March 10, 2014
In this issue
Global Asset Allocation Outlook
Markets had a difficult start to the year. After experiencing negative returns in January, both
U.S. and European equities recovered in February and are now slightly positive for the year.
The best returns have come from U.S. small-cap equities along with shares of equities
domiciled in the periphery of Europe. These two broad groups are both up mid-single digits.
Emerging market equities continue to lag developed market performance. And, Japanese
equities also regained some ground lost in February but are still down for the year in total.
Fixed-income returns have been positive across all sectors with longer dated Treasuries,
municipal debt and high-yield corporate bonds leading the way. The dollar weakened against
both emerging market and developed market currencies.
Jeffrey Knight
Head of Global Asset Allocation
Summary of Contents
Global Asset Allocation
Outlook
Income inequality, disinflation
and profit growth – the role of
globalization
Beware of earnings gimmicks
A primer on preferred
securities
It’s a mobile world
Despite a slight slowdown in recent economic growth, our Global Asset Allocation proprietary
investment clock for the U.S. signals continued economic expansion. The investment clock
allows us to better understand the behavior of the business cycle and the resulting impact on
asset class performance. We believe growth continues to be on a solid footing, somewhere
between 2% and 3%. The recent slowdown in U.S. growth could be attributed partly to
weather and partly to the payback from the strength in inventory stocking witnessed
throughout most of last year.
Signals from our equity scorecard model also point to a moderately bullish outlook for
equities. Equity momentum remains in a favorable state and macro factors on balance
support this trend. In our country scorecard, U.S. rankings improved significantly. Earnings
growth has improved and technical conditions have strengthened. U.S. monetary policy
remains largely accommodative and stock market valuations are not overtly elevated for this
stage in the business cycle. In light of these developments, we raised our preference for U.S.
equities from a modest underweight to neutral. Related to this increase, we raised U.S. largecap equity exposure from a modest underweight to neutral, but maintained an underweight to
small caps given their elevated valuations in relation to large caps.
European countries presented a slightly different picture with core economies such as
Germany and France deteriorating, while those on the periphery of the continent improving.
Overall, the eurozone declined somewhat on our scorecard as earnings growth weakened.
Ever since the speech by European Central Bank President Mario Draghi which promised to
do “whatever it takes” to support the monetary union, European markets have been willing to
look through these earnings downgrades. As a result, European equities have risen in value
while earnings have not kept up. This month, we moderated our overweight in European
equities from overweight to neutral.
In the past few weeks emerging economies — particularly those in Eastern Europe —
experienced heightened volatility. For the moment, the situation is relatively calm but risks
remain that volatility could re-emerge. We maintain a neutral outlook on overall emerging
markets equities, but have lowered our overweight to EMEA region from a modest overweight
to neutral. Growth expectations continue to deteriorate, inflation remains high and central
(Continued on page 2)
(Continued from page 1)
bankers have embarked on a monetary tightening cycle. In addition, political risks are elevated in the
region. To a large extent, this view is already expressed in the markets and valuations appear
attractive. But leading indicators of growth, such as the PMIs have continued to deteriorate putting into
question the prospects for near-term improvement in the region.
In addition, we raised TIPS (Treasury Inflation-Protected Securities) exposure from underweight to
neutral, mainly on attractive valuations. Lack of inflation was a concern last year and still remains
below the Fed’s preferred target of 2%. Nevertheless, we believe inflation measures have seen their
lows and are set to edge higher.
Finally, we upgraded convertible bonds from underweight to neutral. Over the past year, convertible
returns have been largely driven by the equity component of their return function rather than the bond
component. Given our modest overweight to equities and expectations of rates being rangebound we
expect convertibles to continue to perform well.
As always, we continue to monitor global markets and adjust our investment strategy accordingly.
Overall position
Equities
Fixed income
Alternatives
Cash
Equity
U.S. stocks
> Large caps
> Small caps
Developed equities (EAFE)
> Japan
> UK
> eurozone
Emerging market equities
> Latin America
> Asia
> EMEA
Fixed income
Investment-grade bonds
Securitized bonds
Emerging market bonds
Treasuries
TIPS
High-yield bonds
Developed market bonds
Municipal bonds
Alternatives
Absolute return strategies
Commodities
REITs
Convertible bonds
Cash
Cash
Max underweight Neutral
5
4
3
l Current allocation (as-of 2/28/14)
Max overweight
2
1
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l
l Previous allocation (1/24/14)
Source: Columbia Management Investment Advisers, LLC. The chart reflects the views of the
Global Asset Allocation team as of February 24, 2013. Asset classes are ranked from 1
(overweight) to 5 (underweight), with 3 representing a neutral allocation.
Income inequality, disinflation and profit growth –
the role of globalization
Last week we discussed rising income inequality in developed markets and the degree to which bank
lending to lower income households helped create a financially unstable and unsustainable dynamic
that culminated in the global financial crisis. We postulated that the lack of willingness on the part of
banks to recreate this unsustainable dynamic would deliver a drag to consumption growth in developed
markets. This week we consider the degree to which income inequality is a global phenomenon.
Marie Schofield
Chief Economist
Many countries in emerging markets (EM) have high and rising levels of income inequality with
attendant social and political risks. On a country by country basis, we observe that income inequality
has tended to rise in both developed and EM. We believe that this is associated with higher returns to
education and capital that go hand in hand with the process of globalization. Data for consumption
inequality and household debt-to-income ratios across income deciles outside developed markets is
sparse. But it does not appear obvious that patterns in the U.S. are at all in evidence in countries like
China.
Interestingly, despite levels of inequality rising within individual states, the rapid economic growth seen
at the overall economy level for EM has seen global inequality — measured at the household level —
first plateau and then decline at the margin over the past 30 years (at admittedly extremely high
levels).
Exhibit 1: Real income growth at various percentiles of global household income distribution,
1988-2008 (in 2005 PPPs)
Toby Nangle
Head of Multi Asset Allocation
Source: Lakner & Milanovic, 2013; World Bank Dataset
Exhibit 1 shows how this has occurred. While the top 1% of global households have seen their real
incomes increase by a cumulative 65% in real terms, households at the bottom of the top quartile
(seen in the 75th to 95th percentile) have seen only very modest increases in their real incomes (and
this is associated with rising inequality in many developed markets). Moving leftwards across the chart,
we encounter EM (in the middle percentiles of the distribution). Here income growth for better off
emerging market households has outstripped the global one percenters, while conditions among the
very poorest have barely improved (and this is associated with rising inequality within and between
many EM).
How do we account for this? We associate it with the process of globalization. With international trade
and capital barriers falling, the beginnings of a cross-border arbitrage of unit labor costs have been
taking place. Put simply, companies look across the globe to determine the locations from which they
can manufacture their products at the lowest risk-adjusted cost.
Of course, wages are only one component in the calculus as to where to locate. Integral to the
calculation of the cost of doing business are concerns over governance (the cost of managing across
multiple legal, regulatory, political, monetary and physical geographies, as well as the level of
uncertainties attached to the stability of these considerations). Also, educational and physical
infrastructures are by no means homogenous across the world. Put simply, there is a good reason why
Silicon Valley has not shut up shop and relocated to the Democratic Republic of Congo despite its
much lower wages.
The profits of this process go to both owners of global businesses and to workers employed in EM,
with margins at the former boosted by the lower relative unit cost of the latter. So, for example, Apple
reaps the majority of the profits from iPhone sales even though China has a virtual monopoly on the
assembly and export of iPhones, together with the bulk of the low wage jobs attached to its
construction*.
And so when we look at profitability trends in U.S. national accounts data, we can see that while
domestic non-financial profits are around 7.3% of gross domestic product (GDP) — around 1.6%
above their long-term average — total profits generated by U.S.-based firms outside the United States
(shown in Exhibit 2) has risen from less than 1% of GDP to around 2.5% of GDP.
Exhibit 2: Profits generated outside the U.S. by U.S. firms as % of U.S. GDP
Source: Bureau of Economic Analysis, Threadneedle, September 2013
The economic, policy and investment implications are profound but also familiar. With citizens of EM a
good deal poorer than their developed market neighbors, and with a slow convergence in political
governance and education standards, we believe that the global unit labor cost arbitrage is likely to
continue for many decades. This arbitrage is likely to cap developed market lower and middle income
household income growth by denying them pricing power (which, all else equal, is disinflationary). And this
can be expected to contribute to further falls in income inequality at a global household level, even if it
pushes up (or heightens) inequality within individual countries. In so far as this dynamic is disinflationary in
developed markets, and with developed market central banks like the U.S. Federal Reserve mandated to
target domestic unemployment and domestic inflation, the rates at which global companies are able to
borrow are likely to remain low versus historical norms on a medium-term basis, all of which supports
higher long-term returns to capital in both emerging and developed markets that global companies should
be best able to exploit.
Importantly, this outline is contingent on the convergence of EM from a governance perspective as well as
an economic perspective, and an ever-more integrated global economy. The path of convergence is far
from smooth, and the background to the latest bout of EM turmoil poses proximate challenges to this
convergence story, although the intermediate convergence story remains, in our view, intact.
*http://www.frbsf.org/economic-research/publications/economic-letter/2011/august/us-made-in-china/
Beware of earnings gimmicks
Since the global financial crisis, economic recovery worldwide has been slow. Over the last three years,
annual gross domestic product (GDP) growth in the U.S. was limited to 2.1%, significantly below its
long-term average of 3.3%. In this low growth environment, for a majority of companies, churning out
high earnings-per-share (EPS) growth rates, either through top-line growth or margin expansion, has
become increasingly more difficult. At the same time, the markets are at all-time highs, with multipleexpansion driving most of the rally. Expectations are high and everyday investors and Wall Street
analysts alike have adopted a “show me” attitude. The consequence for a disappointing report could be
severe. To appease Wall Street, corporate managements are pressured to do everything in their power
to deliver strong earnings numbers. There are a wide range of possible accounting gimmicks that could
be deployed. Some examples are premature recognition of revenue, aggressive capitalization of
expenses, exaggerating current expenses/losses to create cookie jar reserves, classifying one-time
gains as earnings from continuing operations and hiding debt in unconsolidated subsidiaries.
Jason Wang
Senior Quant Analyst
A more commonly used “garden-variety” type of technique is accruals management, where accountants
increase or decrease the level of financial statement accruals (such as accounts receivables, inventory,
accounts payable, deferred revenue, accrued liabilities and prepaid expenses) in order to reach a
desired level of profit. Earnings achieved through these types of accounting manipulations are low
quality. Looking at the level of accruals, which represent the difference between net income and cash
flow from operations, is a standard way to detect earnings management. If cash flow is less than net
income, then the difference can be found in an accrual account, such as inventory. One fundamental
property of accruals is that they will reverse over time. Specifically, future earnings for companies with
built-up accruals will be suppressed when those accrual items invariably start to unwind. Eventually,
companies are forced to make up earnings shortfalls with real cash earnings, or suffer write-downs or
even management shakeup.
High quality earnings are both sustainable and repeatable. They should be based on consistent
reporting choices and backed by actual cash flows. Academic literature (Sloan 1996; Richardson et al.
2005) shows stocks with disproportionately wide gaps between cash flows and reported earnings have
lower future returns. Our own research confirms these findings. Stocks with the lowest accounting
accruals outperformed their benchmark by 2.7% per year between 1993 and 2013. On the other hand,
(Continued on page 6)
stocks with the largest level of accruals underperformed the universe by 2.8% (Exhibit 1).
Exhibit 1
Source: Columbia Management Investor Advisers; Notes: stock returns were weighted by the square
root of market-capitalization. And financial stocks were excluded from this study. The investment
horizon is six month. Past performance does not guarantee future results.
In the post crisis bull market, and especially in the last three years, the quality of earnings has not
been much of a focus for investors. However, without many options on the table to meet Wall Street’s
high earnings expectations and at higher valuations, some companies are more likely to turn to more
aggressive accounting maneuvers. We all remember what happened to companies like Sunbeam,
WorldCom and Enron during the go-go days around the turn of the millennium. In today’s environment,
even if the gimmickry we see is not of the scale of those examples, active investors who closely
monitor the quality of earnings issues should still be rewarded for their efforts.
References:
Richardson, S., R. Sloan, M. Soliman, and I. Tuna, 2005, Accrual reliability, earnings persistence and
stock prices, Journal of Accounting and Economics, 39, 437–485.
Sloan, R., 1996, Do stock prices fully reflect information in accruals and cash flows about future
earnings? The Accounting Review, 71, 289 – 316.
A primer on preferred securities
As financial institutions raise capital and reduce risk, preferred securities can offer an attractive riskadjusted yield in a low-yield environment. Let’s examine this asset class, including the structures, the
motivation of issuers and investors and why we think preferred securities make sense in the current
market environment.
What is a preferred security?
Carl Pappo
Head of Core Fixed Income
Preferred securities carry attributes of both debt and equity securities. Preferred securities rank higher
in the capital structure relative to common equity, as they have a priority claim on dividend payments
and a higher claim on assets in a bankruptcy. Preferred securities generally offer higher yields than
senior unsecured debt from the same issuer, reflecting their junior position in the capital structure, as
well as the issuer’s ability to suspend or defer payment. These instruments can have long or perpetual
maturities, and they can offer tax advantages to both the issuer and the holder. There are several
different forms of preferred securities, with some targeted for institutional investors and others for retail.
Before investing in the space, you need to understand the various structures, tax implications and,
most importantly, the creditworthiness of the issuers.
The financial markets have traditionally treated preferred securities more like bonds than equities. The
underwriting and secondary trading of these instruments falls within the bond/fixed income
departments of security dealers, and the majority of institutional structures are held by bond investors.
While there are many different forms of these securities, the most relevant categories include:
Willow Piersol
Senior Analyst

Debt-based hybrid instruments have characteristics of both debt and equity. These hybrids,
introduced in the mid-1990s, rank as junior subordinated obligations within the capital structure,
and are always ahead of common equity and traditional preferred securities. The newest
generation of hybrid structure typically start out as fixed-rate bonds for a set period and then
transition to floating rate payments following a call date.

Traditional preferred securities are perpetual securities that rank ahead of common shares and
behind all other debt. These securities are typically held by retail investors and usually trade over
the counter. Historically, they have been denominated in shares, issued at $25 per share. More
recently, institutional interest in these securities has supported the creation of $1,000
denominated (bond like) securities.

Contingent Convertible Securities (CoCo) are the newest form of preferred securities which came
out of the requirement by bank regulators to create securities that were truly loss absorbing. The
structure of the CoCos is shaped by their primary purpose as a source of building capital in times
of crisis. To achieve this objective they need to automatically absorb losses prior to or at the point
of insolvency and the loss absorption mechanism must be tied to the capitalization of the issuing
banks. These securities are the riskiest forms of the preferred structures, and investors must be
comfortable with both the debt and equity of the issuer, as the capital position of the underlying
company is directly tied to these securities. Within the CoCo securities various structures exist, as
some actually have final maturities and are cumulative, while others are non-cumulative and
perpetual. Up to this point, they have only been issued by non-U.S. banks.
Why do companies issue preferred securities?

Primarily financial institutions raise capital in the preferred market as regulatory requirements
mandate a certain level of Tier I capital (common equity and perpetual non-cumulative preferred
securities) to support liabilities.
(Continued on page 8)

Preferred securities typically viewed by issuers as a cheaper/less dilutive alternative to common
equity.

Certain structures are given equity credit by the ratings agencies.

For certain structures, payments are deductible as an interest expense.
Why do investors buy them?

Investors primarily view preferred securities as a way to buy a high quality company and receive
an enhanced yield relative to the senior unsecured debt. Currently, the yield on traditional
preferred securities is 200 to 250 basis points above the yield of senior unsecured paper.

U.S. corporations can deduct 70% of income received on certain preferred securities (DRD
Preferred securities).

Individuals pay a maximum statutory rate of 20% on qualified dividend income (QDI) distributions,
relative to the maximum rate of 39.6% on ordinary income, which is the category that most bond
income falls into.

As a security that straddles the line between fixed income and equity, preferred securities provide
diversification to core fixed-income portfolios, which can be very interest rate sensitive.
Additionally, since many securities have fixed-to-float or pure floating rate structures, the coupons
will increase with rates, providing a hedge against a rising rate environment.
How do we find value in the preferred market?
Given the nuances of the preferred market, we find that investors who are equipped to analyze and
trade these structures can find attractive relative value opportunities. Our analysis begins with a
thorough bottom-up credit analysis of the individual issuers, followed by quantitative modeling of the
unique structural features of the deal, incorporating assumptions for forward LIBOR rates and future
call or default scenarios. As a long-term active participant in this market, we have also developed
expertise in trading these unique instruments, which sometimes requires involvement with various
divisions within both the domestic and overseas desks of our trading counterparties.
Exhibit 1
Source: BAML, December 2013. Past performance does not guarantee future results.
Exhibit 2 is an example of the various debt offerings across the capital structure for several banks. On
one side of the risk spectrum we have senior bonds, which hold priority to the other security types. As
we move further down the capital stack, investors can receive a much higher yield, but at the expense
of additional risk, as illustrated by the credit ratings.
Exhibit 2
Source: Columbia Management investment Advisers, LLC, December 2013
It's a mobile world
Mobile World Congress (MWC) is the industry’s annual trade show, which was held this year during
the last week of February in Barcelona, Spain. As the telecommunications industry’s largest trade
show, there are more than 85,000 attendees and seemingly as many ideas. Here are a few takeaways
from the show this year.
Smartphones
Two key themes in smartphones stood out at the show. First, Samsung presented its newest
smartphone, the Galaxy S5, and the general consensus from many investors coming out of MWC was
how evolutionary and unexciting the new phone is. For many investors, this confirmed that the
smartphone market is saturated and that there are no investable themes in mobile.
Dave Egan
Senior Equity Analyst
To some extent, these conclusions have validity given that there is clear deceleration in the growth of
high-end smartphones, such as the iPhone and the Galaxy S. However, many investors are using too
broad of a brush for the space and are missing a number of investment opportunities. For example,
while the high-end is decelerating, the low-end in China and the emerging markets continue to see
strong growth. As consumers in these areas trade up from voice-only feature phones to 3G/4G datacentric smartphones, the dollar amount of components per phone continues to rise. For example, radio
frequency (RF) components in 2G voice phones is < $1; RF components in an emerging markets longterm evolution (LTE) smartphone can be as much as $3. As a result, despite the deceleration in the
growth rate of the high-end of the smartphone market, component vendors into smartphones continue
to see a growth tailwind from the trade-up in the low-end, which benefits components such as cellular
baseband vendors, RF component vendors and mobile memory makers, such as Micron.
The second major smartphone-related theme from the show was component vendor consolidation. RF
component vendors RFMD and Triquint announced a merger, which will rationalize the number of RF
vendors from four to three. For many investors, consolidation implies more favorable competitive
dynamics and a positive re-rating for the stocks. Over the next few years, the next smartphone-related
space to see consolidation will likely be cellular baseband vendors. Today, there are six vendors in this
space and, in our view, there will likely be three over the long-term.
Communications infrastructure
Due to the rapid growth of mobile data traffic, investors seem to be consistently excited about the
prospects of strong growth in the demand for communications infrastructure. Unfortunately, that
demand has been lumpy at best and, more often than not, relatively disappointing. The reasons for the
weaker-than-expected equipment demand over the last few years have included: a decline in demand
generation equipment offsetting the increase in demand for next generation equipment (e.g. decline in
3G equipment offsetting growth in demand for LTE equipment), slow government approval for time
division (TD)-LTE licensees in China and limited ability of carriers to monetize the growth in data traffic.
At MWC this year, the outlook seems to have improved. Within China, China Mobile appears set to
make significant investments to upgrade from its 3G network to its LTE network, and its competitor
China Telecom looks set to do the same starting in the second half of 2014. In addition, 3G
Investments in India appear strong and LTE investments by carriers in Europe also appear likely.
While the improved outlook we are hearing about could turn out to be just another head fake, the
demand appears real and at minimum should at least meet investor expectations, if not beat those
expectations to some degree, in our opinion.
Internet of Things (IoT)
While IoT was not a core theme of the show, there were a number of vendors demonstrating
wearables, such as Samsung Gear. Cisco Systems reiterated its long-held and provocative view that
IoT is a 5 to10x bigger opportunity that the original Internet. From a use case perspective, IoT can be
bucketed into wearables, connected home & auto and industrial automation. From a technology
perspective on the component side, the three key technologies are connectivity (Wifi, Bluetooth,
Zigbee, Ethernet), sensors (motion, temp, positioning) and processing, with connectivity being the
most important, in our view. As an investable theme for the overall component space, IoT may be more
evolutionary than revolutionary for most companies.
The securities listed are for illustrative purposes only, subject to change and should not be
construed as a recommendation to buy or sell. Securities discussed may or may not prove
profitable.
The views expressed are as of the date given, may change as market or other
conditions change, and may differ from views expressed by other Columbia
Management Investment Advisers, LLC (CMIA) associates or affiliates. Actual
investments or investment decisions made by CMIA and its affiliates, whether for its own
account or on behalf of clients, will not necessarily reflect the views expressed. This
information is not intended to provide investment advice and does not account for
individual investor circumstances. Investment decisions should always be made based
on an investor's specific financial needs, objectives, goals, time horizon, and risk
tolerance. Asset classes described may not be suitable for all investors. Past
performance does not guarantee future results and no forecast should be considered a
guarantee either. Since economic and market conditions change frequently, there can
be no assurance that the trends described here will continue or that the forecasts are
accurate.
Gain insight into market conditions, trends and investment opportunities through our
thought leadership publications. Please visit the Market Insights section of our website:
columbiamanagement.com/market-insights or visit our blog for our latest commentary
on the economy.
Weekly Market Summary as of 3/7/2014
Last
Bonds
U.S. 2-year
U.S. 10-year
Barclays U.S. Aggregate
Barclays U.S. Agg Corporate
BofA Merrill Lynch High Yield Master ll Index
AAA Muni 10-year
Equity Indices
S&P 500 Index
Russell 1000 Grow th Index
Russell 1000 Value Index
Russell 2000 Grow th Index
Russell 2000 Value Index
MSCI EAFE Index
MSCI EM Index
Commodities
Gold
Crude Oil
U.S. Dollar
U.S. Dollar Index
Yield
0.37
2.79
2.40
3.15
6.15
2.75
Price
Week Ago
Yield
0.32
2.65
2.28
3.00
6.11
2.69
Price
Chg
0.05
0.14
0.12
0.15
0.05
0.06
TR Chg
Month Ago
Yield
0.30
2.68
2.31
3.08
6.37
2.75
Price
1,878.0 1,859.5 1.1% 1,797.0
885.5 880.1 0.7% 846.2
941.7 929.6 1.4% 898.9
720.8 708.4 1.8% 668.3
1,521.2 1,496.1 1.7% 1,412.7
1,927.5 1,935.9 -0.3% 1,851.4
966.7 966.4 0.1% 937.3
Price
Price
1,340.0 1,326.4
102.6 102.6
Price
79.7
Price
79.7
% Chg
Price
1.0% 1,267.3
0.0%
99.9
% Chg
0.0%
Price
Chg
YTD
Yield
0.07
0.11
0.09
0.07
-0.21
0.00
TR Chg
4.7%
4.8%
5.0%
7.9%
7.9%
4.4%
3.2%
% Chg
0.38
3.03
2.48
3.26
6.39
2.97
Price
Year Ago
Chg
-0.01
-0.24
-0.08
-0.11
-0.23
-0.22
TR Chg
1,848.4 2.0%
863.8 2.8%
927.6 2.0%
688.1 4.8%
1,491.4 2.3%
1,915.6 1.0%
1,002.7 -3.5%
Price
% Chg
Yield
Chg
0.25
2.00
1.93
2.81
6.49
2.14
0.12
0.79
0.47
0.34
-0.33
0.61
Price
TR Chg
1,544.3
705.3
787.4
535.8
1,235.8
1,682.7
1,057.9
24.2%
27.7%
22.5%
35.4%
25.6%
18.2%
-6.1%
Price
% Chg
5.7% 1,205.7 11.1% 1,579.0 -15.1%
2.7%
98.4 4.2%
91.6 12.0%
% Chg
Price
80.7 -1.2%
% Chg
80.0 -0.4%
Price
82.1
% Chg
-2.9%
Source: Columbia Management Investment Advisers, LLC
Past performance does not guarantee future results. It is not possible to invest directly in an index.
DESCRIPTION OF INDICES
The Barclays U.S. Aggregate Bond Index is a market value-weighted index that tracks the daily price, coupon, paydowns, and total return performance of fixed-rate, publicly placed, dollar-denominated, and non-convertible investment
grade debt issues with at least $250 million par amount outstanding and with at least one year to final maturity.
The Barclays U.S. Corporate Investment Grade Index is an unmanaged index consisting of publicly issued U.S.
Corporate and specified foreign debentures and secured notes that are rated investment grade (Baa3/BBB- or higher)
by at least two ratings agencies, have at least one year to final maturity and have at least $250 million par amount
outstanding. To qualify, bonds must be SEC-registered
The BofA Merrill Lynch High-Yield Bond Master II Index is an unmanaged index that tracks the performance of
below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market.
The Standard & Poor's (S&P) 500 Index tracks the performance of 500 widely held, large-capitalization U.S. stocks.
The Russell 1000 Growth Index measures the performance of those Russell 1000 Index companies with higher priceto-book ratios and higher forecasted growth values.
The Russell 1000 Value Index measures the performance of those Russell 1000 Index companies with lower price-tobook ratios and lower forecasted growth values.
The Russell 2000 Growth Index measures the performance of those Russell 2000 Index companies with higher priceto-book ratios and higher forecasted growth values.
The Russell 2000 Value Index tracks the performance of those Russell 2000 Index companies with lower price-tobook ratios and lower forecasted growth values.
The MSCI EAFE Index is a capitalization-weighted index that tracks the total return of common stocks in 21 developedmarket countries within Europe, Australia and the Far East.
The MSCI EM Index is a free float-adjusted market capitalization index that is designed to measure equity market
performance in the global emerging markets.
Investment products are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal and fluctuation in value.
Securities products offered through Columbia Management Investment Distributors, Inc., member FINRA. Advisory
services provided by Columbia Management Investment Advisers, LLC.
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225 Franklin St., Boston, MA 02110
columbiamanagement.com
872049