accounting principles (GAAP) require 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. 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 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 (to include NAV for open-end mutual funds). 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 Fund Administrator, 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. Non-U.S. equity securities actively traded in foreign markets may be reflected in Level 2 despite the availability of closing prices, because the Fund evaluates and determines whether those closing prices reflect fair value at the close of the New York Stock Exchange (NYSE) or require adjustment, as described in Note 2 to the financial statements -- Valuation of securities. 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 -------------------------------------------------------------------------------- 24 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- FAIR VALUE MEASUREMENTS (CONTINUED) 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 rely on one or more significant unobservable inputs and/or significant assumptions by the Fund Administrator. Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data. The following table is a summary of the inputs used to value the Fund's investments as of Oct. 31, 2010:
FAIR VALUE AT OCT. 31, 2010 ------------------------------------------------------------------ LEVEL 1 LEVEL 2 QUOTED PRICES OTHER LEVEL 3 IN ACTIVE SIGNIFICANT SIGNIFICANT MARKETS FOR OBSERVABLE UNOBSERVABLE DESCRIPTION(A) IDENTICAL ASSETS(b) INPUTS INPUTS TOTAL ----------------------------------------------------------------------------------------------- Equity Securities Common Stocks $442,602,541 $-- $-- $442,602,541 ----------------------------------------------------------------------------------------------- Total Equity Securities 442,602,541 -- -- 442,602,541 ----------------------------------------------------------------------------------------------- Other Affiliated Money Market Fund(c) 1,107,766 -- -- 1,107,766 Investments of Cash Collateral Received for Securities on Loan -- 13,755,606 -- 13,755,606 ----------------------------------------------------------------------------------------------- Total Other 1,107,766 13,755,606 -- 14,863,372 ----------------------------------------------------------------------------------------------- Total $443,710,307 $13,755,606 $-- $457,465,913 -----------------------------------------------------------------------------------------------
(a) See the Portfolio of Investments for all investment classifications not indicated in the table. (b) Includes certain securities trading outside the U.S. whose values were adjusted at Oct. 31, 2009 as a result of significant market movements following the close of local trading, and were classified as Level 2. Values were not adjusted as of Oct, 31, 2010. Therefore, these investment securities were classified as Level 1 instead of Level 2 at Oct. 31, 2010. The amount of securities transferred out of Level 2 into Level 1 during the period was $129,711,776. Transfers between Levels 1 and 2 are determined based on the fair value at the beginning of the period for security positions held throughout the period. (c) Money market fund that is a sweep investment for cash balances in the Fund at Oct. 31, 2010. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 25 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS (i) The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (Commission) for the first and third quarters of each fiscal year on Form N-Q; (ii) The Fund's Forms N-Q are available on the Commission's website at http://www.sec.gov; (iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC (information on the operations of the Public Reference Room may be obtained by calling 800.SEC.0330); and (iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q, can be obtained without charge, upon request, by calling 800.345.6611. -------------------------------------------------------------------------------- 26 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT STATEMENT OF ASSETS AND LIABILITIES -------------------------------------------- OCT. 31, 2010
ASSETS Investments in securities, at value Unaffiliated issuers* (identified cost $373,829,916) $ 442,602,541 Affiliated money market fund (identified cost $1,107,766) 1,107,766 Investments of cash collateral received for securities on loan (identified cost $13,755,606) 13,755,606 --------------------------------------------------------------------------------------- Total investments in securities (identified cost $388,693,288) 457,465,913 Cash 1 Foreign currency holdings (identified cost $360,531) 370,929 Capital shares receivable 90,372 Dividends and accrued interest receivable 322,460 Receivable for investment securities sold 3,106,950 Reclaims receivable 373,458 --------------------------------------------------------------------------------------- Total assets 461,730,083 --------------------------------------------------------------------------------------- LIABILITIES Capital shares payable 472,921 Payable upon return of securities loaned 13,755,606 Accrued investment management services fees 9,691 Accrued distribution fees 3,511 Accrued transfer agency fees 10,785 Accrued administrative services fees 983 Accrued plan administration services fees 48 Other accrued expenses 168,509 --------------------------------------------------------------------------------------- Total liabilities 14,422,054 --------------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $ 447,308,029 --------------------------------------------------------------------------------------- REPRESENTED BY Capital stock -- $.01 par value $ 635,488 Additional paid-in capital 579,121,345 Undistributed net investment income 229,417 Accumulated net realized gain (loss) (201,517,104) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 68,838,883 --------------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $ 447,308,029 --------------------------------------------------------------------------------------- *Value of securities on loan $ 12,949,988 ---------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 27 STATEMENT OF ASSETS AND LIABILITIES (continued) -------------------------------- OCT. 31, 2010
NET ASSET VALUE PER SHARE NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE Class A $375,168,966 53,042,442 $7.07(1) Class B $ 23,894,493 3,605,201 $6.63 Class C $ 10,146,647 1,548,238 $6.55 Class I $ 31,014,538 4,359,437 $7.11 Class R $ 41,009 5,746 $7.14 Class R4 $ 7,015,836 983,963 $7.13 Class R5 $ 19,408 2,727 $7.12 Class W $ 4,534 639 $7.10 Class Z $ 2,598 365 $7.12 ------------------------------------------------------------------------------
(1) The maximum offering price per share for Class A is $7.50. The offering price is calculated by dividing the net asset value by 1.0 minus the maximum sales charge of 5.75%. The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 28 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT STATEMENT OF OPERATIONS -------------------------------------------------------- YEAR ENDED OCT. 31, 2010
INVESTMENT INCOME Income: Dividends $ 7,503,577 Interest 672 Income distributions from affiliated money market fund 3,654 Income from securities lending -- net 83,085 Foreign taxes withheld (798,492) ------------------------------------------------------------------------- Total income 6,792,496 ------------------------------------------------------------------------- Expenses: Investment management services fees 3,435,736 Distribution fees Class A 949,930 Class B 300,148 Class C 101,910 Class R 186 Class R3 9 Class W 11 Transfer agency fees Class A 1,083,861 Class B 91,383 Class C 29,922 Class R 31 Class R3 3 Class R4 3,134 Class R5 9 Class W 8 Administrative services fees 366,549 Plan administration services fees Class R 78 Class R3 9 Class R4 16,416 Compensation of board members 13,626 Custodian fees 89,895 Printing and postage 70,520 Registration fees 117,880 Professional fees 39,490 Other 40,932 ------------------------------------------------------------------------- Total expenses 6,751,676 ------------------------------------------------------------------------- Investment income (loss) -- net 40,820 -------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 29 STATEMENT OF OPERATIONS (continued) -------------------------------------------- YEAR ENDED OCT. 31, 2010
REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions $20,167,206 Foreign currency transactions 298,333 ------------------------------------------------------------------------- Net realized gain (loss) on investments 20,465,539 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 45,779,384 ------------------------------------------------------------------------- Net gain (loss) on investments and foreign currencies 66,244,923 ------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $66,285,743 -------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 30 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
YEAR ENDED OCT. 31, 2010 2009 OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ 40,820 $ 3,794,601 Net realized gain (loss) on investments 20,465,539 (107,498,811) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 45,779,384 183,214,646 ------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations 66,285,743 79,510,436 ------------------------------------------------------------------------------------------ Distributions to shareholders from: Net investment income Class A (1,567,578) (5,343,305) Class B (38,424) -- Class C (13,917) (7,366) Class I (255,509) (409,801) Class R -- (81) Class R3 (14) (64) Class R4 (36,668) (95,325) Class R5 (132) (82) Class W (20) (56) ------------------------------------------------------------------------------------------ Total distributions (1,912,262) (5,856,080) ------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 31 STATEMENTS OF CHANGES IN NET ASSETS (continued) --------------------------------
YEAR ENDED OCT. 31, 2010 2009 CAPITAL SHARE TRANSACTIONS Proceeds from sales Class A shares $ 19,793,978 $ 38,201,079 Class B shares 1,904,019 3,574,996 Class C shares 1,059,943 1,451,876 Class I shares 2,020,204 39,064,193 Class R shares 12,579 9,763 Class R4 shares 1,404,854 1,403,150 Class R5 shares -- 1 Class Z shares 2,500 -- Fund merger (Note 11) Class A shares N/A 11,920,114 Class B shares N/A 968,653 Class C shares N/A 5,405,143 Class R shares N/A 143,426 Class R5 shares N/A 13,250 Reinvestment of distributions at net asset value Class A shares 1,522,138 5,231,241 Class B shares 37,535 -- Class C shares 12,552 7,156 Class I shares 255,476 409,715 Class R shares -- 31 Class R4 shares 36,668 95,325 Class R5 shares 101 -- Conversions from Class B to Class A Class A shares 6,351,106 8,590,859 Class B shares (6,351,106) (8,590,859) Payments for redemptions Class A shares (101,092,506) (105,412,307) Class B shares (8,324,086) (10,894,724) Class C shares (2,870,826) (1,994,833) Class I shares (8,634,570) (17,447,359) Class R shares (23,750) (121,102) Class R3 shares (3,241) -- Class R4 shares (1,418,681) (1,395,358) Class R5 shares (971) -- ------------------------------------------------------------------------------------------ Increase (decrease) in net assets from capital share transactions (94,306,084) (29,366,571) ------------------------------------------------------------------------------------------ Proceeds from regulatory settlements (Note 10) 424,540 93,216 ------------------------------------------------------------------------------------------ Total increase (decrease) in net assets (29,508,063) 44,381,001 Net assets at beginning of year 476,816,092 432,435,091 ------------------------------------------------------------------------------------------ Net assets at end of year $ 447,308,029 $ 476,816,092 ------------------------------------------------------------------------------------------ Undistributed net investment income $ 229,417 $ 356,736 ------------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 32 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT FINANCIAL HIGHLIGHTS ----------------------------------------------------------- The following tables are 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. For periods ended 2007 and after, per share net investment income (loss) amounts are calculated based on average shares outstanding during the period. Total returns assume reinvestment of all dividends and distributions. Total returns do not reflect payment of sales charges, if any, and are not annualized for periods of less than one year.
YEAR ENDED OCT. 31, CLASS A ------------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006 Net asset value, beginning of period $6.13 $5.21 $9.61 $7.52 $6.23 ---------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .00(a) .05 .05 .02 .01 Net gains (losses) (both realized and unrealized) .96 .95 (4.41) 2.13 1.30 ---------------------------------------------------------------------------------------------------------- Total from investment operations .96 1.00 (4.36) 2.15 1.31 ---------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.03) (.08) (.04) (.06) (.02) ---------------------------------------------------------------------------------------------------------- Proceeds from regulatory settlements .01 .00(a) -- -- -- ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $7.07 $6.13 $5.21 $9.61 $7.52 ---------------------------------------------------------------------------------------------------------- TOTAL RETURN 15.78%(b) 19.39%(c) (45.55%) 28.82% 21.01% ---------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Total expenses 1.45% 1.44% 1.46% 1.39% 1.51% ---------------------------------------------------------------------------------------------------------- Net investment income (loss) .03% .92% .65% .28% .23% ---------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $375 $395 $380 $737 $608 ---------------------------------------------------------------------------------------------------------- Portfolio turnover rate 54% 81% 97% 100% 112% ----------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 33 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
YEAR ENDED OCT. 31, CLASS B ------------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006 Net asset value, beginning of period $5.77 $4.87 $9.02 $7.06 $5.88 ---------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.04) .01 (.01) (.04) (.01) Net gains (losses) (both realized and unrealized) .90 .89 (4.14) 2.00 1.19 ---------------------------------------------------------------------------------------------------------- Total from investment operations .86 .90 (4.15) 1.96 1.18 ---------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.01) -- -- .00(a) -- ---------------------------------------------------------------------------------------------------------- Proceeds from regulatory settlements .01 .00(a) -- -- -- ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $6.63 $5.77 $4.87 $9.02 $7.06 ---------------------------------------------------------------------------------------------------------- TOTAL RETURN 15.03%(b) 18.48%(c) (46.01%) 27.81% 20.07% ---------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Total expenses 2.21% 2.21% 2.23% 2.15% 2.28% ---------------------------------------------------------------------------------------------------------- Net investment income (loss) (.69%) .22% (.11%) (.45%) (.54%) ---------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $24 $33 $42 $104 $110 ---------------------------------------------------------------------------------------------------------- Portfolio turnover rate 54% 81% 97% 100% 112% ----------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 34 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS C ------------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006 Net asset value, beginning of period $5.71 $4.83 $8.93 $7.02 $5.85 ---------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.04) .00(a) (.01) (.04) (.01) Net gains (losses) (both realized and unrealized) .88 .89 (4.09) 1.98 1.18 ---------------------------------------------------------------------------------------------------------- Total from investment operations .84 .89 (4.10) 1.94 1.17 ---------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.01) (.01) -- (.03) -- ---------------------------------------------------------------------------------------------------------- Proceeds from regulatory settlements .01 .00(a) -- -- -- ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $6.55 $5.71 $4.83 $8.93 $7.02 ---------------------------------------------------------------------------------------------------------- TOTAL RETURN 14.86%(b) 18.39%(c) (45.91%) 27.76% 20.03% ---------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Total expenses 2.21% 2.20% 2.22% 2.15% 2.27% ---------------------------------------------------------------------------------------------------------- Net investment income (loss) (.72%) (.08%) (.09%) (.48%) (.50%) ---------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $10 $11 $5 $8 $6 ---------------------------------------------------------------------------------------------------------- Portfolio turnover rate 54% 81% 97% 100% 112% ----------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 35 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
YEAR ENDED OCT. 31, CLASS I ------------------------------- PER SHARE DATA 2010 2009 2008(e) Net asset value, beginning of period $6.16 $5.25 $7.47 ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .04 .09 .03 Net gains (losses) (both realized and unrealized) .95 .95 (2.25) ---------------------------------------------------------------------------------- Total from investment operations .99 1.04 (2.22) ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.05) (.13) -- ---------------------------------------------------------------------------------- Proceeds from regulatory settlements .01 .00(a) -- ---------------------------------------------------------------------------------- Net asset value, end of period $7.11 $6.16 $5.25 ---------------------------------------------------------------------------------- TOTAL RETURN 16.32%(b) 20.21%(c) (29.72%) ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Total expenses .91% .84% .85%(f) ---------------------------------------------------------------------------------- Net investment income (loss) .55% 1.56% 1.55%(f) ---------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $31 $33 $-- ---------------------------------------------------------------------------------- Portfolio turnover rate 54% 81% 97% ----------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 36 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS R* -------------------------------------------- PER SHARE DATA 2010 2009 2008 2007(g) Net asset value, beginning of period $6.14 $5.23 $9.62 $7.89 ----------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.02) (.01) .05 (.01) Net gains (losses) (both realized and unrealized) 1.01 1.00 (4.42) 1.84 ----------------------------------------------------------------------------------------------- Total from investment operations .99 .99 (4.37) 1.83 ----------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income -- (.08) (.02) (.10) ----------------------------------------------------------------------------------------------- Proceeds from regulatory settlements .01 .00(a) -- -- ----------------------------------------------------------------------------------------------- Net asset value, end of period $7.14 $6.14 $5.23 $9.62 ----------------------------------------------------------------------------------------------- TOTAL RETURN 16.29%(b) 19.13%(c) (45.48%) 23.41% ----------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Gross expenses prior to expense waiver/reimbursement 1.71% 1.69% 1.79% 1.74%(f) ----------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(h) 1.71% 1.69% 1.54% 1.74%(f) ----------------------------------------------------------------------------------------------- Net investment income (loss) (.24%) (.16%) .57% (.13%)(f) ----------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- $-- ----------------------------------------------------------------------------------------------- Portfolio turnover rate 54% 81% 97% 100% -----------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 37 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
YEAR ENDED OCT. 31, CLASS R4 ------------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006 Net asset value, beginning of period $6.18 $5.26 $9.70 $7.60 $6.29 ---------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .02 .06 .07 .04 .02 Net gains (losses) (both realized and unrealized) .96 .96 (4.46) 2.13 1.31 ---------------------------------------------------------------------------------------------------------- Total from investment operations .98 1.02 (4.39) 2.17 1.33 ---------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.04) (.10) (.05) (.07) (.02) ---------------------------------------------------------------------------------------------------------- Proceeds from regulatory settlements .01 .00(a) -- -- -- ---------------------------------------------------------------------------------------------------------- Net asset value, end of period $7.13 $6.18 $5.26 $9.70 $7.60 ---------------------------------------------------------------------------------------------------------- TOTAL RETURN 16.03%(b) 19.72%(c) (45.47%) 28.85% 21.26% ---------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Gross expenses prior to expense waiver/reimbursement 1.21% 1.15% 1.29% 1.23% 1.32% ---------------------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(h) 1.21% 1.15% 1.28% 1.23% 1.32% ---------------------------------------------------------------------------------------------------------- Net investment income (loss) .27% 1.22% .83% .45% .44% ---------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $7 $6 $5 $10 $9 ---------------------------------------------------------------------------------------------------------- Portfolio turnover rate 54% 81% 97% 100% 112% ----------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 38 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS R5 -------------------------------------------- PER SHARE DATA 2010 2009 2008 2007(g) Net asset value, beginning of period $6.16 $5.25 $9.69 $7.89 ----------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .03 .08 .08 .05 Net gains (losses) (both realized and unrealized) .97 .96 (4.45) 1.85 ----------------------------------------------------------------------------------------------- Total from investment operations 1.00 1.04 (4.37) 1.90 ----------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.05) (.13) (.07) (.10) ----------------------------------------------------------------------------------------------- Proceeds from regulatory settlements .01 .00(a) -- -- ----------------------------------------------------------------------------------------------- Net asset value, end of period $7.12 $6.16 $5.25 $9.69 ----------------------------------------------------------------------------------------------- TOTAL RETURN 16.44%(b) 20.20%(c) (45.40%) 24.33% ----------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Total expenses .96% .90% 1.04% .99%(f) ----------------------------------------------------------------------------------------------- Net investment income (loss) .50% 1.39% 1.07% .62%(f) ----------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- $-- ----------------------------------------------------------------------------------------------- Portfolio turnover rate 54% 81% 97% 100% -----------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 39 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
YEAR ENDED OCT. 31, CLASS W -------------------------------------------- PER SHARE DATA 2010 2009 2008 2007(i) Net asset value, beginning of period $6.16 $5.23 $9.66 $7.83 ----------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01 .06 .05 .02 Net gains (losses) (both realized and unrealized) .95 .96 (4.44) 1.91 ----------------------------------------------------------------------------------------------- Total from investment operations .96 1.02 (4.39) 1.93 ----------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.03) (.09) (.04) (.10) ----------------------------------------------------------------------------------------------- Proceeds from regulatory settlements .01 .00(a) -- -- ----------------------------------------------------------------------------------------------- Net asset value, end of period $7.10 $6.16 $5.23 $9.66 ----------------------------------------------------------------------------------------------- TOTAL RETURN 15.80%(b) 19.70%(c) (45.62%) 24.87% ----------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Total expenses 1.38% 1.30% 1.43% 1.39%(f) ----------------------------------------------------------------------------------------------- Net investment income (loss) .08% 1.05% .68% .20%(f) ----------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- $-- ----------------------------------------------------------------------------------------------- Portfolio turnover rate 54% 81% 97% 100% -----------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 40 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED CLASS Z OCT. 31, PER SHARE DATA 2010(j) Net asset value, beginning of period $6.85 ------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.01) Net gains (losses) (both realized and unrealized) .28 ------------------------------------------------------------- Total from investment operations .27 ------------------------------------------------------------- Net asset value, end of period $7.12 ------------------------------------------------------------- TOTAL RETURN 3.94% ------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(d) Total expenses 1.37%(f) ------------------------------------------------------------- Net investment income (loss) (1.52%)(f) ------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- ------------------------------------------------------------- Portfolio turnover rate 54% -------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS * Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. (a) Rounds to less than $0.01 per share. (b) During the year ended Oct. 31, 2010, the Fund received proceeds from a regulatory settlement. Had the Fund not received these proceeds, the total return would have been lower by 0.09%. (c) During the year ended Oct. 31, 2009, the Fund received proceeds from a regulatory settlement. Had the Fund not received these proceeds, the total return would have been lower by 0.02%. (d) Expense ratios include the impact of a performance incentive adjustment, if any. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. (e) For the period from Aug. 1, 2008 (when shares became available) to Oct. 31, 2008. (f) Annualized. (g) For the period from Dec. 11, 2006 (when shares became available) to Oct. 31, 2007. (h) The Investment Manager and its affiliates agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (i) For the period from Dec. 1, 2006 (when shares became available) to Oct. 31, 2007. (j) For the period from Sept. 27, 2010 (when shares became available) to Oct. 31, 2010. The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 41 NOTES TO FINANCIAL STATEMENTS -------------------------------------------------- 1. ORGANIZATION Columbia Global Equity Fund (formerly known as Threadneedle Global Equity Fund) (the Fund) is a series of RiverSource Global Series, Inc. (the Corporation) and is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, open-end management investment company. The Corporation has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Corporation's Board of Directors (the Board). The Fund offers Class A, Class B, Class C, Class I, Class R, Class R4, Class R5, Class W and Class Z shares. - Class A shares are offered with a front-end sales charge, which may be waived under certain circumstances. - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares one month after the completion of the eighth year of ownership if originally purchased in a RiverSource fund on or after May 21, 2005 or originally purchased in a Seligman fund on or after June 13, 2009. Class B shares originally purchased in a RiverSource fund prior to May 21, 2005 will convert to Class A shares in the ninth calendar year of ownership. Class B shares originally purchased in a Seligman fund prior to June 13, 2009 will convert to Class A shares in the month prior to the ninth year of ownership. Effective Sept. 7, 2010, the Fund no longer accepts investments from new or existing investors in the Fund's Class B shares, except that (i) dividend and/or capital gain distributions may continue to be reinvested in Class B shares of the Fund and (ii) shareholders invested in Class B shares of the Fund may exchange those shares for Class B shares of other Columbia, RiverSource, Seligman and Threadneedle funds offering such shares. - Class C shares may be subject to a CDSC on shares redeemed within one year of purchase. - Class I shares are not subject to sales charges and are available only to the Columbia Family of Funds. - Class R shares are offered without a front-end sales charge or CDSC to qualifying institutional investors. Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. - Class R4 and Class R5 shares are not subject to sales charges, however, these classes are closed to new investors effective Dec. 31, 2010. - Class W shares are offered without a front-end sales charge or CDSC and are offered through qualifying discretionary accounts. -------------------------------------------------------------------------------- 42 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- - Class Z shares are offered without a front-end sales charge or CDSC to certain eligible investors. Class Z shares became effective Sept. 27, 2010. At Aug. 27, 2010, all Class R3 shares were liquidated. The shares in this class had consisted solely of seed capital from Columbia Management Investment Advisers, LLC (formerly known as RiverSource Investment, LLC) (the Investment Manager). At Oct. 31, 2010, the Investment Manager and affiliated funds-of-funds owned 100% of Class I shares, and the Investment Manager owned 100% of Class W and Class Z shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration services fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. VALUATION OF SECURITIES All securities are valued at the close of business of the New York Stock Exchange (NYSE). Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price from the primary exchange. Debt securities are generally traded in the over-the-counter market and are valued by an independent pricing service using an evaluated bid. When market quotes are not readily available, the pricing service, in determining fair values of debt securities, takes into consideration such factors as current quotations by broker/dealers, coupon, maturity, quality, type of issue, trading characteristics, and other yield and risk factors it deems relevant in determining valuations. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. The procedures adopted by the Board generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 43 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- (such as foreign securities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the NYSE and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the NYSE, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise Financial), parent company of the Investment Manager, as administrator to the Fund, will fair value foreign securities pursuant to procedures adopted by the Board, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the NYSE. The fair value of a security is likely to be different from the quoted or published price, if available. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates. Typically, those maturing in 60 days or less that originally had maturities of more than 60 days at acquisition date are valued at amortized cost using the market value on the 61st day before maturity. Short-term securities maturing in 60 days or less at acquisition date are valued at amortized cost. Amortized cost is an approximation of market value. Investments in money market funds are valued at net asset value. FOREIGN CURRENCY TRANSLATIONS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the Statement of Operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. At Oct. 31, 2010, foreign currency holdings consisted of multiple denominations, primarily Brazilian reais. -------------------------------------------------------------------------------- 44 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS The Fund may enter into repurchase agreements. Generally, securities received as collateral subject to repurchase agreements are deposited with the Fund's custodian and, pursuant to the terms of the repurchase agreement, must have an aggregate market value greater than or equal to the repurchase price plus accrued interest at all times. The market value of securities held as collateral for repurchase agreements is monitored on a daily basis to ensure the existence of the proper level of collateral. GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. 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. FEDERAL TAXES The Fund's policy is to comply with Subchapter M of the Internal Revenue Code that applies to regulated investment companies and to distribute substantially all of its taxable income (which includes net short-term capital gains) to shareholders. No provision for income or excise taxes is thus required. Management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Generally, the tax authorities can examine all tax returns filed for the last three years. FOREIGN CAPITAL GAINS TAXES Realized gains in certain countries may be subject to foreign taxes at the Fund level, at rates ranging from approximately 10% to 15%. The Fund pays such foreign taxes on net realized gains at the appropriate rate for each jurisdiction. DIVIDENDS TO SHAREHOLDERS An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are normally distributed along with the income dividend. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities. Interest income, -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 45 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. 3. 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 other assets, such as securities, currencies, commodities or indices. Derivative instruments may be used to maintain cash reserves while maintaining exposure to certain other assets, to offset anticipated declines in values of investments, 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 obligation under the terms of the contract, the potential for an illiquid secondary market 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 Fund and any counterparty are required to maintain an agreement that requires the Fund and that counterparty to monitor (on a daily basis) the net fair value of all derivatives entered into pursuant to the contract between the Fund and such counterparty. If the net fair value of such derivatives between the Fund and that counterparty exceeds a certain threshold (as defined in the agreement), the Fund or the counterparty (as the case may be) is required to post cash and/or securities as collateral. Fair values of derivatives presented in the financial statements are not netted with the fair value of other derivatives or with any collateral amounts posted by the Fund or any counterparty. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS Forward foreign currency exchange contracts are agreements between two parties to buy and sell a currency at a set price on a future date. These contracts are intended to be used to minimize the exposure to foreign exchange rate fluctuations during the period between the trade and settlement dates of the contract. The Fund utilized forward foreign currency exchange contracts to hedge the currency exposure associated with some or all of the Fund's securities. The market values of forward foreign currency exchange contracts fluctuate with changes in foreign currency exchange rates. The Fund will record a realized gain or loss when the forward foreign currency exchange contract is closed. -------------------------------------------------------------------------------- 46 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- The use of forward foreign currency exchange contracts does not eliminate fluctuations in the prices of the Fund's portfolio securities. The risks of forward foreign currency contracts include movement in the values of the foreign currencies relative to the U.S. dollar (or other foreign currencies) and the possibility that counterparties will not complete their contractual obligations, which may be in excess of the amount reflected, if any, in the Statement of Assets and Liabilities. EFFECTS OF DERIVATIVE TRANSACTIONS ON 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; the impact of derivative transactions on the Fund's operations over the period including realized gains or losses and unrealized gains or losses. The derivative schedules following the Portfolio of Investments present additional information regarding derivative instruments outstanding at the end of the period, if any. FAIR VALUES OF DERIVATIVE INSTRUMENTS AT OCT. 31, 2010 At Oct. 31, 2010, the Fund had no outstanding derivatives. EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCT. 31, 2010
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME --------------------------------------------------------------------- FORWARD FOREIGN CURRENCY EXCHANGE RISK EXPOSURE CATEGORY CONTRACTS --------------------------------------------------------------------- Foreign exchange contracts $20,708 ---------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED IN INCOME --------------------------------------------------------------------- FORWARD FOREIGN CURRENCY EXCHANGE RISK EXPOSURE CATEGORY CONTRACTS --------------------------------------------------------------------- Foreign exchange contracts $-- ---------------------------------------------------------------------
VOLUME OF DERIVATIVE ACTIVITY FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS At Oct. 31, 2010, the Fund had no outstanding forward foreign currency exchange contracts. The monthly average gross notional amount for these contracts was $600,000 for the year ended Oct. 31, 2010. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 47 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- 4. EXPENSES AND SALES CHARGES INVESTMENT MANAGEMENT SERVICES FEES Under an Investment Management Services Agreement (IMSA), the Investment Manager is responsible for the management of the Fund. Day-to-day portfolio management of the Fund is provided by the Fund's subadviser. See Subadvisory agreement below. The management fee is an annual fee that is equal to a percentage of the Fund's average daily net assets that declines from 0.80% to 0.57% as the Fund's net assets increase. The fee may be adjusted upward or downward by a performance incentive adjustment (PIA) determined monthly by measuring the percentage difference over a rolling 12-month period between the annualized performance of one Class A share of the Fund and the annualized performance of the Lipper Global Funds Index. In certain circumstances, the Board may approve a change in the index. The maximum adjustment is 0.12% per year. If the performance difference is less than 0.50%, the adjustment will be zero. The adjustment decreased the management fee by $177,692 for the year ended Oct. 31, 2010. The management fee for the year ended Oct. 31, 2010 was 0.75% of the Fund's average daily net assets, including the adjustment under the terms of the performance incentive arrangement. In September 2010, the Board approved, subject to approval by shareholders, an amended IMSA that would eliminate the Fund's PIA. If approved by Fund shareholders, the IMSA proposal is expected to be effective in the second quarter of 2011. If not approved, the current IMSA will stay in effect including any adjustment under the terms of the PIA. SUBADVISORY AGREEMENT The Investment Manager has a Subadvisory Agreement with Threadneedle International Limited (Threadneedle), an affiliate of the Investment Manager and an indirect wholly-owned subsidiary of Ameriprise Financial, to subadvise the assets of the Fund. The Investment Manager contracts with and compensates Threadneedle to manage the investment of the Fund's assets. ADMINISTRATIVE SERVICES FEES Under an Administrative Services Agreement, the Fund pays Ameriprise Financial an annual fee for administration and accounting services equal to a percentage of the Fund's average daily net assets that declines from 0.08% to 0.05% as the Fund's net assets increase. The fee for the year ended Oct. 31, 2010 was 0.08% of the Fund's average daily net assets. OTHER FEES Other expenses are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, -------------------------------------------------------------------------------- 48 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited administrative services to the Fund and the Board. For the year ended Oct. 31, 2010, other expenses paid to this company were $743. COMPENSATION OF BOARD MEMBERS Under a Deferred Compensation Plan (the Plan), the board members who are not "interested persons" of the Fund as defined under the 1940 Act may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or certain other 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 Plan. TRANSFER AGENCY FEES Under a Transfer Agency Agreement, Columbia Management Investment Services Corp. (formerly known as RiverSource Service Corporation) (the Transfer Agent) is responsible for providing transfer agency services to the Fund. Prior to Sept. 7, 2010, the Transfer Agent received annual account-based service fees from Class A, Class B and Class C shares that varied by class and annual asset-based service fees based on the Fund's average daily net assets attributable to Class R, Class R4, Class R5 and Class W shares, which amount varied by class. In addition, the Transfer Agent charged an annual fee per inactive account and received reimbursement from the Fund for certain out-of- pocket expenses. Under a new Transfer Agency Agreement effective Sept. 7, 2010, the Transfer Agent has contracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. The Transfer Agent receives monthly account-based service fees based on the number of open accounts and is reimbursed by the Fund for the fees and expenses the Transfer Agent pays to financial intermediaries that maintain omnibus accounts with the Fund subject to an annual limitation (that varies by class) that is a percentage of the average aggregate value of the Fund's shares maintained in each such omnibus account (other than omnibus accounts for which American Enterprise Investment Services, Inc. is the broker of record or accounts where the beneficial shareholder is a customer of Ameriprise Financial Services, Inc., which are paid a per account fee). The Transfer Agent pays the fees of BFDS for services as sub-transfer agent and is not entitled to reimbursement for such fees from the Fund. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses and may also retain, as additional compensation for its services, fees for wire, telephone and redemption orders, Individual Retirement Account ("IRA") -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 49 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- trustee agent fees and account transcript fees due to the Transfer Agent from shareholders of the Fund and credits (net of bank charges) earned with respect to balances in accounts the Transfer Agent maintains in connection with its services to the Fund. For the year ended Oct. 31, 2010, the Fund's effective transfer agent fee rates as a percentage of average daily net assets of each class were as follows: Class A.............................................. 0.29% Class B.............................................. 0.30 Class C.............................................. 0.29 Class R.............................................. 0.08 Class R4............................................. 0.05 Class R5............................................. 0.05 Class W.............................................. 0.20 Class Z.............................................. 0.19*
* Annualized. Class I shares do not pay transfer agent fees. The Fund and certain other associated investment companies (together, the Guarantors), have severally, but not jointly, guaranteed the performance and observance of all the terms and conditions of a lease entered into by Seligman Data Corp. (SDC), the former transfer agent of Seligman Global Growth Fund, which was acquired by the Fund on Aug. 14, 2009 (Note 11), including the payment of rent by SDC (the Guaranty). The lease and the Guaranty expire in January 2019. At Oct. 31, 2010, the Fund's total potential future obligation over the life of the Guaranty is $23,613. The liability remaining at Oct. 31, 2010 for non-recurring charges associated with the lease amounted to $11,735 and is included within other accrued expenses in the Statement of Assets and Liabilities. PLAN ADMINISTRATION SERVICES FEES Under a Plan Administration Services Agreement with the Transfer Agent, the Fund pays an annual fee at a rate of 0.25% of the Fund's average daily net assets attributable to Class R4 shares for the provision of various administrative, recordkeeping, communication and educational services. Prior to Sept. 7, 2010, the Fund also paid an annual fee at a rate of 0.25% of the Fund's average daily net assets attributable to Class R shares for such services. DISTRIBUTION FEES The Fund has an agreement with Columbia Management Investment Distributors, Inc. (formerly known as RiverSource Fund Distributors, Inc.) (the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund paid a fee at an annual rate of up -------------------------------------------------------------------------------- 50 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- to 0.25% of the Fund's average daily net assets attributable to Class A and Class W shares, a fee at an annual rate of up to 0.50% of the Fund's average daily net assets attributable to Class R shares (of which up to 0.25% may be used for services) and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. For Class B and Class C shares, of the 1.00% fee, up to 0.75% is reimbursed for distribution expenses. The amount of distribution expenses incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $1,321,000 and $1,518,000 for Class B and Class C shares, respectively. These amounts are based on the most recent information available as July 31, 2010, and may be recovered from future payments under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution fee is reduced. SALES CHARGES Sales charges, including front-end and CDSCs, received by the Distributor for distributing Fund shares were $263,126 for Class A, $20,400 for Class B and $442 for Class C for the year ended Oct. 31, 2010. EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES Effective Jan. 1, 2011, the Investment Manager and its affiliates have contractually agreed to waive certain fees and reimburse certain expenses until Dec. 31, 2011, unless sooner terminated at the sole discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds*), before giving effect to any performance incentive adjustment, will not exceed the following percentage of the class' average daily net assets: Class A.............................................. 1.36% Class B.............................................. 2.11 Class C.............................................. 2.11 Class I.............................................. 0.91 Class R.............................................. 1.61 Class R4............................................. 1.21 Class R5............................................. 0.96 Class W.............................................. 1.36 Class Z.............................................. 1.11
* In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 51 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- 5. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $244,014,816 and $344,114,577, respectively, for the year ended Oct. 31, 2010. Realized gains and losses are determined on an identified cost basis. 6. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated were as follows:
YEAR ENDED OCT. 31, 2010 2009 ------------------------------------------------------------------- CLASS A Sold 3,039,215 7,500,867 Fund merger N/A 2,011,033 Converted from Class B(a) 995,109 1,463,400 Reinvested distributions 235,302 983,464 Redeemed (15,580,909) (20,645,429) ------------------------------------------------------------------- Net increase (decrease) (11,311,283) (8,686,665) ------------------------------------------------------------------- CLASS B Sold 311,662 745,833 Fund merger N/A 173,293 Reinvested distributions 6,174 -- Converted to Class A(a) (1,059,873) (1,561,833) Redeemed (1,370,661) (2,294,056) ------------------------------------------------------------------- Net increase (decrease) (2,112,698) (2,936,763) ------------------------------------------------------------------- CLASS C Sold 175,367 298,410 Fund merger N/A 977,635 Reinvested distributions 2,085 1,304 Redeemed (480,706) (411,308) ------------------------------------------------------------------- Net increase (decrease) (303,254) 866,041 ------------------------------------------------------------------- CLASS I Sold 305,925 8,069,029 Reinvested distributions 39,003 69,326 Redeemed (1,275,047) (2,849,465) ------------------------------------------------------------------- Net increase (decrease) (930,119) 5,288,890 ------------------------------------------------------------------- CLASS R(b) Sold 1,903 1,844 Fund merger N/A 24,131 Reinvested distributions -- 5 Redeemed (3,655) (19,116) ------------------------------------------------------------------- Net increase (decrease) (1,752) 6,864 -------------------------------------------------------------------
-------------------------------------------------------------------------------- 52 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, 2010 2009 ------------------------------------------------------------------- CLASS R3 Redeemed (634) -- ------------------------------------------------------------------- Net increase (decrease) (634) -- ------------------------------------------------------------------- CLASS R4 Sold 215,707 265,435 Reinvested distributions 5,591 17,716 Redeemed (217,500) (266,560) ------------------------------------------------------------------- Net increase (decrease) 3,798 16,591 ------------------------------------------------------------------- CLASS R5 Fund merger N/A 2,227 Reinvested distributions 15 -- Redeemed (149) -- ------------------------------------------------------------------- Net increase (decrease) (134) 2,227 ------------------------------------------------------------------- CLASS Z(c) Sold 365 N/A ------------------------------------------------------------------- Net increase (decrease) 365 N/A -------------------------------------------------------------------
(a) Automatic conversion of Class B shares to Class A shares based on the original purchase date. (b) Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. (c) For the period from Sept. 27, 2010 (when shares became available) to Oct. 31, 2010. 7. LENDING OF PORTFOLIO SECURITIES The Fund has entered into a Master Securities Lending Agreement (the Agreement) with JPMorgan Chase Bank, National Association (JPMorgan). The Agreement authorizes JPMorgan as lending agent to lend securities to authorized borrowers in order to generate additional income on behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured by cash or U.S. government securities equal to at least 100% of the market value of the loaned securities. Any additional collateral required to maintain those levels due to market fluctuations of the loaned securities is delivered the following business day. Cash collateral received is invested by the lending agent on behalf of the Fund into authorized investments pursuant to the Agreement. The investments made with the cash collateral are listed in the Portfolio of Investments. The values of such investments and any uninvested cash collateral are disclosed in the Statement of Assets and Liabilities along with the related obligation to return the collateral upon the return of the securities loaned. At Oct. 31, 2010, securities valued at $12,949,988 were on loan, secured by cash collateral of $13,755,606 invested in short-term securities or in cash equivalents. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 53 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- Risks of delay in recovery of securities or even loss of rights in the securities may occur should the borrower of the securities fail financially. Risks may also arise to the extent that the value of the securities loaned increases above the value of the collateral received. JPMorgan will indemnify the Fund from losses resulting from a borrower's failure to return a loaned security when due. Such indemnification does not extend to losses associated with declines in the value of cash collateral investments. Loans are subject to termination by the Fund or the borrower at any time, and are, therefore, not considered to be illiquid investments. Pursuant to the Agreement, the Fund receives income for lending its securities either in the form of fees or by earning interest on invested cash collateral, net of negotiated rebates paid to borrowers and fees paid to the lending agent for services provided and any other securities lending expenses. Net income of $83,085 earned from securities lending for the year ended Oct. 31, 2010 is included in the Statement of Operations. The Fund also continues to earn interest and dividends on the securities loaned. 8. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in Columbia Short-Term Cash Fund (formerly known as RiverSource Short-Term Cash Fund), a money market fund established for the exclusive use of certain funds managed by the Investment Manager and other institutional clients of the Investment Manager. The cost of the Fund's purchases and proceeds from sales of shares of Columbia Short-Term Cash Fund aggregated $116,197,271 and $117,504,438, respectively, for the year ended Oct. 31, 2010. The income distributions received with respect to the Fund's investment in Columbia Short-Term Cash Fund can be found in the Statement of Operations and the Fund's invested balance in Columbia Short-Term Cash Fund at Oct. 31, 2010, can be found in the Portfolio of Investments. 9. BANK BORROWINGS The Fund has entered into a revolving credit facility with a syndicate of banks led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility became effective on Oct. 14, 2010, replacing a prior credit facility. The credit facility agreement, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager, severally and not jointly, permits collective borrowings up to $300 million. The borrowers shall have the right, upon written notice to the Administrative Agent, to request an increase of up to $200 million in the aggregate amount of the credit facility from new or existing lenders, provided that the aggregate amount of the credit facility shall at no time exceed -------------------------------------------------------------------------------- 54 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- $500 million. Participation in such increase by any existing lender shall be at such lender's sole discretion. Interest is charged to each fund based on its borrowings at a rate equal to the sum of the federal funds rate plus (i) 1.25% per annum plus (ii) if one-month LIBOR exceeds the federal funds rate, the amount of such excess. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.10% per annum. Prior to Oct. 14, 2010, the credit facility agreement, which was a collective agreement between the Fund and certain other funds managed by the Investment Manager, severally and not jointly, permitted collective borrowings up to $300 million. The Fund also paid a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.10% per annum, in addition to an upfront fee equal to its pro rata share of 0.04% of the amount of the credit facility. The Fund had no borrowings during the year ended Oct. 31, 2010. 10. PROCEEDS FROM REGULATORY SETTLEMENTS As a result of settlements of administrative proceedings brought by the Securities and Exchange Commission against unaffiliated third parties relating to market timing and/or late trading of mutual funds, the Fund received $424,540 during the year ended Oct. 31, 2010 and $93,216 during the year ended Oct. 31, 2009, which represented the Fund's portion of the proceeds from the settlements (the Fund was not a party to the proceeding). The proceeds received by the Fund were recorded as an increase to additional paid-in capital. 11. FUND MERGER At the close of business on Aug. 14, 2009, Columbia Global Equity Fund acquired the assets and assumed the identified liabilities of Seligman Global Growth Fund. The merger was completed after shareholders of the acquired fund approved the plan on June 29, 2009. The aggregate net assets of Columbia Global Equity Fund immediately before the acquisition were $475,267,886 and the combined net assets immediately after the acquisition were $493,718,472. The acquisition was accomplished by a tax-free exchange of 3,038,152 shares of Seligman Global Growth Fund valued at $18,450,586. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 55 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- In exchange for Seligman Global Growth Fund shares, Columbia Global Equity Fund issued the following number of shares:
SHARES ------------------------------------------------------------- Class A........................................... 2,011,033 Class B........................................... 173,293 Class C........................................... 977,635 Class R2.......................................... 24,131 Class R5.......................................... 2,227
The components of Seligman Global Growth Fund's net assets after adjustments for any permanent book-to-tax differences at the merger date were as follows:
EXCESS OF ACCUMULATED DISTRIBUTIONS OVER TOTAL CAPITAL UNREALIZED NET NET INVESTMENT NET ASSETS STOCK APPRECIATION REALIZED LOSS INCOME ---------------------------------------------------------------------------------------------- Seligman Global Growth Fund...... $18,450,586 $52,704,193 $320,343 $(34,572,254) $(1,696)
12. FEDERAL TAX INFORMATION Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of foreign currency transactions, passive foreign investment company (PFIC) holdings, foreign tax credits and losses deferred due to wash sales. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Fund. In the Statement of Assets and Liabilities, as a result of permanent book-to-tax differences, undistributed net investment income has been increased by $1,744,123 and accumulated net realized loss has been decreased by $129,000,943 resulting in a net reclassification adjustment to decrease paid-in capital by $130,745,066. The tax character of distributions paid for the years indicated was as follows:
YEAR ENDED OCT. 31, 2010 2009 ------------------------------------------------------------------ Ordinary income........................... $1,912,262 $5,856,080 Long-term capital gain.................... -- --
-------------------------------------------------------------------------------- 56 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- At Oct. 31, 2010, the components of distributable earnings on a tax basis were as follows: Undistributed ordinary income................... $ 1,359,972 Undistributed accumulated long-term gain........ $ -- Accumulated realized loss....................... $(194,881,637) Unrealized appreciation (depreciation).......... $ 61,072,861
For federal income tax purposes, the Fund had a capital loss carry-over of $194,881,637 at Oct. 31, 2010, that if not offset by capital gains will expire as follows:
2011 2015 2016 2017 $30,509,951 $1,766,232 $62,625,028 $99,980,426
For the year ended Oct. 31, 2010, $14,600,080 of capital loss carry-over was utilized and $130,038,031 expired unused. It is unlikely the Board will authorize a distribution of any net realized capital gains until the available capital loss carry-over has been offset or expires. There is no assurance that the Fund will be able to utilize all of its capital loss carry-over before it expires. 13. RISKS RELATING TO CERTAIN INVESTMENTS FOREIGN/EMERGING MARKETS RISK Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities. Investing in emerging markets may accentuate these risks. 14. SUBSEQUENT EVENTS Management has evaluated Fund related events and transactions that occurred during the period from the date of the Statement of Assets and Liabilities through the date of issuance of the Fund's financial statements. There were no events or transactions that occurred during the period that materially impacted the amounts or disclosures in the Fund's financial statements. 15. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc. was filed in the -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 57 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company (now known as legacy RiverSource) mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota (the District Court). In response to defendants' motion to dismiss the complaint, the District Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. Summary judgment was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit) on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary judgment and remanded to the District Court for further proceedings. On August 6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court (the Supreme Court), asking the Supreme Court to stay the District Court proceedings while the Supreme Court considers and rules in a case captioned Jones v. Harris Associates, which involves issues of law similar to those presented in the Gallus case. On March 30, 2010, the Supreme Court issued its ruling in Jones v. Harris Associates, and on April 5, 2010, the Supreme Court vacated the Eighth Circuit's decision in the Gallus case and remanded the case to the Eighth Circuit for further consideration in light of the Supreme Court's decision in Jones v. Harris Associates. On June 4, 2010, the Eighth Circuit remanded the Gallus case to the District Court for further consideration in light of the Supreme Court's decision in Jones v. Harris Associates. On December 9, 2010, the District Court reinstated its July 9, 2007 summary judgment order in favor of the defendants. In December 2005, without admitting or denying the allegations, American Express Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc. (Ameriprise Financial)), entered into settlement agreements with the Securities and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC) related to market timing activities. As a result, AEFC was censured and ordered to cease and desist from committing or causing any violations of certain provisions of the Investment Advisers Act of 1940, the Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million and civil money penalties of $7 million. AEFC also agreed to retain an independent distribution consultant to assist in developing a plan for distribution of all disgorgement and civil penalties ordered by the SEC -------------------------------------------------------------------------------- 58 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- in accordance with various undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its affiliates have cooperated with the SEC and the MDOC in these legal proceedings, and have made regular reports to the funds' Boards of Directors/Trustees. Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Funds. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 59 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------ TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF COLUMBIA GLOBAL EQUITY FUND: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Columbia Global Equity Fund (formerly known as Threadneedle Global Equity Fund) (the Fund) (one of the portfolios constituting the RiverSource Global Series, Inc.) as of October 31, 2010, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights of the Fund for the period ended October 31, 2006, were audited by other auditors whose report dated December 20, 2006, expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2010, by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion. -------------------------------------------------------------------------------- 60 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- In our opinion, the financial statements and financial highlights audited by us as referred to above present fairly, in all material respects, the financial position of Columbia Global Equity Fund of the RiverSource Global Series, Inc. at October 31, 2010, 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 then ended, and the financial highlights for each of the four years in the period then ended, in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP Minneapolis, Minnesota December 20, 2010 -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 61 FEDERAL INCOME TAX INFORMATION ------------------------------------------------- (UNAUDITED) The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. The dividends listed below are reported to you on Form 1099-DIV, Dividends and Distributions. Shareholders should consult a tax advisor on how to report distributions for state and local tax purposes. Fiscal year ended Oct. 31, 2010
INCOME DISTRIBUTIONS -- the Fund designates the following tax attributes for distributions: Qualified Dividend Income for individuals.................... 100.00% Dividends Received Deduction for corporations................ 90.45% U.S. Government Obligations.................................. 0.00% Foreign Taxes Paid........................................... $671,137 Foreign Source Income........................................ $3,243,616
The Fund designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares. -------------------------------------------------------------------------------- 62 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT BOARD MEMBERS AND OFFICERS ----------------------------------------------------- Shareholders elect a Board that oversees the Fund's operations. The Board appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following is a list of the Fund's Board members. Each Board member oversees 145 Columbia, RiverSource, Seligman and Threadneedle funds. Under current Board policy, members generally serve until the next Board meeting after he or she reaches the mandatory retirement age established by the Board, or the fifteenth anniversary of the first Board meeting they attended as members of the Board. INDEPENDENT BOARD MEMBERS
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None 901 S. Marquette Ave. 1/11/06 Attorney Minneapolis, MN 55402 Age 56 ------------------------------------------------------------------------------------------------------------------------------ Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None 901 S. Marquette Ave. 7/11/07 Leadership (consulting company) Minneapolis, MN 55402 Age 56 ------------------------------------------------------------------------------------------------------------------------------ Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None 901 S. Marquette Ave. 11/1/04 University; former Dean, McCallum Graduate School of Minneapolis, MN 55402 Business, Bentley University Age 60 ------------------------------------------------------------------------------------------------------------------------------ Anne P. Jones Board member since Attorney and Consultant None 901 S. Marquette Ave. 3/1/85 Minneapolis, MN 55402 Age 75 ------------------------------------------------------------------------------------------------------------------------------ Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries, 901 S. Marquette Ave. since 1/1/07, College Inc. (manufactures Minneapolis, MN 55402 Board member irrigation systems) Age 71 since 1/1/02 ------------------------------------------------------------------------------------------------------------------------------ John F. Maher Board member Retired President and Chief Executive Officer and None 901 S. Marquette Ave. since 12/10/08 former Director, Great Western Financial Corporation Minneapolis, MN 55402 (financial services), 1986-1997 Age 67 ------------------------------------------------------------------------------------------------------------------------------ Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None 901 S. Marquette Ave. 11/1/04 real estate and asset management company) Minneapolis, MN 55402 Age 58 ------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 63 BOARD MEMBERS AND OFFICERS (continued) ----------------------------------------- INDEPENDENT BOARD MEMBERS (CONTINUED)
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ Leroy C. Richie Board member Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc. 901 S. Marquette Ave. since 11/11/08 President and General Counsel, Automotive Legal (digital imaging); Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil Age 69 and gas exploration and production); OGE Energy Corp. (energy and energy services) ------------------------------------------------------------------------------------------------------------------------------ Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera 901 S. Marquette Ave. 11/13/02 since 2003 (biotechnology); former President, Aquila Pharmaceuticals, Minneapolis, MN 55402 Biopharmaceuticals Inc. Age 66 (biotechnology); Healthways, Inc. (health management programs) ------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 64 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- BOARD MEMBER AFFILIATED WITH THE INVESTMENT MANAGER*
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ William F. Truscott Board member Chairman of the Board, Columbia Management Investment None 53600 Ameriprise since 11/7/01, Advisers, LLC (formerly RiverSource Investments, LLC) Financial Center Vice President since since May 2010 (previously President, Chairman of the Minneapolis, MN 55474 2002 Board and Chief Investment Officer, 2001-April 2010); Age 50 Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Chief Executive Officer, U.S. Asset Management & President -- Annuities, Ameriprise Financial, Inc. since May 2010 (previously President -- U.S. Asset Management and Chief Investment Officer, 2005-April 2010 and Senior Vice President -- Chief Investment Officer, 2001-2005); Director, President and Chief Executive Officer, Ameriprise Certificate Company since 2006; Director, Columbia Management Investment Distributors, Inc. (formerly RiverSource Fund Distributors, Inc.) since May 2010 (previously Chairman of the Board and Chief Executive Officer, 2008-April 2010); Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006 ------------------------------------------------------------------------------------------------------------------------------
* Interested person (as defined under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the investment manager or Ameriprise Financial. The SAI has additional information about the Fund's Board members and is available, without charge, upon request by calling 800.345.6611; contacting your financial intermediary; or visiting columbiamanagement.com. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 65 BOARD MEMBERS 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. In addition to Mr. Truscott, who is Vice President, the Fund's other officers are: FUND OFFICERS
NAME, POSITION HELD ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION AGE LENGTH OF SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------- J. Kevin Connaughton President since Senior Vice President and General Manager -- Mutual One Financial Center 5/1/10 Fund Products, Columbia Management Investment Advisers, Boston, MA 02111 LLC since May 2010; President, Columbia Funds since Age 46 2009 (previously Senior Vice President and Chief Financial Officer, June 2008 -- January 2009); President, Atlantic Funds and Nations Funds since 2009; Managing Director of Columbia Management Advisors, LLC, December 2004 -- April 2010; Treasurer, Columbia Funds, October 2003 -- May 2008; Treasurer, the Liberty Funds, Stein Roe Funds and Liberty All-Star Funds, December 2000 -- December 2006 -------------------------------------------------------------------------------------------------------- Amy K. Johnson Vice President since Senior Vice President and Chief Operating Officer, 5228 Ameriprise Financial 12/5/06 Columbia Management Investment Advisers, LLC (formerly Center Minneapolis, MN RiverSource Investments, LLC) since May 2010 55474 (previously Chief Administrative Officer, 2009 -- April Age 45 2010 and Vice President -- Asset Management and Trust Company Services, 2006-2009 and Vice President -- Operations and Compliance, 2004-2006); Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010 -------------------------------------------------------------------------------------------------------- Jeffrey P. Fox Treasurer since Chief Financial Officer, Columbia Management Investment 105 Ameriprise 7/10/02 Distributors, Inc. (formerly RiverSource Fund Financial Center Distributors, Inc.) and of Seligman Data Corp. since Minneapolis, MN 55474 2008; Vice President -- Investment Accounting, Age 55 Ameriprise Financial, Inc. since 2002; Chief Financial Officer, RiverSource Distributors, Inc. since 2006 -------------------------------------------------------------------------------------------------------- Scott R. Plummer Vice President, Chief Legal Officer and Assistant Secretary, Columbia 5228 Ameriprise Financial General Counsel and Management Investment Advisers, LLC (formerly Center Secretary since RiverSource Investments, LLC) since June 2005; Vice Minneapolis, MN 55474 12/5/06 President and Lead Chief Counsel -- Asset Management, Age 51 Ameriprise Financial, Inc. since May 2010 (previously Vice President and Chief Counsel -- Asset Management, 2005-April 2010 and Vice President -- Asset Management Compliance, 2004-2005); Senior Vice President, Secretary and Chief Legal Officer, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Vice President, Chief Counsel and Assistant Secretary, Columbia Management Investment Distributors, Inc. (formerly RiverSource Fund Distributors, Inc.) since 2008; Vice President, General Counsel and Secretary, Ameriprise Certificate Company since 2005; Chief Counsel, RiverSource Distributors, Inc. since 2006 --------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 66 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- FUND OFFICERS (CONTINUED)
NAME, POSITION HELD ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION AGE LENGTH OF SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------- Michael A. Jones Vice President since Director and President, Columbia Management Investment 100 Federal Street 5/1/10 Advisers, LLC since May 2010; President and Director, Boston, MA 02110 Columbia Management Investment Distributors, Inc. since Age 51 May 2010; Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Manager, Chairman, Chief Executive Officer and President, Columbia Management Advisors, LLC, 2007 -- April 2010; Chief Executive Officer, President and Director, Columbia Management Distributors, Inc., 2006 -- April 2010; former Co-President and Senior Managing Director, Robeco Investment Management -------------------------------------------------------------------------------------------------------- Colin Moore Vice President since Chief Investment Officer, Columbia Management One Financial Center 5/1/10 Investment Advisers, LLC since May 2010; Senior Vice Boston, MA 02111 President, Atlantic Funds, Columbia Funds and Nations Age 52 Funds since May 2010; Manager, Managing Director and Chief Investment Officer, Columbia Management Advisors, LLC, 2007- April 2010; Head of Equities, Columbia Management Advisors, LLC, 2002-Sept. 2007 -------------------------------------------------------------------------------------------------------- Linda Wondrack Chief Compliance Vice President and Chief Compliance Officer, Columbia One Financial Center Officer since 5/1/10 Management Investment Advisers, LLC since May 2010; Boston, MA 02111 Chief Compliance Officer, Columbia Funds since 2007; Age 46 Senior Vice President and Chief Compliance Officer, Atlantic Funds and Nations Funds since 2007; Director (Columbia Management Group, LLC and Investment Product Group Compliance), Bank of America, June 2005 -- April 2010 -------------------------------------------------------------------------------------------------------- Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial, 2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer and Center since 11/9/05 and Identity Theft Prevention Officer, Columbia Management Minneapolis, MN 55474 Identity Theft Investment Distributors, Inc. (formerly RiverSource Age 46 Prevention Officer Fund Distributors, Inc.) since 2008; Anti-Money since 2008 Laundering Officer, Ameriprise Financial, Inc. since 2005; Compliance Director, Ameriprise Financial, Inc., 2004-2008 --------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT 67 PROXY VOTING ------------------------------------------------------------------ The policy of the Board 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 columbiamanagement.com; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting columbiamanagement.com; or searching the website of the SEC at www.sec.gov. -------------------------------------------------------------------------------- 68 COLUMBIA GLOBAL EQUITY FUND -- 2010 ANNUAL REPORT COLUMBIA GLOBAL EQUITY FUND (formerly known as Threadneedle Global Equity Fund) P.O. Box 8081 Boston, MA 02266-8081 COLUMBIAMANAGEMENT.COM This report must be accompanied or preceded by the Fund's current prospectus. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC. (C)2010 Columbia Management Investment Advisers, LLC. All (COLUMBIA MANAGEMENT LOGO) rights reserved. S-6334 AJ (12/10)
Annual Report and Prospectus (COLUMBIA MANAGEMENT LOGO) COLUMBIA GLOBAL BOND FUND (FORMERLY KNOWN AS RIVERSOURCE GLOBAL BOND FUND) -------------------------------------------------------------------------------- ANNUAL REPORT FOR THE PERIOD ENDED OCTOBER 31, 2010 (Prospectus also enclosed) COLUMBIA GLOBAL BOND FUND SEEKS TO PROVIDE SHAREHOLDERS WITH HIGH TOTAL RETURN THROUGH INCOME AND GROWTH OF CAPITAL. This annual report includes a prospectus that describes in detail the Fund's objective, investment strategy, risks, sales charges, fees and other matters of interest. Please read the prospectus carefully before you invest or send money. NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE TABLE OF CONTENTS -------------------------------------------------------------- Your Fund at a Glance.............. 3 Manager Commentary................. 6 The Fund's Long-term Performance... 12 Fund Expenses Example.............. 14 Portfolio of Investments........... 17 Statement of Assets and Liabilities...................... 37 Statement of Operations............ 39 Statements of Changes in Net Assets........................... 41 Financial Highlights............... 43 Notes to Financial Statements...... 48 Report of Independent Registered Public Accounting Firm........... 67 Federal Income Tax Information..... 69 Board Members and Officers......... 70 Proxy Voting....................... 75
SEE THE FUND'S PROSPECTUS FOR RISKS ASSOCIATED WITH INVESTING IN THE FUND. -------------------------------------------------------------------------------- 2 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT YOUR FUND AT A GLANCE ---------------------------------------------------------- FUND SUMMARY -------------------------------------------------------------------------------- > Columbia Global Bond Fund (the Fund) Class A shares gained 7.70% (excluding sales charge) for the 12 months ended Oct. 31, 2010. > The Fund outperformed its benchmark, the Barclays Capital Global Aggregate Index, which increased 6.89% for the 12-month period. > The Fund underperformed its peer group, as represented by the Lipper Global Income Funds Index, which rose 9.90% for the same period. ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2010) --------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS --------------------------------------------------------------------- Columbia Global Bond Fund Class A (excluding sales charge) +7.70% +6.69% +6.77% +7.30% --------------------------------------------------------------------- Barclays Capital Global Aggregate Index (unmanaged) +6.89% +7.23% +7.28% +7.50% --------------------------------------------------------------------- Lipper Global Income Funds Index (unmanaged) +9.90% +6.39% +6.60% +7.09% ---------------------------------------------------------------------
(See "The Fund's Long-term Performance" for Index descriptions) 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 columbiamanagement.com or calling 800.345.6611. The 4.75% sales charge applicable to Class A shares of the Fund is not reflected in the table above. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in fees and expenses. The Fund's returns reflect the effect of fee waivers/expense reimbursements, if any. Without such waivers/reimbursements, the Fund's returns would be lower. See the Average Annual Total Returns table for performance of other share classes of the Fund. The indices do not reflect the effects of sales charges, expenses (excluding Lipper) and taxes. It is not possible to invest directly in an index. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 3 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------
AT OCT. 31, 2010 SINCE Without sales charge 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION* Class A (inception 3/20/89) +7.70% +6.69% +6.77% +7.30% N/A ------------------------------------------------------------------------- Class B (inception 3/20/95) +6.89% +5.90% +5.96% +6.47% N/A ------------------------------------------------------------------------- Class C (inception 6/26/00) +6.95% +5.93% +5.95% +6.48% N/A ------------------------------------------------------------------------- Class I (inception 3/4/04) +8.16% +7.19% +7.20% N/A +6.20% ------------------------------------------------------------------------- Class R** (inception 3/15/10) N/A N/A N/A N/A +8.15%*** ------------------------------------------------------------------------- Class R4 (inception 3/20/95) +7.85% +7.01% +7.03% +7.53% N/A ------------------------------------------------------------------------- Class W (inception 12/1/06) +7.66% +6.67% N/A N/A +6.57% ------------------------------------------------------------------------- Class Z (inception 9/27/10) N/A N/A N/A N/A +2.05%*** ------------------------------------------------------------------------- With sales charge Class A (inception 3/20/89) +2.59% +4.97% +5.73% +6.78% N/A ------------------------------------------------------------------------- Class B (inception 3/20/95) +1.89% +5.00% +5.64% +6.47% N/A ------------------------------------------------------------------------- Class C (inception 6/26/00) +5.95% +5.93% +5.95% +6.48% N/A -------------------------------------------------------------------------
Class A share performance reflects the maximum initial sales charge of 4.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second year 4%; third and fourth years 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I, Class R, Class R4, Class W and Class Z shares. Class I, Class R and Class 4 are available to qualifying institutional investors only. Class W shares are offered through qualifying discretionary accounts. Class Z shares are offered to certain eligible investors. *For classes with less than 10 years performance. **Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. *- **Not annualized. -------------------------------------------------------------------------------- 4 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- PORTFOLIO STATISTICS -------------------------------------------------------------------------------- Weighted average life(1) 7.3 years -------------------------------------- Effective duration(2) 5.1 years --------------------------------------
(1) WEIGHTED AVERAGE LIFE measures a bond's maturity, which takes into consideration the possibility that the issuer may call the bond before its maturity date. (2) EFFECTIVE DURATION measures the sensitivity of a security's price to parallel shifts in the yield curve (the graphical depiction of the levels of interest rates from two years out to 30 years). Positive duration means that as rates rise, the price decreases, and negative duration means that as rates rise, the price increases. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 5 MANAGER COMMENTARY ------------------------------------------------------------- Effective Sept. 27, 2010, RiverSource Global Bond Fund was renamed Columbia Global Bond Fund. At Oct. 31, 2010, approximately 36% of the Fund's shares were owned in aggregate by affiliated funds-of-funds managed by Columbia Management Investment Advisers, LLC (Columbia Management). As a result of asset allocation decisions by Columbia Management, it is possible Columbia Global Bond Fund may experience relatively large purchases or redemptions from affiliated funds-of-funds (see page 60, Class I capital share transactions for related activity during the most recent fiscal period). Columbia Management seeks to minimize the impact of these transactions by structuring them over a reasonable period of time. Columbia Global Bond Fund may experience increased expenses as it buys and sells securities as a result of purchases or redemptions by affiliated funds-of-funds. For more information on the Fund's expenses, see the discussions beginning on pages 14 and 55. PORTFOLIO BREAKDOWN(1) (at Oct. 31, 2010) --------------------------------------------------------------------------------
Asset-Backed 1.7% ------------------------------------------------ Commercial Mortgage-Backed 3.5% ------------------------------------------------ Consumer Discretionary 1.5% ------------------------------------------------ Consumer Staples 2.4% ------------------------------------------------ Energy 1.2% ------------------------------------------------ Financials 7.8% ------------------------------------------------ Foreign Government 55.0% ------------------------------------------------ Health Care 0.4% ------------------------------------------------ Industrials 0.8% ------------------------------------------------ Materials 1.6% ------------------------------------------------ Residential Mortgage-Backed 4.6% ------------------------------------------------ Telecommunication 5.0% ------------------------------------------------ U.S. Government Obligations & Agencies 3.8% ------------------------------------------------ Utilities 8.6% ------------------------------------------------ Other(2) 2.1% ------------------------------------------------
(1) Portfolio holdings include industry sectors that can be comprised of securities in several industries. Please refer to the section entitled "Portfolio of Investments" for a complete listing. No single industry exceeded 25% of portfolio assets. Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan). The Fund's composition is subject to change. (2) Cash & Cash Equivalents. -------------------------------------------------------------------------------- 6 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- Dear Shareholders, Columbia Global Bond Fund (the Fund) Class A shares gained 7.70% (excluding sales charge) for the 12 months ended Oct. 31, 2010. The Fund outperformed its benchmark, the Barclays Capital Global Aggregate Index (Barclays Global Index), which rose 6.89%, but underperformed the Lipper Global Income Funds Index, representing the Fund's peer group, which increased 9.90% during the same period. SIGNIFICANT PERFORMANCE FACTORS On an absolute basis, the Fund benefited during the annual period from a decline in government bond yields, reasonable performance in non-government bond sectors and a modest decline in the U.S. dollar. The U.S. dollar declined 1.7% on a trade-weighted basis during the annual period. As the value of the U.S. dollar decreases, the dollar value of foreign investments typically rises and vice versa. The Fund had approximately 62% of its net assets exposed to foreign currencies, on average, during the annual period, down slightly from approximately 63%, on average, in the prior 12-month period. Relative to the Barclays Global Index, the Fund was helped most during the annual period by our active management decisions. Currency and country selection, duration and yield curve positioning, and sector and issue selection all aided performance during the period. Decisions that had a particularly positive impact on performance included our allocation to TOP TEN COUNTRIES(1) (at Oct. 31, 2010) --------------------------------------------------------------------------------
United States 35.8% ------------------------------------------------ Japan 12.8% ------------------------------------------------ Germany 5.7% ------------------------------------------------ France 5.4% ------------------------------------------------ United Kingdom 4.9% ------------------------------------------------ Netherlands 3.9% ------------------------------------------------ Italy 3.2% ------------------------------------------------ Canada 3.1% ------------------------------------------------ Spain 2.8% ------------------------------------------------ Brazil 2.4% ------------------------------------------------
(1) Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan and Cash & Cash Equivalents). -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 7 MANAGER COMMENTARY (continued) ------------------------------------------------- several commodity-related and emerging market currencies, our allocation to below investment grade issuers (both sovereign and corporate), and issue selection within investment grade credit. Our positioning in the peripheral Eurozone countries (Italy, Spain, Portugal, Ireland, and Greece) had a modestly positive impact on performance. Moderate exposure to Greek bonds hurt performance, but underweight positions in the other peripheral issuers more than compensated. In contrast, our underweight positions in the Japanese yen and U.S. mortgages weighed on performance relative to the index. On balance, though, the annual period offers a good representation of our investment style, which looks to add return in a diversified and balanced fashion over time. CHANGES TO THE FUND'S PORTFOLIO We made a number of changes to portfolio positioning during the period. Our largest position shifts took place around the middle of the period, when mounting concerns over Southern Europe's debt crisis and signs of a slowdown in the US economy led to a sharp drop in government bond yields in core markets, a widening in credit spreads, and a sell-off in more cyclically sensitive currencies. We used the market turbulence as an opportunity to add risk to the Fund's portfolio, which we did in several ways. First, we cut our duration-weighted exposure to government bonds sharply and reallocated the exposure to spread sectors, especially investment grade corporate bonds, securitized assets, and below investment grade bonds (both sovereign and corporate issues). Second, we shortened portfolio duration relative to the index, especially in the U.S., Japan and Europe. In hindsight, we made this shift a few months too early, but the good performance of spread sectors in the second half of the period more than compensated. Third, we increased our exposure to several cyclically sensitive currencies such as the Canadian dollar. We had increased our U.S. dollar exposure in the spring, when the Southern European debt crisis started to unfold, but then cut it sharply over the summer once the U.S. dollar peaked and started to trade lower. We made an additional round of changes towards the end of the annual period, taking profits on some of the position shifts above. In particular, we cut back our overweight positions in the Canadian, Australian, and New Zealand dollars. We also trimmed our overweight position in -------------------------------------------------------------------------------- 8 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- investment grade corporate bonds and went back to an underweight position in securitized assets. Finally, we increased our exposure to the U.S. dollar, moving from an underweight to a neutral position on the view that speculation of a second round of quantitative easing by the U.S. Federal Reserve had caused the U.S. dollar to trade below levels justified by interest rate differentials. On balance, these changes left the Fund in a somewhat more defensive stance as the annual period ended. OUR FUTURE STRATEGY Looking forward, we expect the global economy to expand at a trend-like pace of 4% in the year ahead. The global economy has become bifurcated, however, between economies experiencing normal cyclical recoveries and those seeing sub-par recoveries due to the damage left behind by financial crisis. The first group includes economies where the events of 2007-09 were largely an external shock and where imbalances coming into the crisis were modest. Fiscal and monetary stimulus had the desired effect and growth rebounded smartly. Output gaps have largely or fully disappeared and central banks have generally started normalizing monetary policy as a result. Growth appears to be moderating to a more sustainable pace in many of these countries, but policy generally remains accommodative and we expect the normalization process to continue. The second group includes countries where the combination of excess leverage and falling asset prices, especially real estate prices, damaged household balance sheets, banks, and government finances. Fiscal and monetary policy stimulus helped arrest the decline and spur recovery, but the transition to an environment of healthy private sector expansion has been bumpy and halting, reflecting the need for further deleveraging. Output gaps in this second group of countries remain large, keeping central banks on hold at historically low interest rates. We expect this theme of differentiation to remain in place and anticipate looking to capitalize on it by focusing on healthier countries, currencies, and sectors. We also expect government yields to rise over time, but this process will likely remain gradual as long as the major developed country central banks remain on hold. We also expect the U.S. dollar to remain broadly weak in the year ahead, reflecting low U.S. short-term rates, but -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 9 MANAGER COMMENTARY (continued) ------------------------------------------------- remain alert to the risk of temporary U.S. dollar appreciation during bouts of investor risk aversion. A year plus into the global recovery process, however, markets remain fickle. The annual period just ended was marked by sudden and unpredictable swings in investor risk appetite, sometimes almost monthly, and it seems likely this pattern will continue until economic recovery in the largest developed countries is more firmly entrenched. As a result, we continue to monitor the market for changing conditions and adjust the Fund's duration, country, sector, yield curve, and currency positioning in an effort to seek an attractive balance between risk and potential return. Our sector teams remain focused on careful individual security selection, as we continue to seek opportunities to capitalize on attractively valued bonds. Nicholas Pifer, CFA(R) Portfolio Manager Any specific securities mentioned are for illustrative purposes only and are not a complete list of securities that have increased or decreased in value. The views expressed in this statement reflect those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Columbia Management Investment Advisers, LLC* (the Investment Manager) or any subadviser to the Fund or any other person in the Investment Manager or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and the Investment Manager disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for the Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of the Fund. * Effective May 1, 2010, RiverSource Investments, LLC became known as Columbia Management Investment Advisers, LLC. -------------------------------------------------------------------------------- 10 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT THIS PAGE LEFT BLANK INTENTIONALLY THE FUND'S LONG-TERM PERFORMANCE ----------------------------------------------- The chart on the facing page illustrates the total value of an assumed $10,000 investment in Columbia Global Bond Fund Class A shares (from 11/1/00 to 10/31/10) as compared to the performance of the Barclays Capital Global Aggregate Index and the Lipper Global Income Funds Index. In comparing the Fund's Class A shares to these indices, you should take into account the fact that the Fund's performance reflects the maximum initial sales charge of 4.75%, while such charges are not reflected in the performance of the indices. Returns for the Fund include the reinvestment of any distributions paid during each period. The performance information shown represents past performance and is not a guarantee of future results. The table below and the chart on the facing page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 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 or visiting columbiamanagement.com. Also see "Past Performance" in the Fund's current prospectus. COMPARATIVE RESULTS --------------------------------------------------------------------------------
Results at Oct. 31, 2010 1 YEAR 3 YEARS 5 YEARS 10 YEARS COLUMBIA GLOBAL BOND FUND (INCLUDES SALES CHARGE) Class A Cumulative value of $10,000 $10,259 $11,567 $13,215 $19,283 ------------------------------------------------------------------------------------------ Average annual total return +2.59% +4.97% +5.73% +6.78% ------------------------------------------------------------------------------------------ BARCLAYS CAPITAL GLOBAL AGGREGATE INDEX(1) Cumulative value of $10,000 $10,689 $12,331 $14,207 $20,606 ------------------------------------------------------------------------------------------ Average annual total return +6.89% +7.23% +7.28% +7.50% ------------------------------------------------------------------------------------------ LIPPER GLOBAL INCOME FUNDS INDEX(2) Cumulative value of $10,000 $10,990 $12,041 $13,763 $19,829 ------------------------------------------------------------------------------------------ Average annual total return +9.90% +6.39% +6.60% +7.09% ------------------------------------------------------------------------------------------
Results for other share classes can be found on page 4. -------------------------------------------------------------------------------- 12 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- (VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN COLUMBIA GLOBAL BOND FUND LINE GRAPH)
COLUMBIA GLOBAL BOND FUND CLASS A BARCLAYS CAPITAL LIPPER GLOBAL (INCLUDES SALES GLOBAL AGGREGATE INCOME FUNDS CHARGE) INDEX(1) INDEX(2) ----------------- ------------------ ------------------ 11/1/00 $ 9,525 $10,000 $10,000 10,191 10,515 10,622 9,946 10,304 10,434 10,110 10,486 10,611 10/01 10,557 10,984 11,010 10,220 10,534 10,757 10,436 10,854 10,959 10,918 11,587 11,268 10/02 11,217 11,872 11,549 11,948 12,525 12,188 12,312 12,882 12,648 12,254 12,811 12,643 10/03 12,704 13,321 13,075 13,361 13,987 13,693 13,089 13,695 13,453 13,186 13,800 13,541 10/04 14,062 14,610 14,242 14,485 15,067 14,680 14,472 15,108 14,709 14,081 14,720 14,554 10/05 13,896 14,505 14,408 14,086 14,727 14,715 14,177 14,805 14,861 14,345 15,025 15,000 10/06 14,614 15,344 15,302 14,731 15,357 15,450 15,188 15,888 15,878 15,171 15,887 15,898 10/07 15,875 16,712 16,468 16,283 17,452 16,986 16,501 17,760 16,996 16,330 17,603 16,702 10/08 14,659 16,281 14,906 15,356 17,211 15,189 15,759 17,369 15,507 17,171 18,463 16,994 10/09 17,903 19,279 18,043 17,717 19,106 18,283 17,745 18,978 18,663 18,306 19,612 18,984 10/10 19,283 20,606 19,829
(1) The Barclays Capital Global Aggregate Index, an unmanaged market capitalization weighted benchmark, tracks the performance of investment grade fixed income securities denominated in 13 currencies. The index reflects reinvestment of all distributions and changes in market prices. (2) The Lipper Global Income Funds Index includes the 30 largest global income funds tracked by Lipper Inc. The index's returns include net reinvested dividends. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 13 FUND EXPENSES EXAMPLE ---------------------------------------------------------- (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (i) transaction costs, including sales charges (loads) on purchase payments; and (ii) ongoing costs, which may include management fees; distribution and service (Rule 12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the ongoing expenses of any funds in which the Fund invests (also referred to as "acquired funds"), including affiliated and non- affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the ongoing expenses charged by acquired funds using the expense ratio of each of the acquired funds as of the acquired fund's most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period indicated and held until Oct. 31, 2010. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses for each class. You may use the information in this line, together with the amount you 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 result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for each class and an assumed rate of return of 5% per year before expenses, which is not the actual return for the class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. -------------------------------------------------------------------------------- 14 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED MAY 1, 2010(a) OCT. 31, 2010 THE PERIOD(b) EXPENSE RATIO ------------------------------------------------------------------------------------------- Class A ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,086.70 $ 6.50(d) 1.25%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,018.70 $ 6.29(d) 1.25%(d) ------------------------------------------------------------------------------------------- Class B ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,082.10 $10.49(d) 2.02%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,014.86 $10.15(d) 2.02%(d) ------------------------------------------------------------------------------------------- Class C ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,082.40 $10.38(d) 2.00%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,014.96 $10.05(d) 2.00%(d) ------------------------------------------------------------------------------------------- Class I ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,089.00 $ 4.27(d) .82%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,020.84 $ 4.13(d) .82%(d) ------------------------------------------------------------------------------------------- Class R ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,084.90 $ 8.21(d) 1.58%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,017.05 $ 7.95(d) 1.58%(d) ------------------------------------------------------------------------------------------- Class R4 ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,087.40 $ 5.83(d) 1.12%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,019.35 $ 5.64(d) 1.12%(d) ------------------------------------------------------------------------------------------- Class W ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,085.00 $ 6.55(d) 1.26%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,018.65 $ 6.34(d) 1.26%(d) ------------------------------------------------------------------------------------------- Class Z ------------------------------------------------------------------------------------------- Actual(e) $1,000 $1,020.50 $ 0.84(d) .95%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,020.19 $ 4.78(d) .95%(d) -------------------------------------------------------------------------------------------
(a) The beginning account value for Class Z is as of Sept. 27, 2010 (when shares became available) for actual expense calculations. (b) Expenses are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). Actual expenses for Class Z are equal to the annualized expense ratio for -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 15 FUND EXPENSES EXAMPLE (continued) ---------------------------------------------- the class as indicated above, multiplied by the average account value over the period, multiplied by 32/365 (to reflect the number of days in the period). (c) Based on the actual return for the six months ended Oct. 31, 2010: +8.67% for Class A, +8.21% for Class B, +8.24% for Class C, +8.90% for Class I, +8.49% for Class R, +8.74% for Class R4 and +8.50% for Class W. (d) Columbia Management Investment Advisers, LLC (formerly known as RiverSource Investments, LLC) (the Investment Manager) and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Dec. 31, 2011, unless sooner terminated at the sole discretion of the Fund's Board, such that net expenses (excluding fees and expenses of acquired funds), will not exceed 1.21% for Class A, 1.96% for Class B, 1.96% for Class C, 0.76% for Class I, 1.46% for Class R, 1.06% for Class R4, 1.21% for Class W and 0.96% for Class Z. Any amounts waived will not be reimbursed by the Fund. This change is effective Jan. 1, 2011. Had this change been in place for the entire six month period ended Oct. 31, 2010, the actual expenses paid would have been $6.29 for Class A, $10.17 for Class B, $10.18 for Class C, $3.96 for Class I, $7.59 for Class R, $5.52 for Class R4, $6.29 for Class W and $0.85 for Class Z; the hypothetical expenses paid would have been $6.09 for Class A, $9.85 for Class B, $9.85 for Class C, $3.83 for Class I, $7.34 for Class R, $5.34 for Class R4, $6.09 for Class W and $4.84 for Class Z. (e) Based on the actual return for the period from Sept. 27, 2010 (when shares became available) to Oct. 31, 2010 of +2.05% for Class Z. -------------------------------------------------------------------------------- 16 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT PORTFOLIO OF INVESTMENTS ------------------------------------------------------- OCT. 31, 2010 (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
BONDS (93.3%)(c) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(a) ARGENTINA (0.3%) Argentina Bonos Senior Unsecured 09-12-13 7.000% $1,033,000 $1,016,285 Argentina Government International Bond Senior Unsecured 12-15-35 0.000 2,900,000(e) 385,700 --------------- Total 1,401,985 ------------------------------------------------------------------------------------- AUSTRALIA (1.7%) Australia & New Zealand Banking Group Ltd. (AUD) 11-08-11 6.500 420,000 416,174 FMG Resources August 2006 Pty Ltd. Senior Notes 11-01-15 7.000 64,000(d,g) 65,880 11-01-15 7.000 207,000(d) 213,082 New South Wales Treasury Corp. (AUD) Local Government Guaranteed 05-01-12 6.000 6,825,000 6,777,148 Telstra Corp., Ltd. Senior Unsecured 04-01-12 6.375 500,000 534,717 Westpac Banking Corp. (AUD) Senior Unsecured 09-24-12 7.250 300,000 301,125 Woodside Finance Ltd. 11-10-14 4.500 520,000(d) 561,002 --------------- Total 8,869,128 ------------------------------------------------------------------------------------- AUSTRIA (1.4%) Austria Government Bond (EUR) Senior Unsecured 07-15-14 4.300 5,045,000 7,662,763 ------------------------------------------------------------------------------------- BELGIUM (2.0%) Belgium Government Bond (EUR) 03-28-11 3.500 1,470,000 2,065,930 09-28-12 5.000 5,285,000 7,847,146 Fortis Bank SA/NV (EUR) Senior Unsecured 05-30-14 4.500 420,000 618,648 --------------- Total 10,531,724 ------------------------------------------------------------------------------------- BERMUDA (0.2%) Bacardi Ltd. 04-01-14 7.450 $245,000(d) 289,237 Intelsat Jackson Holdings SA Senior Unsecured 10-15-20 7.250 350,000(d) 357,875 Weatherford International Ltd. 09-15-40 6.750 435,000 461,239 --------------- Total 1,108,351 ------------------------------------------------------------------------------------- BRAZIL (2.3%) Banco Nacional de Desenvolvimento Economico e Social Senior Unsecured 06-16-18 6.369 535,000(d) 613,913 06-10-19 6.500 910,000(d) 1,052,487 Brazil Notas do Tesouro Nacional (BRL) 01-01-12 10.000 762,500 4,562,323 01-01-13 10.000 740,000 4,343,554 Brazilian Government International Bond 01-15-18 8.000 249,167 301,118 Brazilian Government International Bond Senior Unsecured 01-17-17 6.000 307,000 362,413 10-14-19 8.875 115,000 163,300 01-07-41 5.625 270,000 298,688 Centrais Eletricas Brasileiras SA Senior Unsecured 07-30-19 6.875 375,000(d) 448,410 --------------- Total 12,146,206 ------------------------------------------------------------------------------------- CANADA (2.9%) Bank of Nova Scotia 10-29-15 1.650 1,465,000(d) 1,459,782
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 17 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(a) CANADA (CONT.) Canadian Government Bond (CAD) 06-01-18 4.250% 1,080,000 $1,186,337 Cascades, Inc. 12-15-17 7.750 $500,000 534,375 Devon Financing Corp. ULC 09-30-11 6.875 110,000 115,940 EnCana Corp. Senior Unsecured 11-01-11 6.300 30,000 31,573 Petro-Canada Senior Unsecured 05-15-18 6.050 350,000 412,606 Province of British Columbia Canada (CAD) 06-18-14 5.300 1,640,000 1,797,986 Province of Ontario Canada (CAD) 03-08-14 5.000 2,835,000 3,051,454 Province of Quebec Canada (CAD) 12-01-17 4.500 4,083,000 4,386,092 Royal Bank of Canada (EUR) Senior Unsecured 01-18-13 3.250 630,000 902,808 TELUS Corp. Senior Unsecured 06-01-11 8.000 377,000 392,486 The Toronto-Dominion Bank (EUR) Senior Unsecured 05-14-15 5.375 600,000 940,640 Thomson Reuters Corp. Senior Unsecured 04-15-40 5.850 235,000 248,807 TransAlta Corp. Senior Unsecured 03-15-40 6.500 180,000 188,069 --------------- Total 15,648,955 ------------------------------------------------------------------------------------- CAYMAN ISLANDS (0.2%) Allstate Life Funding LLC (GBP) Senior Secured 01-17-11 6.375 250,000 $404,075 Pacific Life Funding LLC (GBP) Secured 02-08-11 6.250 251,000 406,362 --------------- Total 810,437 ------------------------------------------------------------------------------------- COLOMBIA (0.3%) Colombia Government International Bond 01-27-17 7.375 $230,000 286,925 09-18-37 7.375 260,000 347,100 Colombia Government International Bond Senior Unsecured 03-18-19 7.375 250,000(k) 319,375 01-18-41 6.125 235,000(k) 268,374 Ecopetrol SA Senior Unsecured 07-23-19 7.625 300,000 369,000 --------------- Total 1,590,774 ------------------------------------------------------------------------------------- CZECH REPUBLIC (0.1%) Czech Republic Government Bond (CZK) 06-16-13 3.700 11,530,000 679,791 ------------------------------------------------------------------------------------- DENMARK (0.3%) Nykredit Realkredit A/S (DKK) 04-01-28 5.000 9,241,556 1,798,579 ------------------------------------------------------------------------------------- EL SALVADOR (0.1%) El Salvador Government International Bond Senior Unsecured 01-24-23 7.750 245,000(d) 285,425 ------------------------------------------------------------------------------------- FRANCE (5.0%) BNP Paribas Home Loan Covered Bonds SA 11-02-15 2.200 1,300,000(d,g) 1,307,245 BNP Paribas (EUR) Subordinated Notes 12-17-12 5.250 555,000 817,812 Cie de Financement Foncier 09-16-15 2.500 1,400,000(d) 1,413,462
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 18 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(a) FRANCE (CONT.) Credit Agricole SA (EUR) Senior Unsecured 06-24-13 6.000% 550,000 $838,557 EDF SA (EUR) Senior Unsecured 02-05-18 5.000 750,000 1,168,669 France Government Bond OAT (EUR) 04-25-12 5.000 540,000 794,728 04-25-13 4.000 7,020,000 10,423,950 10-25-16 5.000 3,180,000 5,110,329 10-25-19 3.750 2,000,000 2,995,804 France Telecom SA (EUR) Senior Unsecured 02-21-17 4.750 1,180,000 1,798,438 Veolia Environnement (EUR) Senior Unsecured 01-16-17 4.375 315,000 468,986 --------------- Total 27,137,980 ------------------------------------------------------------------------------------- GERMANY (5.3%) Bayerische Landesbank (JPY) Senior Unsecured 04-22-13 1.400 170,000,000 2,151,340 Bundesrepublik Deutschland (EUR) 01-04-15 3.750 1,650,000 2,498,535 07-04-19 3.500 2,120,000 3,195,167 07-04-27 6.500 4,140,000 8,389,129 07-04-28 4.750 2,415,000 4,136,686 07-04-34 4.750 4,025,000 7,134,435 Landwirtschaftliche Rentenbank (AUD) Government Guaranteed 06-15-11 5.750 1,250,000 1,229,296 --------------- Total 28,734,588 ------------------------------------------------------------------------------------- GREECE (0.3%) Hellenic Republic Government Bond (EUR) Senior Unsecured 03-20-24 4.700 1,800,000 1,541,697 ------------------------------------------------------------------------------------- INDONESIA (1.5%) Indonesia Government International Bond Senior Unsecured 01-17-18 6.875 500,000(d) 602,500 10-12-35 8.500 190,000(d) 275,025 01-17-38 7.750 140,000(d) 188,300 Indonesia Treasury Bond (IDR) Senior Unsecured 05-15-16 10.750 9,320,000,000 1,236,882 11-15-20 11.000 19,540,000,000 2,705,666 07-15-22 10.250 21,944,000,000 2,920,301 Perusahaan Penerbit SBSN Senior Unsecured 04-23-14 8.800 160,000(d) 192,293 --------------- Total 8,120,967 ------------------------------------------------------------------------------------- IRELAND (--%) Ardagh Packaging Finance PLC Senior Secured 10-15-17 7.375 116,000(d,k) 122,960 Warner Chilcott Co. LLC/Finance 09-15-18 7.750 134,000(d) 139,360 --------------- Total 262,320 ------------------------------------------------------------------------------------- ITALY (3.0%) Intesa Sanpaolo SpA (EUR) Senior Unsecured 12-19-13 5.375 400,000 596,078 Italy Buoni Poliennali Del Tesoro (EUR) 04-15-12 4.000 1,745,000 2,502,936 08-01-15 3.750 700,000 1,013,802 02-01-19 4.250 2,445,000 3,552,426 11-01-26 7.250 4,186,283 7,597,027 11-01-27 6.500 525,000 892,465 --------------- Total 16,154,734 ------------------------------------------------------------------------------------- JAPAN (11.9%) Bayer Holding Ltd. (JPY) 06-28-12 1.955 40,000,000 501,275 Development Bank of Japan (JPY) Government Guaranteed 06-20-12 1.400 326,000,000 4,127,095
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 19 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(a) JAPAN (CONT.) Japan Government 10-Year Bond (JPY) Senior Unsecured 06-20-12 1.400% 95,000,000 $1,204,818 12-20-12 1.000 708,000,000 8,956,794 12-20-14 1.300 200,000,000 2,589,166 09-20-17 1.700 811,000,000 10,911,423 Japan Government 20-Year Bond (JPY) Senior Unsecured 03-20-20 2.400 420,000,000 5,946,343 12-20-22 1.400 496,000,000 6,277,423 12-20-26 2.100 757,000,000 10,047,395 09-20-29 2.100 300,000,000 3,916,899 Japan Government 30-Year Bond (JPY) Senior Unsecured 12-20-34 2.400 283,000,000 3,838,299 03-20-39 2.300 123,000,000 1,636,473 Japanese Government CPI-Linked Bond (JPY) Senior Unsecured 03-10-18 1.400 345,664,000(j) 4,331,603 --------------- Total 64,285,006 ------------------------------------------------------------------------------------- KAZAKHSTAN (0.1%) KazMunaiGaz Finance Sub BV 07-02-18 9.125 $250,000(d) 306,563 ------------------------------------------------------------------------------------- LITHUANIA (0.1%) Lithuania Government International Bond Senior Unsecured 09-14-17 5.125 760,000(d) 779,000 ------------------------------------------------------------------------------------- LUXEMBOURG (0.2%) ArcelorMittal Senior Unsecured 06-01-19 9.850 305,000 393,428 10-15-39 7.000 545,000 548,553 Expro Finance Luxembourg SCA Senior Secured 12-15-16 8.500 349,000(d) 342,391 Telecom Italia Capital SA 07-18-36 7.200 35,000 38,050 --------------- Total 1,322,422 ------------------------------------------------------------------------------------- MALAYSIA (0.5%) Petronas Capital Ltd. 05-22-12 7.000 500,000(d) 542,709 08-12-19 5.250 1,980,000(d) 2,205,885 --------------- Total 2,748,594 ------------------------------------------------------------------------------------- MEXICO (1.7%) Mexican Bonos (MXN) 12-19-13 8.000 35,940,000 3,155,680 12-17-15 8.000 55,280,000 4,974,251 Mexican Government International Bond Senior Unsecured 09-27-34 6.750 270,000 333,450 Pemex Project Funding Master Trust 03-01-18 5.750 617,000 692,702 --------------- Total 9,156,083 ------------------------------------------------------------------------------------- NETHERLANDS (3.6%) Allianz Finance II BV (EUR) 11-23-16 4.000 400,000 589,702 BMW Finance NV (EUR) 09-19-13 8.875 650,000 1,069,089 Deutsche Telekom International Finance BV (EUR) 01-19-15 4.000 1,335,000 1,951,496 Deutsche Telekom International Finance BV (GBP) 12-09-10 6.250 415,000 668,180 E.ON International Finance BV (EUR) 10-02-17 5.500 535,000 857,509 ING Groep NV (EUR) Senior Unsecured 05-31-17 4.750 1,205,000 1,775,502 Netherlands Government Bond (EUR) 07-15-12 5.000 1,530,000 2,269,119 07-15-13 4.250 2,345,000 3,524,978 07-15-20 3.500 4,045,000 5,989,791
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 20 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(a) NETHERLANDS (CONT.) Rabobank Nederland NV (EUR) Senior Unsecured 04-04-12 4.125% 600,000 $863,765 --------------- Total 19,559,131 ------------------------------------------------------------------------------------- NEW ZEALAND (1.1%) ANZ National International Ltd. Bank Guaranteed 08-10-15 3.125 $1,270,000(d,k) 1,299,420 New Zealand Government Bond (NZD) Senior Unsecured 04-15-13 6.500 5,850,000 4,710,747 --------------- Total 6,010,167 ------------------------------------------------------------------------------------- NORWAY (1.0%) Norway Government Bond (NOK) 05-16-11 6.000 31,250,000 5,442,113 ------------------------------------------------------------------------------------- PHILIPPINE ISLANDS (0.3%) Philippine Government International Bond Senior Unsecured 01-15-21 4.000 129,000 128,839 01-14-31 7.750 405,000 534,600 Power Sector Assets & Liabilities Management Corp. Government Guaranteed 05-27-19 7.250 790,000(d) 962,813 --------------- Total 1,626,252 ------------------------------------------------------------------------------------- POLAND (1.7%) Poland Government Bond (PLN) 04-25-13 5.250 6,400,000 2,269,578 10-25-17 5.250 20,485,000 7,110,202 --------------- Total 9,379,780 ------------------------------------------------------------------------------------- QATAR (0.3%) Qatar Government International Bond Senior Unsecured 04-09-19 6.550 550,000(d) 657,406 Qatari Diar Finance QSC Government Guaranteed 07-21-20 5.000 500,000(d) 523,318 Ras Laffan Liquefied Natural Gas Co., Ltd. III Senior Secured 09-30-14 5.500 310,000(d) 343,723 --------------- Total 1,524,447 ------------------------------------------------------------------------------------- RUSSIA (0.4%) AK Transneft OJSC Via TransCapitalInvest Ltd. Senior Unsecured 03-05-14 5.670 200,000(d) 213,151 08-07-18 8.700 100,000(d) 125,720 Gazprom Via Gaz Capital SA Senior Unsecured 11-22-16 6.212 100,000(d) 106,625 08-16-37 7.288 230,000(d) 249,550 Russian Foreign Bond -- Eurobond 03-31-30 7.500 1,159,025(d) 1,385,035 --------------- Total 2,080,081 ------------------------------------------------------------------------------------- SOUTH AFRICA (0.5%) South Africa Government Bond (ZAR) Senior Unsecured 12-21-14 8.750 15,975,000 2,435,322 ------------------------------------------------------------------------------------- SOUTH KOREA (0.3%) Export-Import Bank of Korea Senior Unsecured 01-21-14 8.125 810,000 948,430 01-14-15 5.875 450,000 502,088 --------------- Total 1,450,518 ------------------------------------------------------------------------------------- SPAIN (2.6%) Ayt Cedulas Cajas Global (EUR) 06-14-18 4.250 1,500,000 1,886,159 Caja de Ahorros y Monte de Piedad de Madrid (EUR) 03-25-11 3.500 1,800,000 2,509,344 Instituto de Credito Oficial (AUD) Government Guaranteed 03-08-11 5.500 1,210,000 1,180,465 Santander International Debt SA (EUR) Bank Guaranteed 04-11-11 5.125 1,200,000 1,689,807
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 21 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(a) SPAIN (CONT.) Santander U.S. Debt SA Unipersonal Bank Guaranteed 10-07-15 3.781% $1,000,000(d) $1,015,049 Spain Government Bond (EUR) 07-30-17 5.500 2,050,000 3,147,080 Telefonica Emisiones SAU 01-15-15 4.949 1,440,000 1,589,893 Telefonica Emisiones SAU (EUR) 02-02-16 4.375 550,000 796,604 --------------- Total 13,814,401 ------------------------------------------------------------------------------------- SUPRA-NATIONAL (0.3%) Corp. Andina de Fomento Senior Unsecured 06-04-19 8.125 730,000 904,462 European Investment Bank (GBP) Senior Unsecured 12-07-11 5.500 445,000 749,192 --------------- Total 1,653,654 ------------------------------------------------------------------------------------- SWEDEN (1.0%) Sweden Government Bond (SEK) 05-05-14 6.750 30,525,000 5,298,214 ------------------------------------------------------------------------------------- TURKEY (0.3%) Turkey Government International Bond Senior Unsecured 07-14-17 7.500 350,000 435,313 04-03-18 6.750 204,000 244,800 06-05-20 7.000 235,000 291,400 03-17-36 6.875 540,000 649,350 --------------- Total 1,620,863 ------------------------------------------------------------------------------------- UNITED KINGDOM (4.6%) MetLife of Connecticut (JPY) 05-24-12 0.653 100,000,000(i) 1,193,364 SABMiller PLC Senior Unsecured 01-15-14 5.700 1,275,000(d) 1,433,576 United Kingdom Gilt (GBP) 09-07-16 4.000 1,910,000 3,374,208 03-07-18 5.000 1,700,000 3,162,316 03-07-19 4.500 2,240,000 4,015,542 03-07-25 5.000 660,000 1,214,145 12-07-27 4.250 1,750,000 2,932,966 03-07-36 4.250 1,400,000 2,285,810 12-07-38 4.750 1,690,000 2,980,114 12-07-49 4.250 1,185,000 1,931,547 --------------- Total 24,523,588 ------------------------------------------------------------------------------------- UNITED STATES (33.3%) Ally Financial, Inc. 09-15-20 7.500 $480,000(d) 518,400 Amkor Technology, Inc. Senior Unsecured 05-01-18 7.375 237,000(d,k) 246,480 Anadarko Petroleum Corp. Senior Unsecured 09-15-16 5.950 435,000 475,738 Anheuser-Busch InBev Worldwide, Inc. 01-15-14 7.200 710,000(d) 832,310 11-15-14 5.375 2,620,000(d) 2,959,900 Ashland, Inc. 06-01-17 9.125 180,000 207,450 Associated Materials LLC Senior Secured 11-01-17 9.125 90,000(d) 94,725 AT&T, Inc. Senior Unsecured 02-15-39 6.550 2,570,000 2,927,489 Ball Corp. 09-01-19 7.375 35,000 39,025 09-15-20 6.750 234,000 257,985 Bank of America Corp. (GBP) Senior Unsecured 02-02-11 0.835 950,000(i) 1,519,053 Bank of America Corp. Senior Unsecured 05-01-18 5.650 2,190,000 2,306,879
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 22 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(a) UNITED STATES (CONT.) BellSouth Corp. Senior Unsecured 10-15-11 6.000% $785,000 $825,572 Berry Petroleum Co. Senior Unsecured 11-01-20 6.750 50,000(g) 51,500 Brocade Communications Systems, Inc. Senior Secured 01-15-18 6.625 76,000 80,940 01-15-20 6.875 67,000(k) 72,025 Burlington Northern Santa Fe LLC Senior Unsecured 05-01-40 5.750 730,000 774,201 Cardtronics, Inc. 09-01-18 8.250 190,000 201,400 CC Holdings GS V LLC/Crown Castle GS III Corp. Senior Secured 05-01-17 7.750 820,000(d) 920,450 CCO Holdings LLC/Capital Corp. 04-30-18 7.875 136,000(d) 144,500 Celanese U.S. Holdings LLC 10-15-18 6.625 232,000(d) 244,180 CenterPoint Energy Houston Electric LLC 03-01-14 7.000 605,000 714,664 CenterPoint Energy Resources Corp. Senior Unsecured 02-15-11 7.750 1,270,000 1,295,693 CF Industries, Inc. 05-01-18 6.875 65,000 73,938 05-01-20 7.125 65,000 75,563 Charter Communications Operating LLC/Capital Secured 04-30-12 8.000 140,000(d) 148,925 Chesapeake Energy Corp. 08-15-20 6.625 560,000 593,599 CIT Group, Inc. Senior Secured 05-01-16 7.000 535,000 532,994 CitiFinancial Auto Issuance Trust Series 2009-1 Class A2 11-15-12 1.830 3,463,227(d) 3,477,835 Citigroup Commercial Mortgage Trust Series 2006-C5 Class A4 10-15-49 5.431 1,700,000(f) 1,822,872 Citigroup, Inc. (EUR) Senior Unsecured 08-02-19 5.000 595,000 848,923 Citigroup, Inc. Senior Unsecured 08-09-20 5.375 755,000 794,614 Colorado Interstate Gas Co. Senior Unsecured 11-15-15 6.800 3,170,000 3,769,266 Comcast Corp. 07-01-39 6.550 865,000 968,540 Commercial Mortgage Pass-Through Certificates Series 2006-CN2A Class BFL 02-05-19 0.567 400,000(d,f,i) 355,632 Cott Beverages, Inc. 09-01-18 8.125 34,000 36,805 Credit Suisse First Boston Mortgage Securities Corp. Series 2004-C2 Class A1 05-15-36 3.819 446,156(f) 464,637 Cricket Communications, Inc. Senior Secured 05-15-16 7.750 317,000 341,568 CSC Holdings LLC Senior Unsecured 02-15-19 8.625 100,000 115,625 CVS Caremark Corp. Senior Unsecured 09-15-39 6.125 305,000 328,682 Del Monte Corp. 10-15-19 7.500 370,000 406,075 Denbury Resources, Inc. 04-01-13 7.500 170,000 172,338 03-01-16 9.750 310,000 351,075 DIRECTV Holdings LLC/Financing Co., Inc. 02-15-16 3.125 1,465,000 1,500,371 DISH DBS Corp. 10-01-14 6.625 440,000 465,850 02-01-16 7.125 290,000 307,400
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 23 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(a) UNITED STATES (CONT.) Dominion Resources, Inc. Senior Unsecured 08-01-33 5.250% $1,460,000 $1,670,006 Dr Pepper Snapple Group, Inc. 12-21-11 1.700 1,310,000 1,321,160 DTE Energy Co. Senior Unsecured 06-01-11 7.050 115,000 119,142 05-15-14 7.625 1,540,000 1,831,057 Duke Energy Corp. Senior Unsecured 02-01-14 6.300 450,000 515,795 Duke Energy Indiana, Inc. 1st Mortgage 08-15-38 6.350 940,000 1,113,623 Dunkin Securitization Series 2006-1 Class A2 (AMBAC) 06-20-31 5.779 1,600,000(d,m) 1,622,544 El Paso Corp. Senior Unsecured 09-15-20 6.500 405,000(d) 421,200 Embarq Corp. Senior Unsecured 06-01-36 7.995 920,000 1,005,204 Energy Transfer Equity LP 10-15-20 7.500 285,000(k) 310,650 Entravision Communications Corp. Senior Secured 08-01-17 8.750 300,000(d) 319,500 ERAC USA Finance LLC 10-15-37 7.000 905,000(d) 1,001,847 Esterline Technologies Corp. 08-01-20 7.000 15,000(d) 15,938 Federal Home Loan Mortgage Corp. #A11799 08-01-33 6.500 130,955(f) 147,398 Federal Home Loan Mortgage Corp. #A15881 11-01-33 5.000 905,051(f) 975,087 Federal Home Loan Mortgage Corp. #E91486 09-01-17 6.500 89,086(f) 98,077 Federal Home Loan Mortgage Corp. #E99684 10-01-18 5.000 346,789(f) 375,155 Federal Home Loan Mortgage Corp. #G01960 12-01-35 5.000 1,983,697(f) 2,117,376 Federal National Mortgage Association 10-15-14 4.625 1,565,000 1,784,123 Federal National Mortgage Association #545874 08-01-32 6.500 129,018(f) 147,245 Federal National Mortgage Association #555528 04-01-33 6.000 552,513(f) 613,943 Federal National Mortgage Association #555734 07-01-23 5.000 564,651(f) 602,925 Federal National Mortgage Association #555740 08-01-18 4.500 721,125(f) 770,392 Federal National Mortgage Association #555851 01-01-33 6.500 651,783(f) 736,675 Federal National Mortgage Association #575487 04-01-17 6.500 244,469(f) 266,505 Federal National Mortgage Association #621581 12-01-31 6.500 176,739(f) 199,937 Federal National Mortgage Association #633966 03-01-17 6.000 59,467(f) 64,711 Federal National Mortgage Association #634749 03-01-17 5.500 347,427(f) 381,505 Federal National Mortgage Association #640996 05-01-32 7.500 239,053(f) 275,362 Federal National Mortgage Association #643381 06-01-17 6.000 133,307(f) 145,063 Federal National Mortgage Association #645053 05-01-32 7.000 422,284(f) 483,717 Federal National Mortgage Association #646147 06-01-32 7.000 248,467(f) 284,793 Federal National Mortgage Association #652284 08-01-32 6.500 200,588(f) 226,463 Federal National Mortgage Association #653145 07-01-17 6.000 116,919(f) 127,032 Federal National Mortgage Association #653730 09-01-32 6.500 139,381(f) 158,979 Federal National Mortgage Association #655589 08-01-32 6.500 939,844(f) 1,062,734 Federal National Mortgage Association #666424 08-01-32 6.500 150,598(f) 170,024 Federal National Mortgage Association #670461 11-01-32 7.500 140,242(f) 161,542 Federal National Mortgage Association #677333 01-01-33 6.000 2,664,233(f) 2,960,452
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 24 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(a) UNITED STATES (CONT.) Federal National Mortgage Association #688034 03-01-33 5.500% $297,965(f) $326,120 Federal National Mortgage Association #688691 03-01-33 5.500 393,751(f) 426,886 Federal National Mortgage Association #711503 06-01-33 5.500 647,340(f) 705,595 Federal National Mortgage Association #720576 06-01-33 5.000 1,525,618(f) 1,633,909 Federal National Mortgage Association #735029 09-01-13 5.322 599,837(f) 649,397 Federal National Mortgage Association #741850 09-01-33 5.500 1,284,380(f) 1,392,463 Federal National Mortgage Association #753507 12-01-18 5.000 1,202,141(f) 1,291,191 Federal National Mortgage Association #755498 11-01-18 5.500 528,518(f) 576,255 Federal National Mortgage Association #756788 11-01-33 6.500 209,545(f) 236,369 Federal National Mortgage Association #928019 01-01-37 5.500 1,282,397(f,o) 1,400,733 Florida Power Corp. 1st Mortgage 06-15-38 6.400 210,000 251,004 04-01-40 5.650 600,000 654,927 Forest Oil Corp. 02-15-14 8.500 210,000 232,575 Frontier Communications Corp. Senior Unsecured 04-15-15 7.875 78,000 87,360 04-15-17 8.250 194,000 221,160 04-15-20 8.500 158,000 182,490 General Electric Capital Assurance Co. Series 2003-1 Class A4 05-12-35 5.254 370,459(d,f) 399,491 General Electric Capital Corp. (GBP) Senior Unsecured 05-17-12 6.125 474,000 803,619 General Electric Capital Corp. Senior Unsecured 09-16-20 4.375 2,320,000 2,340,216 01-10-39 6.875 290,000 333,435 Georgia-Pacific LLC 05-01-16 8.250 230,000(d) 263,925 11-01-20 5.400 260,000(d,g) 262,600 Government National Mortgage Association #604708 10-15-33 5.500 647,584(f) 706,268 Government National Mortgage Association CMO I.O. Series 2002-80 Class CI 01-20-32 0.000 57,692(f,l) 494 Graphic Packaging International, Inc. 10-01-18 7.875 38,000 40,090 Greenwich Capital Commercial Funding Corp. Series 2003-C1 Class A3 07-05-35 3.858 725,000(f) 743,691 Greenwich Capital Commercial Funding Corp. Series 2004-GG1 Class A5 06-10-36 4.883 500,000(f) 507,396 Greenwich Capital Commercial Funding Corp. Series 2007-GG9 Class A4 03-10-39 5.444 2,100,000(f) 2,244,829 Greif, Inc. Senior Unsecured 02-01-17 6.750 195,000 203,288 GS Mortgage Securities Corp. II Series 2007-EOP Class J 03-06-20 1.107 1,250,000(d,f,i) 1,066,555 GS Mortgage Securities Corp. II Series 2007-GG10 Class F 08-10-45 5.808 775,000(f) 100,841 GTP Towers Issuer LLC 02-15-15 4.436 450,000(d) 488,929 Harborview Mortgage Loan Trust CMO Series 2004-1 Class 4A 04-19-34 4.757 1,270,077(f,i) 1,173,249 HCA, Inc. Senior Secured 02-15-17 9.875 325,000 364,812 09-15-20 7.250 745,000 814,843 HJ Heinz Finance Co. 07-15-11 6.625 500,000 520,353 Indiana Michigan Power Co. Senior Unsecured 03-15-37 6.050 85,000 90,880
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 25 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(a) UNITED STATES (CONT.) Invista 05-01-12 9.250% $103,000(d) $104,674 Jarden Corp. 05-01-16 8.000 300,000 331,125 JP Morgan Chase Commercial Mortgage Securities Corp. Series 2003-LN1 Class A1 10-15-37 4.134 154,230(f) 160,693 JP Morgan Chase Commercial Mortgage Securities Corp. Series 2003-ML1A Class A1 03-12-39 3.972 111,363(f) 114,623 JP Morgan Chase Commercial Mortgage Securities Corp. Series 2003-ML1A Class A2 03-12-39 4.767 1,200,000(f) 1,277,702 JP Morgan Chase Commercial Mortgage Securities Corp. Series 2005-LDP3 Class ASB 08-15-42 4.893 1,109,074(f) 1,170,972 JPMorgan Chase & Co. Senior Unsecured 10-15-20 4.250 2,155,000 2,170,720 K Hovnanian Enterprises, Inc. Senior Secured 10-15-16 10.625 470,000 478,225 Kraft Foods, Inc. Senior Unsecured 02-19-14 6.750 145,000 169,376 08-11-17 6.500 609,000 731,120 02-01-18 6.125 2,830,000 3,333,793 Lamar Media Corp. 04-01-14 9.750 255,000 294,525 04-15-18 7.875 73,000 77,928 LB-UBS Commercial Mortgage Trust Series 2004-C2 Class A3 03-15-29 3.973 750,000(f) 765,585 LB-UBS Commercial Mortgage Trust Series 2006-C4 Class AAB 06-15-32 6.055 750,000(f) 832,515 LB-UBS Commercial Mortgage Trust Series 2007-C7 Class A3 09-15-45 5.866 1,660,000(f) 1,770,805 Lear Corp. 03-15-18 7.875 214,000 233,260 03-15-20 8.125 117,000(k) 129,285 LifePoint Hospitals, Inc. 10-01-20 6.625 75,000(d) 78,938 LyondellBasell Industries Senior Secured 11-01-17 8.000 531,000(d) 582,773 Mantech International Corp. 04-15-18 7.250 57,000 60,563 Mellon Funding Corp. (GBP) 11-08-11 6.375 370,000 616,572 Metropolitan Life Global Funding I (GBP) Senior Secured 01-27-11 4.625 540,000 869,263 MGM Resorts International Senior Secured 11-15-17 11.125 290,000 333,500 Midwest Generation LLC Pass-Through Certificates 01-02-16 8.560 135,366 135,705 Morgan Stanley Capital I Series 2004-HQ4 Class A5 04-14-40 4.590 750,000(f) 754,980 Morgan Stanley Capital I Series 2006-T23 Class AAB 08-12-41 5.795 575,000(f) 633,890 Morgan Stanley (EUR) Senior Unsecured 10-02-17 5.500 625,000 904,150 Morgan Stanley (GBP) Senior Unsecured 04-11-11 7.500 470,000 765,056 Morgan Stanley Senior Unsecured 04-01-18 6.625 205,000 230,262 07-24-20 5.500 1,180,000 1,228,024 Nalco Co. Senior Notes 05-15-17 8.250 460,000 512,325 National Collegiate Student Loan Trust CMO I.O. Series 2006-3 Class AIO 01-25-12 5.880 2,400,000(l) 160,225
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 26 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(a) UNITED STATES (CONT.) Nevada Power Co. 01-15-15 5.875% $1,000,000 $1,148,707 05-15-18 6.500 365,000 439,261 Nextel Communications, Inc. 08-01-15 7.375 445,000 446,669 Nisource Finance Corp. 09-15-17 5.250 2,855,000 3,114,371 09-15-20 5.450 970,000 1,046,822 Northern States Power Co. 1st Mortgage 08-28-12 8.000 515,000 580,575 Northwest Pipeline GP Senior Unsecured 04-15-17 5.950 1,085,000 1,250,536 NRG Energy, Inc. 02-01-16 7.375 1,125,000 1,171,406 Oracle Corp. Senior Notes 07-15-40 5.375 90,000(d) 94,058 Oshkosh Corp. 03-01-17 8.250 146,000 159,504 03-01-20 8.500 119,000 131,793 Pacific Gas & Electric Co. Senior Unsecured 01-15-40 5.400 425,000 441,776 PacifiCorp 1st Mortgage 10-15-37 6.250 200,000 233,522 01-15-39 6.000 440,000 499,058 Peabody Energy Corp. 09-15-20 6.500 250,000 279,375 Petrohawk Energy Corp. 08-01-14 10.500 260,000 296,400 Phillips-Van Heusen Corp. Senior Unsecured 05-15-20 7.375 110,000 118,800 Pinafore LLC/Inc. Senior Secured 10-01-18 9.000 30,000(d) 32,100 Potomac Electric Power Co. 1st Mortgage 04-15-14 4.650 280,000 306,555 PPL Electric Utilities Corp. 1st Mortgage 11-30-13 7.125 2,850,000 3,346,375 Progress Energy, Inc. Senior Unsecured 03-01-11 7.100 325,000 331,751 03-15-14 6.050 875,000 996,791 QEP Resources, Inc. Senior Unsecured 03-01-21 6.875 170,000 184,875 Quicksilver Resources, Inc. 08-01-15 8.250 245,000 248,675 QVC, Inc. Senior Secured 04-15-17 7.125 316,000(d) 336,540 10-15-20 7.375 316,000(d) 338,120 Qwest Communications International, Inc. 04-01-18 7.125 370,000(d) 393,125 Range Resources Corp. 05-15-16 7.500 265,000 277,588 05-15-19 8.000 720,000 797,399 Regal Cinemas Corp. 07-15-19 8.625 200,000 213,500 Regency Energy Partners LP/Finance Corp. 06-01-16 9.375 5,000(k) 5,600 12-01-18 6.875 75,000 78,844 Renaissance Home Equity Loan Trust Series 2005-4 Class A3 02-25-36 5.565 369,862 350,465 Reynolds Group Issuer, Inc./LLC Senior Secured 10-15-16 7.750 270,000(d) 286,200 04-15-19 7.125 234,000(d) 243,945 RR Donnelley & Sons Co. Senior Unsecured 01-15-17 6.125 2,190,000 2,302,471 Santander Drive Auto Receivables Trust Series 2007-1 Class A4 (FGIC) 09-15-14 0.306 764,802(i,m) 760,039 SBA Telecommunications, Inc. 08-15-16 8.000 240,000 264,600 08-15-19 8.250 85,000 95,625
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 27 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(a) UNITED STATES (CONT.) SCANA Corp. Senior Unsecured 05-15-11 6.875% $205,000 $211,464 Select Medical Corp. 02-01-15 7.625 242,000 245,328 Sierra Pacific Power Co. 05-15-16 6.000 2,935,000 3,437,590 Southern California Gas Co. 1st Mortgage 03-15-14 5.500 845,000 959,964 Southern Natural Gas Co. Senior Unsecured 04-01-17 5.900 2,131,000(d) 2,337,193 Spectrum Brands Holdings, Inc. Senior Secured 06-15-18 9.500 100,000(d) 111,000 Speedway Motorsports, Inc. 06-01-16 8.750 380,000 415,150 Sprint Nextel Corp. Senior Unsecured 08-15-17 8.375 150,000(k) 165,375 Tampa Electric Co. Senior Unsecured 05-15-18 6.100 620,000 728,440 TCM Sub LLC 01-15-15 3.550 845,000(d) 893,824 The Cleveland Electric Illuminating Co. 1st Mortgage 11-15-18 8.875 750,000 992,151 The Dow Chemical Co. (EUR) Senior Unsecured 05-27-11 4.625 520,000 731,183 The Dow Chemical Co. Senior Unsecured 05-15-19 8.550 825,000 1,059,577 The Goldman Sachs Group, Inc. (EUR) Senior Unsecured 05-02-18 6.375 350,000 535,835 The Goldman Sachs Group, Inc. Senior Unsecured 03-15-20 5.375 860,000 909,944 The Hertz Corp. 10-15-18 7.500 155,000(d) 159,263 The Manitowoc Co., Inc. 11-01-13 7.125 470,000(k) 473,525 11-01-20 8.500 90,000 93,938 The Toledo Edison Co. Senior Secured 05-15-37 6.150 450,000 475,796 Transcontinental Gas Pipe Line Co. LLC Senior Unsecured 04-15-16 6.400 3,590,000 4,268,547 tw telecom holdings, inc. 03-01-18 8.000 216,000 233,280 U.S. Treasury 10-31-11 1.000 670,000(k) 674,999 07-15-12 1.500 2,130,000(k) 2,174,097 09-30-15 1.250 1,293,000(k) 1,299,062 07-31-17 2.375 715,000(k) 739,578 08-15-20 2.625 1,525,000(k) 1,526,430 08-15-23 6.250 4,400,000 5,882,251 05-15-40 4.375 4,989,000 5,314,083 United States Cellular Corp. Senior Unsecured 12-15-33 6.700 165,000 166,985 United States Steel Corp. Senior Unsecured 02-01-18 7.000 63,000 64,418 04-01-20 7.375 173,000 179,920 Valeant Pharmaceuticals International 10-01-20 7.000 465,000(d) 488,250 Valmont Industries, Inc. 04-20-20 6.625 522,000 544,752 Verizon New York, Inc. Senior Unsecured 04-01-12 6.875 2,380,000 2,567,060 04-01-32 7.375 1,255,000 1,437,033 Wachovia Bank Commercial Mortgage Trust Series 2005-C20 Class A5 07-15-42 5.087 800,000(f) 818,824 Wachovia Bank Commercial Mortgage Trust Series 2006-C24 Class APB 03-15-45 5.576 500,000(f) 537,680 Wachovia Bank Commercial Mortgage Trust Series 2006-C27 Class APB 07-15-45 5.727 650,000(f) 693,204
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 28 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
BONDS (CONTINUED) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(a) UNITED STATES (CONT.) Wells Fargo & Co. (EUR) Senior Unsecured 11-03-16 4.125% 330,000 $476,366 Wells Fargo & Co. (GBP) Senior Unsecured 11-30-10 4.750 1,300,000 2,087,618 Windstream Corp. 08-01-16 8.625 $144,000 153,000 03-15-19 7.000 40,000 40,450 Wyndham Worldwide Corp. Senior Unsecured 02-01-18 5.750 107,000 111,187 XM Satellite Radio, Inc. Senior Unsecured 11-01-18 7.625 237,000(d) 242,333 --------------- Total 179,321,720 ------------------------------------------------------------------------------------- URUGUAY (0.2%) Uruguay Government International Bond 11-18-22 8.000 450,000 605,250 Uruguay Government International Bond Senior Unsecured 03-21-36 7.625 275,000 364,375 --------------- Total 969,625 ------------------------------------------------------------------------------------- VENEZUELA (0.4%) Petroleos de Venezuela SA 04-12-17 5.250 1,190,000 702,100 Venezuela Government International Bond 02-26-16 5.750 620,000 441,750 Venezuela Government International Bond Senior Unsecured 10-08-14 8.500 160,000 134,800 05-07-23 9.000 931,000 623,863 --------------- Total 1,902,513 ------------------------------------------------------------------------------------- TOTAL BONDS (Cost: $455,517,284) $501,696,461 ------------------------------------------------------------------------------------- SENIOR LOANS (0.1%)(p) COUPON PRINCIPAL BORROWER RATE AMOUNT VALUE(a) UNITED STATES Fairpoint Communications, Inc. Tranche B Term Loan 03-31-15 1.750% $558,658(b,n) $362,837 Goodman Global, Inc. 1st Lien Term Loan TBD TBD 35,000(g,h) 35,433 ------------------------------------------------------------------------------------- TOTAL SENIOR LOANS (Cost: $353,820) $398,270 -------------------------------------------------------------------------------------
MONEY MARKET FUND (2.0%) SHARES VALUE(a) MONEY MARKET FUND Columbia Short-Term Cash Fund, 0.241% 10,951,314(q) $10,951,314 ------------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $10,951,314) $10,951,314 -------------------------------------------------------------------------------------
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (0.6%) EFFECTIVE PRINCIPAL ISSUER YIELD AMOUNT VALUE(a) REPURCHASE AGREEMENTS(r) Societe Generale dated 10-29-10, matures 11-01-10, repurchase price $3,005,095 0.230% $3,005,038 $3,005,038 ------------------------------------------------------------------------------------- TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (Cost: $3,005,038) $3,005,038 ------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $469,827,456)(s) $516,051,083 =====================================================================================
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 29 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- INVESTMENTS IN DERIVATIVES FUTURES CONTRACTS OUTSTANDING AT OCT. 31, 2010
NUMBER OF UNREALIZED CONTRACTS NOTIONAL EXPIRATION APPRECIATION CONTRACT DESCRIPTION LONG (SHORT) MARKET VALUE DATE (DEPRECIATION) ------------------------------------------------------------------------------------ Euro-Bobl, 5-year 9 $1,498,097 Dec. 2010 $(11,599) Euro-Bund, 10-year (25) (4,494,944) Dec. 2010 41,628 Japanese Government Bond, 10-year 4 7,118,181 Dec. 2010 86,414 U.S. Long Bond, 20-year 25 3,273,437 Dec. 2010 (28,163) U.S. Treasury Note, 5- year (137) (16,656,204) Jan. 2011 (236,542) U.S. Treasury Note, 10- year (105) (13,259,531) Dec. 2010 (177,650) U.S. Treasury Ultra Bond, 30-year (23) (3,101,406) Dec. 2010 178,575 ------------------------------------------------------------------------------------ Total $(147,337) ------------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS OPEN AT OCT. 31, 2010
CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED COUNTERPARTY EXCHANGE DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION ---------------------------------------------------------------------------------------------- UBS Securities Nov. 5, 2010 2,290,987 3,935,000 $23,621 $-- (USD) (BRL) J.P. Morgan Nov. 8, 2010 17,984,780 1,506,585,000 738,179 -- Securities, Inc. (USD) (JPY) HSBC Securities (USA), Nov. 12, 2010 280,000 446,251 -- (2,341) Inc. (GBP) (USD) Barclays Bank PLC Nov. 15, 2010 2,188,000 2,486,420 -- (46,434) (GBP) (EUR) HSBC Securities (USA), Nov. 22, 2010 6,150,000 4,721,598 -- (30,494) Inc. (SGD) (USD) J.P. Morgan Nov. 23, 2010 2,497,795 31,150,000 21,365 -- Securities, Inc. (USD) (MXN) UBS Securities Nov. 29, 2010 3,377,000 2,513,501 -- (55,522) (NZD) (USD) HSBC Securities (USA), Dec. 2, 2010 4,877,128 5,038,000 58,831 -- Inc. (USD) (CAD) State Street Bank & Dec. 6, 2010 4,358,000 6,056,683 -- (4,569) Trust Company (EUR) (USD) State Street Bank & Dec. 6, 2010 3,836,000 5,392,687 57,450 -- Trust Company (EUR) (USD) HSBC Securities (USA), Dec. 6, 2010 5,125,446 229,620,000 19,072 -- Inc. (USD) (INR) HSBC Securities (USA), Dec. 7, 2010 5,260,000 5,072,113 -- (58,769) Inc. (AUD) (USD) ---------------------------------------------------------------------------------------------- Total $918,518 $(198,129) ----------------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 30 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- NOTES TO PORTFOLIO OF INVESTMENTS AUD -- Australian Dollar BRL -- Brazilian Real CAD -- Canadian Dollar CMO -- Collateralized Mortgage Obligation CZK -- Czech Koruna DKK -- Danish Krone EUR -- European Monetary Unit GBP -- British Pound Sterling IDR -- Indonesian Rupiah INR -- Indian Rupee I.O. -- Interest Only JPY -- Japanese Yen MXN -- Mexican Peso NOK -- Norwegian Krone NZD -- New Zealand Dollar PLN -- Polish Zloty SEK -- Swedish Krona SGD -- Singapore Dollar ZAR -- South African Rand
(a) Securities are valued by using policies described in Note 2 to the financial statements. (b) Non-income producing. For long-term debt securities, item identified is in default as to payment of interest and/or principal. (c) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in U.S. dollar currency unless otherwise noted. (d) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act of 1933, as amended. This security may be determined to be liquid under guidelines established by the Fund's Board of Directors. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At Oct. 31, 2010, the value of these securities amounted to $44,608,374 or 8.30% of net assets. (e) This is a variable rate security that entitles holders to receive only interest payments. Interest is paid annually. The interest payment is based on the Gross Domestic Product (GDP) level of the previous year for the respective country. To the extent that the previous year's GDP exceeds the 'base case GDP', an interest payment is made equal to 0.012225 of the difference. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 31 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED) (f) Mortgage-backed securities represent direct or indirect participations in, or are secured by and payable from, mortgage loans secured by real property, and include single- and multi-class pass-through securities and collateralized mortgage obligations. These securities may be issued or guaranteed by U.S. government agencies or instrumentalities, or by private issuers, generally originators and investors in mortgage loans, including savings associations, mortgage bankers, commercial banks, investment bankers and special purpose entities. The maturity dates shown represent the original maturity of the underlying obligation. Actual maturity may vary based upon prepayment activity on these obligations. Unless otherwise noted, the coupon rates presented are fixed rates. (g) At Oct. 31, 2010, the cost of securities purchased, including interest purchased, on a when-issued and/or other forward-commitment basis was $1,708,205. See Note 2 to the financial statements. (h) Represents a senior loan purchased on a when-issued or delayed-delivery basis. Certain details associated with this purchase are not known prior to the settlement date of the transaction. In addition, senior loans typically trade without accrued interest and therefore a weighted average coupon rate is not available prior to settlement. At settlement, if still unknown, the borrower or counterparty will provide the Fund with the final weighted average coupon rate and maturity date. (i) Interest rate varies either based on a predetermined schedule or to reflect current market conditions; rate shown is the effective rate on Oct. 31, 2010. (j) Inflation-indexed bonds are securities in which the principal amount is adjusted for inflation and the semiannual interest payments equal a fixed percentage of the inflation-adjusted principal amount. (k) At Oct. 31, 2010, security was partially or fully on loan. See Note 7 to the financial statements. (l) Interest only represents securities that entitle holders to receive only interest payments on the underlying mortgages. The yield to maturity of an interest only security is extremely sensitive to the rate of principal payments on the underlying mortgage assets. A rapid (slow) rate of principal repayments may have an adverse (positive) effect on yield to maturity. The principal amount shown is the notional amount of the underlying mortgages. The interest rate disclosed represents yield based upon the estimated timing and amount of future cash flows at Oct. 31, 2010. (m) The following abbreviations are used in the portfolio security descriptions to identify the insurer and/or guarantor of the issue: AMBAC -- Ambac Assurance Corporation FGIC -- Financial Guaranty Insurance Company
(n) This position is in bankruptcy. (o) At Oct. 31, 2010, investments in securities included securities valued at $497,820 that were partially pledged as collateral to cover initial margin deposits on open interest rate futures contracts. -------------------------------------------------------------------------------- 32 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED) (p) Senior loans have rates of interest that float periodically based primarily on the London Interbank Offered Rate ("LIBOR") and other short-term rates. Remaining maturities of senior loans may be less than the stated maturities shown as a result of contractual or optional prepayments by the borrower. Such prepayments cannot be predicted with certainty. (q) Affiliated Money Market Fund -- See Note 8 to the financial statements. The rate shown is the seven-day current annualized yield at Oct. 31, 2010. (r) The table below represents securities received as collateral for repurchase agreements. This collateral, which is generally high quality short-term obligations, is deposited with the Fund's custodian and, pursuant to the terms of the repurchase agreement, must have an aggregate market value greater than or equal to the repurchase price plus accrued interest at all times. The value of securities and/or cash held as collateral for repurchase agreements is monitored on a daily basis to ensure the existence of the proper level of collateral.
SOCIETE GENERALE (0.230%) SECURITY DESCRIPTION VALUE(a) ------------------------------------------------------------ Government National Mortgage Association $3,065,138 ------------------------------------------------------------ Total market value of collateral securities $3,065,138 ------------------------------------------------------------
(s) At Oct. 31, 2010, the cost of securities for federal income tax purposes was $474,975,951 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $44,332,818 Unrealized depreciation (3,257,686) ----------------------------------------------------------- Net unrealized appreciation $41,075,132 -----------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 33 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- FAIR VALUE MEASUREMENTS Generally accepted accounting principles (GAAP) require 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. 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 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 (to include NAV for open-end mutual funds). 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 Fund Administrator, 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 rely on one or more significant unobservable inputs and/or significant assumptions by the Fund Administrator. Inputs used in valuations may -------------------------------------------------------------------------------- 34 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- FAIR VALUE MEASUREMENTS (CONTINUED) include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data. The following table is a summary of the inputs used to value the Fund's investments as of Oct. 31, 2010:
Fair value at Oct. 31, 2010 ---------------------------------------------------------------- Level 1 Level 2 quoted prices other Level 3 in active significant significant markets for observable unobservable DESCRIPTION(a) identical assets inputs(b) inputs Total -------------------------------------------------------------------------------------------- Bonds Foreign Government Obligations & Agencies $-- $280,736,759 -- $280,736,759 U.S. Government Obligations & Agencies 17,610,500 1,784,123 -- 19,394,623 Asset-Backed Securities -- 6,860,037 1,798,579 8,658,616 Commercial Mortgage- Backed Securities -- 17,886,814 -- 17,886,814 Residential Mortgage- Backed Securities -- 23,422,624 -- 23,422,624 Corporate Debt Securities -- 150,403,661 1,193,364 151,597,025 -------------------------------------------------------------------------------------------- Total Bonds 17,610,500 481,094,018 2,991,943 501,696,461 -------------------------------------------------------------------------------------------- Other Senior Loans -- 398,270 -- 398,270 Affiliated Money Market Fund(c) 10,951,314 -- -- 10,951,314 Investments of Cash Collateral Received for Securities on Loan -- 3,005,038 -- 3,005,038 -------------------------------------------------------------------------------------------- Total Other 10,951,314 3,403,308 -- 14,354,622 -------------------------------------------------------------------------------------------- Investments in Securities 28,561,814 484,497,326 2,991,943 516,051,083 Derivatives(d) Assets Futures Contracts 306,617 -- -- 306,617 Forward Foreign Currency Exchange Contracts -- 918,518 -- 918,518 Liabilities Futures Contracts (453,954) -- -- (453,954) Forward Foreign Currency Exchange Contracts -- (198,129) -- (198,129) -------------------------------------------------------------------------------------------- Total $28,414,477 $485,217,715 $2,991,943 $516,624,135 --------------------------------------------------------------------------------------------
(a) See the Portfolio of Investments for all investment classifications not indicated in the table. (b) There were no significant transfers between Levels 1 and 2 during the period. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 35 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- FAIR VALUE MEASUREMENTS (CONTINUED) (c) Money market fund that is a sweep investment for cash balances in the Fund at Oct. 31, 2010. (d) Derivative instruments are valued at unrealized appreciation (depreciation). The following table is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value.
ASSET- CORPORATE BACKED DEBT SECURITIES SECURITIES TOTAL ------------------------------------------------------------------------------ Balance as of Oct. 31, 2009 $2,060,678 $-- $2,060,678 Accrued discounts/premiums 403 27,576 27,979 Realized gain (loss) 13,557 -- 13,557 Change in unrealized appreciation (depreciation)* (115,940) 118,392 2,452 Sales (611,479) -- (611,479) Purchases 451,360 1,047,396 1,498,756 Transfers into Level 3 -- -- -- Transfers out of Level 3 -- -- -- ------------------------------------------------------------------------------ Balance as of Oct. 31, 2010 $1,798,579 $1,193,364 $2,991,943 ------------------------------------------------------------------------------
* Change in unrealized appreciation (depreciation) relating to securities held at Oct. 31, 2010 was $2,452, which is comprised of Asset-Backed Securities of $(115,940) and Corporate Debt Securities of $118,392. Transfers in and/or out of Level 3 are determined based on the fair value at the beginning of the period for security positions held throughout the period. HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS (i) The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (Commission) for the first and third quarters of each fiscal year on Form N-Q; (ii) The Fund's Forms N-Q are available on the Commission's website at http://www.sec.gov; (iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC (information on the operations of the Public Reference Room may be obtained by calling 800.SEC.0330); and (iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q, can be obtained without charge, upon request, by calling 800.345.6611. -------------------------------------------------------------------------------- 36 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT STATEMENT OF ASSETS AND LIABILI- TIE- S ------------------------------------------------------------------------------ - OCT. 31, 2010
ASSETS Investments in securities, at value Unaffiliated issuers* (identified cost $455,871,104) $502,094,731 Affiliated money market fund (identified cost $10,951,314) 10,951,314 Investments of cash collateral received for securities on loan (identified cost $3,005,038) 3,005,038 ------------------------------------------------------------------------------- Total investments in securities (identified cost $469,827,456) 516,051,083 Foreign currency holdings (identified cost $15,464,984) 16,473,441 Receivable from Investment Manager 1,155 Capital shares receivable 3,606,385 Dividends and accrued interest receivable 6,329,571 Receivable for investment securities sold 8,704,537 Unrealized appreciation on forward foreign currency exchange contracts 918,518 ------------------------------------------------------------------------------- Total assets 552,084,690 ------------------------------------------------------------------------------- LIABILITIES Disbursements in excess of cash 135,252 Capital shares payable 751,804 Payable for investment securities purchased 10,229,040 Payable upon return of securities loaned 3,005,038 Variation margin payable on futures contracts 120,748 Unrealized depreciation on forward foreign currency exchange contracts 198,129 Accrued investment management services fees 10,303 Accrued distribution fees 2,842 Accrued transfer agency fees 9,410 Accrued administrative services fees 1,164 Accrued plan administration services fees 3 Other accrued expenses 141,609 ------------------------------------------------------------------------------- Total liabilities 14,605,342 ------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $537,479,348 ------------------------------------------------------------------------------- REPRESENTED BY Capital stock -- $.01 par value $ 719,074 Additional paid-in capital 496,267,496 Undistributed net investment income 5,782,355 Accumulated net realized gain (loss) (13,304,257) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 48,014,680 ------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $537,479,348 ------------------------------------------------------------------------------- *Value of securities on loan $ 8,771,604 -------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 37 STATEMENT OF ASSETS AND LIABILITIES (continued) ------------------------- OCT. 31, 2010
NET ASSET VALUE PER SHARE NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE Class A $246,929,356 33,048,004 $7.47(1) Class B $ 18,512,676 2,460,622 $7.52 Class C $ 6,162,276 827,014 $7.45 Class I $195,612,882 26,157,651 $7.48 Class R $ 5,341 716 $7.46 Class R4 $ 407,251 54,466 $7.48 Class W $ 69,842,043 9,357,911 $7.46 Class Z $ 7,523 1,006 $7.48 ------------------------------------------------------------------------------
(1) The maximum offering price per share for Class A is $7.84. The offering price is calculated by dividing the net asset value by 1.0 minus the maximum sales charge of 4.75%. The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 38 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT STATEMENT OF OPERATIONS ------------------------------------------------------- YEAR ENDED OCT. 31, 2010
INVESTMENT INCOME Income: Interest $22,761,691 Income distributions from affiliated money market fund 20,786 Income from securities lending -- net 15,219 Foreign taxes withheld (73,968) ------------------------------------------------------------------------------ Total income 22,723,728 ------------------------------------------------------------------------------ Expenses: Investment management services fees 3,543,599 Distribution fees Class A 613,780 Class B 256,387 Class C 61,070 Class R 16 Class R3 5 Class W 136,877 Transfer agency fees Class A 564,981 Class B 63,609 Class C 14,350 Class R 3 Class R3 2 Class R4 168 Class R5 2 Class W 107,035 Class Z 1 Administrative services fees 400,481 Plan administration services fees Class R 6 Class R3 5 Class R4 730 Compensation of board members 14,762 Custodian fees 74,385 Printing and postage 86,000 Registration fees 105,300 Professional fees 43,836 Other 50,526 ------------------------------------------------------------------------------ Total expenses 6,137,916 Expenses waived/reimbursed by the Investment Manager and its affiliates (347,134) ------------------------------------------------------------------------------ Total net expenses 5,790,782 ------------------------------------------------------------------------------ Investment income (loss) -- net 16,932,946 ------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 39 STATEMENT OF OPERATIONS (continued) ------------------------------------------- YEAR ENDED OCT. 31, 2010
REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions $ 3,955,678 Foreign currency transactions 1,765,452 Futures contracts (436,414) ------------------------------------------------------------------------------ Net realized gain (loss) on investments 5,284,716 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 15,264,873 ------------------------------------------------------------------------------ Net gain (loss) on investments and foreign currencies 20,549,589 ------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations $37,482,535 ------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 40 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------
YEAR ENDED OCT. 31, 2010 2009 OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ 16,932,946 $ 14,084,975 Net realized gain (loss) on investments 5,284,716 (6,929,498) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 15,264,873 96,312,630 ---------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 37,482,535 103,468,107 ---------------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A (5,782,358) (14,451,166) Class B (373,924) (2,363,547) Class C (100,533) (247,912) Class I (4,785,145) (12,198,283) Class R (60) N/A Class R3 (25) N/A Class R4 (6,931) (7,374) Class R5 (32) N/A Class W (1,333,863) (5,231,186) ---------------------------------------------------------------------------------------------- Total distributions (12,382,871) (34,499,468) ----------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 41 STATEMENTS OF CHANGES IN NET ASSETS (continued) -------------------------------
YEAR ENDED OCT. 31, 2010 2009 CAPITAL SHARE TRANSACTIONS Proceeds from sales Class A shares $ 36,915,658 $ 34,656,103 Class B shares 3,786,502 4,760,950 Class C shares 2,784,327 1,892,530 Class I shares 46,339,721 44,757,560 Class R shares 5,000 N/A Class R3 shares 5,000 N/A Class R4 shares 253,675 42,421 Class R5 shares 5,000 N/A Class W shares 42,249,228 47,318,890 Class Z shares 7,503 N/A Reinvestment of distributions at net asset value Class A shares 5,281,045 13,585,257 Class B shares 350,444 2,243,075 Class C shares 93,758 228,357 Class I shares 4,784,860 12,197,728 Class R4 shares 6,931 7,374 Class W shares 1,333,742 5,230,912 Conversions from Class B to Class A Class A shares 7,184,278 6,603,705 Class B shares (7,184,278) (6,603,705) Payments for redemptions Class A shares (67,135,882) (83,721,233) Class B shares (9,329,593) (17,508,600) Class C shares (2,542,770) (1,461,886) Class I shares (34,389,475) (115,655,803) Class R3 shares (5,000) N/A Class R4 shares (46,250) (18,796) Class R5 shares (5,000) N/A Class W shares (36,839,123) (135,568,998) ---------------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions (6,090,699) (187,014,159) ---------------------------------------------------------------------------------------------- Total increase (decrease) in net assets 19,008,965 (118,045,520) Net assets at beginning of year 518,470,383 636,515,903 ---------------------------------------------------------------------------------------------- Net assets at end of year $537,479,348 $ 518,470,383 ---------------------------------------------------------------------------------------------- Undistributed (excess of distributions over) net investment income $ 5,782,355 $ (1,411,247) ----------------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 42 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT FINANCIAL HIGHLIGHTS ----------------------------------------------------------- The following tables are 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. For periods ended 2007 and after, per share net investment income (loss) amounts are calculated based on average shares outstanding during the period. Total returns assume reinvestment of all dividends and distributions. Total returns do not reflect payment of sales charges, if any, and are not annualized for periods of less than one year.
YEAR ENDED OCT. 31, CLASS A --------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006 Net asset value, beginning of period $7.10 $6.16 $6.89 $6.60 $6.59 ------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .23 .17 .22 .20 .19 Net gains (losses) (both realized and unrealized) .31 1.15 (.73) .35 .14 ------------------------------------------------------------------------------------------------------ Total from investment operations .54 1.32 (.51) .55 .33 ------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.17) (.38) (.22) (.26) (.32) ------------------------------------------------------------------------------------------------------ Net asset value, end of period $7.47 $7.10 $6.16 $6.89 $6.60 ------------------------------------------------------------------------------------------------------ TOTAL RETURN 7.70% 22.12% (7.66%) 8.63% 5.17% ------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS(a) Gross expenses prior to expense waiver/reimbursement 1.34% 1.36% 1.32% 1.37% 1.39% ------------------------------------------------------------------------------------------------------ Net expenses after expense waiver/reimbursement(b) 1.25% 1.25% 1.25% 1.25% 1.25% ------------------------------------------------------------------------------------------------------ Net investment income (loss) 3.31% 2.72% 3.26% 3.08% 2.77% ------------------------------------------------------------------------------------------------------ SUPPLEMENTAL DATA Net assets, end of period (in millions) $247 $253 $249 $259 $276 ------------------------------------------------------------------------------------------------------ Portfolio turnover rate 62% 69% 75% 77% 68% ------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 43 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
YEAR ENDED OCT. 31, CLASS B --------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006 Net asset value, beginning of period $7.14 $6.23 $6.96 $6.67 $6.59 ------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .18 .13 .17 .15 .13 Net gains (losses) (both realized and unrealized) .31 1.15 (.73) .35 .16 ------------------------------------------------------------------------------------------------------ Total from investment operations .49 1.28 (.56) .50 .29 ------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.11) (.37) (.17) (.21) (.21) ------------------------------------------------------------------------------------------------------ Net asset value, end of period $7.52 $7.14 $6.23 $6.96 $6.67 ------------------------------------------------------------------------------------------------------ TOTAL RETURN 6.89% 21.14% (8.28%) 7.68% 4.45% ------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS(a) Gross expenses prior to expense waiver/reimbursement 2.10% 2.13% 2.09% 2.13% 2.16% ------------------------------------------------------------------------------------------------------ Net expenses after expense waiver/reimbursement(b) 2.02% 2.01% 2.01% 2.01% 2.02% ------------------------------------------------------------------------------------------------------ Net investment income (loss) 2.58% 2.00% 2.49% 2.30% 1.98% ------------------------------------------------------------------------------------------------------ SUPPLEMENTAL DATA Net assets, end of period (in millions) $19 $30 $42 $47 $63 ------------------------------------------------------------------------------------------------------ Portfolio turnover rate 62% 69% 75% 77% 68% ------------------------------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS C --------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006 Net asset value, beginning of period $7.08 $6.18 $6.91 $6.62 $6.57 ------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .18 .13 .17 .15 .14 Net gains (losses) (both realized and unrealized) .31 1.14 (.73) .35 .13 ------------------------------------------------------------------------------------------------------ Total from investment operations .49 1.27 (.56) .50 .27 ------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.12) (.37) (.17) (.21) (.22) ------------------------------------------------------------------------------------------------------ Net asset value, end of period $7.45 $7.08 $6.18 $6.91 $6.62 ------------------------------------------------------------------------------------------------------ TOTAL RETURN 6.95% 21.15% (8.27%) 7.75% 4.25% ------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS(a) Gross expenses prior to expense waiver/reimbursement 2.10% 2.12% 2.08% 2.13% 2.16% ------------------------------------------------------------------------------------------------------ Net expenses after expense waiver/reimbursement(b) 2.01% 2.01% 2.01% 2.01% 2.02% ------------------------------------------------------------------------------------------------------ Net investment income (loss) 2.58% 1.94% 2.51% 2.32% 2.00% ------------------------------------------------------------------------------------------------------ SUPPLEMENTAL DATA Net assets, end of period (in millions) $6 $6 $4 $3 $3 ------------------------------------------------------------------------------------------------------ Portfolio turnover rate 62% 69% 75% 77% 68% ------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 44 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS I --------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006 Net asset value, beginning of period $7.11 $6.14 $6.87 $6.59 $6.61 ------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .26 .20 .25 .23 .21 Net gains (losses) (both realized and unrealized) .31 1.15 (.73) .34 .14 ------------------------------------------------------------------------------------------------------ Total from investment operations .57 1.35 (.48) .57 .35 ------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.20) (.38) (.25) (.29) (.37) ------------------------------------------------------------------------------------------------------ Net asset value, end of period $7.48 $7.11 $6.14 $6.87 $6.59 ------------------------------------------------------------------------------------------------------ TOTAL RETURN 8.16% 22.83% (7.30%) 8.91% 5.52% ------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS(a) Gross expenses prior to expense waiver/reimbursement .86% .86% .85% .87% .88% ------------------------------------------------------------------------------------------------------ Net expenses after expense waiver/reimbursement(b) .82% .82% .82% .87% .88% ------------------------------------------------------------------------------------------------------ Net investment income (loss) 3.70% 3.16% 3.68% 3.47% 3.18% ------------------------------------------------------------------------------------------------------ SUPPLEMENTAL DATA Net assets, end of period (in millions) $196 $170 $206 $157 $145 ------------------------------------------------------------------------------------------------------ Portfolio turnover rate 62% 69% 75% 77% 68% ------------------------------------------------------------------------------------------------------
CLASS R* YEAR ENDED PER SHARE DATA OCT. 31, 2010(c) Net asset value, beginning of period $6.98 ------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .16 Net gains (losses) (both realized and unrealized) .40 ------------------------------------------------------------------- Total from investment operations .56 ------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.08) ------------------------------------------------------------------- Net asset value, end of period $7.46 ------------------------------------------------------------------- TOTAL RETURN 8.15% ------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(a) Gross expenses prior to expense waiver/reimbursement 1.66%(d) ------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(b) 1.59%(d) ------------------------------------------------------------------- Net investment income (loss) 3.58%(d) ------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- ------------------------------------------------------------------- Portfolio turnover rate 62% -------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 45 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
YEAR ENDED OCT. 31, CLASS R4 --------------------------------------------------- PER SHARE DATA 2010 2009 2008 2007 2006 Net asset value, beginning of period $7.11 $6.16 $6.89 $6.60 $6.61 ------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .24 .18 .25 .22 .20 Net gains (losses) (both realized and unrealized) .31 1.15 (.72) .35 .13 ------------------------------------------------------------------------------------------------------ Total from investment operations .55 1.33 (.47) .57 .33 ------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS: Dividends from net investment income (.18) (.38) (.26) (.28) (.34) ------------------------------------------------------------------------------------------------------ Net asset value, end of period $7.48 $7.11 $6.16 $6.89 $6.60 ------------------------------------------------------------------------------------------------------ TOTAL RETURN 7.85% 22.42% (7.19%) 8.84% 5.29% ------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS(a) Gross expenses prior to expense waiver/reimbursement 1.18% 1.16% 1.14% 1.17% 1.20% ------------------------------------------------------------------------------------------------------ Net expenses after expense waiver/reimbursement(b) 1.12% 1.06% .87% 1.08% 1.08% ------------------------------------------------------------------------------------------------------ Net investment income (loss) 3.35% 2.86% 3.64% 3.27% 2.95% ------------------------------------------------------------------------------------------------------ SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- $-- $-- ------------------------------------------------------------------------------------------------------ Portfolio turnover rate 62% 69% 75% 77% 68% ------------------------------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS W ------------------------------------------ PER SHARE DATA 2010 2009 2008 2007(e) Net asset value, beginning of period $7.09 $6.15 $6.88 $6.79 --------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .22 .17 .22 .20 Net gains (losses) (both realized and unrealized) .31 1.14 (.73) .17 --------------------------------------------------------------------------------------------- Total from investment operations .53 1.31 (.51) .37 --------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.16) (.37) (.22) (.28) --------------------------------------------------------------------------------------------- Net asset value, end of period $7.46 $7.09 $6.15 $6.88 --------------------------------------------------------------------------------------------- TOTAL RETURN 7.66% 22.04% (7.62%) 5.71% --------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(a) Gross expenses prior to expense waiver/reimbursement 1.31% 1.30% 1.30% 1.35%(d) --------------------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(b) 1.27% 1.27% 1.27% 1.26%(d) --------------------------------------------------------------------------------------------- Net investment income (loss) 3.15% 2.70% 3.27% 3.34%(d) --------------------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $70 $60 $135 $54 --------------------------------------------------------------------------------------------- Portfolio turnover rate 62% 69% 75% 77% ---------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 46 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
CLASS Z YEAR ENDED PER SHARE DATA OCT. 31, 2010(f) Net asset value, beginning of period $7.33 ------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .01 Net gains (losses) (both realized and unrealized) .14 ------------------------------------------------------------------- Total from investment operations .15 ------------------------------------------------------------------- Net asset value, end of period $7.48 ------------------------------------------------------------------- TOTAL RETURN 2.05% ------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(a) Gross expenses prior to expense waiver/reimbursement 1.13%(d) ------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(b) .95%(d) ------------------------------------------------------------------- Net investment income (loss) 2.31%(d) ------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- ------------------------------------------------------------------- Portfolio turnover rate 62% -------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS * Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. (a) In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. (b) The Investment Manager and its affiliates agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds). (c) For the period from March 15, 2010 (when shares became available) to Oct. 31, 2010. (d) Annualized. (e) For the period from Dec. 1, 2006 (when shares became available) to Oct. 31, 2007. (f) For the period from Sept. 27, 2010 (when shares became available) to Oct. 31, 2010. The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 47 NOTES TO FINANCIAL STATEMENTS -------------------------------------------------- 1. ORGANIZATION Columbia Global Bond Fund (formerly known as RiverSource Global Bond Fund) (the Fund) is a series of RiverSource Global Series, Inc. (the Corporation) and is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a non-diversified, open-end management investment company. The Corporation has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Corporation's Board of Directors (the Board). The Fund offers Class A, Class B, Class C, Class I, Class R, Class R4, Class W and Class Z shares. - Class A shares are offered with a front-end sales charge, which may be waived under certain circumstances. - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares one month after the completion of the eighth year of ownership if originally purchased in a RiverSource fund on or after May 21, 2005 or originally purchased in a Seligman fund on or after June 13, 2009. Class B shares originally purchased in a RiverSource fund prior to May 21, 2005 will convert to Class A shares in the ninth calendar year of ownership. Class B shares originally purchased in a Seligman fund prior to June 13, 2009 will convert to Class A shares in the month prior to the ninth year of ownership. Effective Sept. 7, 2010, the Fund no longer accepts investments from new or existing investors in the Fund's Class B shares, except that (i) dividend and/or capital gain distributions may continue to be reinvested in Class B shares of the Fund and (ii) shareholders invested in Class B shares of the Fund may exchange those shares for Class B shares of other Columbia, RiverSource, Seligman and Threadneedle funds offering such shares. - Class C shares may be subject to a CDSC on shares redeemed within one year of purchase. - Class I shares are not subject to sales charges and are available only to the Columbia Family of Funds. - Class R shares are offered without a front-end sales charge or CDSC to qualifying institutional investors. Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. - Class R4 shares are not subject to sales charges, however, this class is closed to new investors effective Dec. 31, 2010. - Class W shares are offered without a front-end sales charge or CDSC and are offered through qualifying discretionary accounts. -------------------------------------------------------------------------------- 48 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- - Class Z shares are offered without a front-end sales charge or CDSC to certain eligible investors. Class Z shares became effective Sept. 27, 2010. At Aug. 27, 2010, all Class R3 and Class R5 shares were liquidated. The shares in these classes had consisted solely of seed capital from Columbia Management Investment Advisers, LLC (formerly known as RiverSource Investments, LLC) (the Investment Manager). At Oct. 31, 2010, the Investment Manager and affiliated funds-of-funds owned 100% of Class I shares, and the Investment Manager owned 100% of Class R shares. At Oct. 31, 2010, the Investment Manager and affiliated funds-of-funds owned approximately 36% of the total outstanding Fund shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration services fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. VALUATION OF SECURITIES All securities are valued at the close of business of the New York Stock Exchange (NYSE). Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price from the primary exchange. Debt securities are generally traded in the over-the-counter market and are valued by an independent pricing service using an evaluated bid. When market quotes are not readily available, the pricing service, in determining fair values of debt securities, takes into consideration such factors as current quotations by broker/dealers, coupon, maturity, quality, type of issue, trading characteristics, and other yield and risk factors it deems relevant in determining valuations. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. The procedures adopted by the Board generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 49 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- (such as foreign securities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the NYSE and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the NYSE, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise Financial), parent company of the Investment Manager, as administrator to the Fund, will fair value foreign securities pursuant to procedures adopted by the Board, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the NYSE. The fair value of a security is likely to be different from the quoted or published price, if available. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates. Typically, those maturing in 60 days or less that originally had maturities of more than 60 days at acquisition date are valued at amortized cost using the market value on the 61st day before maturity. Short-term securities maturing in 60 days or less at acquisition date are valued at amortized cost. Amortized cost is an approximation of market value. Investments in money market funds are valued at net asset value. FOREIGN CURRENCY TRANSLATIONS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the Statement of Operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. At Oct. 31, 2010, foreign currency holdings consisted of multiple denominations, primarily European monetary units and Japanese Yen. REPURCHASE AGREEMENTS The Fund may enter into repurchase agreements. Generally, securities received as collateral subject to repurchase agreements are deposited with the Fund's -------------------------------------------------------------------------------- 50 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- custodian and, pursuant to the terms of the repurchase agreement, must have an aggregate market value greater than or equal to the repurchase price plus accrued interest at all times. The market value of securities held as collateral for repurchase agreements is monitored on a daily basis to ensure the existence of the proper level of collateral. SECURITIES PURCHASED ON A FORWARD-COMMITMENT BASIS Delivery and payment for securities that have been purchased by the Fund on a forward-commitment basis, including when-issued securities and other forward- commitments, can take place one month or more after the transaction date. During this period, such securities are subject to market fluctuations, and they may affect the Fund's net assets the same as owned securities. The Fund designates cash or liquid securities at least equal to the amount of its forward- commitments. At Oct. 31, 2010, the Fund has outstanding when-issued securities of $1,673,555 and other forward-commitments of $34,650. GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. 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. FEDERAL TAXES The Fund's policy is to comply with Subchapter M of the Internal Revenue Code that applies to regulated investment companies and to distribute substantially all of its taxable income (which includes net short-term capital gains) to shareholders. No provision for income or excise taxes is thus required. Management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Generally, the tax authorities can examine all tax returns filed for the last three years. FOREIGN CAPITAL GAINS TAXES Realized gains in certain countries may be subject to foreign taxes at the Fund level, at rates ranging from approximately 10% to 15%. The Fund pays such foreign taxes on net realized gains at the appropriate rate for each jurisdiction. DIVIDENDS TO SHAREHOLDERS Dividends from net investment income, declared and paid each calendar quarter, when available, are reinvested in additional shares of the Fund at net asset value -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 51 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- or payable in cash. Capital gains, when available, are normally distributed along with the last income dividend of the calendar year. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income, if any, is recognized on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities. Interest income, including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. 3. 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 other assets, such as securities, currencies, commodities or indices. Derivative instruments may be used to maintain cash reserves while maintaining exposure to certain other assets, to offset anticipated declines in values of investments, 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 obligation under the terms of the contract, the potential for an illiquid secondary market 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 Fund and any counterparty are required to maintain an agreement that requires the Fund and that counterparty to monitor (on a daily basis) the net fair value of all derivatives entered into pursuant to the contract between the Fund and such counterparty. If the net fair value of such derivatives between the Fund and that counterparty exceeds a certain threshold (as defined in the agreement), the Fund or the counterparty (as the case may be) is required to post cash and/or securities as collateral. Fair values of derivatives presented in the financial statements are not netted with the fair value of other derivatives or with any collateral amounts posted by the Fund or any counterparty. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS Forward foreign currency exchange contracts are agreements between two parties to buy and sell a currency at a set price on a future date. These contracts are intended to be used to minimize the exposure to foreign exchange rate fluctuations during the period between the trade and settlement dates of the contract. The Fund utilized forward foreign currency exchange contracts in connection with the settlement of purchases and sales of securities, to hedge the -------------------------------------------------------------------------------- 52 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- currency exposure associated with some or all of the Fund's securities, to shift foreign currency exposure back to U.S. dollars, to shift investment exposure from one currency to another, to shift U.S. dollar exposure to achieve a representative weighted mix of major currencies in its benchmark, and/or to recover an underweight country exposure in its portfolio and to gain exposure to currencies where either the underlying bond market is unattractive or where foreign investors cannot easily invest in local fixed income securities. The market values of forward foreign currency exchange contracts fluctuate with changes in foreign currency exchange rates. The Fund will record a realized gain or loss when the forward foreign currency exchange contract is closed. The use of forward foreign currency exchange contracts does not eliminate fluctuations in the prices of the Fund's portfolio securities. The risks of forward foreign currency contracts include movement in the values of the foreign currencies relative to the U.S. dollar (or other foreign currencies) and the possibility that counterparties will not complete their contractual obligations, which may be in excess of the amount reflected, if any, in the Statement of Assets and Liabilities. FUTURES CONTRACTS Futures contracts 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 traded on U.S. and foreign exchanges to produce incremental earnings, to manage the duration and yield curve exposure of the Fund vs. the benchmark (interest rate futures), to manage exposure to movements in interest rates (interest rate futures), to manage the duration and yield curve exposure of the Fund vs. the benchmark (U.S. Treasury Note futures) and to implement cross market strategies efficiently (i.e., a sale of U.S. 10 yr futures versus a purchase of German 10 yr futures to position for expected changes in the spread between U.S. and German yields). Upon entering into futures contracts, the Fund bears risks which may include interest rates, exchange rates or securities prices moving unexpectedly, in which case, the Fund 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 pledges cash or securities with the broker in an amount sufficient to meet the initial margin requirement. 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 -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 53 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- 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 ON 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; the impact of derivative transactions on the Fund's operations over the period including realized gains or losses and unrealized gains or losses. The derivative schedules following the Portfolio of Investments present additional information regarding derivative instruments outstanding at the end of the period, if any. FAIR VALUES OF DERIVATIVE INSTRUMENTS AT OCT. 31, 2010
ASSET DERIVATIVES LIABILITY DERIVATIVES ------------------------------- ------------------------------- STATEMENT OF ASSETS STATEMENT OF ASSETS RISK EXPOSURE AND LIABILITIES AND LIABILITIES CATEGORY LOCATION FAIR VALUE LOCATION FAIR VALUE ------------------------------------------------------------------------------------------- Unrealized Unrealized appreciation on depreciation on forward foreign forward foreign Foreign exchange currency exchange currency exchange contracts contracts $918,518 contracts $198,129 ------------------------------------------------------------------------------------------- Net assets -- unrealized Interest rate depreciation on contracts N/A N/A investments 147,337* ------------------------------------------------------------------------------------------- Total $918,518 $345,466 -------------------------------------------------------------------------------------------
* Includes cumulative appreciation (depreciation) of futures contracts as reported in the Futures Contracts Outstanding table 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. EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCT. 31, 2010
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME ----------------------------------------------------------------------------------- FORWARD FOREIGN CURRENCY FUTURES RISK EXPOSURE CATEGORY EXCHANGE CONTRACTS CONTRACTS TOTAL ----------------------------------------------------------------------------------- Foreign exchange contracts $2,539,065 $ -- $2,539,065 ----------------------------------------------------------------------------------- Interest rate contracts -- (436,414) $ (436,414) ----------------------------------------------------------------------------------- Total $2,539,065 $(436,414) $2,102,651 -----------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 54 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED IN INCOME ---------------------------------------------------------------------------------- FORWARD FOREIGN CURRENCY FUTURES RISK EXPOSURE CATEGORY EXCHANGE CONTRACTS CONTRACTS TOTAL ---------------------------------------------------------------------------------- Foreign exchange contracts $445,405 $ -- $445,405 ---------------------------------------------------------------------------------- Interest rate contracts -- (98,865) $(98,865) ---------------------------------------------------------------------------------- Total $445,405 $(98,865) $346,540 ----------------------------------------------------------------------------------
VOLUME OF DERIVATIVE ACTIVITY FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS The gross notional amount of contracts outstanding was approximately $60.4 million at Oct. 31, 2010. The monthly average gross notional amount for these contracts was $46.2 million for the year ended Oct. 31, 2010. The fair value of such contracts at Oct. 31, 2010 is set forth in the table above. FUTURES CONTRACTS The gross notional amount of long and short contracts outstanding was approximately $11.9 million and $37.5 million, respectively, at Oct. 31, 2010. The monthly average gross notional amounts for long and short contracts was $15.1 million and $15.4 million, respectively, for the year ended Oct. 31, 2010. The fair value of such contracts at Oct. 31, 2010 is set forth in the table above. 4. EXPENSES AND SALES CHARGES INVESTMENT MANAGEMENT SERVICES FEES Under an Investment Management Services Agreement, the Investment Manager determines which securities will be purchased, held or sold. The management fee is an annual fee that is equal to a percentage of the Fund's average daily net assets that declines from 0.72% to 0.52% as the Fund's net assets increase. The management fee for the year ended Oct. 31, 2010 was 0.71% of the Fund's average daily net assets. ADMINISTRATIVE SERVICES FEES Under an Administrative Services Agreement, the Fund pays Ameriprise Financial an annual fee for administration and accounting services equal to a percentage of the Fund's average daily net assets that declines from 0.08% to 0.05% as the Fund's net assets increase. The fee for the year ended Oct. 31, 2010 was 0.08% of the Fund's average daily net assets. OTHER FEES Other expenses are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 55 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- administrative services to the Fund and the Board. For the year ended Oct. 31, 2010, other expenses paid to this company were $1,017. COMPENSATION OF BOARD MEMBERS Under a Deferred Compensation Plan (the Plan), the board members who are not "interested persons" of the Fund as defined under the 1940 Act may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or certain other 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 Plan. TRANSFER AGENCY FEES Under a Transfer Agency Agreement, Columbia Management Investment Services Corp. (formerly known as RiverSource Service Corporation) (the Transfer Agent) is responsible for providing transfer agency services to the Fund. Prior to Sept. 7, 2010, the Transfer Agent received annual account-based service fees from Class A, Class B and Class C shares that varied by class and annual asset-based service fees based on the Fund's average daily net assets attributable to Class R, Class R4 and Class W shares, which amount varied by class. In addition, the Transfer Agent charged an annual fee per inactive account and received reimbursement from the Fund for certain out-of-pocket expenses. Under a new Transfer Agency Agreement effective Sept. 7, 2010, the Transfer Agent has contracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. The Transfer Agent receives monthly account-based service fees based on the number of open accounts and is reimbursed by the Fund for the fees and expenses the Transfer Agent pays to financial intermediaries that maintain omnibus accounts with the Fund subject to an annual limitation (that varies by class) that is a percentage of the average aggregate value of the Fund's shares maintained in each such omnibus account (other than omnibus accounts for which American Enterprise Investment Services, Inc. is the broker of record or accounts where the beneficial shareholder is a customer of Ameriprise Financial Services, Inc., which are paid a per account fee). The Transfer Agent pays the fees of BFDS for services as sub-transfer agent and is not entitled to reimbursement for such fees from the Fund. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses and may also retain, as additional compensation for its services, fees for wire, telephone and redemption orders, Individual Retirement Account ("IRA") trustee agent fees and account transcript fees due to the Transfer Agent from shareholders of the Fund and credits (net of bank charges) earned with respect to -------------------------------------------------------------------------------- 56 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- balances in accounts the Transfer Agent maintains in connection with its services to the Fund. For the year ended Oct. 31, 2010, the Fund's effective transfer agent fee rates as a percentage of average daily net assets of each class were as follows: Class A.............................................. 0.23% Class B.............................................. 0.25 Class C.............................................. 0.24 Class R.............................................. 0.08 Class R4............................................. 0.06 Class W.............................................. 0.20 Class Z.............................................. 0.13*
* Annualized. Class I shares do not pay transfer agent fees. PLAN ADMINISTRATION SERVICES FEES Under a Plan Administration Services Agreement with the Transfer Agent, the Fund pays an annual fee at a rate of 0.25% of the Fund's average daily net assets attributable to Class R4 shares for the provision of various administrative, recordkeeping, communication and educational services. Prior to Sept. 7, 2010, the Fund also paid an annual fee at a rate of 0.25% of the Fund's average daily net assets attributable to Class R shares for such services. DISTRIBUTION FEES The Fund has an agreement with Columbia Management Investment Distributors, Inc. (formerly known as RiverSource Fund Distributors, Inc.) (the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund paid a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A and Class W shares, a fee at an annual rate of up to 0.50% of the Fund's average daily net assets attributable to Class R shares (of which up to 0.25% may be used for services) and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. For Class B and Class C shares, of the 1.00% fee, up to 0.75% is reimbursed for distribution expenses. The amount of distribution expenses incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $1,130,000 and $83,000 for Class B and Class C shares, respectively. These amounts are based on the most recent information available as of July 31, 2010, and may be recovered from future payments under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution fee is reduced. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 57 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- SALES CHARGES Sales charges, including front-end and CDSCs, received by the Distributor for distributing Fund shares were $214,527 for Class A, $6,190 for Class B and $2,282 for Class C for the year ended Oct. 31, 2010. EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES For the year ended Oct. 31, 2010, the Investment Manager and its affiliates waived/reimbursed certain fees and expenses such that net expenses (excluding fees and expenses of acquired funds*) were as follows: Class A.............................................. 1.25% Class B.............................................. 2.02 Class C.............................................. 2.01 Class I.............................................. 0.82 Class R.............................................. 1.59 Class R4............................................. 1.12 Class W.............................................. 1.27 Class Z.............................................. 0.95
The waived/reimbursed fees and expenses for the transfer agency fees at the class level were as follows: Class A........................................... $123,060 Class B........................................... 12,851 Class C........................................... 3,061 Class R4.......................................... 21
The management fees waived/reimbursed at the Fund level were $208,141. The Investment Manager and its affiliates have contractually agreed to waive certain fees and reimburse certain expenses until Dec. 31, 2010, unless sooner terminated at the sole discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds*) will not exceed the following percentage of the class' average daily net assets: Class A.............................................. 1.25% Class B.............................................. 2.02 Class C.............................................. 2.01 Class I.............................................. 0.82 Class R.............................................. 1.62 Class R4............................................. 1.12 Class W.............................................. 1.27 Class Z.............................................. 1.00
Effective Jan. 1, 2011, the Investment Manager and its affiliates have contractually agreed to waive certain fees and reimburse certain expenses until Dec. 31, 2011, unless sooner terminated at the sole discretion of the Board, such -------------------------------------------------------------------------------- 58 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- that net expenses (excluding fees and expenses of acquired funds*), will not exceed the following percentage of the class' average daily net assets: Class A.............................................. 1.21% Class B.............................................. 1.96 Class C.............................................. 1.96 Class I.............................................. 0.76 Class R.............................................. 1.46 Class R4............................................. 1.06 Class W.............................................. 1.21 Class Z.............................................. 0.96
* In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. 5. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $296,998,710 and $310,324,179, respectively, for the year ended Oct. 31, 2010. Realized gains and losses are determined on an identified cost basis. 6. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated were as follows:
YEAR ENDED OCT. 31, 2010 2009 ------------------------------------------------------------------ CLASS A Sold 5,227,742 5,231,964 Converted from Class B(a) 1,004,833 969,818 Reinvested distributions 745,196 2,146,170 Redeemed (9,534,806) (13,137,526) ------------------------------------------------------------------ Net increase (decrease) (2,557,035) (4,789,574) ------------------------------------------------------------------ CLASS B Sold 533,314 725,964 Reinvested distributions 49,123 349,934 Converted to Class A(a) (999,242) (962,748) Redeemed (1,320,786) (2,725,361) ------------------------------------------------------------------ Net increase (decrease) (1,737,591) (2,612,211) ------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 59 NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
YEAR ENDED OCT. 31, 2010 2009 ------------------------------------------------------------------ CLASS C Sold 394,093 281,159 Reinvested distributions 13,210 35,905 Redeemed (364,923) (227,718) ------------------------------------------------------------------ Net increase (decrease) 42,380 89,346 ------------------------------------------------------------------ CLASS I Sold 6,515,742 6,812,712 Reinvested distributions 675,045 1,933,079 Redeemed (4,919,521) (18,357,075) ------------------------------------------------------------------ Net increase (decrease) 2,271,266 (9,611,284) ------------------------------------------------------------------ CLASS R(B,C) Sold 716 N/A ------------------------------------------------------------------ Net increase (decrease) 716 N/A ------------------------------------------------------------------ CLASS R3(b) Sold 716 N/A Redeemed (716) N/A ------------------------------------------------------------------ Net increase (decrease) -- N/A ------------------------------------------------------------------ CLASS R4 Sold 36,368 6,358 Reinvested distributions 974 1,165 Redeemed (6,616) (3,012) ------------------------------------------------------------------ Net increase (decrease) 30,726 4,511 ------------------------------------------------------------------ CLASS R5(b) Sold 715 N/A Redeemed (715) N/A ------------------------------------------------------------------ Net increase (decrease) -- N/A ------------------------------------------------------------------ CLASS W Sold 5,960,012 7,283,695 Reinvested distributions 187,672 826,368 Redeemed (5,289,790) (21,598,586) ------------------------------------------------------------------ Net increase (decrease) 857,894 (13,488,523) ------------------------------------------------------------------ CLASS Z(d) Sold 1,006 N/A ------------------------------------------------------------------ Net increase (decrease) 1,006 N/A ------------------------------------------------------------------
(a) Automatic conversion of Class B shares to Class A shares based on the original purchase date. (b) For the period from March 15, 2010 (when shares became available) to Oct. 31, 2010. (c) Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. (d) For the period from Sept. 27, 2010 (when shares became available) to Oct. 31, 2010. -------------------------------------------------------------------------------- 60 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- 7. LENDING OF PORTFOLIO SECURITIES The Fund has entered into a Master Securities Lending Agreement (the Agreement) with JPMorgan Chase Bank, National Association (JPMorgan). The Agreement authorizes JPMorgan as lending agent to lend securities to authorized borrowers in order to generate additional income on behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured by cash or U.S. government securities equal to at least 100% of the market value of the loaned securities. Any additional collateral required to maintain those levels due to market fluctuations of the loaned securities is delivered the following business day. Cash collateral received is invested by the lending agent on behalf of the Fund into authorized investments pursuant to the Agreement. The investments made with the cash collateral are listed in the Portfolio of Investments. The values of such investments and any uninvested cash collateral are disclosed in the Statement of Assets and Liabilities along with the related obligation to return the collateral upon the return of the securities loaned. At Oct. 31, 2010, securities valued at $8,771,604 were on loan, secured by U.S. government securities valued at $5,887,409 and by cash collateral of $3,005,038 invested in short-term securities or in cash equivalents. Risks of delay in recovery of securities or even loss of rights in the securities may occur should the borrower of the securities fail financially. Risks may also arise to the extent that the value of the securities loaned increases above the value of the collateral received. JPMorgan will indemnify the Fund from losses resulting from a borrower's failure to return a loaned security when due. Such indemnification does not extend to losses associated with declines in the value of cash collateral investments. Loans are subject to termination by the Fund or the borrower at any time, and are, therefore, not considered to be illiquid investments. Pursuant to the Agreement, the Fund receives income for lending its securities either in the form of fees or by earning interest on invested cash collateral, net of negotiated rebates paid to borrowers and fees paid to the lending agent for services provided and any other securities lending expenses. Net income of $15,219 earned from securities lending for the year ended Oct. 31, 2010 is included in the Statement of Operations. The Fund also continues to earn interest and dividends on the securities loaned. 8. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in Columbia Short-Term Cash Fund (formerly known as RiverSource Short-Term Cash Fund), a money market fund established for the exclusive use of certain funds managed by the Investment Manager and other institutional clients of the Investment Manager. The cost of -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 61 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- the Fund's purchases and proceeds from sales of shares of Columbia Short-Term Cash Fund aggregated $129,611,914 and $130,927,530, respectively, for the year ended Oct. 31, 2010. The income distributions received with respect to the Fund's investment in Columbia Short-Term Cash Fund can be found in the Statement of Operations and the Fund's invested balance in Columbia Short-Term Cash Fund at Oct. 31, 2010, can be found in the Portfolio of Investments. 9. BANK BORROWINGS The Fund has entered into a revolving credit facility with a syndicate of banks led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility became effective on Oct. 14, 2010, replacing a prior credit facility. The credit facility agreement, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager, severally and not jointly, permits collective borrowings up to $300 million. The borrowers shall have the right, upon written notice to the Administrative Agent, to request an increase of up to $200 million in the aggregate amount of the credit facility from new or existing lenders, provided that the aggregate amount of the credit facility shall at no time exceed $500 million. Participation in such increase by any existing lender shall be at such lender's sole discretion. Interest is charged to each fund based on its borrowings at a rate equal to the sum of the federal funds rate plus (i) 1.25% per annum plus (ii) if one-month LIBOR exceeds the federal funds rate, the amount of such excess. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.10% per annum. Prior to Oct. 14, 2010, the credit facility agreement, which was a collective agreement between the Fund and certain other funds managed by the Investment Manager, severally and not jointly, permitted collective borrowings up to $300 million. The Fund also paid a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.10% per annum, in addition to an upfront fee equal to its pro rata share of 0.04% of the amount of the credit facility. The Fund had no borrowings during the year ended Oct. 31, 2010. 10. FEDERAL TAX INFORMATION Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of futures contracts, foreign currency transactions, foreign tax credits and losses deferred due to wash sales. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, -------------------------------------------------------------------------------- 62 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Fund. In the Statement of Assets and Liabilities, as a result of permanent book-to-tax differences, undistributed net investment income has been increased by $2,643,527 and accumulated net realized loss has been increased by $969,791 resulting in a net reclassification adjustment to decrease paid-in capital by $1,673,736. The tax character of distributions paid for the years indicated was as follows:
YEAR ENDED OCT. 31, 2010 2009 ------------------------------------------------------------------ Ordinary income........................... 12,382,871 34,499,468 Long-term capital gain.................... -- --
At Oct. 31, 2010, the components of distributable earnings on a tax basis were as follows: Undistributed ordinary income................... $ 9,830,118 Undistributed accumulated long-term gain........ $ -- Accumulated realized loss....................... $(11,380,428) Unrealized appreciation (depreciation).......... $ 42,043,088
For federal income tax purposes, the Fund had a capital loss carry-over of $11,380,428 at Oct. 31, 2010, that if not offset by capital gains will expire as follows:
2014 2016 2017 $498,771 $2,328,738 $8,552,919
For the year ended Oct. 31, 2010, $1,991,313 of capital loss carry-over was utilized and $1,673,736 expired unused. It is unlikely the Board will authorize a distribution of any net realized capital gains until the available capital loss carry-over has been offset or expires. There is no assurance that the Fund will be able to utilize all of its capital loss carry-over before it expires. 11. RISKS RELATING TO CERTAIN INVESTMENTS NON-DIVERSIFICATION RISK The Fund is non-diversified. A non-diversified fund may invest more of its assets in fewer companies than if it were a diversified fund. Because each investment has a greater effect on the Fund's performance, the Fund may be more exposed to the risks of loss and volatility than a fund that invests more broadly. FOREIGN/EMERGING MARKETS RISK Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 63 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities. Investing in emerging markets may accentuate these risks. 12. SUBSEQUENT EVENTS Management has evaluated Fund related events and transactions that occurred during the period from the date of the Statement of Assets and Liabilities through the date of issuance of the Fund's financial statements. There were no events or transactions that occurred during the period that materially impacted the amounts or disclosures in the Fund's financial statements. 13. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc. was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company (now known as legacy RiverSource) mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota (the District Court). In response to defendants' motion to dismiss the complaint, the District Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. Summary judgment was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit) on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary judgment and remanded to the District Court for further proceedings. On August 6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court (the Supreme Court), asking the Supreme Court to stay the District Court proceedings while the Supreme Court considers and rules in a case captioned Jones v. Harris Associates, which involves issues of law similar to those presented in the Gallus case. On March 30, 2010, the Supreme Court issued its ruling in Jones v. Harris Associates, and on April 5, 2010, the Supreme Court vacated the Eighth Circuit's decision in the Gallus case and remanded the case to the Eighth Circuit for further consideration in light of the Supreme Court's decision in Jones v. Harris Associates. On June 4, 2010, the Eighth Circuit remanded the Gallus case to the District Court for further consideration in light of the Supreme Court's decision in Jones v. Harris Associates. On December 9, -------------------------------------------------------------------------------- 64 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- 2010, the District Court reinstated its July 9, 2007 summary judgment order in favor of the defendants. In December 2005, without admitting or denying the allegations, American Express Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc. (Ameriprise Financial)), entered into settlement agreements with the Securities and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC) related to market timing activities. As a result, AEFC was censured and ordered to cease and desist from committing or causing any violations of certain provisions of the Investment Advisers Act of 1940, the Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million and civil money penalties of $7 million. AEFC also agreed to retain an independent distribution consultant to assist in developing a plan for distribution of all disgorgement and civil penalties ordered by the SEC in accordance with various undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its affiliates have cooperated with the SEC and the MDOC in these legal proceedings, and have made regular reports to the funds' Boards of Directors/Trustees. Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Funds. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 65 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial. -------------------------------------------------------------------------------- 66 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------ TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF COLUMBIA GLOBAL BOND FUND: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Columbia Global Bond Fund (formerly known as RiverSource Global Bond Fund) (the Fund) (one of the portfolios constituting the RiverSource Global Series, Inc.) as of October 31, 2010, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights of the Fund for the period ended October 31, 2006, were audited by other auditors whose report dated December 20, 2006, expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2010, by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 67 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued) ------------ In our opinion, the financial statements and financial highlights audited by us as referred to above present fairly, in all material respects, the financial position of Columbia Global Bond Fund of the RiverSource Global Series, Inc. at October 31, 2010, 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 then ended, and the financial highlights for each of the four years in the period then ended, in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP Minneapolis, Minnesota December 20, 2010 -------------------------------------------------------------------------------- 68 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT FEDERAL INCOME TAX INFORMATION ------------------------------------------------- (UNAUDITED) The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. The dividends listed below are reported to you on Form 1099-DIV, Dividends and Distributions. Shareholders should consult a tax advisor on how to report distributions for state and local tax purposes. Fiscal year ended Oct. 31, 2010
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for distributions: Qualified Dividend Income for individuals.................... 0.00% Dividends Received Deduction for corporations................ 0.00% U.S. Government Obligations.................................. 3.66% Foreign Taxes Paid........................................... $74,010 $3,162,4- Foreign Source Income........................................ 09
The Fund designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 69 BOARD MEMBERS AND OFFICERS ----------------------------------------------------- Shareholders elect a Board that oversees the Fund's operations. The Board appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following is a list of the Fund's Board members. Each Board member oversees 145 Columbia, RiverSource, Seligman and Threadneedle funds. Under current Board policy, members generally serve until the next Board meeting after he or she reaches the mandatory retirement age established by the Board, or the fifteenth anniversary of the first Board meeting they attended as members of the Board. INDEPENDENT BOARD MEMBERS
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None 901 S. Marquette Ave. 1/11/06 Attorney Minneapolis, MN 55402 Age 56 ------------------------------------------------------------------------------------------------------------------------------ Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None 901 S. Marquette Ave. 7/11/07 Leadership (consulting company) Minneapolis, MN 55402 Age 56 ------------------------------------------------------------------------------------------------------------------------------ Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None 901 S. Marquette Ave. 11/1/04 University; former Dean, McCallum Graduate School of Minneapolis, MN 55402 Business, Bentley University Age 60 ------------------------------------------------------------------------------------------------------------------------------ Anne P. Jones Board member since Attorney and Consultant None 901 S. Marquette Ave. 3/1/85 Minneapolis, MN 55402 Age 75 ------------------------------------------------------------------------------------------------------------------------------ Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries, 901 S. Marquette Ave. since 1/1/07, College Inc. (manufactures Minneapolis, MN 55402 Board member irrigation systems) Age 71 since 1/1/02 ------------------------------------------------------------------------------------------------------------------------------ John F. Maher Board member Retired President and Chief Executive Officer and None 901 S. Marquette Ave. since 12/10/08 former Director, Great Western Financial Corporation Minneapolis, MN 55402 (financial services), 1986-1997 Age 67 ------------------------------------------------------------------------------------------------------------------------------ Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None 901 S. Marquette Ave. 11/1/04 real estate and asset management company) Minneapolis, MN 55402 Age 58 ------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 70 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- INDEPENDENT BOARD MEMBERS (CONTINUED)
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ Leroy C. Richie Board member Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc. 901 S. Marquette Ave. since 11/11/08 President and General Counsel, Automotive Legal (digital imaging); Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil Age 69 and gas exploration and production); OGE Energy Corp. (energy and energy services) ------------------------------------------------------------------------------------------------------------------------------ Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera 901 S. Marquette Ave. 11/13/02 since 2003 (biotechnology); former President, Aquila Pharmaceuticals, Minneapolis, MN 55402 Biopharmaceuticals Inc. Age 66 (biotechnology); Healthways, Inc. (health management programs) ------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 71 BOARD MEMBERS AND OFFICERS (continued) ----------------------------------------- BOARD MEMBER AFFILIATED WITH THE INVESTMENT MANAGER*
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ William F. Truscott Board member Chairman of the Board, Columbia Management Investment None 53600 Ameriprise since 11/7/01, Advisers, LLC (formerly RiverSource Investments, LLC) Financial Center Vice President since since May 2010 (previously President, Chairman of the Minneapolis, MN 55474 2002 Board and Chief Investment Officer, 2001-April 2010); Age 50 Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Chief Executive Officer, U.S. Asset Management & President -- Annuities, Ameriprise Financial, Inc. since May 2010 (previously President -- U.S. Asset Management and Chief Investment Officer, 2005-April 2010 and Senior Vice President -- Chief Investment Officer, 2001-2005); Director, President and Chief Executive Officer, Ameriprise Certificate Company since 2006; Director, Columbia Management Investment Distributors, Inc. (formerly RiverSource Fund Distributors, Inc.) since May 2010 (previously Chairman of the Board and Chief Executive Officer, 2008-April 2010); Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006 ------------------------------------------------------------------------------------------------------------------------------
* Interested person (as defined under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the investment manager or Ameriprise Financial. The SAI has additional information about the Fund's Board members and is available, without charge, upon request by calling 800.345.6611; contacting your financial intermediary; or visiting columbiamanagement.com. -------------------------------------------------------------------------------- 72 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- 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. In addition to Mr. Truscott, who is Vice President, the Fund's other officers are: FUND OFFICERS
NAME, POSITION HELD ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION AGE LENGTH OF SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------- J. Kevin Connaughton President since Senior Vice President and General Manager -- Mutual One Financial Center 5/1/10 Fund Products, Columbia Management Investment Advisers, Boston, MA 02111 LLC since May 2010; President, Columbia Funds since Age 46 2009 (previously Senior Vice President and Chief Financial Officer, June 2008 -- January 2009); President, Atlantic Funds and Nations Funds since 2009; Managing Director of Columbia Management Advisors, LLC, December 2004 -- April 2010; Treasurer, Columbia Funds, October 2003 -- May 2008; Treasurer, the Liberty Funds, Stein Roe Funds and Liberty All-Star Funds, December 2000 -- December 2006 -------------------------------------------------------------------------------------------------------- Amy K. Johnson Vice President since Senior Vice President and Chief Operating Officer, 5228 Ameriprise Financial 12/5/06 Columbia Management Investment Advisers, LLC (formerly Center Minneapolis, MN RiverSource Investments, LLC) since May 2010 55474 (previously Chief Administrative Officer, 2009 -- April Age 45 2010 and Vice President -- Asset Management and Trust Company Services, 2006-2009 and Vice President -- Operations and Compliance, 2004-2006); Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010 -------------------------------------------------------------------------------------------------------- Jeffrey P. Fox Treasurer since Chief Financial Officer, Columbia Management Investment 105 Ameriprise 7/10/02 Distributors, Inc. (formerly RiverSource Fund Financial Center Distributors, Inc.) and of Seligman Data Corp. since Minneapolis, MN 55474 2008; Vice President -- Investment Accounting, Age 55 Ameriprise Financial, Inc. since 2002; Chief Financial Officer, RiverSource Distributors, Inc. since 2006 -------------------------------------------------------------------------------------------------------- Scott R. Plummer Vice President, Chief Legal Officer and Assistant Secretary, Columbia 5228 Ameriprise Financial General Counsel and Management Investment Advisers, LLC (formerly Center Secretary since RiverSource Investments, LLC) since June 2005; Vice Minneapolis, MN 55474 12/5/06 President and Lead Chief Counsel -- Asset Management, Age 51 Ameriprise Financial, Inc. since May 2010 (previously Vice President and Chief Counsel -- Asset Management, 2005-April 2010 and Vice President -- Asset Management Compliance, 2004-2005); Senior Vice President, Secretary and Chief Legal Officer, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Vice President, Chief Counsel and Assistant Secretary, Columbia Management Investment Distributors, Inc. (formerly RiverSource Fund Distributors, Inc.) since 2008; Vice President, General Counsel and Secretary, Ameriprise Certificate Company since 2005; Chief Counsel, RiverSource Distributors, Inc. since 2006 --------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 73 BOARD MEMBERS AND OFFICERS (continued) ----------------------------------------- FUND OFFICERS (CONTINUED)
NAME, POSITION HELD ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION AGE LENGTH OF SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------- Michael A. Jones Vice President since Director and President, Columbia Management Investment 100 Federal Street 5/1/10 Advisers, LLC since May 2010; President and Director, Boston, MA 02110 Columbia Management Investment Distributors, Inc. since Age 51 May 2010; Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Manager, Chairman, Chief Executive Officer and President, Columbia Management Advisors, LLC, 2007 -- April 2010; Chief Executive Officer, President and Director, Columbia Management Distributors, Inc., 2006 -- April 2010; former Co-President and Senior Managing Director, Robeco Investment Management -------------------------------------------------------------------------------------------------------- Colin Moore Vice President since Chief Investment Officer, Columbia Management One Financial Center 5/1/10 Investment Advisers, LLC since May 2010; Senior Vice Boston, MA 02111 President, Atlantic Funds, Columbia Funds and Nations Age 52 Funds since May 2010; Manager, Managing Director and Chief Investment Officer, Columbia Management Advisors, LLC, 2007- April 2010; Head of Equities, Columbia Management Advisors, LLC, 2002-Sept. 2007 -------------------------------------------------------------------------------------------------------- Linda Wondrack Chief Compliance Vice President and Chief Compliance Officer, Columbia One Financial Center Officer since 5/1/10 Management Investment Advisers, LLC since May 2010; Boston, MA 02111 Chief Compliance Officer, Columbia Funds since 2007; Age 46 Senior Vice President and Chief Compliance Officer, Atlantic Funds and Nations Funds since 2007; Director (Columbia Management Group, LLC and Investment Product Group Compliance), Bank of America, June 2005 -- April 2010 -------------------------------------------------------------------------------------------------------- Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial, 2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer and Center since 11/9/05 and Identity Theft Prevention Officer, Columbia Management Minneapolis, MN 55474 Identity Theft Investment Distributors, Inc. (formerly RiverSource Age 46 Prevention Officer Fund Distributors, Inc.) since 2008; Anti-Money since 2008 Laundering Officer, Ameriprise Financial, Inc. since 2005; Compliance Director, Ameriprise Financial, Inc., 2004-2008 --------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 74 COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT PROXY VOTING ------------------------------------------------------------------ The policy of the Board 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 columbiamanagement.com; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting columbiamanagement.com; or searching the website of the SEC at www.sec.gov. -------------------------------------------------------------------------------- COLUMBIA GLOBAL BOND FUND -- 2010 ANNUAL REPORT 75 COLUMBIA GLOBAL BOND FUND (formerly known as RiverSource Global Bond Fund) P.O. Box 8081 Boston, MA 02266-8081 COLUMBIAMANAGEMENT.COM This report must be accompanied or preceded by the Fund's current prospectus. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC. (C)2010 Columbia Management Investment Advisers, LLC. All (COLUMBIA MANAGEMENT LOGO) rights reserved. S-6309 AG (12/10)
Annual Report and Prospectus (COLUMBIA MANAGEMENT LOGO) COLUMBIA GLOBAL EXTENDED ALPHA FUND (FORMERLY KNOWN AS THREADNEEDLE GLOBAL EXTENDED ALPHA FUND) -------------------------------------------------------------------------------- ANNUAL REPORT FOR THE PERIOD ENDED OCTOBER 31, 2010 (Prospectus also enclosed) COLUMBIA GLOBAL EXTENDED ALPHA FUND SEEKS TO PROVIDE SHAREHOLDERS WITH LONG-TERM CAPITAL GROWTH. This annual report includes a prospectus that describes in detail the Fund's objective, investment strategy, risks, sales charges, fees and other matters of interest. Please read the prospectus carefully before you invest or send money. NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE TABLE OF CONTENTS -------------------------------------------------------------- Your Fund at a Glance.............. 3 Manager Commentary................. 6 The Fund's Long-term Performance... 12 Fund Expenses Example.............. 14 Portfolio of Investments........... 17 Statement of Assets and Liabilities...................... 26 Statement of Operations............ 27 Statements of Changes in Net Assets........................... 29 Financial Highlights............... 30 Notes to Financial Statements...... 37 Report of Independent Registered Public Accounting Firm........... 56 Federal Income Tax Information..... 58 Board Members and Officers......... 59 Proxy Voting....................... 64
SEE THE FUND'S PROSPECTUS FOR RISKS ASSOCIATED WITH INVESTING IN THE FUND. -------------------------------------------------------------------------------- 2 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT YOUR FUND AT A GLANCE ---------------------------------------------------------- FUND SUMMARY -------------------------------------------------------------------------------- > Columbia Global Extended Alpha Fund (the Fund) Class A shares gained 21.21% (excluding sales charge) for the 12 months ended Oct. 31, 2010. > The Fund outperformed its benchmark, the Morgan Stanley Capital International (MSCI) All Country World Index, which advanced 14.65% for the 12-month period. ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2010) --------------------------------------------------------------------------------
SINCE INCEPTION 1 YEAR 8/1/08 ---------------------------------------------------------------- Columbia Global Extended Alpha Fund Class A (excluding sales charge) +21.21% +3.04% ---------------------------------------------------------------- MSCI All Country World Index (unmanaged) +14.65% -0.75% ----------------------------------------------------------------
(See "The Fund's Long-term Performance" for Index descriptions) 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 columbiamanagement.com or calling 800.345.6611. The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the table above. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in fees and expenses. The Fund's returns reflect the effect of fee waivers/expense reimbursements, if any. Without such waivers/reimbursements, the Fund's returns would be lower. See the Average Annual Total Returns table for performance of other share classes of the Fund. The index does not reflect the effects of sales charges, expenses and taxes. It is not possible to invest directly in an index. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 3 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------
AT OCT. 31, 2010 SINCE Without sales charge 1 YEAR INCEPTION Class A (inception 8/1/08) +21.21% +3.04% --------------------------------------------------------------- Class B (inception 8/1/08) +20.32% +2.23% --------------------------------------------------------------- Class C (inception 8/1/08) +20.27% +2.24% --------------------------------------------------------------- Class I (inception 8/1/08) +21.58% +3.36% --------------------------------------------------------------- Class R* (inception 8/1/08) +20.69% +2.61% --------------------------------------------------------------- Class R4 (inception 8/1/08) +21.26% +3.11% --------------------------------------------------------------- Class Z (inception 9/27/10) N/A +5.12%** --------------------------------------------------------------- With sales charge Class A (inception 8/1/08) +14.24% +0.36% --------------------------------------------------------------- Class B (inception 8/1/08) +15.32% +0.93% --------------------------------------------------------------- Class C (inception 8/1/08) +19.27% +2.24% ---------------------------------------------------------------
Class A share performance reflects the maximum initial sales charge of 5.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second year 4%; third and fourth years 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I, Class R, Class R4 and Class Z shares. Class I, Class R and Class R4 are available to qualifying institutional investors only. Class Z shares are offered to certain eligible investors. *Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. **Not annualized. -------------------------------------------------------------------------------- 4 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- MORNINGSTAR STYLE BOX(TM) --------------------------------------------------------------------------------
Equity Style Value Blend Growth X Large Medium Size Small
The Morningstar Style Box(TM) is based on the fund's portfolio holdings as of period end. The vertical axis shows the market capitalization of the stocks owned, and the horizontal axis shows investment style (value, blend, or growth). Information shown is based on the most recent data provided by Morningstar. (C)2010 Morningstar, Inc. All rights reserved. The information contained herein is proprietary to Morningstar and/or its content providers, may not be copied or distributed and 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. Past performance is no guarantee of future results. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 5 MANAGER COMMENTARY ------------------------------------------------------------- Effective Sept. 27, 2010, Threadneedle Global Extended Alpha Fund was renamed Columbia Global Extended Alpha Fund. Dear Shareholders, Columbia Global Extended Alpha Fund (the Fund) Class A shares gained 21.21% (excluding sales charge) for the 12 months ended Oct. 31, 2010. The Fund outperformed its benchmark, the Morgan Stanley Capital International (MSCI) All Country World Index (MSCI Index), which advanced 14.65% for the 12-month period. SIGNIFICANT PERFORMANCE FACTORS The MSCI Index delivered a double-digit return as the world moved further from the epicenter of the financial crisis, having escaped the worst case scenario many investors feared. Productivity gains and global economic growth have translated to revenue and profit growth for many companies. Balance sheets appear generally healthy and cash flow has been strong, while companies still trade at valuations we find attractive. PORTFOLIO BREAKDOWN BY COUNTRY(1) (at Oct. 31, 2010; % of portfolio and portfolio swap(2)) --------------------------------------------------------------------------------
LONG SHORT(3) NET Australia 0.9% 0.0% 0.9% ------------------------------------------------------------------ Brazil 3.6% 0.0% 3.6% ------------------------------------------------------------------ Canada 6.4% -0.9% 5.5% ------------------------------------------------------------------ China 3.3% 0.0% 3.3% ------------------------------------------------------------------ Denmark 1.0% 0.0% 1.0% ------------------------------------------------------------------ France 2.3% -1.0% 1.3% ------------------------------------------------------------------ Germany 4.6% 0.0% 4.6% ------------------------------------------------------------------ Hong Kong 2.6% 0.0% 2.6% ------------------------------------------------------------------ India 2.9% 0.0% 2.9% ------------------------------------------------------------------ Indonesia 3.0% 0.0% 3.0% ------------------------------------------------------------------ Ireland 1.6% 0.0% 1.6% ------------------------------------------------------------------ Italy 1.7% 0.0% 1.7% ------------------------------------------------------------------ Japan 4.3% -2.0% 2.3% ------------------------------------------------------------------ Mexico 1.4% 0.0% 1.4% ------------------------------------------------------------------ Netherlands 3.2% 0.0% 3.2% ------------------------------------------------------------------ Panama 1.7% 0.0% 1.7% ------------------------------------------------------------------ Portugal 1.2% 0.0% 1.2% ------------------------------------------------------------------
-------------------------------------------------------------------------------- 6 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- PORTFOLIO BREAKDOWN BY COUNTRY(1) (at Oct. 31, 2010; % of portfolio and portfolio swap(2)) (continued) --------------------------------------------------------------------------------
LONG SHORT(3) NET South Africa 1.9% 0.0% 1.9% ------------------------------------------------------------------- South Korea 2.4% 0.0% 2.4% ------------------------------------------------------------------- Spain 0.0% -0.8% -0.8% ------------------------------------------------------------------- Switzerland 7.0% -2.4% 4.6% ------------------------------------------------------------------- Turkey 2.0% 0.0% 2.0% ------------------------------------------------------------------- United Kingdom 9.5% -1.2% 8.4% ------------------------------------------------------------------- United States 55.0% -18.8% 36.2% ------------------------------------------------------------------- Other(4) 3.6% -0.1% 3.5% ------------------------------------------------------------------- 127.2% -27.2% 100.0% -------------------------------------------------------------------
(1) Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan). The Fund's composition is subject to change. (2) The Fund has entered into a portfolio swap agreement. A portfolio swap allows the Fund to obtain exposure to a custom basket of securities and foreign markets (both long and short exposures) without owning or taking physical custody of such securities. The portfolio breakdown by country for each underlying position in the custom basket has been estimated by multiplying the notional amount of each security by its Oct. 31, 2010 closing market price as obtained from an authorized pricing source. The notional amounts and the market values of the positions in the custom basket are not presented in the financial statements. (3) At Oct. 31, 2010, the Fund had no short positions. However, the Fund had entered into a portfolio swap in order to gain short exposure to foreign equity markets. See Portfolio Swap Outstanding at Oct. 31, 2010 following the Portfolio of Investments, and Note 3 to the financial statements. (4) Cash & Cash Equivalents. Top ten holdings do not include notional exposure to holdings the Fund has through its use of a portfolio swap. For more information regarding the Fund's portfolio swap, see "Portfolio of Investments" pages 20-21. During the year, we saw continued divergence between developed and emerging economies. While growth slowed in the developed world, emerging markets grew at a rapid pace, supporting their stock markets, particularly in India and Indonesia. China's stock market, which suffered from high valuations and inflation concerns, was an exception. The Fund significantly outperformed the MSCI Index over the period. Stock selection in most geographic areas and industry sectors added to relative performance, with selection in the financial and industrial sectors of the emerging markets and Europe having the most notable positive effect. The portfolio's long segment outperformed its short segment, -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 7 MANAGER COMMENTARY (continued) ------------------------------------------------- which is what we would expect given the strong market gains during the period and our strategy of taking short positions and reinvesting the proceeds into the long positions we think will perform best. Notable individual performers included U.K. luxury retailer BURBERRY, U.S. luxury goods company TIFFANY and Swiss luxury watch brand SWATCH. These companies are benefiting from growing demand for their products in emerging markets. Industrial stocks AGGREKO and THE WEIR GROUP, which are U.K.-listed, also benefited from emerging market growth. Companies such as these, while based in developed countries, get most of their earnings from overseas rather than their own local markets. The Fund also benefited from exposure to emerging market financial stocks including BANK RAKYAT in Indonesia, GARANTI BANKASI in Turkey and STATE BANK OF INDIA. Also within the emerging markets, the Fund's holdings of FOCUS MEDIA, a Chinese outdoor advertising company, performed well. We sold FOCUS MEDIA as its valuation became less attractive to us. Within the developed markets, the Fund benefited from its holdings of high quality businesses with sustainable growth including U.S. technology TOP TEN HOLDINGS(1) (at Oct. 31, 2010) ---------------------------------------------------------------------
AsiaInfo-Linkage, Inc. (China) 3.5% ------------------------------------------------ Nestle SA (Switzerland) 2.9% ------------------------------------------------ The Coca-Cola Co. (United States) 2.9% ------------------------------------------------ McDonald's Corp. (United States) 2.9% ------------------------------------------------ Banco Santander Brasil SA, ADR (Brazil) 2.8% ------------------------------------------------ NHN Corp. (South Korea) 2.6% ------------------------------------------------ Thermo Fisher Scientific, Inc. (United States) 2.6% ------------------------------------------------ Linde AG (Germany) 2.5% ------------------------------------------------ Tyco Electronics Ltd. (Switzerland) 2.5% ------------------------------------------------ MTU Aero Engines Holding AG (Germany) 2.3% ------------------------------------------------
(1) Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan and Cash & Cash Equivalents). For further detail about these holdings, please refer to the section entitled "Portfolio of Investments." Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. -------------------------------------------------------------------------------- 8 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- companies APPLE and ORACLE CORP., U.S. dental equipment company SIRONA DENTAL, U.S. cell phone tower operator AMERICAN TOWER and LINDE, a German industrial gases company. The Fund benefited from short positions in a Swiss dental implants company, a Spanish industrial company and a Japanese investment bank. Individual detractors included HEWLETT-PACKARD, which had a management change over the period, WALGREENS, a drug store chain that reported disappointing earnings results, and COLGATE-PALMOLIVE, which suffered from an increasingly competitive environment and commodity price pressures. We believe Hewlett- Packard still has appreciation potential given its broad exposure to a recovery in technology spending and we think the pressures affecting Colgate-Palmolive will diminish over the next several years. We believe Colgate-Palmolive has good prospects due to its strong brands and entrenched presence in the emerging markets. Walgreens, on the other hand, was a turnaround story that didn't evolve as well as we had expected. We sold the stock during the fiscal year. The consumer discretionary sector was the only sector that detracted for the year, mainly due to holdings of Colgate-Palmolive and Walgreens. CHANGES TO THE FUND'S PORTFOLIO We have begun to find attractive opportunities in sustainable growth businesses we believe are trading at reasonable valuations, so we have added to select blue chip companies including COCA COLA and MCDONALDS. We also added to the Fund's emerging markets position, but were careful to focus on what we view as attractively Overall, we currently remain positive about global economic growth and we see good opportunities for profit growth across a number of different companies. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 9 MANAGER COMMENTARY (continued) ------------------------------------------------- valued stocks such as BANCO SANTANDER BRASIL, ASIAINFO-LINKAGE, which is a China-domiciled telecommunications software company, and HYUNDAI HOME SHOPPING, a Korean television home shopping company trading at a very attractive valuation. Within the Fund's cyclical exposure we have been emphasizing quality and looking for cyclical companies with definitive performance drivers, such as continued cost cutting or restructuring that can boost profit growth. Examples include U.S. industrial conglomerate ROPER INDUSTRIES, U.S. aviation fuel service company WORLD FUEL SERVICES, U.S. based TYCO ELECTRONICS and MAKITA CORP. a Japanese tools company. In terms of overall sector allocations, we added to the industrials position where we find good high quality, cyclical growth companies, and also increased exposure to energy, which looks attractive to us because energy prices have lagged other commodities. We reduced the Fund's weightings in the health care and financials sectors, two areas where we think companies have less pricing power. Regionally, we increased the emerging market exposure and reduced the U.S. weighting. During the period, we increased the portfolio's gross equity exposure by adding new short positions and also taking a short position in an index ETF. We then reinvested the proceeds into the long positions. In our view, the Fund's long positions, in general, fit under the banner of good companies selling at fair prices or fair companies at low prices. Conversely, we have taken short positions in what we believe are weak companies selling at fair prices or fair companies selling at high prices. Short positions established during the period include a U.S. trucking company that is selling at a high price and losing market share, an expensive Canadian information technology company with a poor history of capital allocation, and an expensive Japanese utility that is experiencing pressure on returns and also not allocating capital effectively. OUR FUTURE STRATEGY In general, we anticipate positive global economic growth. However, we still expect a prolonged low growth trend in developed countries, which are weighed down by both government and private debt. Despite loose fiscal and monetary policy, we do not think developed countries will be -------------------------------------------------------------------------------- 10 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- able to deliver strong sustainable economic growth as they come to grips with imbalances in their economies. We are mindful of potential missteps in monetary and fiscal policy as developed countries, particularly the U.S. and parts of Western Europe, address their deficits. Amid continued rapid growth in emerging markets, we are now starting to see inflationary pressures in select countries, which may lead to tighter monetary policies. However, we believe these inflationary concerns are cyclical rather than secular. Overall, we currently remain positive about global economic growth and we see good opportunities for profit growth across a number of different companies. We will continue to seek to identify a host of well-managed companies with growth businesses, good balance sheets and very attractive valuations. Also, we believe that in a world where inflation risks seem to be rising, equities, as an asset class, appear increasingly attractive. Andrew Holliman, CFA(R) Jeremy Podger Portfolio Manager Deputy Portfolio Manager
Any specific securities mentioned are for illustrative purposes only and are not a complete list of securities that have increased or decreased in value. The views expressed in this statement reflect those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Columbia Management Investment Advisers, LLC* (the Investment Manager) or any subadviser to the Fund or any other person in the Investment Manager or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and the Investment Manager disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for the Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of the Fund. * Effective May 1, 2010, RiverSource Investments, LLC became known as Columbia Management Investment Advisers, LLC. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 11 THE FUND'S LONG-TERM PERFORMANCE ----------------------------------------------- The chart on the facing page illustrates the total value of an assumed $10,000 investment in Columbia Global Extended Alpha Fund Class A shares (from 8/1/08 to 10/31/10) as compared to the performance of the Morgan Stanley Capital International (MSCI) All Country World Index. In comparing the Fund's Class A shares to this index, you should take into account the fact that the Fund's performance reflects the maximum initial sales charge of 5.75%, while such charges are not reflected in the performance of the index. Returns for the Fund include the reinvestment of any distributions paid during each period. The performance information shown represents past performance and is not a guarantee of future results. The table below and the chart on the facing page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 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 or visiting columbiamanagement.com. Also see "Past Performance" in the Fund's current prospectus. COMPARATIVE RESULTS --------------------------------------------------------------------------------
Results at Oct. 31, 2010 SINCE INCEPTION 1 YEAR 8/1/08 COLUMBIA GLOBAL EXTENDED ALPHA FUND (INCLUDES SALES CHARGE) Class A Cumulative value of $10,000 $11,424 $10,082 ----------------------------------------------------------------------- Average annual total return +14.24% +0.36% ----------------------------------------------------------------------- MSCI ALL COUNTRY WORLD INDEX(1) Cumulative value of $10,000 $11,465 $9,833 ----------------------------------------------------------------------- Average annual total return +14.65% -0.75% -----------------------------------------------------------------------
Results for other share classes can be found on page 4. -------------------------------------------------------------------------------- 12 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- (VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN COLUMBIA GLOBAL EXTENDED ALPHA FUND LINE GRAPH)
COLUMBIA GLOBAL EXTENDED ALPHA FUND CLASS MSCI ALL A (INCLUDES COUNTRY WORLD SALES CHARGE) INDEX(1) --------------- ------------- 8/1/08 $ 9,425 $10,000 10/08 6,583 6,949 1/09 6,070 6,162 4/09 6,508 6,740 7/09 7,724 8,034 10/09 8,318 8,576 1/10 8,574 8,728 4/10 9,478 9,437 7/10 8,936 8,967 10/10 10,082 9,833
(1) The Morgan Stanley Capital International (MSCI) All Country World Index, an unmanaged index of equity securities, is designed to measure equity market performance in the global developed and emerging markets. The index reflects reinvestment of all distributions and changes in market prices. The Fund's performance is currently measured against this index for purposes of determining the performance incentive adjustment. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 13 FUND EXPENSES EXAMPLE ---------------------------------------------------------- (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (i) transaction costs, including sales charges (loads) on purchase payments; and (ii) ongoing costs, which may include management fees; distribution and service (Rule 12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the ongoing expenses of any funds in which the Fund invests (also referred to as "acquired funds"), including affiliated and non- affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the ongoing expenses charged by acquired funds using the expense ratio of each of the acquired funds as of the acquired fund's most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period indicated and held until Oct. 31, 2010. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses for each class. You may use the information in this line, together with the amount you 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 result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for each class and an assumed rate of return of 5% per year before expenses, which is not the actual return for the class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. -------------------------------------------------------------------------------- 14 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED MAY 1, 2010(a) OCT. 31, 2010 THE PERIOD(b) EXPENSE RATIO ------------------------------------------------------------------------------------------- Class A ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,063.70 $ 8.64(d) 1.68%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,016.55 $ 8.45(d) 1.68%(d) ------------------------------------------------------------------------------------------- Class B ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,059.60 $12.38(d) 2.41%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,012.91 $12.09(d) 2.41%(d) ------------------------------------------------------------------------------------------- Class C ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,059.60 $12.53(d) 2.44%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,012.76 $12.24(d) 2.44%(d) ------------------------------------------------------------------------------------------- Class I ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,065.60 $ 6.90(d) 1.34%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,018.25 $ 6.74(d) 1.34%(d) ------------------------------------------------------------------------------------------- Class R ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,061.40 $10.74(d) 2.09%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,014.51 $10.50(d) 2.09%(d) ------------------------------------------------------------------------------------------- Class R4 ------------------------------------------------------------------------------------------- Actual(c) $1,000 $1,063.70 $ 8.44(d) 1.64%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,016.75 $ 8.25(d) 1.64%(d) -------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 15 FUND EXPENSES EXAMPLE (continued) ----------------------------------------------
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED MAY 1, 2010(a) OCT. 31, 2010 THE PERIOD(b) EXPENSE RATIO ------------------------------------------------------------------------------------------- Class Z ------------------------------------------------------------------------------------------- Actual(e) $1,000 $1,051.20 $ 1.37(d) 1.52%(d) ------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,017.35 $ 7.64(d) 1.52%(d) -------------------------------------------------------------------------------------------
(a) The beginning account value for Class Z is as of Sept. 27, 2010 (when shares became available) for actual expense calculations. (b) Expenses are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). Actual expenses for Class Z are equal to the annualized expense ratio for the class as indicated above, multiplied by the average account value over the period, multiplied by 32/365 (to reflect the number of days in the period). (c) Based on the actual return for the six months ended Oct. 31, 2010: +6.37% for Class A, +5.96% for Class B, +5.96% for Class C, +6.56% for Class I, +6.14% for Class R and +6.37% for Class R4. (d) Columbia Management Investment Advisers, LLC (formerly known as RiverSource Investments, LLC) (the Investment Manager) and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Dec. 31, 2011, unless sooner terminated at the sole discretion of the Fund's Board, such that net expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment, will not exceed 1.55% for Class A, 2.30% for Class B, 2.30% for Class C, 1.18% for Class I, 1.80% for Class R, 1.48% for Class R4 and 1.30% for Class Z. Any amounts waived will not be reimbursed by the Fund. This change is effective Jan. 1, 2011. Had this change been in place for the entire six month period ended Oct. 31, 2010, the actual expenses paid would have been $6.75 for Class I, $9.92 for Class R and $8.28 for Class R4; the hypothetical expenses paid would have been $6.59 for Class I, $9.70 for Class R and $8.10 for Class R4. The actual and hypothetical expenses paid for Class A, Class B, Class C and Class Z would have been the same as those expenses presented in the table above. (e) Based on the actual return for the period from Sept. 27, 2010 (when shares became available) to Oct. 31, 2010 of +5.12% for Class Z. -------------------------------------------------------------------------------- 16 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT PORTFOLIO OF INVESTMENTS ------------------------------------------------------ OCT. 31, 2010 (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
COMMON STOCKS (94.9%)(c) ISSUER SHARES VALUE(a) AUSTRALIA (0.9%) InterOil Corp. 1,320(b) $93,959 ------------------------------------------------------------------------------------- BRAZIL (3.6%) Banco Santander Brasil SA, ADR 18,700 269,280 MRV Engenharia e Participacoes SA 10,000 97,422 --------------- Total 366,702 ------------------------------------------------------------------------------------- CANADA (6.4%) Barrick Gold Corp. 1,800 86,691 CGI Group, Inc., Class A 6,000(b) 92,303 Fairfax Financial Holdings Ltd. 400 163,621 IESI-BFC Ltd. 6,500 151,970 MacDonald, Dettwiler & Associates Ltd. 3,100(b) 154,438 --------------- Total 649,023 ------------------------------------------------------------------------------------- CHINA (3.3%) AsiaInfo-Linkage, Inc. 15,095(b) 335,410 ------------------------------------------------------------------------------------- DENMARK (1.0%) FLSmidth & Co. A/S 1,350(d) 99,754 ------------------------------------------------------------------------------------- FRANCE (2.3%) Euler Hermes SA 1,000(b) 94,121 Renault SA 2,550(b) 141,647 --------------- Total 235,768 ------------------------------------------------------------------------------------- GERMANY (4.6%) Linde AG 1,690 243,242 MTU Aero Engines Holding AG 3,699 223,355 --------------- Total 466,597 ------------------------------------------------------------------------------------- HONG KONG (2.6%) 361 Degrees International Ltd. 100,000(d) 96,891 Great Eagle Holdings Ltd. 54,359 162,705 --------------- Total 259,596 ------------------------------------------------------------------------------------- INDIA (2.9%) State Bank of India, GDR 1,010 139,380 Union Bank of India 18,085 153,860 --------------- Total 293,240 ------------------------------------------------------------------------------------- INDONESIA (2.9%) Bank Rakyat Indonesia Persero Tbk PT 123,000 156,933 PT Perusahaan Gas Negara Tbk 309,000 140,062 --------------- Total 296,995 ------------------------------------------------------------------------------------- IRELAND (1.6%) Accenture PLC, Class A 3,596 160,777 ------------------------------------------------------------------------------------- ITALY (1.7%) Prysmian SpA 9,000 174,427 ------------------------------------------------------------------------------------- JAPAN (4.5%) Asahi Breweries Ltd. 9,800 197,900 Makita Corp. 4,500 158,258 Ushio, Inc. 5,800 96,655 --------------- Total 452,813 ------------------------------------------------------------------------------------- MEXICO (1.4%) America Movil SAB de CV, Series L, ADR 2,500 143,149 ------------------------------------------------------------------------------------- NETHERLANDS (2.0%) Fugro NV-CVA 2,890 204,380 ------------------------------------------------------------------------------------- PANAMA (1.7%) Copa Holdings SA, Class A 3,350 169,946 ------------------------------------------------------------------------------------- SOUTH AFRICA (1.9%) MTN Group Ltd. 10,750 193,563 ------------------------------------------------------------------------------------- SOUTH KOREA (2.5%) NHN Corp. 1,400(b) 248,249 ------------------------------------------------------------------------------------- SWITZERLAND (5.1%) Nestle SA 5,150 282,041 Tyco Electronics Ltd. 7,500 237,600 --------------- Total 519,641 -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 17 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) TURKEY (2.0%) Turkiye Garanti Bankasi AS 34,000 $205,419 ------------------------------------------------------------------------------------- UNITED KINGDOM (7.7%) Aggreko PLC 2,800 70,657 BG Group PLC 9,900 192,800 Ensco PLC, ADR 2,000 92,680 Tesco PLC 22,000 150,458 The Weir Group PLC 5,500 137,292 Tullow Oil PLC 6,800 129,105 --------------- Total 772,992 ------------------------------------------------------------------------------------- UNITED STATES (32.1%) Advance Auto Parts, Inc. 3,200 207,936 Air Products & Chemicals, Inc. 1,200 101,964 American Tower Corp., Class A 1,991(b) 102,756 Blackstone Group LP 12,000 161,760 Cloud Peak Energy, Inc. 6,275(b) 108,997 Colgate-Palmolive Co. 1,446 111,516 Flowserve Corp. 1,350 135,000 Hartford Financial Services Group, Inc. 5,045 120,979 Hewlett-Packard Co. 3,500 147,210 Laboratory Corp. of America Holdings 2,499(b) 203,219 McDonald's Corp. 3,517 273,517 Micron Technology, Inc. 12,579(b) 104,028 Oasis Petroleum, Inc. 2,600(b) 55,302 Roper Industries, Inc. 2,300 159,689 The Coca-Cola Co. 4,485 275,019 Thermo Fisher Scientific, Inc. 4,790(b) 246,302 Union Pacific Corp. 2,100 184,128 Waste Connections, Inc. 3,800 154,812 WESCO International, Inc. 5,200(b) 222,664 World Fuel Services Corp. 5,696 160,797 --------------- Total 3,237,595 ------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $8,330,724) $9,579,995 -------------------------------------------------------------------------------------
MONEY MARKET FUND (5.1%) SHARES VALUE(a) Columbia Short-Term Cash Fund, 0.241% 515,048(f) $515,048 ------------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $515,048) $515,048 -------------------------------------------------------------------------------------
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (1.4%) EFFECTIVE PRINCIPAL ISSUER YIELD AMOUNT VALUE(a) REPURCHASE AGREEMENTS(e) Deutsche Bank AG dated 10-29-10, matures 11-01-10, repurchase price $146,094 0.230% $146,092 $146,092 ------------------------------------------------------------------------------------- TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (Cost: $146,092) $146,092 ------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $8,991,864)(g) $10,241,135 =====================================================================================
SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY The following table represents the portfolio investments of the Fund by industry classifications as a percentage of net assets at Oct. 31, 2010:
PERCENTAGE OF INDUSTRY NET ASSETS VALUE(a) ----------------------------------------------------------------------- Aerospace & Defense 2.2% $223,355 Airlines 1.7 169,946 Automobiles 1.4 141,647
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 18 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY (CONTINUED)
PERCENTAGE OF INDUSTRY NET ASSETS VALUE(a) ----------------------------------------------------------------------- Beverages 4.7% $472,919 Capital Markets 1.6 161,760 Chemicals 3.4 345,206 Commercial Banks 9.2 924,872 Commercial Services & Supplies 3.7 377,439 Computers & Peripherals 1.5 147,210 Construction & Engineering 1.0 99,754 Electrical Equipment 4.3 430,771 Electronic Equipment, Instruments & Components 2.4 237,600 Energy Equipment & Services 2.9 297,060 Food & Staples Retailing 1.5 150,458 Food Products 2.8 282,041 Gas Utilities 1.4 140,062 Health Care Providers & Services 2.0 203,219 Hotels, Restaurants & Leisure 2.7 273,517 Household Durables 1.0 97,422 Household Products 1.1 111,516 Insurance 3.7 378,721 Internet Software & Services 2.5 248,249 IT Services 2.5 253,080 Life Sciences Tools & Services 2.4 246,302 Machinery 4.3 430,550 Metals & Mining 0.9 86,691 Oil, Gas & Consumable Fuels 7.3 740,960 Real Estate Management & Development 1.6 162,705 Road & Rail 1.8 184,128 Semiconductors & Semiconductor Equipment 1.0 104,028 Software 4.8 489,848 Specialty Retail 2.1 207,936 Textiles, Apparel & Luxury Goods 1.0 96,891 Trading Companies & Distributors 2.2 222,664 Wireless Telecommunication Services 4.3 439,468 Other(1) 6.5 661,140 ----------------------------------------------------------------------- Total $10,241,135 -----------------------------------------------------------------------
(1) Cash & Cash Equivalents. The industries identified above are based on the Global Industry Classification Standard (GICS), which was developed by, and is the exclusive property of, Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 19 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------ INVESTMENTS IN DERIVATIVES PORTFOLIO SWAP(1) OUTSTANDING AT OCT. 31, 2010
NEXT NET UNREALIZED COUNTERPARTY DESCRIPTION RESET DATE APPRECIATION ------------------------------------------------------------------------------- UBS The Fund receives (pays) the total Nov. 8, 2010 $80,931 return on a custom basket of long (short) equity positions and pays (receives) a floating rate based on the 1-day LIBOR which is denominated in various foreign currencies based on the local currencies of the securities underlying the custom basket. ------------------------------------------------------------------------------- Total $80,931 -------------------------------------------------------------------------------
SUMMARY OF PORTFOLIO SWAP EXPOSURE BY INDUSTRY The following table represents the exposure of the custom basket of equity securities underlying the portfolio swap by industry classifications as a percentage of net assets at Oct. 31, 2010:
VALUE PERCENTAGE OF ----------------------------------- NET ASSETS LONG SHORT NET ----------------------------------------------------------------------------------- Capital Markets (1.3)% $-- $(133,187) $(133,187) Commercial Banks 2.0 197,869 -- 197,869 Communications Equipment 2.3 228,300 -- 228,300 Computers & Peripherals 3.0 300,870 -- 300,870 Construction & Engineering (1.0) -- (98,300) (98,300) Construction Materials (1.5) -- (155,552) (155,552) Diversified Financial Services 3.0 305,534 -- 305,534 Electric Utilities (2.4) -- (242,789) (242,789) Health Care Equipment & Supplies (0.6) 190,132 (246,808) (56,676) Health Care Providers & Services 1.6 157,220 -- 157,220 Hotels, Restaurants, & Leisure (1.9) -- (188,139) (188,139) IT Services 5.1 516,960 -- 516,960 Machinery 0.8 164,768 (83,269) 81,499 Media (0.9) -- (95,625) (95,625) Oil, Gas & Consumable Fuels 0.7 185,913 (116,727) 69,186 Real Estate Investment Trusts (REITs) (2.1) -- (214,160) (214,160) Road & Rail (1.7) -- (168,829) (168,829) Software 3.5 352,800 -- 352,800 Specialty Retail 2.0 201,400 -- 201,400 Textiles, Apparel & Luxury Goods 0.9 191,069 (101,810) 89,259 U.S. Large Cap (8.2) -- (829,710) (829,710) Water Utilities (0.9) (86,120) (86,120)
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 20 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- SUMMARY OF PORTFOLIO SWAP EXPOSURE BY INDUSTRY (CONTINUED) (1) The Fund has entered into a portfolio swap agreement. A portfolio swap allows the Fund to obtain exposure to a custom basket of securities and foreign markets (both long and short exposures) without owning or taking physical custody of such securities. Under the terms of the agreement, payments made by the Fund or the counterparty are based on the total return of the reference assets within the basket. That is, one party agrees to pay another party the return on the basket in return for a specified interest rate. The agreement allows the Investment Manager of the Fund to alter the composition of the custom basket by trading in and out of the notional security positions at its discretion. The notional amounts of the security positions held in the basket are not recorded in the financial statements. The portfolio swap is valued daily, and the change in value is recorded as unrealized appreciation (depreciation). The swap resets monthly at which time the Fund settles in cash with the counterparty. Payments received or made are recorded as realized gains (losses). NOTES TO PORTFOLIO OF INVESTMENTS ADR -- American Depositary Receipt GDR -- Global Depositary Receipt
(a) Securities are valued by using policies described in Note 2 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. (d) At Oct. 31, 2010, security was partially or fully on loan. See Note 7 to the financial statements. (e) The table below represents securities received as collateral for repurchase agreements. This collateral, which is generally high quality short-term obligations, is deposited with the Fund's custodian and, pursuant to the terms of the repurchase agreement, must have an aggregate market value greater than or equal to the repurchase price plus accrued interest at all times. The value of securities and/or cash held as collateral for repurchase agreements is monitored on a daily basis to ensure the existence of the proper level of collateral.
DEUTSCHE BANK AG (0.230%) SECURITY DESCRIPTION VALUE(a) ----------------------------------------------------------- Fannie Mae Pool $149,013 ----------------------------------------------------------- Total market value of collateral securities $149,013 -----------------------------------------------------------
(f) Affiliated Money Market Fund - See Note 8 to the financial statements. The rate shown is the seven-day current annualized yield at Oct. 31, 2010. (g) At Oct. 31, 2010, the cost of securities for federal income tax purposes was $9,037,898 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $1,268,356 Unrealized depreciation (65,119) ----------------------------------------------------------- Net unrealized appreciation $1,203,237 -----------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 21 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------ FAIR VALUE MEASUREMENTS Generally accepted accounting principles (GAAP) require 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. 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 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 (to include NAV for open-end mutual funds). 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 Fund Administrator, 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. Non-U.S. equity securities actively traded in foreign markets may be reflected in Level 2 despite the availability of closing prices, because the Fund evaluates and determines whether those closing prices reflect fair value at the close of the New York Stock Exchange (NYSE) or require adjustment, as described in Note 2 to the financial statements -- Valuation of securities. -------------------------------------------------------------------------------- 22 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- FAIR VALUE MEASUREMENTS (CONTINUED) Investments falling into the Level 3 category are primarily supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices. Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models rely on one or more significant unobservable inputs and/or significant assumptions by the Fund Administrator. Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data. The following table is a summary of the inputs used to value the Fund's investments as of Oct. 31, 2010:
FAIR VALUE AT OCT. 31, 2010 ----------------------------------------------------------------- LEVEL 1 LEVEL 2 QUOTED PRICES OTHER LEVEL 3 IN ACTIVE SIGNIFICANT SIGNIFICANT MARKETS FOR OBSERVABLE UNOBSERVABLE DESCRIPTION(A) IDENTICAL ASSETS(B) INPUTS INPUTS TOTAL ---------------------------------------------------------------------------------------------- Equity Securities Common Stocks $9,579,995 $-- $-- $9,579,995 ---------------------------------------------------------------------------------------------- Total Equity Securities 9,579,995 -- -- 9,579,995 ---------------------------------------------------------------------------------------------- Other Affiliated Money Market Fund(c) 515,048 -- -- 515,048 Investments of Cash Collateral Received for Securities on Loan -- 146,092 -- 146,092 ---------------------------------------------------------------------------------------------- Total Other 515,048 146,092 -- 661,140 ---------------------------------------------------------------------------------------------- Investments in Securities 10,095,043 146,092 -- 10,241,135 Derivatives(d) Assets Swap Contracts -- 80,931 -- 80,931 ---------------------------------------------------------------------------------------------- Total $10,095,043 $227,023 $-- $10,322,066 ----------------------------------------------------------------------------------------------
(a) See the Portfolio of Investments for all investment classifications not indicated in the table. (b) Includes certain securities trading outside the U.S. whose values were adjusted at Oct. 31, 2009 as a result of significant market movements following the close of local trading, and were classified as Level 2. Values were not adjusted as of Oct. 31, 2010. Therefore, these investment securities were classified as Level 1 instead of Level 2 at Oct. 31, 2010. The amount of securities transferred out of Level 2 into Level 1 during the period was $1,356,738. Transfers between Levels 1 and 2 are determined based on the fair value at the beginning of the period for security positions held throughout the period. (c) Money market fund that is a sweep investment for cash balances in the Fund at Oct. 31, 2010. (d) Derivative instruments are valued at unrealized appreciation (depreciation). -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 23 HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS (i) The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (Commission) for the first and third quarters of each fiscal year on Form N-Q; (ii) The Fund's Forms N-Q are available on the Commission's website at http://www.sec.gov; (iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC (information on the operations of the Public Reference Room may be obtained by calling 800.SEC.0330); and (iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q, can be obtained without charge, upon request, by calling 800.345.6611. -------------------------------------------------------------------------------- 24 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT STATEMENT OF ASSETS AND LIABILITIES -------------------------------------------- OCT. 31, 2010
ASSETS Investments in securities, at value Unaffiliated issuers* (identified cost $8,330,724) $ 9,579,995 Affiliated money market fund (identified cost $515,048) 515,048 Investments of cash collateral received for securities on loan (identified cost $146,092) 146,092 ------------------------------------------------------------------------------ Total investments in securities (identified cost $8,991,864) 10,241,135 Cash 2 Foreign currency holdings (identified cost $27,440) 28,350 Receivable from Investment Manager 353 Capital shares receivable 21,778 Dividends and accrued interest receivable 7,421 Receivable for investment securities sold 89,848 Reclaims receivable 5,448 Unrealized appreciation on swap contracts 80,931 ------------------------------------------------------------------------------ Total assets 10,475,266 ------------------------------------------------------------------------------ LIABILITIES Payable for investment securities purchased 159,684 Payable upon return of securities loaned 146,092 Accrued investment management services fees 289 Accrued distribution fees 43 Accrued transfer agency fees 81 Accrued administrative services fees 22 Accrued plan administration services fees 1 Other accrued expenses 70,574 ------------------------------------------------------------------------------ Total liabilities 376,786 ------------------------------------------------------------------------------ Net assets applicable to outstanding capital stock $10,098,480 ------------------------------------------------------------------------------ REPRESENTED BY Capital stock -- $.01 par value $ 4,834 Additional paid-in capital 9,102,052 Undistributed net investment income 122,554 Accumulated net realized gain (loss) (461,496) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 1,330,536 ------------------------------------------------------------------------------ Total -- representing net assets applicable to outstanding capital stock $10,098,480 ------------------------------------------------------------------------------ *Value of securities on loan $ 136,296 ------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE Class A $4,320,527 207,166 $20.86(1) Class B $ 303,638 14,721 $20.63 Class C $ 181,374 8,801 $20.61 Class I $5,163,998 246,500 $20.95 Class R $ 10,370 500 $20.74 Class R4 $ 90,339 4,331 $20.86 Class Z $ 28,234 1,348 $20.95 ----------------------------------------------------------------------------
(1) The maximum offering price per share for Class A is $22.13. The offering price is calculated by dividing the net asset value by 1.0 minus the maximum sales charge of 5.75%. The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 25 STATEMENT OF OPERATIONS -------------------------------------------------------- YEAR ENDED OCT. 31, 2010
INVESTMENT INCOME Income: Dividends $ 133,224 Interest 54 Income distributions from affiliated money market fund 1,032 Income from securities lending -- net 1,055 Foreign taxes withheld (7,699) ------------------------------------------------------------------------ Total income 127,666 ------------------------------------------------------------------------ Expenses: Investment management services fees 96,692 Distribution fees Class A 8,488 Class B 3,593 Class C 1,535 Class R 47 Class R3 19 Transfer agency fees Class A 4,310 Class B 476 Class C 198 Class R 6 Class R3 4 Class R4 53 Class R5 4 Administrative services fees 6,913 Plan administration services fees Class R 19 Class R3 19 Class R4 220 Compensation of board members 251 Custodian fees 13,745 Printing and postage 34,022 Registration fees 88,049 Professional fees 37,909 Other 5,021 ------------------------------------------------------------------------ Total expenses 301,593 Expenses waived/reimbursed by the Investment Manager and its affiliates (173,544) ------------------------------------------------------------------------ Total net expenses 128,049 ------------------------------------------------------------------------ Investment income (loss) -- net (383) ------------------------------------------------------------------------
-------------------------------------------------------------------------------- 26 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions $1,055,296 Foreign currency transactions 6,340 Swap transactions 121,378 ------------------------------------------------------------------------ Net realized gain (loss) on investments 1,183,014 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 490,188 ------------------------------------------------------------------------ Net gain (loss) on investments and foreign currencies 1,673,202 ------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations $1,672,819 ------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 27 STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
YEAR ENDED OCT. 31, 2010 2009 OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ (383) $ 46,023 Net realized gain (loss) on investments 1,183,014 (839,697) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 490,188 2,246,014 -------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 1,672,819 1,452,340 -------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A (67,438) -- Class B (6,160) -- Class C (2,835) -- Class I (127,867) -- Class R (199) -- Class R3 (218) -- Class R4 (2,332) -- Class R5 (256) -- -------------------------------------------------------------------------------------- Total distributions (207,305) -- -------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS Proceeds from sales Class A shares 2,417,981 1,183,549 Class B shares 162,448 152,947 Class C shares 68,669 65,424 Class R4 shares 49,967 31,011 Class Z shares 28,110 N/A Reinvestment of distributions at net asset value Class A shares 64,358 -- Class B shares 5,630 -- Class C shares 1,903 -- Class R4 shares 2,083 -- Conversions from Class B to Class A Class A shares 98,714 49,083 Class B shares (98,714) (49,083) Payments for redemptions Class A shares (1,497,316) (1,216,964) Class B shares (65,530) (155,807) Class C shares (38,722) (56,896) Class R3 shares (9,480) -- Class R4 shares (31,125) (1,985) Class R5 shares (9,480) -- -------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 1,149,496 1,279 -------------------------------------------------------------------------------------- Total increase (decrease) in net assets 2,615,010 1,453,619 Net assets at beginning of year 7,483,470 6,029,851 -------------------------------------------------------------------------------------- Net assets at end of year $10,098,480 $ 7,483,470 -------------------------------------------------------------------------------------- Undistributed net investment income $ 122,554 $ 202,524 --------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 28 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT FINANCIAL HIGHLIGHTS ----------------------------------------------------------- The following tables are intended to help you understand the Fund's financial performance. Certain information reflects financial results for a single share of a class held for periods shown. Per share net investment income (loss) amounts are calculated based on average shares outstanding during the period. Total returns assume reinvestment of all dividends and distributions. Total returns do not reflect payment of sales charges, if any, and are not annualized for periods of less than one year.
YEAR ENDED OCT. 31, CLASS A ------------------------------- PER SHARE DATA 2010 2009 2008(a) Net asset value, beginning of period $17.65 $13.97 $20.00 ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.03) .09 .00(b) Net gains (losses) (both realized and unrealized) 3.71 3.59 (6.03) ---------------------------------------------------------------------------------- Total from investment operations 3.68 3.68 (6.03) ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.47) -- -- ---------------------------------------------------------------------------------- Net asset value, end of period $20.86 $17.65 $13.97 ---------------------------------------------------------------------------------- TOTAL RETURN 21.21% 26.34% (30.15%) ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(c) Gross expenses prior to expense waiver/reimbursement 3.73% 3.78% 5.55%(d) ---------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e) 1.63% 1.55% 1.55%(d) ---------------------------------------------------------------------------------- Net investment income (loss) (.14%) .59% (.07%)(d) ---------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $4 $3 $2 ---------------------------------------------------------------------------------- Portfolio turnover rate 128% 133% 36% ----------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 29 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
YEAR ENDED OCT. 31, CLASS B ------------------------------- PER SHARE DATA 2010 2009 2008(a) Net asset value, beginning of period $17.47 $13.94 $20.00 ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.16) (.01) (.02) Net gains (losses) (both realized and unrealized) 3.66 3.54 (6.04) ---------------------------------------------------------------------------------- Total from investment operations 3.50 3.53 (6.06) ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.34) -- -- ---------------------------------------------------------------------------------- Net asset value, end of period $20.63 $17.47 $13.94 ---------------------------------------------------------------------------------- TOTAL RETURN 20.32% 25.32% (30.30%) ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(c) Gross expenses prior to expense waiver/reimbursement 4.15% 4.52% 6.33%(d) ---------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e) 2.36% 2.31% 2.31%(d) ---------------------------------------------------------------------------------- Net investment income (loss) (.84%) (.05%) (.55%)(d) ---------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- ---------------------------------------------------------------------------------- Portfolio turnover rate 128% 133% 36% ----------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 30 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS C ------------------------------- PER SHARE DATA 2010 2009 2008(a) Net asset value, beginning of period $17.48 $13.94 $20.00 ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.17) (.02) (.03) Net gains (losses) (both realized and unrealized) 3.66 3.56 (6.03) ---------------------------------------------------------------------------------- Total from investment operations 3.49 3.54 (6.06) ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.36) -- -- ---------------------------------------------------------------------------------- Net asset value, end of period $20.61 $17.48 $13.94 ---------------------------------------------------------------------------------- TOTAL RETURN 20.27% 25.39% (30.30%) ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(c) Gross expenses prior to expense waiver/reimbursement 4.42% 4.58% 6.22%(d) ---------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e) 2.37% 2.30% 2.30%(d) ---------------------------------------------------------------------------------- Net investment income (loss) (.89%) (.12%) (.79%)(d) ---------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- ---------------------------------------------------------------------------------- Portfolio turnover rate 128% 133% 36% ----------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 31 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
YEAR ENDED OCT. 31, CLASS I ------------------------------- PER SHARE DATA 2010 2009 2008(a) Net asset value, beginning of period $17.72 $13.98 $20.00 ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .04 .14 .03 Net gains (losses) (both realized and unrealized) 3.71 3.60 (6.05) ---------------------------------------------------------------------------------- Total from investment operations 3.75 3.74 (6.02) ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.52) -- -- ---------------------------------------------------------------------------------- Net asset value, end of period $20.95 $17.72 $13.98 ---------------------------------------------------------------------------------- TOTAL RETURN 21.58% 26.75% (30.10%) ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(c) Gross expenses prior to expense waiver/reimbursement 3.23% 3.42% 4.94%(d) ---------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e) 1.28% 1.22% 1.21%(d) ---------------------------------------------------------------------------------- Net investment income (loss) .19% .94% .63%(d) ---------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $5 $4 $3 ---------------------------------------------------------------------------------- Portfolio turnover rate 128% 133% 36% ----------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 32 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS R* ------------------------------- PER SHARE DATA 2010 2009 2008(a) Net asset value, beginning of period $17.56 $13.96 $20.00 ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.11) .03 .00(b) Net gains (losses) (both realized and unrealized) 3.69 3.57 (6.04) ---------------------------------------------------------------------------------- Total from investment operations 3.58 3.60 (6.04) ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.40) -- -- ---------------------------------------------------------------------------------- Net asset value, end of period $20.74 $17.56 $13.96 ---------------------------------------------------------------------------------- TOTAL RETURN 20.69% 25.79% (30.20%) ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(c) Gross expenses prior to expense waiver/reimbursement 3.99% 4.22% 5.74%(d) ---------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e) 2.04% 1.96% 1.81%(d) ---------------------------------------------------------------------------------- Net investment income (loss) (.58%) .19% .03%(d) ---------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- ---------------------------------------------------------------------------------- Portfolio turnover rate 128% 133% 36% ----------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 33 FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
YEAR ENDED OCT. 31, CLASS R4 ------------------------------- PER SHARE DATA 2010 2009 2008(a) Net asset value, beginning of period $17.67 $13.98 $20.00 ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.01) .08 .01 Net gains (losses) (both realized and unrealized) 3.70 3.61 (6.03) ---------------------------------------------------------------------------------- Total from investment operations 3.69 3.69 (6.02) ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.50) -- -- ---------------------------------------------------------------------------------- Net asset value, end of period $20.86 $17.67 $13.98 ---------------------------------------------------------------------------------- TOTAL RETURN 21.26% 26.40% (30.10%) ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(c) Gross expenses prior to expense waiver/reimbursement 3.49% 3.92% 5.38%(d) ---------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e) 1.57% 1.47% 1.36%(d) ---------------------------------------------------------------------------------- Net investment income (loss) (.06%) .52% .30%(d) ---------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- ---------------------------------------------------------------------------------- Portfolio turnover rate 128% 133% 36% ----------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 34 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED CLASS Z OCT. 31, PER SHARE DATA 2010(f) Net asset value, beginning of period $19.93 ------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (.01) Net gains (losses) (both realized and unrealized) 1.03 ------------------------------------------------------------- Total from investment operations 1.02 ------------------------------------------------------------- Net asset value, end of period $20.95 ------------------------------------------------------------- TOTAL RETURN 5.12% ------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(c) Gross expenses prior to expense waiver/reimbursement 55.17%(d) ------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e) 1.52%(d) ------------------------------------------------------------- Net investment income (loss) (.48%)(d) ------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- ------------------------------------------------------------- Portfolio turnover rate 128% -------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS * Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. (a) For the period from Aug. 1, 2008 (when shares became available) to Oct. 31, 2008. (b) Rounds to less than $0.01 per share. (c) Expense ratios include the impact of a performance incentive adjustment, if any. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. (d) Annualized. (e) The Investment Manager and its affiliates agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. (f) For the period from Sept. 27, 2010 (when shares became available) to Oct. 31, 2010. The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 35 NOTES TO FINANCIAL STATEMENTS -------------------------------------------------- 1. ORGANIZATION Columbia Global Extended Alpha Fund (formerly known as Threadneedle Global Extended Alpha Fund) (the Fund) is a series of RiverSource Global Series, Inc. (the Corporation) and is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, open-end management investment company. The Corporation has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Corporation's Board of Directors (the Board). The Fund offers Class A, Class B, Class C, Class I, Class R, Class R4 and Class Z shares. - Class A shares are offered with a front-end sales charge, which may be waived under certain circumstances. - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares one month after the completion of the eighth year of ownership if originally purchased in a RiverSource fund on or after May 21, 2005 or originally purchased in a Seligman fund on or after June 13, 2009. Class B shares originally purchased in a RiverSource fund prior to May 21, 2005 will convert to Class A shares in the ninth calendar year of ownership. Class B shares originally purchased in a Seligman fund prior to June 13, 2009 will convert to Class A shares in the month prior to the ninth year of ownership. Effective Sept. 7, 2010, the Fund no longer accepts investments from new or existing investors in the Fund's Class B shares, except that (i) dividend and/or capital gain distributions may continue to be reinvested in Class B shares of the Fund and (ii) shareholders invested in Class B shares of the Fund may exchange those shares for Class B shares of other Columbia, RiverSource, Seligman and Threadneedle funds offering such shares. - Class C shares may be subject to a CDSC on shares redeemed within one year of purchase. - Class I shares are not subject to sales charges and are available only to the Columbia Family of Funds. - Class R shares are offered without a front-end sales charge or CDSC to qualifying institutional investors. Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. - Class R4 shares are not subject to sales charges, however, this class is closed to new investors effective Dec. 31, 2010. - Class Z shares are offered without a front-end sales charge or CDSC to certain eligible investors. Class Z shares became effective Sept. 27, 2010. -------------------------------------------------------------------------------- 36 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- At Aug. 27, 2010, all Class R3 and Class R5 shares were liquidated. The shares in these classes had consisted solely of seed capital from Columbia Management Investment Advisers, LLC (formerly known as RiverSource Investments, LLC) (the Investment Manager). At Oct. 31, 2010, the Investment Manager owned 100% of Class I and Class R shares. At Oct. 31, 2010, the Investment Manager owned approximately 52% of the total outstanding Fund shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration services fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. VALUATION OF SECURITIES All securities are valued at the close of business of the New York Stock Exchange (NYSE). Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price from the primary exchange. Debt securities are generally traded in the over-the-counter market and are valued by an independent pricing service using an evaluated bid. When market quotes are not readily available, the pricing service, in determining fair values of debt securities, takes into consideration such factors as current quotations by broker/dealers, coupon, maturity, quality, type of issue, trading characteristics, and other yield and risk factors it deems relevant in determining valuations. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. The procedures adopted by the Board generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign securities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 37 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- Many securities markets and exchanges outside the U.S. close prior to the close of the NYSE and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the NYSE, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial Inc. (Ameriprise Financial), parent company of the Investment Manager, as administrator to the Fund, will fair value foreign securities pursuant to procedures adopted by the Board, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the NYSE. The fair value of a security is likely to be different from the quoted or published price, if available. Swap transactions are valued through an independent pricing service or broker, or if neither is available, through an internal model based upon observable inputs. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates. Typically, those maturing in 60 days or less that originally had maturities of more than 60 days at acquisition date are valued at amortized cost using the market value on the 61st day before maturity. Short-term securities maturing in 60 days or less at acquisition date are valued at amortized cost. Amortized cost is an approximation of market value. Investments in money market funds are valued at net asset value. FOREIGN CURRENCY TRANSLATIONS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the Statement of Operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. At Oct. 31, 2010, foreign currency holdings consisted of multiple denominations, primarily Brazilian reais. REPURCHASE AGREEMENTS The Fund may enter into repurchase agreements. Generally, securities received as collateral subject to repurchase agreements are deposited with the Fund's -------------------------------------------------------------------------------- 38 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- custodian and, pursuant to the terms of the repurchase agreement, must have an aggregate market value greater than or equal to the repurchase price plus accrued interest at all times. The market value of securities held as collateral for repurchase agreements is monitored on a daily basis to ensure the existence of the proper level of collateral. SECURITIES SOLD SHORT The Fund may enter into short sales of securities that it concurrently holds or for which it holds no corresponding position. Short selling is the practice of selling securities which have been borrowed from a third party in anticipation of a decline in the market price of that security. Securities which have been sold short represent a liability of the Fund to acquire specific securities at prevailing market prices at a future date in order to satisfy the obligation to deliver the securities sold. The Fund is required to return securities borrowed for the short sale at the lender's demand. A realized gain, limited to the price at which the Fund sold the security short, or a realized loss, unlimited in size, will be recorded upon the termination of a short sale. Short sales are collateralized with segregated securities or cash held at the custodian as noted in the Portfolio of Investments, if any. The collateral required is determined daily based on the market value of the securities sold short. At Oct. 31, 2010, the Fund had no outstanding securities sold short. The Fund is liable to pay the counterparty for any dividends accrued on a security it has borrowed and sold short and to pay interest for any net financing costs incurred during the time the short position is held by the Fund. Such dividends (recognized on ex-date) and interest are recorded as an expense and shown in the Statement of Operations. During the year ended Oct. 31, 2010, the Fund had no dividend or interest expense related to securities sold short in the Statement of Operations. GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. 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. FEDERAL TAXES The Fund's policy is to comply with Subchapter M of the Internal Revenue Code that applies to regulated investment companies and to distribute substantially all -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 39 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- of its taxable income (which includes net short-term capital gains) to shareholders. No provision for income or excise taxes is thus required. Management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Generally, the tax authorities can examine all tax returns filed for the last three years. FOREIGN CAPITAL GAINS TAXES Realized gains in certain countries may be subject to foreign taxes at the Fund level, at rates ranging from approximately 10% to 15%. The Fund pays such foreign taxes on net realized gains at the appropriate rate for each jurisdiction. DIVIDENDS TO SHAREHOLDERS An annual dividend from net investment income, declared and paid at the end of the calendar year, when available, is reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are normally distributed along with the income dividend. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities. Interest income, including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. 3. 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 other assets, such as securities, currencies, commodities or indices. Derivative instruments may be used to maintain cash reserves while maintaining exposure to certain other assets, to offset anticipated declines in values of investments, 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 obligation under the terms of the contract, the potential for an illiquid secondary market 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. -------------------------------------------------------------------------------- 40 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- The Fund and any counterparty are required to maintain an agreement that requires the Fund and that counterparty to monitor (on a daily basis) the net fair value of all derivatives entered into pursuant to the contract between the Fund and such counterparty. If the net fair value of such derivatives between the Fund and that counterparty exceeds a certain threshold (as defined in the agreement), the Fund or the counterparty (as the case may be) is required to post cash and/or securities as collateral. Fair values of derivatives presented in the financial statements are not netted with the fair value of other derivatives or with any collateral amounts posted by the Fund or any counterparty. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS Forward foreign currency exchange contracts are agreements between two parties to buy and sell a currency at a set price on a future date. These contracts are intended to be used to minimize the exposure to foreign exchange rate fluctuations during the period between the trade and settlement dates of the contract. The Fund utilized forward foreign currency exchange contracts to hedge the currency exposure associated with some or all of the Fund's securities. The market values of forward foreign currency exchange contracts fluctuate with changes in foreign currency exchange rates. The Fund will record a realized gain or loss when the forward foreign currency exchange contract is closed. The use of forward foreign currency exchange contracts does not eliminate fluctuations in the prices of the Fund's portfolio securities. The risks of forward foreign currency contracts include movement in the values of the foreign currencies relative to the U.S. dollar (or other foreign currencies) and the possibility that counterparties will not complete their contractual obligations, which may be in excess of the amount reflected, if any, in the Statement of Assets and Liabilities. PORTFOLIO SWAPS The Fund entered into a portfolio swap transaction, which allowed the Fund to obtain exposure to a custom basket of securities and foreign markets (both long and short exposures) without owning or taking physical custody of such securities. Under the terms of the contract, payments made by the Fund or the counterparty are based on the total return of the reference assets within the basket in return for a specified interest rate. The contract allows the Investment Manager of the Fund to alter the composition of the custom basket by trading in and out of the notional reference security positions at its discretion. The notional amounts of the swap transactions are not recorded in the financial statements. The portfolio swap is valued daily, and the change in value is recorded as unrealized appreciation (depreciation). The swap resets monthly at -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 41 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- which time the Fund settles in cash with the counterparty. Payments received (or made) by the Fund are recorded as realized gains (losses). See the Portfolio Swap Outstanding table following the Portfolio of Investments for additional information. Portfolio swap transactions may be subject to liquidity risk, which exists when a particular swap is difficult to purchase or sell. It may not be possible for the Fund to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses. Portfolio swaps are subject to the risk associated with the investment in the reference securities within the basket. The risk in the case of short portfolio swap transactions is unlimited based on the potential for unlimited increases in the market value of the reference securities in the basket. This risk may be offset if the Fund holds any of the reference securities. The risk in the case of long portfolio swap transactions is limited to the current notional amount of the portfolio swap. Portfolio swap transactions are also subject to the risk of the counterparty not fulfilling its obligations under the contract (counterparty credit risk). The Fund attempts to mitigate counterparty credit risk by entering into portfolio swap transactions only with counterparties that meet prescribed levels of creditworthiness, as determined by the Investment Manager. The Fund and any counterparty are required to maintain an agreement that requires the Fund and that counterparty to monitor (on a daily basis) the net market value of all derivative transactions entered into pursuant to the contract between the Fund and such counterparty. If the net market value of such derivatives transactions between the Fund and that counterparty exceeds a certain threshold (as defined in the agreement), the Fund or the counterparty is required to post cash and/or securities as collateral. Market values of derivatives transactions presented in the financial statements are not netted with the market values of other derivatives transactions or with any collateral amounts posted by the Fund or any counterparty. EFFECTS OF DERIVATIVE TRANSACTIONS ON 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; the impact of derivative transactions on the Fund's operations over the period including realized gains or losses and unrealized gains or losses. The derivative schedules following the Portfolio of Investments present additional information regarding derivative instruments outstanding at the end of the period, if any. -------------------------------------------------------------------------------- 42 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- FAIR VALUES OF DERIVATIVE INSTRUMENTS AT OCT. 31, 2010
ASSET DERIVATIVES LIABILITY DERIVATIVES ------------------------------- ------------------------------- STATEMENT OF ASSETS STATEMENT OF ASSETS RISK EXPOSURE AND LIABILITIES AND LIABILITIES CATEGORY LOCATION FAIR VALUE LOCATION FAIR VALUE ------------------------------------------------------------------------------------------- Unrealized appreciation on swap Equity contracts transactions $80,931 N/A N/A -------------------------------------------------------------------------------------------
EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCT. 31, 2010
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME ----------------------------------------------------------------------- FORWARD FOREIGN CURRENCY EXCHANGE RISK EXPOSURE CATEGORY CONTRACTS SWAPS TOTAL ----------------------------------------------------------------------------- Equity contracts $ -- $121,378 $121,378 ----------------------------------------------------------------------------- Foreign exchange contracts 1,406 -- 1,406 ----------------------------------------------------------------------------- Total $1,406 $121,378 $122,784 -----------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED IN INCOME ----------------------------------------------------------------------- FORWARD FOREIGN CURRENCY EXCHANGE RISK EXPOSURE CATEGORY CONTRACTS SWAPS TOTAL ----------------------------------------------------------------------------- Equity contracts $-- $76,959 $76,959 ----------------------------------------------------------------------------- Foreign exchange contracts -- -- -- ----------------------------------------------------------------------------- Total $-- $76,959 $76,959 -----------------------------------------------------------------------------
VOLUME OF DERIVATIVE ACTIVITY FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS At Oct. 31, 2010, the Fund had no outstanding forward foreign currency exchange contracts. The monthly average gross notional amount for these contracts was $20,000 for the year ended Oct. 31, 2010. PORTFOLIO SWAP CONTRACT At Oct. 31, 2010, the value of long and short securities underlying the portfolio swap contract were $2,847,767 and $2,766,836 respectively. The monthly average value of long and short securities underlying the portfolio swap contract were $1,921,828 and $1,921,282, respectively for the year ended Oct. 31, 2010. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 43 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- 4. EXPENSES AND SALES CHARGES INVESTMENT MANAGEMENT SERVICES FEES Under an Investment Management Services Agreement (IMSA), the Investment Manager is responsible for the management of the Fund. Day-to-day portfolio management of the Fund is provided by the Fund's subadviser. See Subadvisory agreement below. The management fee is an annual fee that is equal to a percentage of the Fund's average daily net assets that declines from 1.05% to 0.99% as the Fund's net assets increase. The fee may be adjusted upward or downward by a performance incentive adjustment (PIA) determined monthly by measuring the percentage difference over a rolling 36-month period between the annualized performance of one Class A share of the Fund and the annualized performance of the MSCI All Country World Index. In certain circumstances, the Board may approve a change in the index. The maximum adjustment is 0.50% per year. If the performance difference is less than 1.00%, the adjustment will be zero. The first adjustment was made on Aug. 1, 2010 and covered the 24-month period beginning Aug. 1, 2008. The adjustment increased the management fee by $5,960 for the year ended Oct. 31, 2010. The management fee for the year ended Oct. 31, 2010 was 1.12% of the Fund's average daily net assets, including the adjustment under the terms of the performance incentive arrangement. In September 2010, the Board approved, subject to approval by shareholders, an amended IMSA that would eliminate the Fund's PIA. If approved by Fund shareholders, the IMSA proposal is expected to be effective in the second quarter of 2011. If not approved, the current IMSA will stay in effect including any adjustment under the terms of the PIA. SUBADVISORY AGREEMENT The Investment Manager has a Subadvisory Agreement with Threadneedle International Limited (Threadneedle), an affiliate of the Investment Manager and an indirect wholly-owned subsidiary of Ameriprise Financial, to subadvise the assets of the Fund. The Investment Manager contracts with and compensates Threadneedle to manage the investment of the Fund's assets. ADMINISTRATIVE SERVICES FEES Under an Administrative Services Agreement, the Fund pays Ameriprise Financial an annual fee for administration and accounting services equal to a percentage of the Fund's average daily net assets that declines from 0.08% to 0.05% as the Fund's net assets increase. The fee for the year ended Oct. 31, 2010 was 0.08% of the Fund's average daily net assets. -------------------------------------------------------------------------------- 44 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- OTHER FEES Other expenses are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited administrative services to the Fund and the Board. For the year ended Oct. 31, 2010, other expenses paid to this company were $11. COMPENSATION OF BOARD MEMBERS Under a Deferred Compensation Plan (the Plan), the board members who are not "interested persons" of the Fund as defined under the 1940 Act may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or certain other 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 Plan. TRANSFER AGENCY FEES Under a Transfer Agency Agreement, Columbia Management Investment Services Corp. (formerly known as RiverSource Service Corporation) (the Transfer Agent) is responsible for providing transfer agency services to the Fund. Prior to Sept. 7, 2010, the Transfer Agent received annual account-based service fees from Class A, Class B and Class C shares that varied by class and annual asset-based service fees based on the Fund's average daily net assets attributable to Class R and Class R4 shares. In addition, the Transfer Agent charged an annual fee per inactive account and received reimbursement from the Fund for certain out-of-pocket expenses. Under a new Transfer Agency Agreement effective Sept. 7, 2010, the Transfer Agent has contracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. The Transfer Agent receives monthly account-based service fees based on the number of open accounts and is reimbursed by the Fund for the fees and expenses the Transfer Agent pays to financial intermediaries that maintain omnibus accounts with the Fund subject to an annual limitation (that varies by class) that is a percentage of the average aggregate value of the Fund's shares maintained in each such omnibus account (other than omnibus accounts for which American Enterprise Investment Services, Inc. is the broker of record or accounts where the beneficial shareholder is a customer of Ameriprise Financial Services, Inc., which are paid a per account fee). The Transfer Agent pays the fees of BFDS for services as sub-transfer agent and is not entitled to reimbursement for such fees from the Fund. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 45 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- The Transfer Agent also receives reimbursement for certain out-of-pocket expenses and may also retain, as additional compensation for its services, fees for wire, telephone and redemption orders, Individual Retirement Account ("IRA") trustee agent fees and account transcript fees due to the Transfer Agent from shareholders of the Fund and credits (net of bank charges) earned with respect to balances in accounts the Transfer Agent maintains in connection with its services to the Fund. For the year ended Oct. 31, 2010, the Fund's effective transfer agent fee rates as a percentage of average daily net assets of each class were as follows: Class A.............................................. 0.13% Class B.............................................. 0.13 Class C.............................................. 0.13 Class R.............................................. 0.06 Class R4............................................. 0.06 Class Z.............................................. 0.10*
* Annualized. Class I shares do not pay transfer agent fees. PLAN ADMINISTRATION SERVICES FEES Under a Plan Administration Services Agreement with the Transfer Agent, the Fund pays an annual fee at a rate of 0.25% of the Fund's average daily net assets attributable to Class R4 shares for the provision of various administrative, recordkeeping, communication and educational services. Prior to Sept. 7, 2010, the Fund also paid an annual fee at a rate of 0.25% of the Fund's average daily net assets attributable to Class R shares for such services. DISTRIBUTION FEES The Fund has an agreement with Columbia Management Investment Distributors, Inc. (formerly known as RiverSource Fund Distributors, Inc.) (the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund paid a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A shares, a fee at an annual rate of up to 0.50% of the Fund's average daily net assets attributable to Class R shares (of which up to 0.25% may be used for services) and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. For Class B and Class C shares, of the 1.00% fee, up to 0.75% is reimbursed for distribution expenses. The amount of distribution expenses incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $37,000 and $1,000 for Class B and Class C shares, respectively. These amounts are based on the most recent information available as of July 31, 2010, and may be recovered from -------------------------------------------------------------------------------- 46 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- future payments under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution fee is reduced. SALES CHARGES Sales charges, including front-end and CDSCs, received by the Distributor for distributing Fund shares were $8,844 for Class A and $35 for Class B for the year ended Oct. 31, 2010. EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES For the year ended Oct. 31, 2010, the Investment Manager and its affiliates waived/reimbursed certain fees and expenses such that net expenses (excluding fees and expenses of acquired funds*), including the adjustment under the terms of a performance incentive arrangement, were as follows: Class A.............................................. 1.63% Class B.............................................. 2.36 Class C.............................................. 2.37 Class I.............................................. 1.28 Class R.............................................. 2.04 Class R4............................................. 1.57 Class Z.............................................. 1.52
The waived/reimbursed fees and expenses for the transfer agency fees at the class level were as follows: Class A............................................. $1,255 Class B............................................. 133 Class C............................................. 60 Class R4............................................ 9
The management fees and other Fund level expenses waived/reimbursed were $172,087. The Investment Manager and its affiliates have contractually agreed to waive certain fees and reimburse certain expenses until Dec. 31, 2010, unless sooner terminated at the sole discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds*), before giving effect to any performance -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 47 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- incentive adjustment, will not exceed the following percentage of the class' average daily net assets: Class A.............................................. 1.55% Class B.............................................. 2.31 Class C.............................................. 2.30 Class I.............................................. 1.21 Class R.............................................. 2.01 Class R4............................................. 1.51 Class Z.............................................. 1.30
Effective Jan. 1, 2011, the Investment Manager and its affiliates have contractually agreed to waive certain fees and reimburse certain expenses until Dec. 31, 2011, unless sooner terminated at the sole discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds*), before giving effect to any performance incentive adjustment, will not exceed the following percentage of the class' average daily net assets: Class A.............................................. 1.55% Class B.............................................. 2.30 Class C.............................................. 2.30 Class I.............................................. 1.18 Class R.............................................. 1.80 Class R4............................................. 1.48 Class Z.............................................. 1.30
* In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. 5. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $11,315,596 and $10,382,612, respectively, for the year ended Oct. 31, 2010. Realized gains and losses are determined on an identified cost basis. -------------------------------------------------------------------------------- 48 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- 6. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated were as follows:
YEAR ENDED OCT. 31, 2010 2009 --------------------------------------------------------------- CLASS A Sold 128,007 77,358 Converted from Class B* 5,339 2,995 Reinvested distributions 3,522 -- Redeemed (79,720) (88,344) --------------------------------------------------------------- Net increase (decrease) 57,148 (7,991) --------------------------------------------------------------- CLASS B Sold 8,750 10,919 Reinvested distributions 309 -- Converted to Class A* (5,385) (3,019) Redeemed (3,741) (10,228) --------------------------------------------------------------- Net increase (decrease) (67) (2,328) --------------------------------------------------------------- CLASS C Sold 3,707 4,412 Reinvested distributions 105 -- Redeemed (2,165) (3,982) --------------------------------------------------------------- Net increase (decrease) 1,647 430 --------------------------------------------------------------- CLASS R3 Redeemed (500) -- --------------------------------------------------------------- Net increase (decrease) (500) -- --------------------------------------------------------------- CLASS R4 Sold 2,622 1,836 Reinvested distributions 114 -- Redeemed (1,750) (154) --------------------------------------------------------------- Net increase (decrease) 986 1,682 --------------------------------------------------------------- CLASS R5 Redeemed (500) -- --------------------------------------------------------------- Net increase (decrease) (500) -- --------------------------------------------------------------- CLASS Z** Sold 1,348 N/A --------------------------------------------------------------- Net increase (decrease) 1,348 N/A ---------------------------------------------------------------
* Automatic conversion of Class B shares to Class A shares based on the original purchase date. ** For the period from Sept. 27, 2010 (when shares became available) to Oct. 31, 2010. 7. LENDING OF PORTFOLIO SECURITIES The Fund has entered into a Master Securities Lending Agreement (the Agreement) with JPMorgan Chase Bank, National Association (JPMorgan). The Agreement authorizes JPMorgan as lending agent to lend securities to authorized borrowers in -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 49 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- order to generate additional income on behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured by cash or U.S. government securities equal to at least 100% of the market value of the loaned securities. Any additional collateral required to maintain those levels due to market fluctuations of the loaned securities is delivered the following business day. Cash collateral received is invested by the lending agent on behalf of the Fund into authorized investments pursuant to the Agreement. The investments made with the cash collateral are listed in the Portfolio of Investments. The values of such investments and any uninvested cash collateral are disclosed in the Statement of Assets and Liabilities along with the related obligation to return the collateral upon the return of the securities loaned. At Oct. 31, 2010, securities valued at $136,296 were on loan, secured by cash collateral of $146,092 invested in short-term securities or in cash equivalents. Risks of delay in recovery of securities or even loss of rights in the securities may occur should the borrower of the securities fail financially. Risks may also arise to the extent that the value of the securities loaned increases above the value of the collateral received. JPMorgan will indemnify the Fund from losses resulting from a borrower's failure to return a loaned security when due. Such indemnification does not extend to losses associated with declines in the value of cash collateral investments. Loans are subject to termination by the Fund or the borrower at any time, and are, therefore, not considered to be illiquid investments. Pursuant to the Agreement, the Fund receives income for lending its securities either in the form of fees or by earning interest on invested cash collateral, net of negotiated rebates paid to borrowers and fees paid to the lending agent for services provided and any other securities lending expenses. Net income of $1,055 earned from securities lending for the year ended Oct. 31, 2010 is included in the Statement of Operations. The Fund also continues to earn interest and dividends on the securities loaned. 8. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in Columbia Short-Term Cash Fund (formerly known as RiverSource Short-Term Cash Fund), a money market fund established for the exclusive use of certain funds managed by the Investment Manager and other institutional clients of the Investment Manager. The cost of the Fund's purchases and proceeds from sales of shares of Columbia Short-Term Cash Fund aggregated $6,698,379 and $6,474,641, respectively, for the year ended Oct. 31, 2010. The income distributions received with respect to the Fund's investment in Columbia Short-Term Cash Fund can be found in the Statement of Operations and the Fund's invested balance in Columbia Short-Term Cash Fund at Oct. 31, 2010, can be found in the Portfolio of Investments. -------------------------------------------------------------------------------- 50 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- 9. BANK BORROWINGS The Fund has entered into a revolving credit facility with a syndicate of banks led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility became effective on Oct. 14, 2010, replacing a prior credit facility. The credit facility agreement, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager, severally and not jointly, permits collective borrowings up to $300 million. The borrowers shall have the right, upon written notice to the Administrative Agent, to request an increase of up to $200 million in the aggregate amount of the credit facility from new or existing lenders, provided that the aggregate amount of the credit facility shall at no time exceed $500 million. Participation in such increase by any existing lender shall be at such lender's sole discretion. Interest is charged to each fund based on its borrowings at a rate equal to the sum of the federal funds rate plus (i) 1.25% per annum plus (ii) if one-month LIBOR exceeds the federal funds rate, the amount of such excess. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.10% per annum. Prior to Oct. 14, 2010, the credit facility agreement, which was a collective agreement between the Fund and certain other funds managed by the Investment Manager, severally and not jointly, permitted collective borrowings up to $300 million. The Fund also paid a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.10% per annum, in addition to an upfront fee equal to its pro rata share of 0.04% of the amount of the credit facility. The Fund had no borrowings during the year ended Oct. 31, 2010. 10. FEDERAL TAX INFORMATION Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of foreign currency transactions, recognition of unrealized appreciation (depreciation) for certain derivative investments, re-characterization of real estate investment trust distributions, investments in partnerships, foreign tax credits and losses deferred due to wash sales. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Fund. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 51 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- In the Statement of Assets and Liabilities, as a result of permanent book-to-tax differences, undistributed net investment income has been increased by $127,718 and accumulated net realized loss has been increased by $127,718. The tax character of distributions paid for the years indicated was as follows:
YEAR ENDED OCT. 31, 2010 2009 -------------------------------------------------------------- Ordinary income............................... $207,305 $-- Long-term capital gain........................ -- --
At Oct. 31, 2010, the components of distributable earnings on a tax basis were as follows: Undistributed ordinary income.................... $ 203,698 Undistributed accumulated long-term gain......... $ -- Accumulated realized loss........................ $ (415,463) Unrealized appreciation (depreciation)........... $1,203,359
For federal income tax purposes, the Fund had a capital loss carry-over of $415,463 at Oct. 31, 2010, that if not offset by capital gains will expire in 2017. For the year ended Oct. 31, 2010, $992,480 of capital loss carry-over was utilized. It is unlikely the Board will authorize a distribution of any net realized capital gains until the available capital loss carry-over has been offset or expires. There is no assurance that the Fund will be able to utilize all of its capital loss carry-over before it expires. 11. RISKS RELATING TO CERTAIN INVESTMENTS FOREIGN/EMERGING MARKETS RISK Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities. Investing in emerging markets may accentuate these risks. SHORT SELLING RISK The Fund may make short sales, which involves selling a security the Fund does not own in anticipation that the security's price will decline. The Fund's potential losses could exceed those of other mutual funds which hold only long security positions if the value of the securities held long decreases and the value of the securities sold short increases. The Fund's use of short sales in effect "leverages" the Fund, as the Fund may use the cash proceeds from the short sales to invest in additional long securities positions. Leveraging potentially exposes the Fund to greater risks due to -------------------------------------------------------------------------------- 52 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- unanticipated market movements, which may magnify losses and increase volatility of returns. There is no assurance that a leveraging strategy will be successful. 12. SUBSEQUENT EVENTS Management has evaluated Fund related events and transactions that occurred during the period from the date of the Statement of Assets and Liabilities through the date of issuance of the Fund's financial statements. There were no events or transactions that occurred during the period that materially impacted the amounts or disclosures in the Fund's financial statements. 13. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc. was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company (now known as legacy RiverSource) mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota (the District Court). In response to defendants' motion to dismiss the complaint, the District Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. Summary judgment was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit) on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary judgment and remanded to the District Court for further proceedings. On August 6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court (the Supreme Court), asking the Supreme Court to stay the District Court proceedings while the Supreme Court considers and rules in a case captioned Jones v. Harris Associates, which involves issues of law similar to those presented in the Gallus case. On March 30, 2010, the Supreme Court issued its ruling in Jones v. Harris Associates, and on April 5, 2010, the Supreme Court vacated the Eighth Circuit's decision in the Gallus case and remanded the case to the Eighth Circuit for further consideration in light of the Supreme Court's decision in Jones v. Harris Associates. On June 4, 2010, the Eighth Circuit remanded the Gallus case to the District Court for further consideration in light of the Supreme Court's decision in -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 53 NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------- Jones v. Harris Associates. On December 9, 2010, the District Court reinstated its July 9, 2007 summary judgment order in favor of the defendants. In December 2005, without admitting or denying the allegations, American Express Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc. (Ameriprise Financial)), entered into settlement agreements with the Securities and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC) related to market timing activities. As a result, AEFC was censured and ordered to cease and desist from committing or causing any violations of certain provisions of the Investment Advisers Act of 1940, the Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million and civil money penalties of $7 million. AEFC also agreed to retain an independent distribution consultant to assist in developing a plan for distribution of all disgorgement and civil penalties ordered by the SEC in accordance with various undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its affiliates have cooperated with the SEC and the MDOC in these legal proceedings, and have made regular reports to the funds' Boards of Directors/Trustees. Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Funds. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial. -------------------------------------------------------------------------------- 54 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------ TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF COLUMBIA GLOBAL EXTENDED ALPHA FUND: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Columbia Global Extended Alpha Fund (formerly known as Threadneedle Global Extended Alpha Fund) (the Fund) (one of the portfolios constituting the RiverSource Global Series, Inc.) as of October 31, 2010, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the two years then ended and for the period from August 1, 2008 (when shares became available) to October 31, 2008. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2010, by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 55 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued) ------------ In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Columbia Global Extended Alpha Fund of the RiverSource Global Series, Inc. at October 31, 2010, the results of its operations for the year then ended, the changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the two years then ended and for the period from August 1, 2008 (when shares became available) to October 31, 2008, in conformity with U.S. generally accepted accounting principles. /s/ Ernst & Young LLP Minneapolis, Minnesota December 20, 2010 -------------------------------------------------------------------------------- 56 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT FEDERAL INCOME TAX INFORMATION ------------------------------------------------- (UNAUDITED) The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. The dividends listed below are reported to you on Form 1099-DIV, Dividends and Distributions. Shareholders should consult a tax advisor on how to report distributions for state and local tax purposes. Fiscal year ended Oct. 31, 2010
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for distributions: Qualified Dividend Income for individuals.................... 100% Dividends Received Deduction for corporations................ 24.76% U.S. Government Obligations.................................. 0.00% Foreign Taxes Paid........................................... $5,923 Foreign Source Income........................................ $44,791
The Fund designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 57 BOARD MEMBERS AND OFFICERS ----------------------------------------------------- Shareholders elect a Board that oversees the Fund's operations. The Board appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following is a list of the Fund's Board members. Each Board member oversees 145 Columbia, RiverSource, Seligman and Threadneedle funds. Under current Board policy, members generally serve until the next Board meeting after he or she reaches the mandatory retirement age established by the Board, or the fifteenth anniversary of the first Board meeting they attended as members of the Board. INDEPENDENT BOARD MEMBERS
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None 901 S. Marquette Ave. 1/11/06 Attorney Minneapolis, MN 55402 Age 56 ------------------------------------------------------------------------------------------------------------------------------ Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None 901 S. Marquette Ave. 7/11/07 Leadership (consulting company) Minneapolis, MN 55402 Age 56 ------------------------------------------------------------------------------------------------------------------------------ Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None 901 S. Marquette Ave. 11/1/04 University; former Dean, McCallum Graduate School of Minneapolis, MN 55402 Business, Bentley University Age 60 ------------------------------------------------------------------------------------------------------------------------------ Anne P. Jones Board member since Attorney and Consultant None 901 S. Marquette Ave. 3/1/85 Minneapolis, MN 55402 Age 75 ------------------------------------------------------------------------------------------------------------------------------ Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries, 901 S. Marquette Ave. since 1/1/07, College Inc. (manufactures Minneapolis, MN 55402 Board member irrigation systems) Age 71 since 1/1/02 ------------------------------------------------------------------------------------------------------------------------------ John F. Maher Board member Retired President and Chief Executive Officer and None 901 S. Marquette Ave. since 12/10/08 former Director, Great Western Financial Corporation Minneapolis, MN 55402 (financial services), 1986-1997 Age 67 ------------------------------------------------------------------------------------------------------------------------------ Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None 901 S. Marquette Ave. 11/1/04 real estate and asset management company) Minneapolis, MN 55402 Age 58 ------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 58 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- INDEPENDENT BOARD MEMBERS (CONTINUED)
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ Leroy C. Richie Board member Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc. 901 S. Marquette Ave. since 11/11/08 President and General Counsel, Automotive Legal (digital imaging); Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil Age 69 and gas exploration and production); OGE Energy Corp. (energy and energy services) ------------------------------------------------------------------------------------------------------------------------------ Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera 901 S. Marquette Ave. 11/13/02 since 2003 (biotechnology); former President, Aquila Pharmaceuticals, Minneapolis, MN 55402 Biopharmaceuticals Inc. Age 66 (biotechnology); Healthways, Inc. (health management programs) ------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 59 BOARD MEMBERS AND OFFICERS (continued) ----------------------------------------- BOARD MEMBER AFFILIATED WITH THE INVESTMENT MANAGER*
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ William F. Truscott Board member Chairman of the Board, Columbia Management Investment None 53600 Ameriprise since 11/7/01, Advisers, LLC (formerly RiverSource Investments, LLC) Financial Center Vice President since since May 2010 (previously President, Chairman of the Minneapolis, MN 55474 2002 Board and Chief Investment Officer, 2001-April 2010); Age 50 Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Chief Executive Officer, U.S. Asset Management & President -- Annuities, Ameriprise Financial, Inc. since May 2010 (previously President -- U.S. Asset Management and Chief Investment Officer, 2005-April 2010 and Senior Vice President -- Chief Investment Officer, 2001-2005); Director, President and Chief Executive Officer, Ameriprise Certificate Company since 2006; Director, Columbia Management Investment Distributors, Inc. (formerly RiverSource Fund Distributors, Inc.) since May 2010 (previously Chairman of the Board and Chief Executive Officer, 2008-April 2010); Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006 ------------------------------------------------------------------------------------------------------------------------------
* Interested person (as defined under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the investment manager or Ameriprise Financial. The SAI has additional information about the Fund's Board members and is available, without charge, upon request by calling 800.345.6611; contacting your financial intermediary; or visiting columbiamanagement.com. -------------------------------------------------------------------------------- 60 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- 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. In addition to Mr. Truscott, who is Vice President, the Fund's other officers are: FUND OFFICERS
NAME, POSITION HELD ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION AGE LENGTH OF SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------- J. Kevin Connaughton President since Senior Vice President and General Manager -- Mutual One Financial Center 5/1/10 Fund Products, Columbia Management Investment Advisers, Boston, MA 02111 LLC since May 2010; President, Columbia Funds since Age 46 2009 (previously Senior Vice President and Chief Financial Officer, June 2008 -- January 2009); President, Atlantic Funds and Nations Funds since 2009; Managing Director of Columbia Management Advisors, LLC, December 2004 -- April 2010; Treasurer, Columbia Funds, October 2003 -- May 2008; Treasurer, the Liberty Funds, Stein Roe Funds and Liberty All-Star Funds, December 2000 -- December 2006 -------------------------------------------------------------------------------------------------------- Amy K. Johnson Vice President since Senior Vice President and Chief Operating Officer, 5228 Ameriprise Financial 12/5/06 Columbia Management Investment Advisers, LLC (formerly Center Minneapolis, MN RiverSource Investments, LLC) since May 2010 55474 (previously Chief Administrative Officer, 2009 -- April Age 45 2010 and Vice President -- Asset Management and Trust Company Services, 2006-2009 and Vice President -- Operations and Compliance, 2004-2006); Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010 -------------------------------------------------------------------------------------------------------- Jeffrey P. Fox Treasurer since Chief Financial Officer, Columbia Management Investment 105 Ameriprise 7/10/02 Distributors, Inc. (formerly RiverSource Fund Financial Center Distributors, Inc.) and of Seligman Data Corp. since Minneapolis, MN 55474 2008; Vice President -- Investment Accounting, Age 55 Ameriprise Financial, Inc. since 2002; Chief Financial Officer, RiverSource Distributors, Inc. since 2006 -------------------------------------------------------------------------------------------------------- Scott R. Plummer Vice President, Chief Legal Officer and Assistant Secretary, Columbia 5228 Ameriprise Financial General Counsel and Management Investment Advisers, LLC (formerly Center Secretary since RiverSource Investments, LLC) since June 2005; Vice Minneapolis, MN 55474 12/5/06 President and Lead Chief Counsel -- Asset Management, Age 51 Ameriprise Financial, Inc. since May 2010 (previously Vice President and Chief Counsel -- Asset Management, 2005-April 2010 and Vice President -- Asset Management Compliance, 2004-2005); Senior Vice President, Secretary and Chief Legal Officer, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Vice President, Chief Counsel and Assistant Secretary, Columbia Management Investment Distributors, Inc. (formerly RiverSource Fund Distributors, Inc.) since 2008; Vice President, General Counsel and Secretary, Ameriprise Certificate Company since 2005; Chief Counsel, RiverSource Distributors, Inc. since 2006 --------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 61 BOARD MEMBERS AND OFFICERS (continued) ----------------------------------------- FUND OFFICERS (CONTINUED)
NAME, POSITION HELD ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION AGE LENGTH OF SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------- Michael A. Jones Vice President since Director and President, Columbia Management Investment 100 Federal Street 5/1/10 Advisers, LLC since May 2010; President and Director, Boston, MA 02110 Columbia Management Investment Distributors, Inc. since Age 51 May 2010; Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Manager, Chairman, Chief Executive Officer and President, Columbia Management Advisors, LLC, 2007 -- April 2010; Chief Executive Officer, President and Director, Columbia Management Distributors, Inc., 2006 -- April 2010; former Co-President and Senior Managing Director, Robeco Investment Management -------------------------------------------------------------------------------------------------------- Colin Moore Vice President since Chief Investment Officer, Columbia Management One Financial Center 5/1/10 Investment Advisers, LLC since May 2010; Senior Vice Boston, MA 02111 President, Atlantic Funds, Columbia Funds and Nations Age 52 Funds since May 2010; Manager, Managing Director and Chief Investment Officer, Columbia Management Advisors, LLC, 2007- April 2010; Head of Equities, Columbia Management Advisors, LLC, 2002-Sept. 2007 -------------------------------------------------------------------------------------------------------- Linda Wondrack Chief Compliance Vice President and Chief Compliance Officer, Columbia One Financial Center Officer since 5/1/10 Management Investment Advisers, LLC since May 2010; Boston, MA 02111 Chief Compliance Officer, Columbia Funds since 2007; Age 46 Senior Vice President and Chief Compliance Officer, Atlantic Funds and Nations Funds since 2007; Director (Columbia Management Group, LLC and Investment Product Group Compliance), Bank of America, June 2005 -- April 2010 -------------------------------------------------------------------------------------------------------- Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial, 2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer and Center since 11/9/05 and Identity Theft Prevention Officer, Columbia Management Minneapolis, MN 55474 Identity Theft Investment Distributors, Inc. (formerly RiverSource Age 46 Prevention Officer Fund Distributors, Inc.) since 2008; Anti-Money since 2008 Laundering Officer, Ameriprise Financial, Inc. since 2005; Compliance Director, Ameriprise Financial, Inc., 2004-2008 --------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 62 COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT PROXY VOTING ------------------------------------------------------------------ The policy of the Board 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 columbiamanagement.com; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting columbiamanagement.com; or searching the website of the SEC at www.sec.gov. -------------------------------------------------------------------------------- COLUMBIA GLOBAL EXTENDED ALPHA FUND -- 2010 ANNUAL REPORT 63 COLUMBIA GLOBAL EXTENDED ALPHA FUND (formerly known as Threadneedle Global Extended Alpha Fund) P.O. Box 8081 Boston, MA 02266-8081 COLUMBIAMANAGEMENT.COM This report must be accompanied or preceded by the Fund's current prospectus. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC. (C)2010 Columbia Management Investment Advisers, LLC. All (COLUMBIA MANAGEMENT LOGO) rights reserved. S-6527 AJ (12/10)
Annual Report and Prospectus (COLUMBIA MANAGEMENT LOGO) THREADNEEDLE GLOBAL EQUITY INCOME FUND -------------------------------------------------------------------------------- ANNUAL REPORT FOR THE PERIOD ENDED OCTOBER 31, 2010 (Prospectus also enclosed) THREADNEEDLE GLOBAL EQUITY INCOME FUND SEEKS TO PROVIDE SHAREHOLDERS WITH A HIGH LEVEL OF CURRENT INCOME AND SECONDARILY, GROWTH OF CAPITAL. This annual report includes a prospectus that describes in detail the Fund's objective, investment strategy, risks, sales charges, fees and other matters of interest. Please read the prospectus carefully before you invest or send money. NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE TABLE OF CONTENTS -------------------------------------------------------------- Your Fund at a Glance.............. 3 Manager Commentary................. 6 The Fund's Long-term Performance... 12 Fund Expenses Example.............. 14 Portfolio of Investments........... 16 Statement of Assets and Liabilities...................... 24 Statement of Operations............ 25 Statements of Changes in Net Assets........................... 27 Financial Highlights............... 28 Notes to Financial Statements...... 34 Report of Independent Registered Public Accounting Firm........... 51 Federal Income Tax Information..... 53 Board Members and Officers......... 54 Proxy Voting....................... 59
In August 2010, the Board of Directors of Threadneedle Global Equity Income Fund (the "Fund") approved a proposal to merge the Fund with and into Columbia Global Equity Fund (formerly known as Threadneedle Global Equity Fund). The merger is expected to be a tax-free reorganization for U.S. federal income tax purposes. More information about Columbia Global Equity Fund and the definitive terms of the proposed merger will be included in proxy materials. The merger is subject to certain conditions, including final approval by shareholders of the Fund. It is currently anticipated that proxy materials regarding the merger will be distributed to shareholders of the Fund later this year or in early 2011, and that a meeting of shareholders to consider the merger will be held in the first half of 2011. SEE THE FUND'S PROSPECTUS FOR RISKS ASSOCIATED WITH INVESTING IN THE FUND. -------------------------------------------------------------------------------- 2 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT YOUR FUND AT A GLANCE ---------------------------------------------------------- FUND SUMMARY -------------------------------------------------------------------------------- > Threadneedle Global Equity Income Fund (the Fund) Class A shares gained 23.01% (excluding sales charge) for the 12 months ended Oct. 31, 2010. > The Fund outperformed its benchmark, the Morgan Stanley Capital International (MSCI) All Country World Index, which advanced 14.65% for the 12-month period. ANNUALIZED TOTAL RETURNS (for period ended Oct. 31, 2010) --------------------------------------------------------------------------------
SINCE INCEPTION 1 YEAR 8/1/08 ---------------------------------------------------------------- Threadneedle Global Equity Income Fund Class A (excluding sales charge) +23.01% +3.46% ---------------------------------------------------------------- MSCI All Country World Index (unmanaged) +14.65% -0.75% ----------------------------------------------------------------
(See "The Fund's Long-term Performance" for Index descriptions) 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 columbiamanagement.com or calling 800.345.6611. The 5.75% sales charge applicable to Class A shares of the Fund is not reflected in the table above. If reflected, returns would be lower than those shown. The performance of other classes may vary from that shown because of differences in fees and expenses. The Fund's returns reflect the effect of fee waivers/expense reimbursements, if any. Without such waivers/reimbursements, the Fund's returns would be lower. See the Average Annual Total Returns table for performance of other share classes of the Fund. The index does not reflect the effects of sales charges, expenses and taxes. It is not possible to invest directly in an index. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 3 YOUR FUND AT A GLANCE (continued) ---------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS --------------------------------------------------------------------------------
AT OCT. 31, 2010 SINCE Without sales charge 1 YEAR INCEPTION Class A (inception 8/1/08) +23.01% +3.46% ---------------------------------------------------------------- Class B (inception 8/1/08) +22.10% +2.66% ---------------------------------------------------------------- Class C (inception 8/1/08) +22.10% +2.71% ---------------------------------------------------------------- Class I (inception 8/1/08) +23.56% +3.84% ---------------------------------------------------------------- Class R* (inception 8/1/08) +22.65% +3.08% ---------------------------------------------------------------- Class R4 (inception 8/1/08) +23.09% +3.54% ---------------------------------------------------------------- With sales charge Class A (inception 8/1/08) +15.93% +0.77% ---------------------------------------------------------------- Class B (inception 8/1/08) +17.10% +1.36% ---------------------------------------------------------------- Class C (inception 8/1/08) +21.10% +2.71% ----------------------------------------------------------------
Class A share performance reflects the maximum initial sales charge of 5.75%. Class B share performance reflects a contingent deferred sales charge (CDSC) applied as follows: first year 5%; second year 4%; third and fourth years 3%; fifth year 2%; sixth year 1%; no sales charge thereafter. Class C shares may be subject to a 1% CDSC if shares are sold within one year after purchase. Sales charges do not apply to Class I, Class R and Class R4 shares. Class I, Class R and Class R4 are available to qualifying institutional investors only. * Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. -------------------------------------------------------------------------------- 4 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- MORNINGSTAR STYLE BOX(TM) --------------------------------------------------------------------------------
Equity Style Value Blend Growth X Large Medium Size Small
The Morningstar Style Box(TM) is based on the fund's portfolio holdings as of period end. The vertical axis shows the market capitalization of the stocks owned, and the horizontal axis shows investment style (value, blend, or growth). Information shown is based on the most recent data provided by Morningstar. (C)2010 Morningstar, Inc. All rights reserved. The information contained herein is proprietary to Morningstar and/or its content providers, may not be copied or distributed and 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. Past performance is no guarantee of future results. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 5 MANAGER COMMENTARY ------------------------------------------------------------- Threadneedle Global Equity Income Fund portfolio managers Stephen Thornber and Jeremy Podger of Threadneedle International Limited (Threadneedle) discuss the Fund's results and positioning for the 12 months ended Oct. 31, 2010. Threadneedle, an indirect wholly-owned subsidiary of Ameriprise Financial Inc. is the subadviser to the Fund. Dear Shareholders, Threadneedle Global Equity Income Fund (the Fund) Class A shares gained 23.01% (excluding sales charge) for the 12 months ended Oct. 31, 2010. The Fund outperformed its benchmark, the Morgan Stanley Capital International (MSCI) All Country World Index (MSCI Index), which advanced 14.65% for the 12-month period. COUNTRY BREAKDOWN(1) (at Oct. 31, 2010) ---------------------------------------------------------------------
Australia 5.0% ------------------------------------------------ Brazil 2.8% ------------------------------------------------ Canada 4.0% ------------------------------------------------ Finland 4.3% ------------------------------------------------ France 4.8% ------------------------------------------------ Germany 3.1% ------------------------------------------------ Greece 0.5% ------------------------------------------------ Hong Kong 2.7% ------------------------------------------------ Indonesia 0.9% ------------------------------------------------ Italy 3.0% ------------------------------------------------ Malaysia 0.3% ------------------------------------------------ Mexico 1.0% ------------------------------------------------ Poland 0.8% ------------------------------------------------ Singapore 4.1% ------------------------------------------------ South Africa 2.0% ------------------------------------------------ South Korea 3.1% ------------------------------------------------ Spain 1.1% ------------------------------------------------ Sweden 1.1% ------------------------------------------------ Taiwan 6.7% ------------------------------------------------ United Kingdom 18.4% ------------------------------------------------ United States 28.4% ------------------------------------------------ Other(2) 1.9% ------------------------------------------------
(1) Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan). The Fund's composition is subject to change. (2) Cash & Cash Equivalents. -------------------------------------------------------------------------------- 6 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- SIGNIFICANT PERFORMANCE FACTORS The past fiscal year played out much as we expected it to. The global economy exhibited two speeds. Growth in developed countries was subdued and fragile, with investors shifting between optimism and pessimism and rotating among industry sectors. On the other hand, emerging markets showed strong consumer spending and economic growth, which drove those stock markets, as well as companies in developed markets that do business in emerging regions. Though economic data in developed markets have been broadly favorable, results have been variable, with both positive and negative reports causing volatility in equity markets. The Fund significantly outperformed the MSCI Index, primarily due to effective stock selection. TOP TEN HOLDINGS(1) (at Oct. 31, 2010) --------------------------------------------------------------------------------
BP Prudhoe Bay Royalty Trust (United States) 2.2% ------------------------------------------- Vodafone Group PLC (United Kingdom) 2.1% ------------------------------------------- Talvivaara Mining Co. PLC 2013 5.250% (Finland) 2.1% ------------------------------------------- HTC Corp. (Taiwan) 2.0% ------------------------------------------- Pearson PLC (United Kingdom) 1.9% ------------------------------------------- Chunghwa Telecom Co., Ltd., ADR (Taiwan) 1.9% ------------------------------------------- Admiral Group PLC (United Kingdom) 1.8% ------------------------------------------- Baytex Energy Trust Unit (Canada) 1.8% ------------------------------------------- Linn Energy LLC Unit (United States) 1.8% ------------------------------------------- France Telecom SA (France) 1.7% -------------------------------------------
(1) Percentages indicated are based upon total investments (excluding Investments of Cash Collateral Received for Securities on Loan and Cash & Cash Equivalents). For further detail about these holdings, please refer to the section entitled "Portfolio of Investments." Fund holdings are as of the date given, are subject to change at any time, and are not recommendations to buy or sell any security. The Fund significantly outperformed the MSCI Index, primarily due to effective stock selection. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 7 MANAGER COMMENTARY (continued) ------------------------------------------------- Exposure to Latin America and Asia also had a positive effect on relative performance. Furthermore, the Fund had a smaller allocation to Japan than the MSCI Index. This was advantageous as Japanese equities continued to perform poorly, reflecting the fact that investors looking for growth and confidence are not finding either in Japan. Positioning in the financials sector had the largest positive effect on results relative to the MSCI Index. The Fund's allocation to financials, particularly banks, was smaller than the MSCI Index. Many banks are focused on improving their balance sheets and have cut or eliminated dividends. That leaves few banks that meet the Fund's demand for income. The underweight in banks was a notable advantage for the fiscal year. Within the financials sector, individual contributors included ADMIRAL GROUP and BLUEBAY ASSET MANAGEMENT. ADMIRAL GROUP, a U.K. online car insurance company, benefited from a more favorable pricing environment in the U.K. The company has been gaining market share from its competitors due to its superior online platform and has expanded into other European markets, as well as Virginia in the U.S. The company's share price benefited from its stronger profits. BlueBay Asset Management is a U.K. fixed income investment company that pays out most of its earnings in dividends. We bought the company for its high dividend income and because it was rapidly growing its assets under management. Toward the end of the year, the company received a takeover offer that drove the stock price higher. The materials and energy sectors were also areas of strength for the Fund. Within materials, the Fund benefited from its commodity exposure, particularly mining. Emerging markets continue to exhibit voracious demand for commodities across the spectrum. Stock selection was largely responsible for the positive contribution from materials, though a small overweight was also advantageous. Individual contributors in the materials sector included SOUTHERN COPPER, a U.S. company that mines in Mexico and benefited from rising commodity prices, and COAL AND ALLIED INDUSTRIES, an Australian coal company. Another contributor, MASABI TRUST, controls the rights to an iron ore mine. This year iron prices moved to a quarterly price valuation, so prices changed more frequently -------------------------------------------------------------------------------- 8 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- and, during this time, the price trend was upward, adding to iron companies' revenue. Positioning in the information technology also had a positive effect. Information technology is typically not an income producing industry so the Fund tends to have less exposure than the MSCI Index. This underweight was an advantage and stock selection within the sector was also especially strong. HTC, a Taiwanese cell phone handset manufacturer, benefited from the successful introduction of a new cell phone series using Google's Android platform. HTC's profits have come through strongly and its share price rose in response. DELTA ELECTRONICS, a Korean technology company, was another contributor. Stock selection in consumer staples added to relative return and within the consumer discretionary segment, NATURA COSMETICOS, a Brazilian cosmetics company, was an individual contributor. The company benefited from economic growth in Brazil and stronger demand for its products. Profits beat expectations, leading the shares to perform well. In all regions except the U.K., the Fund's results surpassed those of the MSCI Index; the Fund's return in the U.K. was flat relative to the benchmark. The consumer discretionary sector was an area of weakness for the Fund. The sector does not offer much in the way of income, so the Fund's weighting is typically smaller than that of the MSCI Index. This was a disadvantage given the sector's strong performance during the fiscal year. Individual detractors from relative return included BP and DIAMOND OFFSHORE, two energy companies that suffered in the wake of the oil spill in the Gulf of Mexico. Once BP cut its dividend, we sold the Fund's holdings because we invest for income rather than capital appreciation. CHANGES TO THE FUND'S PORTFOLIO Our strategy for managing the Fund changed little over the period. The Fund's positioning remains broadly defensive. However, as we saw evidence of economic recovery and strength in emerging regions, we added to the Fund's holdings in the emerging markets, in Asia and in the mining sector. The Fund entered its fiscal year with an underweight in mining and by year end, had moved to an overweight. This resulted partly -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 9 MANAGER COMMENTARY (continued) ------------------------------------------------- from the industry's strong performance and partly from our deliberate additions to the sector. We also added to the Fund's holdings in North America, while reducing exposure in the U.K. and Europe. In addition to mining, we increased the Fund's exposure to utilities. We reduced the technology and health care weightings, all the result of individual stock selection rather than betting for or against specific sectors. We also increased exposure to financials, which had initially been a significant underweight and by year end was about the same weight as the MSCI Index. We still have a strong bias toward insurance and real estate stocks, with a significant underweight in banks. OUR FUTURE STRATEGY The Fund's weightings in Europe and Asia are larger than those of the MSCI Index. In both regions, we are focusing on high quality companies that offer income generation and growth potential. Particularly in Asia (other than Japan) we anticipate superior economic growth. The Fund has smaller weightings in Japan and North America, partly because companies in those areas pay lower dividends. The portfolio's weightings in telecommunications, consumer staples and utilities are larger than the respective sectors in the MSCI Index. We are seeing strong balance sheets, stable earnings, and attractive valuations in those areas. As noted above, we moved the Fund to an overweight in mining to capitalize on rising commodity prices and we believe there is still room for prices to go higher. Also, as noted above, the Fund remains underweight in the banks and we see no reason to change that strategy at this time. Though we are always on the lookout for good opportunities in the information technology sector, the Fund remains underweight there due to the sector's emphasis on growth over dividend payments. Our current outlook for the developed economies is cautious; we are not expecting much in the way of economic growth due to the hangover from the financial crisis. Thus, we anticipate a continuation of this past year, with a two-tiered global economy. We see developed markets staying on the recovery track, but still potentially fragile. Governments face a -------------------------------------------------------------------------------- 10 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- tightrope walk as they balance support for economic growth with the pressure of rising budget deficits. We are still confident that emerging markets, including China, India and Brazil, can deliver substantial growth, so they remain attractive areas for investment. Corporate profits have recovered strongly, mainly due to aggressive cost cutting and effective inventory management. Unfortunately, we are not yet seeing end demand increase and we wonder how much profits can increase without strong end demand. Though there are reasons to be concerned about equity markets, we think those concerns are already reflected in stock prices. The reality is that emerging markets look attractive and their stocks prices reflect it just as developed markets face certain obstacles and their prices reflect that. In short, we are currently optimistic because equity valuations remain attractive to us. Stephen Thornber Jeremy Podger Portfolio Manager Deputy Portfolio Manager
Any specific securities mentioned are for illustrative purposes only and are not a complete list of securities that have increased or decreased in value. The views expressed in this statement reflect those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Columbia Management Investment Advisers, LLC* (the Investment Manager) or any subadviser to the Fund or any other person in the Investment Manager or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and the Investment Manager disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for the Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of the Fund. * Effective May 1, 2010, RiverSource Investments, LLC became known as Columbia Management Investment Advisers, LLC. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 11 THE FUND'S LONG-TERM PERFORMANCE ----------------------------------------------- The chart on the facing page illustrates the total value of an assumed $10,000 investment in Threadneedle Global Equity Income Fund Class A shares (from 8/1/08 to 10/31/10) as compared to the performance of the Morgan Stanley Capital International (MSCI) All Country World Index. In comparing the Fund's Class A shares to this index, you should take into account the fact that the Fund's performance reflects the maximum initial sales charge of 5.75%, while such charges are not reflected in the performance of the index. Returns for the Fund include the reinvestment of any distributions paid during each period. The performance information shown represents past performance and is not a guarantee of future results. The table below and the chart on the facing page do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 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 or visiting columbiamanagement.com. Also see "Past Performance" in the Fund's current prospectus. COMPARATIVE RESULTS --------------------------------------------------------------------------------
Results at Oct. 31, 2010 SINCE INCEPTION 1 YEAR 8/1/08 THREADNEEDLE GLOBAL EQUITY INCOME FUND (INCLUDES SALES CHARGE) Class A Cumulative value of $10,000 $11,593 $10,175 ----------------------------------------------------------------------- Average annual total return +15.93% +0.77% ----------------------------------------------------------------------- MSCI ALL COUNTRY WORLD INDEX(1) Cumulative value of $10,000 $11,465 $9,833 ----------------------------------------------------------------------- Average annual total return +14.65% -0.75% -----------------------------------------------------------------------
Results for other share classes can be found on page 4. -------------------------------------------------------------------------------- 12 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- (VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN THREADNEEDLE GLOBAL EQUITY INCOME FUND LINE GRAPH)
THREADNEEDLE GLOBAL EQUITY INCOME FUND CLASS MSCI ALL A (INCLUDES COUNTRY WORLD SALES CHARGE) INDEX(1) ------------------- ------------- 8/1/08 $ 9,425 $10,000 10/08 6,878 6,949 1/09 6,062 6,162 4/09 6,430 6,740 7/09 7,711 8,034 10/09 8,256 8,576 1/10 8,415 8,728 4/10 8,892 9,437 7/10 8,906 8,967 10/10 10,175 9,833
(1) The Morgan Stanley Capital International (MSCI) All Country World Index, an unmanaged index of equity securities, is designed to measure equity market performance in the global developed and emerging markets. The index reflects reinvestment of all distributions and changes in market prices. The Fund's performance is currently measured against this index for purposes of determining the performance incentive adjustment. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 13 FUND EXPENSES EXAMPLE ---------------------------------------------------------- (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: (i) transaction costs, including sales charges (loads) on purchase payments; and (ii) ongoing costs, which may include management fees; distribution and service (Rule 12b-1) fees; and other Fund fees and expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. In addition to the ongoing expenses which the Fund bears directly, the Fund's shareholders indirectly bear the ongoing expenses of any funds in which the Fund invests (also referred to as "acquired funds"), including affiliated and non- affiliated pooled investment vehicles (including mutual funds and exchange traded funds). The Fund's indirect expense from investing in the acquired funds is based on the Fund's pro rata portion of the ongoing expenses charged by acquired funds using the expense ratio of each of the acquired funds as of the acquired fund's most recent shareholder report. The example is based on an investment of $1,000 invested at the beginning of the period indicated and held until Oct. 31, 2010. ACTUAL EXPENSES The first line of the table provides information about actual account values and actual expenses for each class. You may use the information in this line, together with the amount you 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 result by the number in the first line under the heading titled "Expenses paid during the period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for each class and an assumed rate of return of 5% per year before expenses, which is not the actual return for the class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. -------------------------------------------------------------------------------- 14 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED MAY 1, 2010 OCT. 31, 2010 THE PERIOD(a) EXPENSE RATIO ------------------------------------------------------------------------------------------ Class A ------------------------------------------------------------------------------------------ Actual(b) $1,000 $1,142.00 $ 7.48 1.40% ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,017.95 $ 7.04 1.40% ------------------------------------------------------------------------------------------ Class B ------------------------------------------------------------------------------------------ Actual(b) $1,000 $1,137.60 $11.40(c) 2.14%(c) ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,014.26 $10.75(c) 2.14%(c) ------------------------------------------------------------------------------------------ Class C ------------------------------------------------------------------------------------------ Actual(b) $1,000 $1,138.60 $11.52(c) 2.16%(c) ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,014.16 $10.85(c) 2.16%(c) ------------------------------------------------------------------------------------------ Class I ------------------------------------------------------------------------------------------ Actual(b) $1,000 $1,145.20 $ 5.40(c) 1.01%(c) ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,019.90 $ 5.09(c) 1.01%(c) ------------------------------------------------------------------------------------------ Class R ------------------------------------------------------------------------------------------ Actual(b) $1,000 $1,141.00 $ 9.39(c) 1.76%(c) ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,016.16 $ 8.85(c) 1.76%(c) ------------------------------------------------------------------------------------------ Class R4 ------------------------------------------------------------------------------------------ Actual(b) $1,000 $1,142.40 $ 7.32(c) 1.37%(c) ------------------------------------------------------------------------------------------ Hypothetical (5% return before expenses) $1,000 $1,018.10 $ 6.89(c) 1.37%(c) ------------------------------------------------------------------------------------------
(a) Expenses are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). (b) Based on the actual return for the six months ended Oct. 31, 2010: +14.20% for Class A, +13.76% for Class B, +13.86% for Class C, +14.52% for Class I, +14.10% for Class R and +14.24% for Class R4. (c) Columbia Management Investment Advisers, LLC (formerly known as RiverSource Investments, LLC) (the Investment Manager) and its affiliates have contractually agreed to waive certain fees and to absorb certain expenses until Dec. 31, 2011, unless sooner terminated at the sole discretion of the Fund's Board, such that net expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment, will not exceed 2.20% for Class B, 2.20% for Class C, 1.03% for Class I, 1.70% for Class R and 1.33% for Class R4. Any amounts waived will not be reimbursed by the Fund. This change is effective Jan. 1, 2011. Had this change been in place for the entire six month period ended Oct. 31, 2010, the actual expenses paid would have been $11.30 for Class B, $11.46 for Class C, $5.24 for Class I, $8.81 for Class R and $7.16 for Class R4; the hypothetical expenses paid would have been $10.65 for Class B, $10.80 for Class C, $4.94 for Class I, $8.30 for Class R and $6.74 for Class R4. The actual and hypothetical expenses paid for Class A would have been the same as those expenses presented in the table above. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 15 PORTFOLIO OF INVESTMENTS ------------------------------------------------------- OCT. 31, 2010 (Percentages represent value of investments compared to net assets) INVESTMENTS IN SECURITIES
COMMON STOCKS (94.7%)(c) ISSUER SHARES VALUE(a) AUSTRALIA (5.0%) Coal & Allied Industries Ltd. 3,797(d) $416,546 Coca-Cola Amatil Ltd. 33,700(d) 401,722 Foster's Group Ltd. 63,159 361,287 National Australia Bank Ltd. 13,837 345,068 Telstra Corp., Ltd. 115,737 302,683 --------------- Total 1,827,306 ------------------------------------------------------------------------------------- BRAZIL (1.2%) Multiplus SA 18,037 302,599 Redecard SA 11,500 148,861 --------------- Total 451,460 ------------------------------------------------------------------------------------- CANADA (4.0%) AGF Management Ltd., Class B 24,700 401,293 Baytex Energy Trust Unit 17,357 648,458 Crescent Point Energy Corp. 11,058(d) 438,026 --------------- Total 1,487,777 ------------------------------------------------------------------------------------- FINLAND (2.3%) Fortum OYJ 9,826 278,477 Sampo OYJ, Series A 19,704 551,848 --------------- Total 830,325 ------------------------------------------------------------------------------------- FRANCE (4.8%) France Telecom SA 26,425 634,750 Sanofi-Aventis SA 3,840 268,091 Total SA 5,900 320,508 Vivendi SA 19,091 544,374 --------------- Total 1,767,723 ------------------------------------------------------------------------------------- GERMANY (3.2%) Allianz SE 1,327 166,237 BASF SE 7,810 568,077 Deutsche Telekom AG 13,917 201,566 E.ON AG 7,177 224,671 --------------- Total 1,160,551 ------------------------------------------------------------------------------------- GREECE (0.5%) OPAP SA 10,223 192,725 ------------------------------------------------------------------------------------- HONG KONG (2.7%) Champion REIT 1,143,000(d) 629,675 Hang Seng Bank Ltd. 24,300 355,518 --------------- Total 985,193 ------------------------------------------------------------------------------------- INDONESIA (0.9%) Perusahaan Gas Negara Tbk 722,500 327,490 ------------------------------------------------------------------------------------- ITALY (3.0%) ENI SpA 12,916 290,935 Snam Rete Gas SpA 62,397 337,920 Telecom Italia SpA 136,667 209,540 Tod's SpA 2,917(d) 282,750 --------------- Total 1,121,145 ------------------------------------------------------------------------------------- MALAYSIA (0.3%) Maxis Bhd 71,000 120,768 ------------------------------------------------------------------------------------- MEXICO (1.0%) Grupo Continental SAB de CV 124,300 350,345 ------------------------------------------------------------------------------------- POLAND (0.8%) KGHM Polska Miedz SA 6,201 278,657 -------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 16 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) SINGAPORE (4.1%) Ascendas Real Estate Investment Trust 203,000 $323,193 DBS Group Holdings Ltd. 55,500 596,220 Mapletree Industrial Trust 431,000(b) 356,419 StarHub Ltd. 116,000 237,576 --------------- Total 1,513,408 ------------------------------------------------------------------------------------- SOUTH AFRICA (2.0%) Kumba Iron Ore Ltd. 7,780 442,494 The Foschini Group Ltd. 24,077 292,562 --------------- Total 735,056 ------------------------------------------------------------------------------------- SOUTH KOREA (3.1%) Kangwon Land, Inc. 21,440 504,043 KT Corp., ADR 13,454 278,363 KT&G Corp. 6,014 369,367 --------------- Total 1,151,773 ------------------------------------------------------------------------------------- SPAIN (1.1%) Banco Santander SA 31,416 403,479 ------------------------------------------------------------------------------------- SWEDEN (1.1%) Skanska AB, Series B 20,313 388,611 ------------------------------------------------------------------------------------- TAIWAN (6.8%) Chunghwa Telecom Co., Ltd., ADR 28,946 677,336 Delta Electronics, Inc. 104,040 429,861 HTC Corp. 32,900 742,525 Hung Poo Real Estate Development Corp. 227,000 337,716 Taiwan Semiconductor Manufacturing Co., Ltd. 144,000 295,365 --------------- Total 2,482,803 ------------------------------------------------------------------------------------- UNITED KINGDOM (18.4%) Admiral Group PLC 25,892 676,191 AstraZeneca PLC 8,386 420,481 BAE Systems PLC 69,961 386,379 BlueBay Asset Management PLC 50,470 395,016 British American Tobacco PLC 12,648 482,298 Close Brothers Group PLC 18,595 229,852 GlaxoSmithKline PLC 19,626 383,941 Man Group PLC 107,696 450,012 National Grid PLC 43,612 412,264 Pearson PLC 44,473 680,126 Royal Dutch Shell PLC, Series B 15,057 482,125 RSA Insurance Group PLC 153,231 321,614 United Utilities Group PLC 28,475 278,754 Vodafone Group PLC 285,388 776,637 Wincanton PLC 106,124 404,676 --------------- Total 6,780,366 ------------------------------------------------------------------------------------- UNITED STATES (28.4%) AllianceBernstein Holding LP 12,957 316,151 Altria Group, Inc. 24,504 622,891 Annaly Capital Management, Inc. 21,186 375,204 AT&T, Inc. 13,937 397,205 Blackstone Group LP 27,544 371,293 BP Prudhoe Bay Royalty Trust 7,827 804,693 Bristol-Myers Squibb Co. 22,069 593,656 CenturyLink, Inc. 12,462 515,678 Enterprise Products Partners LP 8,408 360,283 Foot Locker, Inc. 18,306 291,615 Frontier Communications Corp. 22,067 193,748 Kinder Morgan Energy Partners LP 8,329 578,616 Linn Energy LLC Unit 18,478 646,360 Merck & Co., Inc. 16,381 594,302 Mesabi Trust 12,246 507,352 Penn Virginia Resource Partners LP 14,768 397,998 Pfizer, Inc. 18,214 316,924 Philip Morris International, Inc. 8,405 491,693 Plum Creek Timber Co., Inc. 8,501 313,177 Qwest Communications International, Inc. 48,681 321,295
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 17 PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED) ISSUER SHARES VALUE(a) UNITED STATES (CONT.) Reynolds American, Inc. 6,741 $437,491 Southern Co. 10,182 385,592 Southern Copper Corp. 9,587 410,323 Verizon Communications, Inc. 6,475 210,243 --------------- Total 10,453,783 ------------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost: $27,607,518) $34,810,744 ------------------------------------------------------------------------------------- PREFERRED STOCKS (1.5%)(c) ISSUER SHARES VALUE(a) BRAZIL Cia de Bebidas das Americas 4,123 $565,541 ------------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (Cost: $212,654) $565,541 ------------------------------------------------------------------------------------- RIGHTS (--%)(c) ISSUER SHARES VALUE(a) SPAIN Banco Santander SA 31,416(b) $5,201 ------------------------------------------------------------------------------------- TOTAL RIGHTS (Cost: $--) $5,201 -------------------------------------------------------------------------------------
BONDS (2.1%)(c) COUPON PRINCIPAL ISSUER RATE AMOUNT VALUE(a) FINLAND (2.1%) Talvivaara Mining Co. PLC (EUR) Senior Unsecured Convertible 05-20-13 5.250% $500,000 $768,694 ------------------------------------------------------------------------------------- TOTAL BONDS (Cost: $362,934) $768,694 -------------------------------------------------------------------------------------
MONEY MARKET FUND (1.9%) SHARES VALUE(a) Columbia Short-Term Cash Fund, 0.241% 694,979(f) $694,979 ------------------------------------------------------------------------------------- TOTAL MONEY MARKET FUND (Cost: $694,979) $694,979 -------------------------------------------------------------------------------------
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (3.3%) EFFECTIVE PRINCIPAL ISSUER YIELD AMOUNT VALUE(a) REPURCHASE AGREEMENTS(E) Deutsche Bank AG dated 10-29-10, matures 11-01-10, repurchase price $1,229,232 0.230% $1,229,208 $1,229,208 ------------------------------------------------------------------------------------- TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN (Cost: $1,229,208) $1,229,208 ------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (Cost: $30,107,293)(g) $38,074,367 =====================================================================================
See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- 18 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY The following table represents the portfolio investments of the Fund by industry classifications as a percentage of net assets at Oct. 31, 2010:
PERCENTAGE OF INDUSTRY NET ASSETS VALUE(a) ----------------------------------------------------------------------- Aerospace & Defense 1.1% $386,379 Air Freight & Logistics 1.1 404,676 Beverages 3.0 1,113,354 Capital Markets 5.9 2,163,617 Chemicals 1.5 568,077 Commercial Banks 4.6 1,705,486 Commercial Services & Supplies 0.8 302,599 Communications Equipment 2.0 742,525 Construction & Engineering 1.1 388,611 Diversified Telecommunication Services 10.7 3,942,407 Electric Utilities 2.4 888,740 Electronic Equipment, Instruments & Components 1.2 429,861 Food and Beverage 1.5 565,541 Gas Utilities 1.8 665,410 Hotels, Restaurants & Leisure 1.9 696,768 Insurance 4.7 1,715,890 IT Services 0.4 148,861 Media 3.3 1,224,500 Metals 2.1 768,694 Metals & Mining 4.5 1,638,826 Multi-Utilities 1.9 691,018 Oil, Gas & Consumable Fuels 14.7 5,384,548 Pharmaceuticals 7.0 2,577,395 Real Estate Investment Trusts (REITs) 5.4 1,997,668 Real Estate Management & Development 0.9 337,716 Semiconductors & Semiconductor Equipment 0.8 295,365 Specialty Retail 1.6 584,177 Textiles, Apparel & Luxury Goods 0.8 282,750 Tobacco 6.6 2,403,740 Wireless Telecommunication Services 3.1 1,134,981 Other(1) 5.2 1,924,187 ----------------------------------------------------------------------- Total $38,074,367 -----------------------------------------------------------------------
(1) Cash & Cash Equivalents. The industries identified above are based on the Global Industry Classification Standard (GICS), which was developed by, and is the exclusive property of, Morgan Stanley Capital International Inc. and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. See accompanying Notes to Portfolio of Investments. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 19 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- NOTES TO PORTFOLIO OF INVESTMENTS ADR -- American Depositary Receipt EUR -- European Monetary Unit
(a) Securities are valued by using policies described in Note 2 to the financial statements. (b) Non-income producing. (c) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated in U.S. dollar currency unless otherwise noted. (d) At Oct. 31, 2010, security was partially or fully on loan. See Note 7 to the financial statements. (e) The table below represents securities received as collateral for repurchase agreements. This collateral, which is generally high quality short-term obligations, is deposited with the Fund's custodian and, pursuant to the terms of the repurchase agreement, must have an aggregate market value greater than or equal to the repurchase price plus accrued interest at all times. The value of securities and/or cash held as collateral for repurchase agreements is monitored on a daily basis to ensure the existence of the proper level of collateral.
DEUTSCHE BANK AG (0.230%) SECURITY DESCRIPTION VALUE(a) ------------------------------------------------------------ Fannie Mae Pool $1,253,792 ------------------------------------------------------------ Total market value of collateral securities $1,253,792 ------------------------------------------------------------
(f) Affiliated Money Market Fund - See Note 8 to the financial statements. The rate shown is the seven-day current annualized yield at Oct. 31, 2010. (g) At Oct. 31, 2010, the cost of securities for federal income tax purposes was $30,508,314 and the aggregate gross unrealized appreciation and depreciation based on that cost was: Unrealized appreciation $7,779,050 Unrealized depreciation (212,997) ----------------------------------------------------------- Net unrealized appreciation $7,566,053 -----------------------------------------------------------
-------------------------------------------------------------------------------- 20 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- FAIR VALUE MEASUREMENTS Generally accepted accounting principles (GAAP) require 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. 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 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 (to include NAV for open-end mutual funds). 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 Fund Administrator, 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. Non-U.S. equity securities actively traded in foreign markets may be reflected in Level 2 despite the availability of closing prices, because the Fund evaluates and determines whether those closing prices reflect fair value at the close of the New York Stock Exchange (NYSE) or require adjustment, as described in Note 2 to the financial statements -- Valuation of securities. 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 -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 21 PORTFOLIO OF INVESTMENTS (continued) ------------------------------------------- FAIR VALUE MEASUREMENTS (CONTINUED) 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 rely on one or more significant unobservable inputs and/or significant assumptions by the Fund Administrator. Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data. The following table is a summary of the inputs used to value the Fund's investments as of Oct. 31, 2010:
FAIR VALUE AT OCT. 31, 2010 ----------------------------------------------------------------- LEVEL 1 LEVEL 2 QUOTED PRICES OTHER LEVEL 3 IN ACTIVE SIGNIFICANT SIGNIFICANT MARKETS FOR OBSERVABLE UNOBSERVABLE DESCRIPTION(A) IDENTICAL ASSETS(B) INPUTS INPUTS TOTAL ---------------------------------------------------------------------------------------------- Equity Securities Common Stocks $34,810,744 $-- $-- $34,810,744 Preferred Stocks 565,541 -- -- 565,541 Rights 5,201 -- -- 5,201 ---------------------------------------------------------------------------------------------- Total Equity Securities 35,381,486 -- -- 35,381,486 ---------------------------------------------------------------------------------------------- Bonds Corporate Debt Securities Metals -- -- 768,694 768,694 ---------------------------------------------------------------------------------------------- Total Bonds -- -- 768,694 768,694 ---------------------------------------------------------------------------------------------- Other Affiliated Money Market Fund(c) 694,979 -- -- 694,979 Investments of Cash Collateral Received for Securities on Loan -- 1,229,208 -- 1,229,208 ---------------------------------------------------------------------------------------------- Total Other 694,979 1,229,208 -- 1,924,187 ---------------------------------------------------------------------------------------------- Total $36,076,465 $1,229,208 $768,694 $38,074,367 ----------------------------------------------------------------------------------------------
(a) See the Portfolio of Investments for all investment classifications not indicated in the table. (b) Includes certain securities trading outside the U.S. whose values were adjusted at Oct. 31, 2009 as a result of significant market movements following the close of local trading, and were classified as Level 2. Values were not adjusted as of Oct. 31, 2010. Therefore, these investment securities were classified as Level 1 instead of Level 2 at Oct. 31, 2010. The amount of securities transferred out of Level 2 into Level 1 during the period was $13,259,410. Transfers between Levels 1 and 2 are determined based on the fair value at the beginning of the period for security positions held throughout the period. (c) Money market fund that is a sweep investment for cash balances in the Fund at Oct. 31, 2010. -------------------------------------------------------------------------------- 22 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- The following table is a reconciliation of Level 3 assets for which significant unobservable inputs were used to determine fair value.
CORPORATE DEBT SECURITIES ---------------------------------------------------------------- Balance as of Oct. 31, 2009 $618,029 Accrued discounts/premiums 67,674 Realized gain (loss) -- Change in unrealized appreciation (depreciation)* 82,991 Sales -- Purchases -- Transfers into Level 3 -- Transfers out of Level 3 -- ---------------------------------------------------------------- Balance as of Oct. 31, 2010 $768,694 ----------------------------------------------------------------
* Change in unrealized appreciation (depreciation) relating to securities held at Oct. 31, 2010 was $82,991. Transfers in and/or out of Level 3 are determined based on the fair value at the beginning of the period for security positions held throughout the period. HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS (i) The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (Commission) for the first and third quarters of each fiscal year on Form N-Q; (ii) The Fund's Forms N-Q are available on the Commission's website at http://www.sec.gov; (iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC (information on the operations of the Public Reference Room may be obtained by calling 800.SEC.0330); and (iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q, can be obtained without charge, upon request, by calling 800.345.6611. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 23 STATEMENT OF ASSETS AND LIABILITIES ------------------------------------------- OCT. 31, 2010
ASSETS Investments in securities, at value Unaffiliated issuers* (identified cost $28,183,106) $36,150,180 Affiliated money market fund (identified cost $694,979) 694,979 Investments of cash collateral received for securities on loan (identified cost $1,229,208) 1,229,208 ------------------------------------------------------------------------------------- Total investments in securities (identified cost $30,107,293) 38,074,367 Foreign currency holdings (identified cost $115,696) 119,076 Receivable from Investment Manager 926 Capital shares receivable 53,174 Dividends and accrued interest receivable 136,437 Receivable from investment securities sold 455,180 ------------------------------------------------------------------------------------- Total assets 38,839,160 ------------------------------------------------------------------------------------- LIABILITIES Disbursements in excess of cash 218 Capital shares payable 46,842 Payable for investment securities purchased 735,045 Payable upon return of securities loaned 1,229,208 Accrued investment management services fees 804 Accrued distribution fees 273 Accrued transfer agency fees 695 Accrued administrative services fees 80 Other accrued expenses 72,812 ------------------------------------------------------------------------------------- Total liabilities 2,085,977 ------------------------------------------------------------------------------------- Net assets applicable to outstanding capital stock $36,753,183 ------------------------------------------------------------------------------------- REPRESENTED BY Capital stock -- $.01 par value $ 36,773 Additional paid-in capital 28,982,069 Undistributed net investment income 248,130 Accumulated net realized gain (loss) (486,152) Unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 7,972,363 ------------------------------------------------------------------------------------- Total -- representing net assets applicable to outstanding capital stock $36,753,183 ------------------------------------------------------------------------------------- *Value of securities on loan $ 1,156,881 -------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE Class A $29,056,833 2,907,285 $ 9.99(1) Class B $ 1,875,577 188,131 $ 9.97 Class C $ 844,357 84,741 $ 9.96 Class I $ 4,935,451 493,000 $10.01 Class R $ 10,502 1,050 $10.00 Class R4 $ 30,463 3,046 $10.00 -----------------------------------------------------------------------------
(1) The maximum offering price per share for Class A is $10.60. The offering price is calculated by dividing the net asset value by 1.0 minus the maximum sales charge of 5.75%. The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 24 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT STATEMENT OF OPERATIONS ------------------------------------------------------- YEAR ENDED OCT. 31, 2010
INVESTMENT INCOME Income: Dividends $1,710,989 Interest 140,316 Income distributions from affiliated money market fund 1,040 Income from securities lending -- net 36,397 Foreign taxes withheld (158,655) ------------------------------------------------------------------------ Total income 1,730,087 ------------------------------------------------------------------------ Expenses: Investment management services fees 235,459 Distribution fees Class A 58,854 Class B 20,679 Class C 5,806 Class R 45 Class R3 18 Transfer agency fees Class A 44,210 Class B 4,160 Class C 1,112 Class R 6 Class R3 4 Class R4 14 Class R5 4 Administrative services fees 24,462 Plan administration services fees Class R 19 Class R3 18 Class R4 40 Compensation of board members 891 Custodian fees 11,620 Printing and postage 28,140 Registration fees 72,405 Professional fees 38,558 Other 8,702 ------------------------------------------------------------------------ Total expenses 555,226 Expenses waived/reimbursed by the Investment Manager and its affiliates (117,871) ------------------------------------------------------------------------ Total net expenses 437,355 ------------------------------------------------------------------------ Investment income (loss) -- net 1,292,732 ------------------------------------------------------------------------
-------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 25 STATEMENT OF OPERATIONS (continued) ------------------------------------------- YEAR ENDED OCT. 31, 2010
REALIZED AND UNREALIZED GAIN (LOSS) -- NET Net realized gain (loss) on: Security transactions $1,068,812 Foreign currency transactions 34,148 ------------------------------------------------------------------------ Net realized gain (loss) on investments 1,102,960 Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 4,238,399 ------------------------------------------------------------------------ Net gain (loss) on investments and foreign currencies 5,341,359 ------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations $6,634,091 ------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- 26 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS -------------------------------------------
YEAR ENDED OCT. 31, 2010 2009 OPERATIONS AND DISTRIBUTIONS Investment income (loss) -- net $ 1,292,732 $ 878,788 Net realized gain (loss) on investments 1,102,960 (1,378,960) Net change in unrealized appreciation (depreciation) on investments and on translation of assets and liabilities in foreign currencies 4,238,399 6,134,900 -------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 6,634,091 5,634,728 -------------------------------------------------------------------------------------- Distributions to shareholders from: Net investment income Class A (1,039,349) (424,203) Class B (75,807) (34,776) Class C (21,124) (5,653) Class I (210,743) (104,698) Class R (367) (165) Class R3 (289) (182) Class R4 (671) (207) Class R5 (321) (209) -------------------------------------------------------------------------------------- Total distributions (1,348,671) (570,093) -------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS Proceeds from sales Class A shares 7,486,858 15,276,944 Class B shares 451,125 1,551,236 Class C shares 326,736 352,555 Class R shares 425 -- Class R4 shares 15,002 8,500 Reinvestment of distributions at net asset value Class A shares 985,504 416,219 Class B shares 73,906 34,203 Class C shares 19,873 5,149 Class R shares 8 -- Class R4 shares 269 11 Conversions from Class B to Class A Class A shares 586,823 359,240 Class B shares (586,823) (359,240) Payments for redemptions Class A shares (5,206,085) (4,280,739) Class B shares (427,591) (303,100) Class C shares (60,046) (35,779) Class R3 shares (9,998) -- Class R4 shares -- (7,133) Class R5 shares (9,998) -- -------------------------------------------------------------------------------------- Increase (decrease) in net assets from capital share transactions 3,645,988 13,018,066 -------------------------------------------------------------------------------------- Total increase (decrease) in net assets 8,931,408 18,082,701 Net assets at beginning of year 27,821,775 9,739,074 -------------------------------------------------------------------------------------- Net assets at end of year $36,753,183 $27,821,775 -------------------------------------------------------------------------------------- Undistributed net investment income $ 248,130 $ 281,180 --------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 27 FINANCIAL HIGHLIGHTS ---------------------------------------------------------- The following tables are 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 returns assume reinvestment of all dividends and distributions. Total returns do not reflect payment of sales charges, if any, and are not annualized for periods of less than one year.
YEAR ENDED OCT. 31, CLASS A ------------------------------- PER SHARE DATA 2010 2009 2008(a) Net asset value, beginning of period $8.49 $7.24 $9.96 ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .37 .30 .07 Net gains (losses) (both realized and unrealized) 1.52 1.14 (2.77) ---------------------------------------------------------------------------------- Total from investment operations 1.89 1.44 (2.70) ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.39) (.19) (.02) Tax return of capital -- -- (.00)(b) ---------------------------------------------------------------------------------- Total distributions (.39) (.19) (.02) ---------------------------------------------------------------------------------- Net asset value, end of period $9.99 $8.49 $7.24 ---------------------------------------------------------------------------------- TOTAL RETURN 23.01% 20.16% (27.12%) ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(c) Gross expenses prior to expense waiver/reimbursement 1.82% 2.35% 4.71%(d) ---------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e) 1.42% 1.50% 1.45%(d) ---------------------------------------------------------------------------------- Net investment income (loss) 4.24% 4.19% 3.78%(d) ---------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $29 $21 $5 ---------------------------------------------------------------------------------- Portfolio turnover rate 35% 45% 10% ----------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 28 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS B ------------------------------- PER SHARE DATA 2010 2009 2008(a) Net asset value, beginning of period $8.47 $7.24 $9.96 ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .30 .26 .06 Net gains (losses) (both realized and unrealized) 1.52 1.11 (2.76) ---------------------------------------------------------------------------------- Total from investment operations 1.82 1.37 (2.70) ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.32) (.14) (.02) Tax return of capital -- -- (.00)(b) ---------------------------------------------------------------------------------- Total distributions (.32) (.14) (.02) ---------------------------------------------------------------------------------- Net asset value, end of period $9.97 $8.47 $7.24 ---------------------------------------------------------------------------------- TOTAL RETURN 22.10% 19.14% (27.15%) ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(c) Gross expenses prior to expense waiver/reimbursement 2.53% 3.18% 5.48%(d) ---------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e) 2.17% 2.26% 2.21%(d) ---------------------------------------------------------------------------------- Net investment income (loss) 3.45% 3.64% 3.11%(d) ---------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $2 $2 $1 ---------------------------------------------------------------------------------- Portfolio turnover rate 35% 45% 10% ----------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 29 FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------
YEAR ENDED OCT. 31, CLASS C ------------------------------- PER SHARE DATA 2010 2009 2008(a) Net asset value, beginning of period $8.47 $7.24 $9.96 ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .31 .25 .07 Net gains (losses) (both realized and unrealized) 1.51 1.13 (2.77) ---------------------------------------------------------------------------------- Total from investment operations 1.82 1.38 (2.70) ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.33) (.15) (.02) Tax return of capital -- -- (.00)(b) ---------------------------------------------------------------------------------- Total distributions (.33) (.15) (.02) ---------------------------------------------------------------------------------- Net asset value, end of period $9.96 $8.47 $7.24 ---------------------------------------------------------------------------------- TOTAL RETURN 22.10% 19.21% (27.18%) ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(c) Gross expenses prior to expense waiver/reimbursement 2.59% 3.05% 5.15%(d) ---------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e) 2.17% 2.25% 2.21%(d) ---------------------------------------------------------------------------------- Net investment income (loss) 3.57% 3.44% 3.31%(d) ---------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $1 $-- $-- ---------------------------------------------------------------------------------- Portfolio turnover rate 35% 45% 10% ----------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 30 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS I ------------------------------- PER SHARE DATA 2010 2009 2008(a) Net asset value, beginning of period $8.50 $7.25 $9.96 ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .41 .33 .09 Net gains (losses) (both realized and unrealized) 1.53 1.13 (2.77) ---------------------------------------------------------------------------------- Total from investment operations 1.94 1.46 (2.68) ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.43) (.21) (.03) Tax return of capital -- -- (.00)(b) ---------------------------------------------------------------------------------- Total distributions (.43) (.21) (.03) ---------------------------------------------------------------------------------- Net asset value, end of period $10.01 $8.50 $7.25 ---------------------------------------------------------------------------------- TOTAL RETURN 23.56% 20.53% (27.00%) ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(c) Gross expenses prior to expense waiver/reimbursement 1.37% 1.88% 4.12%(d) ---------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e) 1.03% 1.09% 1.07%(d) ---------------------------------------------------------------------------------- Net investment income (loss) 4.61% 4.52% 3.95%(d) ---------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $5 $4 $4 ---------------------------------------------------------------------------------- Portfolio turnover rate 35% 45% 10% ----------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 31 FINANCIAL HIGHLIGHTS (continued) ----------------------------------------------
YEAR ENDED OCT. 31, CLASS R* ------------------------------- PER SHARE DATA 2010 2009 2008(a) Net asset value, beginning of period $8.49 $7.25 $9.96 ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .34 .27 .07 Net gains (losses) (both realized and unrealized) 1.53 1.13 (2.77) ---------------------------------------------------------------------------------- Total from investment operations 1.87 1.40 (2.70) ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.36) (.16) (.01) Tax return of capital -- -- (.00)(b) ---------------------------------------------------------------------------------- Total distributions (.36) (.16) (.01) ---------------------------------------------------------------------------------- Net asset value, end of period $10.00 $8.49 $7.25 ---------------------------------------------------------------------------------- TOTAL RETURN 22.65% 19.63% (27.10%) ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(c) Gross expenses prior to expense waiver/reimbursement 2.14% 2.68% 4.92%(d) ---------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e) 1.80% 1.83% 1.72%(d) ---------------------------------------------------------------------------------- Net investment income (loss) 3.85% 3.78% 3.36%(d) ---------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- ---------------------------------------------------------------------------------- Portfolio turnover rate 35% 45% 10% ----------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights. -------------------------------------------------------------------------------- 32 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT --------------------------------------------------------------------------------
YEAR ENDED OCT. 31, CLASS R4 ------------------------------- PER SHARE DATA 2010 2009 2008(a) Net asset value, beginning of period $8.50 $7.25 $9.96 ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) .39 .28 .08 Net gains (losses) (both realized and unrealized) 1.51 1.17 (2.77) ---------------------------------------------------------------------------------- Total from investment operations 1.90 1.45 (2.69) ---------------------------------------------------------------------------------- LESS DISTRIBUTIONS: Dividends from net investment income (.40) (.20) (.02) Tax return of capital -- -- (.00)(b) ---------------------------------------------------------------------------------- Total distributions (.40) (.20) (.02) ---------------------------------------------------------------------------------- Net asset value, end of period $10.00 $8.50 $7.25 ---------------------------------------------------------------------------------- TOTAL RETURN 23.09% 20.26% (27.04%) ---------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS(c) Gross expenses prior to expense waiver/reimbursement 1.82% 2.20% 4.42%(d) ---------------------------------------------------------------------------------- Net expenses after expense waiver/reimbursement(e) 1.37% 1.33% 1.24%(d) ---------------------------------------------------------------------------------- Net investment income (loss) 4.44% 4.02% 3.89%(d) ---------------------------------------------------------------------------------- SUPPLEMENTAL DATA Net assets, end of period (in millions) $-- $-- $-- ---------------------------------------------------------------------------------- Portfolio turnover rate 35% 45% 10% ----------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS * Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. (a) For the period from Aug. 1, 2008 (when shares became available) to Oct. 31, 2008. (b) Rounds to zero less than $0.01 per share. (c) Expense ratios include the impact of a performance incentive adjustment, if any. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. (d) Annualized. (e) The Investment Manager and its affiliates agreed to waive/reimburse certain fees and expenses (excluding fees and expenses of acquired funds), before giving effect to any performance incentive adjustment. The accompanying Notes to Financial Statements are an integral part of this statement. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 33 NOTES TO FINANCIAL STATEMENTS -------------------------------------------------- 1. ORGANIZATION Threadneedle Global Equity Income Fund (the Fund) is a series of RiverSource Global Series, Inc. (the Corporation) and is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, open-end management investment company. The Corporation has 10 billion authorized shares of capital stock that can be allocated among the separate series as designated by the Corporation's Board of Directors (the Board). The Fund offers Class A, Class B, Class C, Class I, Class R and Class R4 shares. - Class A shares are offered with a front-end sales charge, which may be waived under certain circumstances. - Class B shares may be subject to a contingent deferred sales charge (CDSC) and automatically convert to Class A shares one month after the completion of the eighth year of ownership if originally purchased in a RiverSource fund on or after May 21, 2005 or originally purchased in a Seligman fund on or after June 13, 2009. Class B shares originally purchased in a RiverSource fund prior to May 21, 2005 will convert to Class A shares in the ninth calendar year of ownership. Class B shares originally purchased in a Seligman fund prior to June 13, 2009 will convert to Class A shares in the month prior to the ninth year of ownership. Effective Sept. 7, 2010, the Fund no longer accepts investments from new or existing investors in the Fund's Class B shares, except that (i) dividend and/or capital gain distributions may continue to be reinvested in Class B shares of the Fund and (ii) shareholders invested in Class B shares of the Fund may exchange those shares for Class B shares of other Columbia, RiverSource, Seligman and Threadneedle funds offering such shares. - Class C shares may be subject to a CDSC on shares redeemed within one year of purchase. - Class I shares are not subject to sales charges and are available only to the Columbia Family of Funds. - Class R shares are offered without a front-end sales charge or CDSC to qualifying institutional investors. Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. - Class R4 shares are not subject to sales charges, however, this class is closed to new investors effective Dec. 31, 2010. At Aug. 27, 2010, all Class R3 and Class R5 shares were liquidated. The shares in these classes had consisted solely of seed capital from Columbia Management Investment Advisers, LLC (formerly known as RiverSource Investments, LLC) (the Investment Manager). -------------------------------------------------------------------------------- 34 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- At Oct. 31, 2010, the Investment Manager owned 100% of Class I shares. All classes of shares have identical voting, dividend and liquidation rights. Class specific expenses (e.g., distribution and service fees, transfer agency fees, plan administration services fees) differ among classes. Income, expenses (other than class specific expenses) and realized and unrealized gains or losses on investments are allocated to each class of shares based upon its relative net assets. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES Preparing financial statements that conform to U.S. generally accepted accounting principles requires management to make estimates (e.g., on assets, liabilities and contingent assets and liabilities) that could differ from actual results. VALUATION OF SECURITIES All securities are valued at the close of business of the New York Stock Exchange (NYSE). Securities traded on national securities exchanges or included in national market systems are valued at the last quoted sales price from the primary exchange. Debt securities are generally traded in the over-the-counter market and are valued by an independent pricing service using an evaluated bid. When market quotes are not readily available, the pricing service, in determining fair values of debt securities, takes into consideration such factors as current quotations by broker/dealers, coupon, maturity, quality, type of issue, trading characteristics, and other yield and risk factors it deems relevant in determining valuations. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. The procedures adopted by the Board generally contemplate the use of fair valuation in the event that price quotations or valuations are not readily available, price quotations or valuations from other sources are not reflective of market value and thus deemed unreliable, or a significant event has occurred in relation to a security or class of securities (such as foreign securities) that is not reflected in price quotations or valuations from other sources. A fair value price is a good faith estimate of the value of a security at a given point in time. Many securities markets and exchanges outside the U.S. close prior to the close of the NYSE and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the NYSE, including significant movements in the U.S. market after foreign exchanges have closed. Accordingly, in those situations, Ameriprise Financial, Inc. (Ameriprise Financial), parent company of the Investment -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 35 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- Manager, as administrator to the Fund, will fair value foreign securities pursuant to procedures adopted by the Board, including utilizing a third party pricing service to determine these fair values. These procedures take into account multiple factors, including movements in the U.S. securities markets, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the NYSE. The fair value of a security is likely to be different from the quoted or published price, if available. Short-term securities maturing in more than 60 days from the valuation date are valued at the market price or approximate market value based on current interest rates. Typically, those maturing in 60 days or less that originally had maturities of more than 60 days at acquisition date are valued at amortized cost using the market value on the 61st day before maturity. Short-term securities maturing in 60 days or less at acquisition date are valued at amortized cost. Amortized cost is an approximation of market value. Investments in money market funds are valued at net asset value. FOREIGN CURRENCY TRANSLATIONS Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the Statement of Operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. At Oct. 31, 2010, foreign currency holdings consisted of multiple denominations. REPURCHASE AGREEMENTS The Fund may enter into repurchase agreements. Generally, securities received as collateral subject to repurchase agreements are deposited with the Fund's custodian and, pursuant to the terms of the repurchase agreement, must have an aggregate market value greater than or equal to the repurchase price plus accrued interest at all times. The market value of securities held as collateral for repurchase agreements is monitored on a daily basis to ensure the existence of the proper level of collateral. GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their -------------------------------------------------------------------------------- 36 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- duties to the Fund. 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. FEDERAL TAXES The Fund's policy is to comply with Subchapter M of the Internal Revenue Code that applies to regulated investment companies and to distribute substantially all of its taxable income (which includes net short-term capital gains) to shareholders. No provision for income or excise taxes is thus required. Management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements. Generally, the tax authorities can examine all tax returns filed for the last three years. FOREIGN CAPITAL GAINS TAXES Realized gains in certain countries may be subject to foreign taxes at the Fund level, at rates ranging from approximately 10% to 15%. The Fund pays such foreign taxes on net realized gains at the appropriate rate for each jurisdiction. DIVIDENDS TO SHAREHOLDERS Dividends from net investment income, declared and paid each calendar quarter, when available, are reinvested in additional shares of the Fund at net asset value or payable in cash. Capital gains, when available, are normally distributed along with the last income dividend of the calendar year. OTHER Security transactions are accounted for on the date securities are purchased or sold. Dividend income is recognized on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities. Interest income, including amortization of premium, market discount and original issue discount using the effective interest method, is accrued daily. 3. 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 other assets, such as securities, currencies, commodities or indices. Derivative instruments may be used to maintain cash reserves while maintaining exposure to certain other assets, to offset anticipated declines in values of investments, to facilitate trading, to reduce transaction costs and to pursue higher investment returns. The Fund may -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 37 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- 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 obligation under the terms of the contract, the potential for an illiquid secondary market 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 Fund and any counterparty are required to maintain an agreement that requires the Fund and that counterparty to monitor (on a daily basis) the net fair value of all derivatives entered into pursuant to the contract between the Fund and such counterparty. If the net fair value of such derivatives between the Fund and that counterparty exceeds a certain threshold (as defined in the agreement), the Fund or the counterparty (as the case may be) is required to post cash and/or securities as collateral. Fair values of derivatives presented in the financial statements are not netted with the fair value of other derivatives or with any collateral amounts posted by the Fund or any counterparty. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS Forward foreign currency exchange contracts are agreements between two parties to buy and sell a currency at a set price on a future date. These contracts are intended to be used to minimize the exposure to foreign exchange rate fluctuations during the period between the trade and settlement dates of the contract. The Fund utilized forward foreign currency exchange contracts to hedge the currency exposure associated with some or all of the Fund's securities. The market values of forward foreign currency exchange contracts fluctuate with changes in foreign currency exchange rates. The Fund will record a realized gain or loss when the forward foreign currency exchange contract is closed. The use of forward foreign currency exchange contracts does not eliminate fluctuations in the prices of the Fund's portfolio securities. The risks of forward foreign currency contracts include movement in the values of the foreign currencies relative to the U.S. dollar (or other foreign currencies) and the possibility that counterparties will not complete their contractual obligations, which may be in excess of the amount reflected, if any, in the Statement of Assets and Liabilities. EFFECTS OF DERIVATIVE TRANSACTIONS ON 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; the impact of derivative transactions on the -------------------------------------------------------------------------------- 38 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- Fund's operations over the period including realized gains or losses and unrealized gains or losses. The derivative schedules following the Portfolio of Investments present additional information regarding derivative instruments outstanding at the end of the period, if any. FAIR VALUES OF DERIVATIVE INSTRUMENTS AT OCT. 31, 2010 At Oct. 31, 2010, the Fund had no outstanding derivatives. EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCT. 31, 2010
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME -------------------------------------------------------------------------- FORWARD FOREIGN RISK EXPOSURE CATEGORY CURRENCY EXCHANGE CONTRACTS -------------------------------------------------------------------------- Foreign exchange contracts $9,604 --------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES RECOGNIZED IN INCOME -------------------------------------------------------------------------- FORWARD FOREIGN RISK EXPOSURE CATEGORY CURRENCY EXCHANGE CONTRACTS -------------------------------------------------------------------------- Foreign exchange contracts $-- --------------------------------------------------------------------------
VOLUME OF DERIVATIVE ACTIVITY FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS At Oct. 31, 2010 the Fund had no outstanding forward foreign currency exchange contracts. The average gross notional amount of forward foreign currency exchange contracts opened, and subsequently closed, was $143,000 for the year ended Oct. 31, 2010. 4. EXPENSES AND SALES CHARGES INVESTMENT MANAGEMENT SERVICES FEES Under an Investment Management Services Agreement, the Investment Manager is responsible for the management of the Fund. Day-to-day portfolio management of the Fund is provided by the Fund's subadviser. See Subadvisory agreement below. The management fee is an annual fee that is equal to a percentage of the Fund's average daily net assets that declines from 0.80% to 0.57% as the Fund's net assets increase. The fee may be adjusted upward or downward by a performance incentive adjustment determined monthly by measuring the percentage difference over a rolling 12-month period between the annualized performance of one Class A share of the Fund and the annualized performance of the MSCI All Country World Index. In certain circumstances, the Board may approve a change in the index. The maximum adjustment is 0.12% per year. If the performance difference is less than 0.50%, the adjustment will be zero. The -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 39 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- adjustment decreased the management fee by $9,164 for the year ended Oct. 31, 2010. The management fee for the year ended Oct. 31, 2010 was 0.77% of the Fund's average daily net assets, including the adjustment under the terms of the performance incentive arrangement. SUBADVISORY AGREEMENT The Investment Manager has a Subadvisory Agreement with Threadneedle International Limited (Threadneedle), an affiliate of the Investment Manager and an indirect wholly-owned subsidiary of Ameriprise Financial, to subadvise the assets of the Fund. The Investment Manager contracts with and compensates Threadneedle to manage the investment of the Fund's assets. ADMINISTRATIVE SERVICES FEES Under an Administrative Services Agreement, the Fund pays Ameriprise Financial an annual fee for administration and accounting services equal to a percentage of the Fund's average daily net assets that declines from 0.08% to 0.05% as the Fund's net assets increase. The fee for the year ended Oct. 31, 2010 was 0.08% of the Fund's average daily net assets. OTHER FEES Other expenses are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited administrative services to the Fund and the Board. For the year ended Oct. 31, 2010, other expenses paid to this company were $44. COMPENSATION OF BOARD MEMBERS Under a Deferred Compensation Plan (the Plan), the board members who are not "interested persons" of the Fund as defined under the 1940 Act may defer receipt of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of the Fund or certain other 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 Plan. TRANSFER AGENCY FEES Under a Transfer Agency Agreement, Columbia Management Investment Services Corp. (formerly known as RiverSource Service Corporation) (the Transfer Agent) is responsible for providing transfer agency services to the Fund. Prior to Sept. 7, 2010, the Transfer Agent received annual account-based service fees from Class A, Class B and Class C shares that varied by class and annual asset-based service fees based on the Fund's average daily net assets attributable -------------------------------------------------------------------------------- 40 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- to Class R and Class R4 shares. In addition, the Transfer Agent charged an annual fee per inactive account and received reimbursement from the Fund for certain out-of-pocket expenses. Under a new Transfer Agency Agreement effective Sept. 7, 2010, the Transfer Agent has contracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. The Transfer Agent receives monthly account-based service fees based on the number of open accounts and is reimbursed by the Fund for the fees and expenses the Transfer Agent pays to financial intermediaries that maintain omnibus accounts with the Fund subject to an annual limitation (that varies by class) that is a percentage of the average aggregate value of the Fund's shares maintained in each such omnibus account (other than omnibus accounts for which American Enterprise Investment Services, Inc. is the broker of record or accounts where the beneficial shareholder is a customer of Ameriprise Financial Services, Inc., which are paid a per account fee). The Transfer Agent pays the fees of BFDS for services as sub-transfer agent and is not entitled to reimbursement for such fees from the Fund. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses and may also retain, as additional compensation for its services, fees for wire, telephone and redemption orders, Individual Retirement Account ("IRA") trustee agent fees and account transcript fees due to the Transfer Agent from shareholders of the Fund and credits (net of bank charges) earned with respect to balances in accounts the Transfer Agent maintains in connection with its services to the Fund. For the year ended Oct. 31, 2010, the Fund's effective transfer agent fee rates as a percentage of average daily net assets of each class were as follows: Class A.............................................. 0.19% Class B.............................................. 0.20 Class C.............................................. 0.19 Class R.............................................. 0.07 Class R4............................................. 0.09
Class I shares do not pay transfer agent fees. PLAN ADMINISTRATION SERVICES FEES Under a Plan Administration Services Agreement with the Transfer Agent, the Fund pays an annual fee at a rate of 0.25% of the Fund's average daily net assets attributable to Class R4 shares for the provision of various administrative, recordkeeping, communication and educational services. Prior to Sept. 7, 2010, the Fund also paid an annual fee at a rate of 0.25% of the Fund's average daily net assets attributable to Class R shares for such services. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 41 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- DISTRIBUTION FEES The Fund has an agreement with Columbia Management Investment Distributors, Inc. (formerly known as RiverSource Fund Distributors, Inc.) (the Distributor) for distribution and shareholder services. Under a Plan and Agreement of Distribution pursuant to Rule 12b-1, the Fund paid a fee at an annual rate of up to 0.25% of the Fund's average daily net assets attributable to Class A shares, a fee at an annual rate of up to 0.50% of the Fund's average daily net assets attributable to Class R shares (of which up to 0.25% may be used for services) and a fee at an annual rate of up to 1.00% of the Fund's average daily net assets attributable to Class B and Class C shares. For Class B and Class C shares, of the 1.00% fee, up to 0.75% is reimbursed for distribution expenses. The amount of distribution expenses incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $87,000 and $6,000 for Class B and Class C shares, respectively. These amounts are based on the most recent information available as of July 31, 2010, and may be recovered from future payments under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution fee is reduced. SALES CHARGES Sales charges, including front-end and CDSCs, received by the Distributor for distributing Fund shares were $38,254 for Class A and $1,067 for Class B for the year ended Oct. 31, 2010. EXPENSES WAIVED/REIMBURSED BY THE INVESTMENT MANAGER AND ITS AFFILIATES For the year ended Oct. 31, 2010, the Investment Manager and its affiliates waived/reimbursed certain fees and expenses such that net expenses (excluding fees and expenses of acquired funds*), including the adjustment under the terms of a performance incentive arrangement, were as follows: Class A.............................................. 1.42% Class B.............................................. 2.17 Class C.............................................. 2.17 Class I.............................................. 1.03 Class R.............................................. 1.80 Class R4............................................. 1.37
The waived/reimbursed fees and expenses for the transfer agency fees at the class level were as follows: Class A............................................ $11,252 Class B............................................ 1,058 Class C............................................ 277 Class R4........................................... 6
-------------------------------------------------------------------------------- 42 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- The management fees waived/reimbursed at the Fund level were $105,278. The Investment Manager and its affiliates have contractually agreed to waive certain fees and reimburse certain expenses until Dec. 31, 2010, unless sooner terminated at the sole discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds*), before giving effect to any performance incentive adjustment, will not exceed the following percentage of the class' average daily net assets: Class A.............................................. 1.45% Class B.............................................. 2.21 Class C.............................................. 2.21 Class I.............................................. 1.06 Class R.............................................. 1.86 Class R4............................................. 1.36
Effective Jan. 1, 2011, the Investment Manager and its affiliates have contractually agreed to waive certain fees and reimburse certain expenses until Dec. 31, 2011, unless sooner terminated at the sole discretion of the Board, such that net expenses (excluding fees and expenses of acquired funds*), before giving effect to any performance incentive adjustment, will not exceed the following percentage of the class' average daily net assets: Class A.............................................. 1.45% Class B.............................................. 2.20 Class C.............................................. 2.20 Class I.............................................. 1.03 Class R.............................................. 1.70 Class R4............................................. 1.33
* In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the funds in which it invests (also referred to as "acquired funds"), including affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange traded funds). Because the acquired funds have varied expense and fee levels and the Fund may own different proportions of acquired funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. 5. SECURITIES TRANSACTIONS Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $13,798,033 and $10,381,692, respectively, for the year ended Oct. 31, 2010. Realized gains and losses are determined on an identified cost basis. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 43 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- 6. CAPITAL SHARE TRANSACTIONS Transactions in shares of capital stock for the periods indicated were as follows:
YEAR ENDED OCT. 31, 2010 2009 ---------------------------------------------------------------- CLASS A Sold 833,743 2,236,131 Converted from Class B(a) 66,308 44,959 Reinvested distributions 111,665 54,237 Redeemed (587,846) (601,493) ---------------------------------------------------------------- Net increase (decrease) 423,870 1,733,834 ---------------------------------------------------------------- CLASS B Sold 51,369 235,158 Reinvested distributions 8,432 4,436 Converted to Class A(a) (66,458) (45,070) Redeemed (49,317) (40,049) ---------------------------------------------------------------- Net increase (decrease) (55,974) 154,475 ---------------------------------------------------------------- CLASS C Sold 36,140 49,579 Reinvested distributions 2,252 660 Redeemed (6,713) (5,153) ---------------------------------------------------------------- Net increase (decrease) 31,679 45,086 ---------------------------------------------------------------- CLASS R(b) Sold 49 -- Reinvested distributions 1 -- ---------------------------------------------------------------- Net increase (decrease) 50 -- ---------------------------------------------------------------- CLASS R3 Redeemed (1,000) -- ---------------------------------------------------------------- Net increase (decrease) (1,000) -- ---------------------------------------------------------------- CLASS R4 Sold 1,787 1,151 Reinvested distributions 29 2 Redeemed -- (1,122) ---------------------------------------------------------------- Net increase (decrease) 1,816 31 ---------------------------------------------------------------- CLASS R5 Redeemed (1,000) -- ---------------------------------------------------------------- Net increase (decrease) (1,000) -- ----------------------------------------------------------------
(a) Automatic conversion of Class B shares to Class A shares based on the original purchase date. (b) Effective Sept. 7, 2010, Class R2 shares were renamed Class R shares. -------------------------------------------------------------------------------- 44 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- 7. LENDING OF PORTFOLIO SECURITIES The Fund has entered into a Master Securities Lending Agreement (the Agreement) with JPMorgan Chase Bank, National Association (JPMorgan). The Agreement authorizes JPMorgan as lending agent to lend securities to authorized borrowers in order to generate additional income on behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured by cash or U.S. government securities equal to at least 100% of the market value of the loaned securities. Any additional collateral required to maintain those levels due to market fluctuations of the loaned securities is delivered the following business day. Cash collateral received is invested by the lending agent on behalf of the Fund into authorized investments pursuant to the Agreement. The investments made with the cash collateral are listed in the Portfolio of Investments. The values of such investments and any uninvested cash collateral are disclosed in the Statement of Assets and Liabilities along with the related obligation to return the collateral upon the return of the securities loaned. At Oct. 31, 2010, securities valued at $1,156,881 were on loan, secured by cash collateral of $1,229,208 invested in short-term securities or in cash equivalents. Risks of delay in recovery of securities or even loss of rights in the securities may occur should the borrower of the securities fail financially. Risks may also arise to the extent that the value of the securities loaned increases above the value of the collateral received. JPMorgan will indemnify the Fund from losses resulting from a borrower's failure to return a loaned security when due. Such indemnification does not extend to losses associated with declines in the value of cash collateral investments. Loans are subject to termination by the Fund or the borrower at any time, and are, therefore, not considered to be illiquid investments. Pursuant to the Agreement, the Fund receives income for lending its securities either in the form of fees or by earning interest on invested cash collateral, net of negotiated rebates paid to borrowers and fees paid to the lending agent for services provided and any other securities lending expenses. Net income of $36,397 earned from securities lending for the year ended Oct. 31, 2010 is included in the Statement of Operations. The Fund also continues to earn interest and dividends on the securities loaned. 8. AFFILIATED MONEY MARKET FUND The Fund may invest its daily cash balance in Columbia Short-Term Cash Fund (formerly known as RiverSource Short-Term Cash Fund), a money market fund established for the exclusive use of certain funds managed by the Investment Manager and other institutional clients of the Investment Manager. The cost of -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 45 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- the Fund's purchases and proceeds from sales of shares of Columbia Short-Term Cash Fund aggregated $9,324,225 and $8,973,035, respectively, for the year ended Oct. 31, 2010. The income distributions received with respect to the Fund's investment in Columbia Short-Term Cash Fund can be found in the Statement of Operations and the Fund's invested balance in Columbia Short-Term Cash Fund at Oct. 31, 2010, can be found in the Portfolio of Investments. 9. BANK BORROWINGS The Fund has entered into a revolving credit facility with a syndicate of banks led by JPMorgan Chase Bank, N.A. (the Administrative Agent), whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility became effective on Oct. 14, 2010, replacing a prior credit facility. The credit facility agreement, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager, severally and not jointly, permits collective borrowings up to $300 million. The borrowers shall have the right, upon written notice to the Administrative Agent, to request an increase of up to $200 million in the aggregate amount of the credit facility from new or existing lenders, provided that the aggregate amount of the credit facility shall at no time exceed $500 million. Participation in such increase by any existing lender shall be at such lender's sole discretion. Interest is charged to each fund based on its borrowings at a rate equal to the sum of the federal funds rate plus (i) 1.25% per annum plus (ii) if one-month LIBOR exceeds the federal funds rate, the amount of such excess. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.10% per annum. Prior to Oct. 14, 2010, the credit facility agreement, which was a collective agreement between the Fund and certain other funds managed by the Investment Manager, severally and not jointly, permitted collective borrowings up to $300 million. The Fund also paid a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.10% per annum, in addition to an upfront fee equal to its pro rata share of 0.04% of the amount of the credit facility. The Fund had no borrowings during the year ended Oct. 31, 2010. 10. FEDERAL TAX INFORMATION Net investment income (loss) and net realized gains (losses) may differ for financial statement and tax purposes primarily because of foreign currency transactions, passive foreign investment company (PFIC) holdings, re- characterization of real estate investment trust distributions, investments in -------------------------------------------------------------------------------- 46 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- partnerships, foreign tax credits and losses deferred due to wash sales. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Fund. In the Statement of Assets and Liabilities, as a result of permanent book-to-tax differences, undistributed net investment income has been increased by $22,889 and accumulated net realized loss has been increased by $22,889. The tax character of distributions paid for the years indicated was as follows:
YEAR ENDED OCT. 31, 2010 2009 ----------------------------------------------------------------- Ordinary income............................ $1,348,671 $570,093 Long-term capital gain..................... -- --
At Oct. 31, 2010, the components of distributable earnings on a tax basis were as follows: Undistributed ordinary income.................... $ 593,416 Undistributed accumulated long-term gain......... $ -- Accumulated realized loss........................ $ (429,635) Unrealized appreciation (depreciation)........... $7,570,560
For federal income tax purposes, the Fund had a capital loss carry-over of $429,635 at Oct. 31, 2010, that if not offset by capital gains will expire in 2017. For the year ended Oct. 31, 2010, $1,047,638 of capital loss carry-over was utilized. It is unlikely the Board will authorize a distribution of any net realized capital gains until the available capital loss carry-over has been offset or expires. There is no assurance that the Fund will be able to utilize all of its capital loss carry-over before it expires. 11. RISKS RELATING TO CERTAIN INVESTMENTS FOREIGN/EMERGING MARKETS RISK Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities. Investing in emerging markets may accentuate these risks. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 47 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- 12. SUBSEQUENT EVENTS Management has evaluated Fund related events and transactions that occurred during the period from the date of the Statement of Assets and Liabilities through the date of issuance of the Fund's financial statements. There were no events or transactions that occurred during the period that materially impacted the amounts or disclosures in the Fund's financial statements, other than as noted below. The Board of Directors of the Fund has approved the proposed merger of the Fund into Columbia Global Equity Fund. It is currently anticipated that a meeting of shareholders will be held during the first half of 2011 to vote on the proposal. 13. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc. was filed in the United States District Court for the District of Arizona. The plaintiffs allege that they are investors in several American Express Company (now known as legacy RiverSource) mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota (the District Court). In response to defendants' motion to dismiss the complaint, the District Court dismissed one of plaintiffs' four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. Summary judgment was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit) on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary judgment and remanded to the District Court for further proceedings. On August 6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court (the Supreme Court), asking the Supreme Court to stay the District Court proceedings while the Supreme Court considers and rules in a case captioned Jones v. Harris Associates, which involves issues of law similar to those presented in the Gallus case. On March 30, 2010, the Supreme Court issued its ruling in Jones v. Harris Associates, and on April 5, 2010, the Supreme Court vacated the Eighth Circuit's decision in the Gallus case and remanded the case to the Eighth Circuit for further consideration in light of the Supreme Court's -------------------------------------------------------------------------------- 48 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- decision in Jones v. Harris Associates. On June 4, 2010, the Eighth Circuit remanded the Gallus case to the District Court for further consideration in light of the Supreme Court's decision in Jones v. Harris Associates. On Dec. 9, 2010, the District Court reinstated its July 9, 2007 summary judgment order in favor of the defendants. In December 2005, without admitting or denying the allegations, American Express Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc. (Ameriprise Financial)), entered into settlement agreements with the Securities and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC) related to market timing activities. As a result, AEFC was censured and ordered to cease and desist from committing or causing any violations of certain provisions of the Investment Advisers Act of 1940, the Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million and civil money penalties of $7 million. AEFC also agreed to retain an independent distribution consultant to assist in developing a plan for distribution of all disgorgement and civil penalties ordered by the SEC in accordance with various undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its affiliates have cooperated with the SEC and the MDOC in these legal proceedings, and have made regular reports to the funds' Boards of Directors/Trustees. Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov. There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Funds. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 49 NOTES TO FINANCIAL STATEMENTS (continued) ------------------------------------- with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial. -------------------------------------------------------------------------------- 50 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ----------------------- TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF THREADNEEDLE GLOBAL EQUITY INCOME FUND: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Threadneedle Global Equity Income Fund (the Fund) (one of the portfolios constituting the RiverSource Global Series, Inc.) as of October 31, 2010, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the two years then ended and for the period from August 1, 2008 (when shares became available) to October 31, 2008. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2010, by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 51 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (continued) ----------- In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Threadneedle Global Equity Income Fund of the RiverSource Global Series, Inc. at October 31, 2010, 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 then ended, and the financial highlights for each of the two years then ended and for the period from August 1, 2008 (when shares became available) to October 31, 2008, in conformity with U.S. generally accepted accounting principles. -s- Ernst & Young LLP Minneapolis, Minnesota December 20, 2010 -------------------------------------------------------------------------------- 52 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT FEDERAL INCOME TAX INFORMATION ------------------------------------------------ (UNAUDITED) The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. The dividends listed below are reported to you on Form 1099-DIV, Dividends and Distributions. Shareholders should consult a tax advisor on how to report distributions for state and local tax purposes. Fiscal year ended Oct. 31, 2010
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for distributions: Qualified Dividend Income for individuals.................... 52.34% Dividends Received Deduction for corporations................ 25.41% U.S. Government Obligations.................................. 0.00% Foreign Taxes Paid........................................... $124,322 Foreign Source Income........................................ $867,266
The Fund designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to shareholders on the redemption of shares. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 53 BOARD MEMBERS AND OFFICERS ----------------------------------------------------- Shareholders elect a Board that oversees the Fund's operations. The Board appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following is a list of the Fund's Board members. Each Board member oversees 145 Columbia, RiverSource, Seligman and Threadneedle funds. Under current Board policy, members generally serve until the next Board meeting after he or she reaches the mandatory retirement age established by the Board, or the fifteenth anniversary of the first Board meeting they attended as members of the Board. INDEPENDENT BOARD MEMBERS
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None 901 S. Marquette Ave. 1/11/06 Attorney Minneapolis, MN 55402 Age 56 ------------------------------------------------------------------------------------------------------------------------------ Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None 901 S. Marquette Ave. 7/11/07 Leadership (consulting company) Minneapolis, MN 55402 Age 56 ------------------------------------------------------------------------------------------------------------------------------ Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None 901 S. Marquette Ave. 11/1/04 University; former Dean, McCallum Graduate School of Minneapolis, MN 55402 Business, Bentley University Age 60 ------------------------------------------------------------------------------------------------------------------------------ Anne P. Jones Board member since Attorney and Consultant None 901 S. Marquette Ave. 3/1/85 Minneapolis, MN 55402 Age 75 ------------------------------------------------------------------------------------------------------------------------------ Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries, 901 S. Marquette Ave. since 1/1/07, College Inc. (manufactures Minneapolis, MN 55402 Board member irrigation systems) Age 71 since 1/1/02 ------------------------------------------------------------------------------------------------------------------------------ John F. Maher Board member Retired President and Chief Executive Officer and None 901 S. Marquette Ave. since 12/10/08 former Director, Great Western Financial Corporation Minneapolis, MN 55402 (financial services), 1986-1997 Age 67 ------------------------------------------------------------------------------------------------------------------------------ Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None 901 S. Marquette Ave. 11/1/04 real estate and asset management company) Minneapolis, MN 55402 Age 58 ------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 54 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- INDEPENDENT BOARD MEMBERS (CONTINUED)
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ Leroy C. Richie Board member Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc. 901 S. Marquette Ave. since 11/11/08 President and General Counsel, Automotive Legal (digital imaging); Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil Age 69 and gas exploration and production); OGE Energy Corp. (energy and energy services) ------------------------------------------------------------------------------------------------------------------------------ Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera 901 S. Marquette Ave. 11/13/02 since 2003 (biotechnology); former President, Aquila Pharmaceuticals, Minneapolis, MN 55402 Biopharmaceuticals Inc. Age 66 (biotechnology); Healthways, Inc. (health management programs) ------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 55 BOARD MEMBERS AND OFFICERS (continued) ----------------------------------------- BOARD MEMBER AFFILIATED WITH THE INVESTMENT MANAGER*
OTHER PRESENT OR NAME, POSITION HELD PAST DIRECTORSHIPS ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION (WITHIN PAST 5 AGE LENGTH OF SERVICE DURING PAST FIVE YEARS YEARS) ------------------------------------------------------------------------------------------------------------------------------ William F. Truscott Board member Chairman of the Board, Columbia Management Investment None 53600 Ameriprise since 11/7/01, Advisers, LLC (formerly RiverSource Investments, LLC) Financial Center Vice President since since May 2010 (previously President, Chairman of the Minneapolis, MN 55474 2002 Board and Chief Investment Officer, 2001-April 2010); Age 50 Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Chief Executive Officer, U.S. Asset Management & President -- Annuities, Ameriprise Financial, Inc. since May 2010 (previously President -- U.S. Asset Management and Chief Investment Officer, 2005-April 2010 and Senior Vice President -- Chief Investment Officer, 2001-2005); Director, President and Chief Executive Officer, Ameriprise Certificate Company since 2006; Director, Columbia Management Investment Distributors, Inc. (formerly RiverSource Fund Distributors, Inc.) since May 2010 (previously Chairman of the Board and Chief Executive Officer, 2008-April 2010); Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006 ------------------------------------------------------------------------------------------------------------------------------
* Interested person (as defined under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the investment manager or Ameriprise Financial. The SAI has additional information about the Fund's Board members and is available, without charge, upon request by calling 800.345.6611; contacting your financial intermediary; or visiting columbiamanagement.com. -------------------------------------------------------------------------------- 56 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT -------------------------------------------------------------------------------- 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. In addition to Mr. Truscott, who is Vice President, the Fund's other officers are: FUND OFFICERS
NAME, POSITION HELD ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION AGE LENGTH OF SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------- J. Kevin Connaughton President since Senior Vice President and General Manager -- Mutual One Financial Center 5/1/10 Fund Products, Columbia Management Investment Advisers, Boston, MA 02111 LLC since May 2010; President, Columbia Funds since Age 46 2009 (previously Senior Vice President and Chief Financial Officer, June 2008 -- January 2009); President, Atlantic Funds and Nations Funds since 2009; Managing Director of Columbia Management Advisors, LLC, December 2004 -- April 2010; Treasurer, Columbia Funds, October 2003 -- May 2008; Treasurer, the Liberty Funds, Stein Roe Funds and Liberty All-Star Funds, December 2000 -- December 2006 -------------------------------------------------------------------------------------------------------- Amy K. Johnson Vice President since Senior Vice President and Chief Operating Officer, 5228 Ameriprise Financial 12/5/06 Columbia Management Investment Advisers, LLC (formerly Center Minneapolis, MN RiverSource Investments, LLC) since May 2010 55474 (previously Chief Administrative Officer, 2009 -- April Age 45 2010 and Vice President -- Asset Management and Trust Company Services, 2006-2009 and Vice President -- Operations and Compliance, 2004-2006); Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010 -------------------------------------------------------------------------------------------------------- Jeffrey P. Fox Treasurer since Chief Financial Officer, Columbia Management Investment 105 Ameriprise 7/10/02 Distributors, Inc. (formerly RiverSource Fund Financial Center Distributors, Inc.) and of Seligman Data Corp. since Minneapolis, MN 55474 2008; Vice President -- Investment Accounting, Age 55 Ameriprise Financial, Inc. since 2002; Chief Financial Officer, RiverSource Distributors, Inc. since 2006 -------------------------------------------------------------------------------------------------------- Scott R. Plummer Vice President, Chief Legal Officer and Assistant Secretary, Columbia 5228 Ameriprise Financial General Counsel and Management Investment Advisers, LLC (formerly Center Secretary since RiverSource Investments, LLC) since June 2005; Vice Minneapolis, MN 55474 12/5/06 President and Lead Chief Counsel -- Asset Management, Age 51 Ameriprise Financial, Inc. since May 2010 (previously Vice President and Chief Counsel -- Asset Management, 2005-April 2010 and Vice President -- Asset Management Compliance, 2004-2005); Senior Vice President, Secretary and Chief Legal Officer, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Vice President, Chief Counsel and Assistant Secretary, Columbia Management Investment Distributors, Inc. (formerly RiverSource Fund Distributors, Inc.) since 2008; Vice President, General Counsel and Secretary, Ameriprise Certificate Company since 2005; Chief Counsel, RiverSource Distributors, Inc. since 2006 --------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 57 BOARD MEMBERS AND OFFICERS (continued) ----------------------------------------- FUND OFFICERS (CONTINUED)
NAME, POSITION HELD ADDRESS, WITH FUNDS AND PRINCIPAL OCCUPATION AGE LENGTH OF SERVICE DURING PAST FIVE YEARS -------------------------------------------------------------------------------------------------------- Michael A. Jones Vice President since Director and President, Columbia Management Investment 100 Federal Street 5/1/10 Advisers, LLC since May 2010; President and Director, Boston, MA 02110 Columbia Management Investment Distributors, Inc. since Age 51 May 2010; Senior Vice President, Atlantic Funds, Columbia Funds and Nations Funds since May 2010; Manager, Chairman, Chief Executive Officer and President, Columbia Management Advisors, LLC, 2007 -- April 2010; Chief Executive Officer, President and Director, Columbia Management Distributors, Inc., 2006 -- April 2010; former Co-President and Senior Managing Director, Robeco Investment Management -------------------------------------------------------------------------------------------------------- Colin Moore Vice President since Chief Investment Officer, Columbia Management One Financial Center 5/1/10 Investment Advisers, LLC since May 2010; Senior Vice Boston, MA 02111 President, Atlantic Funds, Columbia Funds and Nations Age 52 Funds since May 2010; Manager, Managing Director and Chief Investment Officer, Columbia Management Advisors, LLC, 2007- April 2010; Head of Equities, Columbia Management Advisors, LLC, 2002-Sept. 2007 -------------------------------------------------------------------------------------------------------- Linda Wondrack Chief Compliance Vice President and Chief Compliance Officer, Columbia One Financial Center Officer since 5/1/10 Management Investment Advisers, LLC since May 2010; Boston, MA 02111 Chief Compliance Officer, Columbia Funds since 2007; Age 46 Senior Vice President and Chief Compliance Officer, Atlantic Funds and Nations Funds since 2007; Director (Columbia Management Group, LLC and Investment Product Group Compliance), Bank of America, June 2005 -- April 2010 -------------------------------------------------------------------------------------------------------- Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial, 2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer and Center since 11/9/05 and Identity Theft Prevention Officer, Columbia Management Minneapolis, MN 55474 Identity Theft Investment Distributors, Inc. (formerly RiverSource Age 46 Prevention Officer Fund Distributors, Inc.) since 2008; Anti-Money since 2008 Laundering Officer, Ameriprise Financial, Inc. since 2005; Compliance Director, Ameriprise Financial, Inc., 2004-2008 --------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------- 58 THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT PROXY VOTING ------------------------------------------------------------------ The policy of the Board 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 columbiamanagement.com; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting columbiamanagement.com; or searching the website of the SEC at www.sec.gov. -------------------------------------------------------------------------------- THREADNEEDLE GLOBAL EQUITY INCOME FUND -- 2010 ANNUAL REPORT 59 THREADNEEDLE GLOBAL EQUITY INCOME FUND P.O. Box 8081 Boston, MA 02266-8081 COLUMBIAMANAGEMENT.COM This report must be accompanied or preceded by the Fund's current prospectus. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC. (C)2010 Columbia Management Investment Advisers, LLC. All (COLUMBIA MANAGEMENT LOGO) rights reserved. S-6525 AJ (12/10)
Item 2. Code of Ethics. (a) The Registrant has adopted a code of ethics that applies to the Registrant's principal executive officer and principal financial officer. (b) During the period covered by this report, there were not any amendments to a provision of the code of ethics adopted in 2(a) above. (c) During the period covered by this report, there were no waivers, including any implicit waivers, from a provision of the code of ethics described in 2(a) above that relates to one or more of the items set forth in paragraph (b) of this item's instructions. Item 3. Audit Committee Financial Expert. The Registrant's board of directors has determined that independent directors Pamela G. Carlton, Jeffrey Laikind, John F. Maher and Anne P. Jones, each qualify as audit committee financial experts. Item 4. Principal Accountant Fees and Services (a) Audit Fees. The fees for the year ended Oct. 31, to Ernst & Young LLP for professional services rendered for the audit of the annual financial statements for RiverSource Global Series, Inc. were as follows: 2010 - $221,489 2009 - $224,347 (b) Audit-Related Fees. The fees for the year ended Oct. 31, to Ernst & Young LLP for additional audit-related services rendered related to the semiannual financial statement review, the issuance of consents for new share class filings and the 2010 transfer agent 17Ad-13 review for RiverSource Global Series, Inc. were as follows: 2010 - $7,057 2009 - $3,708 (c) Tax Fees. The fees for the year ended Oct. 31, to Ernst & Young LLP for tax compliance related services rendered for RiverSource Global Series, Inc. were as follows: 2010 - $59,656 2009 - $43,761 (d) All Other Fees. The fees for the year ended Oct. 31, to Ernst & Young LLP for additional professional services rendered for RiverSource Global Series, Inc. were as follows: 2010 - $0 2009 - $0 (e) (1) Audit Committee Pre-Approval Policy. Pursuant to Sarbanes-Oxley pre-approval requirements, all services to be performed by Ernst & Young LLP for the registrant and to the registrant's investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant must be pre-approved by the audit committee. (e) (2) 100% of the services performed for items (b) through (d) above during 2010 and 2009 were pre-approved by the audit committee. (f) Not applicable. (g) Non-Audit Fees. The fees for the year ended Oct. 31, to Ernst & Young LLP by the registrant for non-audit fees and by the registrant's investment adviser, and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant were as follows: 2010 - $2,492,674 2009 - $869,955 (h) 100% of the services performed in item (g) above during 2010 and 2009 were pre-approved by the Ameriprise Financial Audit Committee and/or the RiverSource Mutual Funds Audit Committee. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. Investments. (a) The registrant's "Schedule 1 - 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 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 controls over financial reporting that occurred during the registrant's second fiscal quarter of 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. Exhibits. (a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR, is attached as Exhibit 99.CODE ETH. (a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit99.CERT. (a)(3) Not applicable. (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) RiverSource Global Series, Inc. By /s/ J. Kevin Connaughton ------------------------------ J. Kevin Connaughton President and Principal Executive Officer Date December 20, 2010 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By /s/ J. Kevin Connaughton ------------------------------ J. Kevin Connaughton President and Principal Executive Officer Date December 20, 2010 By /s/ Jeffrey P. Fox ------------------------------ Jeffrey P. Fox Treasurer and Principal Financial Officer Date December 20, 2010