Note 1. Organization
Columbia
Active Portfolios
®
— Select Large Cap Growth
Fund (the Fund), a series of Columbia Funds Series Trust I (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a
Massachusetts business trust.
On March 14, 2012, Columbia Management Investment Advisers, LLC (the Investment Manager), a wholly-owned
subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), invested $20,000 in the Class A shares of the Fund, which represented the initial capital for each class at $10.00 per share. Shares of the Fund were first offered to the public
on April 20, 2012.
These financial statements cover the period from April 20, 2012 (commencement of operations) to March 31,
2013.
Fund Shares
The Trust may issue
an unlimited number of shares (without par value). The Fund only offers Class A shares that are available only to certain eligible investors through certain wrap fee programs sponsored and/or managed by Ameriprise Financial or its affiliates.
Class A shares are not subject to any front-end sales charge or contingent deferred sales charge.
Note 2. Summary of Significant Accounting Policies
Use of
Estimates
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 equity 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 ask prices on such exchanges or markets.
Investments in other open-end investment companies, including money market funds, are valued at net asset value.
Investments for which market quotations are not readily available, or that have quotations which management believes are not reliable, are valued at fair
value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees (the Board). If a security or class of securities (such as foreign securities) is valued at fair value,
such value is likely to be different from the last quoted market price for the security.
The determination of fair value often requires
significant judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
Security Transactions
Security transactions are
accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income Recognition
Corporate actions and dividend income are recorded net of any non-reclaimable tax
withholdings, on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities.
Awards from class
action litigation are recorded as a reduction of cost basis if the Fund still owns the applicable securities on the payment date. If the Fund no longer owns the applicable securities, the proceeds are recorded as realized gains.
Expenses
General expenses of the Trust are
allocated to the Fund and other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund.
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 (including net short-term capital gains), if any, for its tax year, and as
such will not be subject to federal income taxes. In addition, the Fund intends to
|
|
|
|
|
|
|
|
Columbia
Active Portfolios
®
– Select Large Cap Growth Fund
|
|
|
Notes to Financial Statements
(continued)
March 31, 2013
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 Taxes
The Fund may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries, as applicable,
based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
Realized gains in certain
countries may be subject to foreign taxes at the Fund level, based on statutory rates. The Fund accrues for such foreign taxes on net realized and unrealized gains at the appropriate rate for each jurisdiction, as applicable. The amount, if any, is
disclosed as a liability on the Statement of Assets and Liabilities.
Distributions to Shareholders
Distributions from net investment income, if any, are declared and paid each calendar quarter. Net realized capital gains, if any, are distributed at
least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and Indemnifications
Under the Trust’s organizational documents and, in some cases,
by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain general
indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting the
likelihood of any such claims.
Recent Accounting Pronouncement
Disclosures about Offsetting Assets and Liabilities
In December 2011, the Financial
Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-11
, Disclosures about Offsetting Assets and Liabilities
and in January 2013, ASU No. 2013-1,
Clarifying the Scope of Disclosures about Offsetting
Assets and Liabilities
(collectively, the ASUs). Specifically, the ASUs require an entity to disclose both gross and net information for derivatives and other financial instruments that are subject to a master netting arrangement or similar
agreement. The ASUs
require disclosure of collateral received in connection with the master netting agreements or similar agreements. The disclosure requirements are effective for interim and annual periods
beginning on or after January 1, 2013. At this time, management is evaluating the implications of this guidance and the impact it will have on the financial statement amounts and footnote disclosures, if any.
Note 3. Fees and Compensation Paid to Affiliates
Investment Management Fees
Under an Investment
Management Services Agreement, Columbia Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), determines which securities will be purchased, held or sold. The
investment management fee is an annual fee that is equal to a percentage of the Fund’s average daily net assets that declines from 0.71% to 0.54% as the Fund’s net assets increase. The annualized effective investment management fee rate
for the period ended March 31, 2013 was 0.69% of the Fund’s average daily net assets.
Administration Fees
Under an Administrative Services Agreement, the Investment Manager also serves as the Fund Administrator. The Fund pays the Fund Administrator an annual
fee for administration and accounting services equal to a percentage of the Fund’s average daily net assets that declines from 0.06% to 0.03% as the Fund’s net assets increase. The annualized effective administration fee rate for the
period ended March 31, 2013 was 0.06% of the Fund’s average daily net assets.
Other Expenses
Other expenses include offering costs which were incurred prior to the shares of the Fund being offered. Offering costs include, among other things, state
registration filing fees and printing costs. The Fund amortizes offering costs over a period of 12 months from the commencement of operations.
Compensation of Board Members
Board members are
compensated for their services to the Fund as disclosed in the Statement of Operations. The Trust’s eligible Trustees may participate in a Deferred Compensation Plan (the Plan) which may be terminated at any time. Obligations of the Plan will
be paid solely out of the Fund’s assets.
Compensation of Chief Compliance Officer
The Board has appointed a Chief Compliance Officer to the Fund in accordance with federal securities regulations. The Fund pays its pro-rata share of the expenses associated with
|
|
|
|
|
|
|
|
|
|
Columbia
Active
Portfolios
®
– Select Large Cap Growth Fund
|
Notes to Financial Statements
(continued)
March 31, 2013
the Chief Compliance Officer. The Fund’s expenses for the Chief Compliance Officer will not exceed $15,000 per year.
Transfer Agent Fees
Under a Transfer and Dividend Disbursing Agent Agreement, Columbia Management
Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent has contracted with
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 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 (with the exception of out-of-pocket fees).
The Transfer Agent also receives compensation from fees for various shareholder services and reimbursements for certain out-of-pocket fees.
For the period ended March 31, 2013, the Fund’s annualized effective transfer agent fee rates as a percentage of average daily net assets for
Class A shares was 0.21%.
An annual minimum account balance fee of $20 may apply to certain accounts with a value below the Fund’s
initial minimum investment requirements to reduce the impact of small accounts on transfer agent fees. These minimum account balance fees are recorded as part of expense reductions in the Statement of Operations. For the period ended March 31,
2013, no minimum account balance fees were charged by the Fund.
Distribution and Service Fees
The Fund has an agreement with Columbia Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a
wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. Pursuant to Rule 12b-1 under the 1940 Act, the Board has approved, and the Fund has adopted, distribution and shareholder service plans (the Plans) which set
the distribution and service fees for the Fund. These fees are calculated daily and are intended to compensate the
Distributor and/or eligible selling and/or servicing agents for selling shares of the Fund and providing services to investors.
The Plans require the payment of a monthly service fee to the Distributor at the maximum annual rate of 0.25% of the average daily net assets attributable to Class A shares of the Fund. The Plans
also require the payment of a monthly distribution fee to the Distributor at the maximum annual rates of 0.25% of the average daily net assets attributable to Class A shares.
Although the Fund may pay a distribution fee up to 0.25% of the Fund’s average daily net assets attributable to Class A shares and a service fee of up to 0.25% of the Fund’s average daily
net assets attributable to Class A shares, the aggregate fee shall not exceed 0.25% of the Fund’s average daily net assets attributable to Class A shares.
Expenses Waived/Reimbursed by the Investment Manager and its Affiliates
The Investment Manager and
certain of its affiliates have contractually agreed to waive fees and/or reimburse expenses (excluding certain fees and expenses described below), through July 31, 2014, unless sooner terminated at the sole discretion of the Board, so that the
Fund’s net operating expenses, after giving effect to fees waived/expenses reimbursed and any balance credits and/or overdraft charges from the Fund’s custodian, do not exceed the annual rate of 1.19% of Class A shares’ average
daily net assets.
Under the agreement governing these fee waivers and/or expense reimbursement arrangements, the following fees and expenses
are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes), expenses associated with investments in affiliated and non-affiliated pooled investment
vehicles (including mutual funds and exchange traded funds), transaction costs and brokerage commissions, costs related to any securities lending program, dividend expenses associated with securities sold short, inverse floater program fees and
expenses, transaction charges and interest on borrowed money, interest, extraordinary expenses and any other expenses the exclusion of which is specifically approved by the Board. This agreement may be modified or amended only with approval from all
parties.
Note 4. Federal Tax Information
The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP
because of temporary or permanent book to tax differences.
At March 31, 2013, these differences are primarily due to differing treatment
for capital loss carryforwards,
|
|
|
|
|
|
|
|
Columbia
Active Portfolios
®
– Select Large Cap Growth Fund
|
|
|
Notes to Financial Statements
(continued)
March 31, 2013
deferral/reversal of wash sale losses, Trustees’ deferred compensation, net operating loss reclassification, non-deductible expenses and late-year ordinary losses. To the extent these
differences are permanent, reclassifications are made among the components of the Fund’s net assets in the Statement of Assets and Liabilities. Temporary differences do not require reclassifications. In the Statement of Assets and Liabilities
the following reclassifications were made:
|
|
|
|
|
|
|
Accumulated net investment loss
|
|
|
$1,953,547
|
|
|
Accumulated net realized loss
|
|
|
—
|
|
|
Paid-in capital
|
|
|
(1,953,547
|
)
|
Net investment loss and net realized gains (losses), as disclosed in the Statement of Operations, and net assets were not
affected by this reclassification.
For the period ended March 31, 2013, there were no distributions.
At March 31, 2013, the components of distributable earnings on a tax basis were as follows:
|
|
|
|
|
|
|
Accumulated realized loss
|
|
|
$(30,924,446
|
)
|
|
Unrealized appreciation
|
|
|
132,555,849
|
|
At March 31, 2013, the cost of investments for federal income tax purposes was $982,335,285 and the aggregate gross
unrealized appreciation and depreciation based on that cost was:
|
|
|
|
|
|
|
Unrealized appreciation
|
|
|
$160,941,045
|
|
|
Unrealized depreciation
|
|
|
(28,385,196
|
)
|
|
Net unrealized appreciation
|
|
|
$132,555,849
|
|
The following capital loss carryforward, determined at March 31, 2013, may be available to reduce taxable income
arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code:
|
|
|
|
|
|
|
Year of Expiration
|
|
Amount ($)
|
|
|
Unlimited short-term
|
|
|
30,924,446
|
|
Under current tax rules, Regulated Investment Companies can elect to treat certain late-year ordinary losses incurred and
post-October capital losses (capital losses realized after October 31) as arising on the first day of the following taxable year. As of March 31, 2013, the Fund will elect to treat late-year ordinary losses of $1,755,931 as arising on April 1, 2013.
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). Generally,
the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.
Note 5. Portfolio Information
The cost of purchases and proceeds from sales of securities, excluding
short-term obligations, aggregated to $1,413,257,425 and $420,869,464, respectively, for the period ended March 31, 2013.
Note 6. Affiliated
Money Market Fund
The Fund invests its daily cash balances in Columbia Short-Term Cash Fund, an affiliated 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 — affiliated issuers” 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 March 31, 2013, one unaffiliated shareholder account owned nearly 100% of the outstanding shares of the Fund. The Fund has no knowledge about
whether any portion of those shares was owned beneficially by such account. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund.
Note 8. Line of Credit
The Fund has entered into a
revolving credit facility with a syndicate of banks led by JPMorgan whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility agreement, as amended, 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 $500 million. Interest is charged to each participating fund based on its borrowings at a
rate equal to the higher of (i) the overnight federal funds rate plus 1.00% or (ii) the one-month LIBOR rate plus 1.00%. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also
pays a commitment fee equal to its pro rata share of the amount of the credit facility at a rate of 0.08% per annum.
The Fund had no
borrowings during the period ended March 31, 2013.
Note 9. Significant Risks
Consumer Discretionary Sector Risk
The Fund’s portfolio managers may invest significantly in
issuers operating in the consumer discretionary sector. The
|
|
|
|
|
|
|
|
|
|
Columbia
Active
Portfolios
®
– Select Large Cap Growth Fund
|
Notes to Financial Statements
(continued)
March 31, 2013
Fund may be more susceptible to the particular risks of this sector than if the Fund were invested in a wider variety of issuers operating in unrelated sectors.
Health Care Sector Risk
The Fund’s portfolio
managers may invest significantly in issuers operating in the health care sector. The Fund may be more susceptible to the particular risks of this sector than if the Fund were invested in a wider variety of issuers operating in unrelated
sectors.
Information Technology Sector Risk
The Fund’s portfolio managers may invest significantly in issuers operating in the information technology sector. The Fund may be more susceptible to the particular risks of this sector than if
the Fund were invested in a wider variety of issuers operating in unrelated sectors.
Note 10. Subsequent Events
Management has evaluated the events and transactions that have occurred through the date the financial statements were issued and noted no items requiring
adjustment of the financial statements or additional disclosure.
Note 11. Information Regarding Pending and Settled Legal Proceedings
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
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 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
Active
Portfolios
®
– Select Large Cap Growth Fund
|
Report of Independent Registered Public Accounting Firm
To the Trustees of Columbia Funds Series Trust I and the Shareholders of Columbia
Active
Portfolios
®
— Select Large Cap Growth Fund
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related
statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Columbia
Active Portfolios
®
— Select Large Cap Growth Fund (the “Fund”) (a series of Columbia Funds Series Trust I) at March 31, 2013, the results of its operations, the changes
in its net assets and the financial highlights for the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as
“financial statements”) are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements 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 are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit, which included confirmation of securities at March 31, 2013 by correspondence with the custodian and transfer agent, provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Minneapolis,
Minnesota
May 22, 2013
|
|
|
|
|
|
|
|
|
|
Columbia
Active
Portfolios
®
– Select Large Cap Growth Fund
|