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Fourth Quarter 2011
Columbia Institutional High Yield Fixed Incomeg
A Presentation to: The City of Fresno Retirement Boards
March 8, 2012
Columbia Management Investment Advisers, LLC is an SEC-registered investment adviser that offers investment products and services under the names Columbia Management g g p gInvestments, Columbia Management Capital Advisers, and Seligman Investments. For purposes of compliance with the Global Investment Performance Standards (GIPS®), Columbia Management Investment Advisers, LLC has defined the institutional Firm as Columbia Management Investments, an operating division of Columbia Management Investment Advisers, LLC that offers investment management and related services to institutional clients. All values are expressed in U.S. dollars unless otherwise noted.130689For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Presenters
Mark A. Van Holland, CFAVice PresidentSector ManagerSector ManagerHigh Yield Fixed [email protected]_______________________________________
Wendy E. PriceDirectorInstitutional Product Management612.671.1724wendy e price@columbiamanagement [email protected]___________________________________
Brian A. ReedBrian A. ReedRegional Vice President Institutional [email protected]__________________________________
2 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Organizational Overview
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
The Strength and Resources of our Asset Management Business
Ameriprise Financial, Inc.Our asset management business is conducted through the following key companies:
Columbia Management Investment Advisers, LLC
Columbia Wanger Asset Management, LLC
Threadneedle Asset Management
Our asset management business is conducted through the following key companies:
Ameriprise Trust Company
> > > >
> >
Extensive product array that includes fundamental Administers 35 collective
Serves as trustee and is an administrator of collective funds
Research-intensive investment process
Three decades of competitive investment performance over the long term with a focus on small- and mid-cap stocks
Based in the U.K., provides a full range of investment management products and services to institutional clients, intermediaries,
>
that includes fundamental equity, quantitative strategies, taxable and tax-exempt fixed income, and private fund offerings
funds, including equity, fixed income and stable value
and mid cap stocks
Experienced investment team
clients, intermediaries, banks and fund platforms
> $300.5 billion AUM* > $29.2 billion AUM > $113.6 billion AUM > $6.7 billion AUM**
*AUM = Assets under management. **Ameriprise Trust Company AUM is also included in the Columbia Management Investment Advisers, LLC AUM.
4
Columbia Wanger Asset Management, LLC is an SEC-registered investment adviser and a subsidiary of Columbia Management Investment Advisers, LLC ("CMIA"). Threadneedle International Limited, a subsidiary of Threadneedle Asset Management Holdings, Ltd. is an SEC- and FSA-registered investment adviser aff iliate of CMIA based in the U.K. Threadneedle AUM show n includes all entities in the Threadneedle group. Ameriprise Trust Company is a chartered trust company aff iliate of CMIA. Not all subsidiaries of Ameriprise Financial are show n.
Source: Ameriprise Financial, Inc. Information as of December 31, 2011.g p p y g ,
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Columbia Management at a Glance
Columbia Management Investment Advisers, LLC Firm Assets
AUM by Product Type ($B)
$300.5 billion in assets under management as of December 31, 2011.
AUM by Asset Class ($B)
Asset Allocation, $3 5 1%
Fixed Income,
Equity, $131.5, 44%
$3.5, 1%
Retail Products,
$178.6 , 59%
I tit ti l,$165.5, 55% Institutional
Products, $121.9, 41%
Total Assets ($B)
- Columbia Management Investments (GIPS Firm) $298 1
GIPS Firm Assets Under Management
- Columbia Management Investments (GIPS Firm) $298.1Columbia Management Investments is the institutional GIPS firm and an operating division of Columbia Management Investment Advisers, LLC.
5
Source: Columbia Management Investment Advisers, LLC.
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Institutional Assets Under Management
$121.9 billion in assets under management
> Approximately 204 relationships> Approximately 204 relationships> Approximately 431 accounts
AUM by Client Type**AUM by Product* AUM by Client Location**
Fixed Income
59%Equity34%
Hedge Fund7%
Northeast25%
Int'l17%
Corporate42%
Hedge Fund9%
Taft-Hartley
5%
E & F***3%
34%
Southeast
Insurance13%
Midwest29%
West6%
23%
Public28%
Source: Columbia Management Investment Advisers LLC as of December 31 2011
6
***E&F= Endowment & Foundation.
*AUM breakdown excludes RiverSource Insurance assets ($40.1 billion).
Source: Columbia Management Investment Advisers, LLC as of December 31, 2011.
**AUM breakdowns exclude RiverSource Insurance assets ($40.1 billion) and Pooled Vehicles ($8.4 billion).
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Representative Institutional Clients
Corporate > ADP> Ameriprise Financial> CVS Corporation
Institutional relationship management team
Public
> CVS Corporation > Kroger> Land O’Lakes
> Bay County Employees’ Retirement System > Boston Retirement System > Minnesota State Board of Investments
Columbia Management is a client-focused firm; and the relationship management team serves an important role in enhancing the institutional
Taft-Hartley > Connecticut Carpenters> New Jersey Carpenters
> Minnesota State Board of Investments> Nevada Public Employees’ Retirement System> Ohio Police and Fire Pension> Omaha Police and Fire Retirement System
client experience. Our goal is to provide thoughtful, proactive service and a dedicated point of contact for clients to reach at any time. Our Relationship M h > New Jersey Carpenters
> Laborers International Union of North America (L.I.U.N.A.)> Teamsters Local 282 Pension Trust Fund> Uniform Sanitationmens Association, Teamsters Local 831
Endowments/Hospitals > Baptist Health Systems of South Florida
Managers have, on average, more than 25 years of investment industry experience.
Subadvisory
> Bethesda Hospital Master Trust > Domestic & Foreign Missionary Society > Fordham University > Yawkey Foundation I and II
> John Hancock Investment N i id F d G> Nationwide Funds Group
> Prudential Retirement Insurance > SEB (Skandinaviska Enskilda Banken) > Stanlib Asset Management, Ltd.
7
Listed are sample institutional accounts who have given permission for their names to be used. It is not known whether the listed clients approve or disapprove of Columbia Management Investment Advisers, LLC or the advisory services provided. Information as of December 31, 2011.For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Team, Philosophy and Process
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Why Columbia Institutional High Yield Fixed Income?
A deep and stable team of experienced sector managers and analysts responsible for over $13.4 billion in high yield assets under management as of
>
p $ g y g12/31/2011.
Experienced team of high yield specialists ti di i li d d t bl
Annualized Risk/Return Relationship
>
executing a disciplined and repeatable process
Since Inception Ending 12/31/2011
Credit selection that seeks to maximize return per unit of risk, resulting in reduced
Columbia Institutional High Yield Fixed Income
9
10
turn
s (%
)
>
volatility of returns
Combined bottom-up and top-down approach to pursue strong risk-adjusted returns through varying market
BofA ML High Yield Cash Pay Constrained Index
7
8
Gro
ss o
f Fee
s R
et
>
Inception Date: June 30 1999
Excellent long-term historical track record
g y genvironments 6
8 9 10 11 12
G
Standard Deviation (%)
Inception Date: June 30, 1999
Source: Columbia Management Investment Advisers, LLC. There is no guarantee that an investment objective will be achieved or that return expectations will be met. Past performance does not guarantee future results.This information is based on gross performance of the Columbia Institutional High Yield Fixed Income Composite. Please refer to the full composite presentation in the Appendix for more information on performance, calculation methodology and benchmarks.
9 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Columbia Management Fixed Income Team
Colin Moore, Chief Investment Officer
Investment Grade Credit High Yield Fixed Income Global Rates and Currency Investment Grade Credit Municipal Fixed Income Liquidity Strategies Core/Core Plus Core/Core PlusKirk Moore, CFA Chuck Fear, CFA Nicholas Pifer, CFA Tom Murphy, CFA James Dearborn Guy Holbrook, CFA Alex Powers Credit
Brad Angermeier, CFA, CPA Julie Grey, CFA, CPA Jim Carlen, CFA Tim Doubek, CFA Kim Campbell John McColley Carl Pappo, CFA Will Peishoff
Steve Harasimowicz, Head of Trading Colin Lundgren, CFA, Head of Fixed Income
Timothy Masek, CFA, Head of Fixed Income Research
TradingFixed Income Sector Specialists Multi-Sector TeamsFixed Income Research
Jeffrey Cicirelli, CFA Brett Kaufman, CFA Tim Flanagan, CFA Royce Wilson, CFA Paul Fuchs, CFA Julie Oman Michael Zazzarino Kevin Lema
Todd Czachor, CFA Michael Skatrud, CFA Hong Ho, CFA Gregg Syverson, CFA, CPA Brian McGreevy Mary Werler, CFA Alan Erickson, CFA
John Daw son, CFA Spencer Sutcliffe Vishal Khanduja, CFA Steve Gorny, CFA Catherine Stienstra Justin Garrison Martha Childs, CFA
Keith Hoppe, CFA Chris Thyssen, CFA Michael Ng, CFA Insurance Anders Myhran, CFA Lee Reddin, CFA Luke Hagopian, CFA
Nathaniel Liddle Tom Tracy Bill Tong Rich Hegw ood, CFA Orhan Imer, Ph.D., CFA William Finan
David Morgan, CFA Patti Vannelli Kris Knudtson Jennifer Lukas, CFA Elena Rozina Braj Agraw al
Willow Piersol, CFA Jason Weinberg, CFA Arlene Jackson Leonard Aplet, CFA Philip McKernanPrivate Portfolios – Municipal
Liquid and Structured Assets
Short Duration and Stable Value
Willow Piersol, CFA Jason Weinberg, CFA Arlene Jackson Leonard Aplet, CFA Philip McKernan
Mary Titler, CFA Christina Pluta Pamela Hunter Bryan Cline
High Yield Fixed Income Kim Michalski Greg Liechty Municipal Fixed IncomeMunicipal Fixed Income Leveraged Debt Jennifer Ponce de Leon Theresa Adame Jim McKay, CFA* John Swaim Anthony Purcell
Donaji Valencia Chad Farrington, CFA Portfolio Management Brian Lavin, CFA Alexis Addrisi James Sims, CFA Jeff Hibbeler Travis Bates
Dan Belcher Lynn Hopton Dan Segner, CFA Charlotte Cheim Ron Stahl, CFA David Kennedy Phil Carty
Structured Assets Jeff Kovala Yvonne Stevens Mark Van Holland, CFA Mike Conerly Ryan Krieg Mike Matthew s Peter Fleming
Emerging Markets Fixed Income
Private Portfolios - Taxable
p
Mitch Helle-Morrissey Ryan Nelson Jerry How ard, CFA David Greavu Carri Dolin Linda Solarek Kristina Russell Courtney Jacobs
Michael Milosch, CFA Michael Roye Steve Staver, CPA Michael Roberts, CFA John Hayes Tiffany Zahas Angela Streur Maggie Saltalamacchia
Melonie Mulligan, CFA Jude Scaglione Jason Sittko, CFA Monica Maguire Ralph Vezina
Ryan Osborn, CFA Ty Schoback Chris Jorel, CFA Brock Mumford Strategic Income LDI Dana Wing
Michael Taylor Research Wendy Norman Gene Tannuzzo, CFA Frank Salem, CFA
Real Estate Loan Mgmt Elizabeth Ware Steve Columbaro, CFA Structured Assets Dan O'Connell Mark Woell Karl Chang, CFA
K i Ab h Ben Woo Angela Jarasunas Jason Callan Lorie Salerno Timothy BrannonKevin Abrahamson Ben Woo Angela Jarasunas Jason Callan Lorie Salerno Timothy Brannon
John Dittrich Ashraf Jilani, CFA Tom Heuer, CFA, CPA Adam Shakoor Diane Bordulis
Jonathan Jablonsky Private Placements Eric Johnson Bill Lee, CFA Holly Thompson
Mark McMullen Chris Patton, CFA, CPA Ron Launsbach, CFA Deb Vargo
Julene Melquist Matt Pielert Jennifer Wacker
Mary Shaifer Bruce Warren
Vesa Tontti, CFA
10
Information as of January 6, 2012. Leaders are indicated in bold font. *Jim McKay is an employee of an affiliated company, Ameriprise Trust Company, and manages investment offerings that leverage the fixed income capabilities of Columbia Management Investment Advisers, LLC.
42 Research Professionals 15 Professionals12 Professionals 51 Professionals 35 Professionals
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Columbia High Yield Sector Team
Colin Moore, Chief Investment Officer
Jennifer Ponce de Leon, Sector Leader Chuck Fear, CFA, Research Leader Brian Lavin, CFA, Sector Manager Cable, Health Care Facilities and Services, Managed CareDaniel Segner, CFA, Sector Manager Julie Grey, CFA, CPA, Senior Analyst
Colin Lundgren, CFA, Head of Fixed Income Tim Masek, CFA, Head of Fixed Income ResearchHIGH YIELD SECTOR MANAGEMENT HIGH YIELD CREDIT RESEARCH
Mark Van Holland, CFA, Sector Manager Media, Leisure, Retail, Textiles/Apparel, Publishing, TheatersDave Greavu, Sector Manager Brett Kaufman, CFA, Senior Analyst Michael Roberts, CFA, Sector Manager Telecommunications, Consumer Products, Satellites, Building MaterialsJason Sittko, CFA, Senior Portfolio Analyst Michael Skatrud, CFA, Senior AnalystChris Jorel, CFA, Portfolio Analyst Financials, Packaging, Paper/Forest Products, Homebuilders
Spencer Sutcliffe Senior AnalystSpencer Sutcliffe, Senior Analyst > Energy, Chemicals > 7 years average tenure
Christopher Thyssen, CFA, Senior Analyst >Automotive, Gaming, Lodging, Technology
Thomas Tracy, Senior Analyst Conglomerates, Industrials, Metals/Mining,
S
Sector managers have 21 years average tenure and 23 years average investment experience 15 years average
investment experience
Patti Vannelli, Senior Analyst Utilities, Food/Beverage
Jason Weinberg, CFA, Senior AnalystPharmaceuticals, Medical Products, Aerospace/Defense, Airlines
Open Position, Senior AnalystChristina Pluta, Analysty
8 Professionals 10 Research ProfessionalsInformation as of February 02, 2012.
11 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Columbia High Yield Fixed Income
Columbia Management Investment Advisers, LLC High Yield Fixed Income Assets Under Management
Strategy Total Assets ($B)
% of Total
Institutional High Yield $4 21 31%
g g
$13.4 billion in high yield fixed income assets under management as of December 31, 2011.
Multi Sector High Yield
Sleeves $2 49Institutional High Yield $4.21 31%
High Quality High Yield $3.33 25%
Broad Spectrum High Yield $2.47 18%
Institutional High Yield, $4.21, 31%
Insurance Buy and Hold , $0.94, 7%
Sleeves, $2.49, 19%
Insurance Buy and Hold $0.94 7%
Sub-Total $10.95
Multi Sector High Yield Sleeves $2.49 19%High Quality
Broad Spectrum High Yield, $2.47,
18%
$ ,
Grand Total $13.44 100%
High Quality High Yield, $3.33, 25%
18%
12
Source: Columbia Management Investment Advisers, LLC. Multi Sector High Yield Sleeve assets shown include high yield allocations within multi-sector fixed income portfolios.
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
High Yield Investment Philosophy
Given the higher risk nature of the high yield asset class, we believe the management of risk and return is inseparable We seek strong and consistent risk-adjusted returns focusing on generating alpha whileis inseparable. We seek strong and consistent risk adjusted returns focusing on generating alpha while actively managing downside risk.
KEY TENETS
Credit selection is paramount in high yield investing. We devote substantial resources to developing bottom up fundamental research which typically contributes two thirds of the
Strong Proprietary Credit
KEY TENETS
developing bottom-up fundamental research which typically contributes two-thirds of the alpha generated.
A key to performing in varying market environments is to effectively assess the outlook for financial and economic conditions By adding a top down overlay approach to our
Proprietary Credit Research
Tactical for financial and economic conditions. By adding a top down overlay approach to our process, we find that tactical management can typically contribute one-third of the alpha generated and even higher levels during extreme market conditions or “turns” in the credit cycle.
Portfolio Management
D id A constant focus on downside risk is required due to the asymmetrical risk profile of high yield. Our approach to portfolio diversification, position size management, and our strong sell discipline are distinguishing features of our downside risk management capability.
Downside Risk Management
13
There is no guarantee that the investment objectives will be achieved or that return expectations will be met.
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Investment Process –Combined Bottom-Up and Top-Down Focus
Independent Proprietary Credit Research and Security Selection
Tactical Portfolio Management
ECONOMIC & BROAD MARKET ASSESSMENT
> Economic activity and interest rates> Outlook for defaults
BOTTOM-UP ANALYSIS OF INDIVIDUAL CREDITS
> Industry fundamentals > Company fundamentals
> Market technicals and credit spreads> Cross-sector strategy input
> Management assessment> Proprietary modeling and forecasting> Catalysts
RELATIVE VALUE ANALYSIS & RISK RATINGDEVELOP INDUSTRY & SECTOR OUTLOOKS
> Quarterly industry reviews and opinions
PORTFOLIO CONSTRUCTION
> Upside/downside parameters
PORTFOLIO CONSTRUCTION> Client objectives/constraints> Industry diversification> Appropriate position sizes
RISK MANAGEMENTRISK MANAGEMENT> Risk rating system> Diversification> Compliance checks
14 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Idea Generation
High Yield Sector Team
> Significant depth and continuity> Significant depth and continuity> Active role in research process> Extensive industry contacts
High Yield Credit Research
> High yield industry specialists
Additional Resources
> Fixed Income Sector Teams
Constant Communication> Close proximity of team
> D il t di g ti g> Career analyst track> Cover 2–4 industries and
50 issuers on average> Associate analyst
Q tit ti l t
> Internal & external macroeconomic input
> Equity research analysts
> Daily trading meetings
> Monthly high yield strategy sessions
> Daily credit round tables
> Weekly fixed income strategy meetings
> Quantitative analysts a a ys s
Benefits> Sector managers and analysts work in
equal partnership> Flat organizational structure by design> Collegial environment fosters
teamwork and strong communication to achieve effective execution of
15
investment ideas
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Research Philosophy
We believe performance in high yield is driven primarily by superior credit selection. Our approach to research is anchored by several key principles resulting in a consistent and repeatable process.y y p p g p p
> Create internal financial projections
Independent> Assign proprietary risk and return ratings> Develop alternative sources of information> Build industry expertise by minimizing turnover of industry coverage
Forward Looking
> Establish a forward looking view on industry and credit fundamentals
> Limit the number of credits covered to a manageable level> Leverage associate analysts for data gathering> Leverage associate analysts for data gathering
Dynamic/Opportunistic
> Actively assess and price risk> Seek to monitor valuation targets and industry/credit fundamental
milestonesOpportunistic milestones> Seeks to exploit market inefficiencies
16 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Research Process –Rigorous Fundamental Due Diligence
Management/ownership> On-site visits
Industry analysis> Peer group analysis
Exit strategy/sell discipline> Monitor positions versus
credit catalysts/milestones Proprietary modeling/
> Road shows on new deals > Competitive environment> Market position
> Quantify appreciation potential/downside risk
> Set price targets for purchases and sales
Round Table Process
forecasting> Stress test forecasts
Security Selection
Round Table Process
Security SelectionDetermination of enterprise value> Asset valuation> Cash flow generation> Analysis of industry
bl
Determination of proprietary relative value and risk ratings
Security Selection> 2 portfolio managers> Recommending
analyst
> Sector managers> Credit analysts
C t t t
comparables
Collateral analysis> Type of assets
Covenant analysis> Understand management
i t t Corporate structure analysis> Capital structure positioning> Subordination analysis> Operating subordination> Structural subordination
yp> Saleability> Valuation
intent> Quantify protection of
bondholder interest
> Structural subordination
17 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Independent Proprietary Credit Research –Risk Rating System
Characteristics we evaluateRisk Rating
At least 2/3
> Solid credit fundamentals: stable or improving> Major risks have been mitigated> Significant credit deterioration unlikely> Free cash flow positive through normal industry economic cycle> Asset coverage to mitigate downside risk
Risk 1
of portfolio in risk 1 & 2
> Asset coverage to mitigate downside risk
Risk 2 > Adequate financial condition> Some modest deterioration in quality possible
No more than 1/3 in risk 3 –I i
> Credit quality could deteriorate or be volatile> Category examples Project finance and build-outs with insufficient cash flow
C dit ith i ifi t t i k/ l til h flRisk 3
Improving situations offering strong relative
f
Credits with significant event risk/volatile cash flows Credits with inadequate asset or downside protection
> Financial condition is weak or deteriorating> Expect debt service to be interrupted in next 12 monthsRisk 4performance > Expect debt service to be interrupted in next 12 months> Companies negotiating debt restructuring—bankruptcy
Risk 4
18
Risk and relative value ratings reflect the Team's internal, proprietary ratings system. There is no guarantee that return expectations will be met.
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Independent Proprietary Credit Research –Relative Value Rating System
Expected Relative Return(12 months)
Relative Value Rating
Definition(12 months)Rating
1 Strong Outperform ≥ 150%
2 Outperform 110% 150%2 Outperform 110% -150%
3 Market Perform 90% -110%
4 Underperform 50% - 90%
5 Sell ≤ 50%
There is no guarantee that an investment objective will be achieved or that return expectations will be met.
19 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Independent Proprietary Credit Research –Combining Ranking for Risk-adjusted Performance
Adjust portfolio weightings based on environment
1Larger Positions
3
2
ive
Valu
e
4Rel
at Smaller Positions
5
4 3 2 1
Risk
Buy CandidatesBuy Candidates
20
For illustrative purposes only. There is no guarantee that an investment objective will be achieved or that return expectations will be met.
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Tactical Portfolio Management
The sector management team adjusts portfolio positioning to take advantage of varying market environments
E i b kd
Based on
Q lit
We adjust these levers
Seek to deliver strong
To deliver
> Economic backdrop
> Point in credit cycle
> Default rate outlook
> Quality
> Capital structure
> Industry weightings
Seek to deliver strong risk-adjusted returns in varying market environments
> Interest rates
> Technical factors
21
There is no guarantee that an investment objective will be achieved or that return expectations will be met.
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Credit Quality Positioning
Total Return by Credit Quality
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
10 YR TSY CCC CCC 10 YR TSY 10 YR TSY CCC B CCC CCC 10 YR TSY BB 10 YR TSY
16.96% 19.77% 109.14% 20.22% 10.14% 16.56% 3.69% 17.43% 53.96% 14.63% 11.89% 15.11%
BB ML HY Cash Pay ML HY Cash Pay BB B B BB ML HY Cash Pay ML HY Cash Pay B ML HY Cash Pay BB6.19% 15.10% 56.78% (18.93%) 3.54% 10.82% 3.15% 10.76% 27.01% 3.54% 6.24% 0.97%
B BB B ML HYCash Pay BB ML HYCash Pay ML HYCash Pay B B BB B ML HYCash PayB BB B ML HY Cash Pay BB ML HY Cash Pay ML HY Cash Pay B B BB B ML HY Cash Pay
4.68% 14.26% 48.45% (25.96%) 3.26% 10.61% 2.86% 10.39% 25.11% 2.32% 2.64% (3.87%)
ML HY Cash Pay B BB B ML HY Cash Pay BB 10 YR TSY BB BB ML HY Cash Pay 10 YR TSY B 4.49% 13.74% 44.89% (28.07%) 2.50% 7.82% 1.93% 9.20% 19.09% 0.14% 3.74% (6.32%)
CCC 10 YR TSY 10 YR TSY CCC CCC 10 YR TSY CCC 10 YR TSY 10 YR TSY CCC CCC CCC (1.35%) 8.27% (8.76%) (41.58%) 0.18% 1.44% 1.14% 4.68% 1.73% (5.03%) 1.71% (17.93%)
> Flexibility to invest across credit quality spectrum enables us to pursue strong risk-adjusted performance across varying market conditions
> We do not rely solely on public rating agencies for assessing the creditworthiness of issuers we follow and instead use these ratings in combination with our own internally-developed risk rating system to assess theinstead use these ratings in combination with our own internally developed risk rating system to assess the high yield universe
> Portfolios focus on the BB and Single B segments of the high yield market; CCC segment is used opportunistically
22
As of December 31, 2011Source: BofA Merrill Lynch. Past performance is not indicative of future results. This information is based on the total return of the BofA ML High Yield Cash Pay Constrained Index. For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Capital Structure Positioning
> Review the entire corporate structure and seek to optimize individual credit selection
Corporate Capital Structuresee to opt e d dua c ed t se ect obased on levels of capital structure
> Balance sheet priority determines risk/reward tradeoff
> Flexibility to adjust capital structure
Senior secured debt
Senior unsecured debt
> Flexibility to adjust capital structure positioning based on: Overall risk appetite Credit fundamentals/catalysts
R l ti l id ti
Subordinated unsecured debt
Preferred stock
Relative value considerations Common stock
23 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Disciplined Portfolio Construction
Credits are selected in an effort to achieve the maximum return per unit of risk given client guidelines, enabling us to balance issuers across the portfolio using a disciplined and g g p g prepeatable process.
DIVERSIFIED PORTFOLIO> 150–200 issuers
> Well-diversified by credit tier,
BUY CANDIDATE> Stable and improving
cash flows
industry and issuer
> Moderate position sizes: Maximum: 3% Core holdings: 1%–1.5%
> Ability to de-leverage through free cash flow
> Asset valuation supports debt
> Industry maximum: 25% Typically limited to 150%
of benchmark weight
> Average credit quality: B
> Strong management
> Strong and sustainable market position
> Attractive risk-adjusted > Average cash position: 2%–4%relative value
24 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Risk Management
Disciplined portfolio construction is critical for risk management in the high yield portfolio due to:
> Inefficiencies of the market> Inefficiencies of the market
> Less liquidity
> Asymmetric risk profiles
Downside Risk Management
> Proprietary risk ratings drive position size
> We dynamically manage positions according to proprietary risk and relative value ratings
At least 2/3 of portfolio in Risk 1 and 2 issuers
No more than 1/3 of portfolio in Risk 3 issuers
> Strong sell discipline
> Rigorous oversight through comprehensive monthly portfolio review meetings
> Sophisticated trading and portfolio management systems limit deviations from portfolio guidelines
25 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Performance and Characteristics
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Columbia Institutional High Yield Fixed Income –Composite Performance
Calendar Year Returns (%) as of December 31, 2011 (USD)
60
80Columbia Institutional High Yield Fixed Income (Gross)
BofA ML High Yield Cash Pay Constrained Index
0
20
40
60
-40
-20
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
BofA ML High Yield Cash Pay Constrained Index Total Return by Credit Quality as of December 31, 2011
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
10 YR TSY CCC CCC 10 YR TSY 10 YR TSY CCC B CCC CCC 10 YR TSY BB 10 YR TSY16.96% 19.77% 109.14% 20.22% 10.14% 16.56% 3.69% 17.43% 53.96% 14.63% 11.89% 15.11%
BB ML HY Cash Pay ML HY Cash Pay BB B B BB ML HY Cash Pay ML HY Cash Pay B ML HY Cash Pay BB6.19% 15.10% 56.78% (18.93%) 3.54% 10.82% 3.15% 10.76% 27.01% 3.54% 6.24% 0.97%
B BB B ML HY Cash Pay BB ML HY Cash Pay ML HY Cash Pay B B BB B ML HY Cash Pay
4.68% 14.26% 48.45% (25.96%) 3.26% 10.61% 2.86% 10.39% 25.11% 2.32% 2.64% (3.87%)
ML HY Cash Pay B BB B ML HY Cash Pay BB 10 YR TSY BB BB ML HY Cash Pay 10 YR TSY B y y y
4.49% 13.74% 44.89% (28.07%) 2.50% 7.82% 1.93% 9.20% 19.09% 0.14% 3.74% (6.32%)
CCC 10 YR TSY 10 YR TSY CCC CCC 10 YR TSY CCC 10 YR TSY 10 YR TSY CCC CCC CCC (1.35%) 8.27% (8.76%) (41.58%) 0.18% 1.44% 1.14% 4.68% 1.73% (5.03%) 1.71% (17.93%)
Source: Columbia Management Investment Advisers, LLC and BofA Merrill Lynch. Past performance does not guarantee future results.The Calendar Year Return information is based on the gross performance of the Columbia Institutional High Yield Fixed Income Composite. The Total Return by Credit Quality information is based on the BofA ML High Yield Cash Pay Constrained Index. This page contains supplemental data. Please refer to the full composite presentation in the Appendix for more information onperformance, calculation methodology and benchmarks.
27 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Columbia Institutional High Yield Fixed Income –Composite Performance
Inception Date: June 30, 1999
QTD YTD 1 Y 3 Y 5 Y 10 Y Since
Trailing Returns (%) as of December 31, 2011 (USD)
QTD YTD 1 Year 3 Years 5 Years 10 Years InceptionColumbia Institutional High Yield (Gross) 7.34 7.14 7.14 21.85 8.93 10.45 9.37
BofA ML High Yield Cash Pay Constrained Index 6.17 4.49 4.49 23.54 7.43 8.66 7.03
30
10
15
20
25
30
0
5
10
QTD YTD 1 Year 3 Years 5 Years 10 Years Since Inception
Columbia Institutional High Yield (Gross) BofA ML High Yield Cash Pay Constrained Index
Source: Columbia Management Investment Advisers, LLC. Past performance does not guarantee future results.Periods over one year are annualized. This information is based on the gross performance of the Columbia Institutional High Yield Fixed Income Composite. Please refer to the full composite presentation in the Appendix for more information on performance, calculation methodology and benchmarks.
28 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Columbia Institutional High Yield Fixed Income –Risk/Return Characteristics
C l bi B fA ML Hi h Yi ld
Risk/Return CharacteristicsSince Inception Ending 12/31/2011
Columbia Institutional High
Yield Fixed Income
BofA ML High Yield Cash Pay
Constrained IndexRelative Return 2.34% --Tracking Error 3 38%Tracking Error 3.38% --Information Ratio 0.69 --Alpha 3.05% --Beta 0.79% --R Squared 0 91% 1 00%R-Squared 0.91% 1.00%Standard Deviation 8.47% 10.24%Sharpe Ratio 0.80 0.43
Inception date: June 30 1999Inception date: June 30, 1999Source: Columbia Management Investment Advisers, LLC. Past performance does not guarantee future results.This information is based on the gross performance of the Columbia Institutional High Yield Fixed Income Composite and is annualized as appropriate. Please refer to the full composite presentation in the Appendix for more information on performance, calculation methodology and benchmarks. This page contains supplemental data. Please see the standard disclosure page at the end of this presentation for more information.
29 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Columbia Institutional High Yield Fixed Income –Portfolio Characteristics
% Market Value
1 22.63%
Internal Ratings Exposure as of 12/31/2011
Risk Ratings
Comparative Ratings as of 12/31/2011
1
2
1.98
35 86 -BBB
2 54.54%3 22.82%4 0.00%Total 100.00%
% Market Value
Relative Value Ratings
2
3
4
35.86
44.67
13.97
-
47.94
39.18
11.73
0 98
BB
B
CCC
CCValue1 13.43%2 54.96%3 25.92%4 4.28%5 0.00%
1
2
3
4
5
-
3.50
0.02
0.98
0.16
-
C
CASH
Not Rated
Total 100.00%
BofA ML High Yield Cash Pay
Constrained Index
Columbia Institutional High Yield Fixed Income
Portfolio Characteristics as of 12/31/2011
Columbia Institutional High Yield Fixed IncomeBofA ML High Yield Cash Pay Constrained Index
196 1,083
300 2,166
7.27% 8.15%4.33 yrs 4.17 yrsAverage Effective Duration
Number of Issuers
Number of IssuesYield to Worst (YTW) Source: Columbia Management Investment Advisers, LLC.
This information is based on a representative account in the Columbia Institutional High Yield Fixed Income Composite. Risk and relative value ratings are based on the Team’s internal proprietary ratings system
604 bps 696 bps
5.43 yrs 5.88 yrs
B1 B1
103 10071 63
Years to Maturity
Average Credit QualityAverage Price
Turnover (1 Yr)
Option Adjusted Spread (OAS) ratings are based on the Team s internal, proprietary ratings system. Please refer to that page for additional information. Bond ratings are divided into categories ranging from AAA (highest) to D (lowest), and are subject to change. The ratings shown are determined by using the average of the ratings from Moody’s, S&P, and Fitch. When a rating from only two agencies is available, the average of the two is used. When a rating from only one agency is available, that rating is used. When a bond is not rated by any of these agencies, it is designated as Not Rated. Holdings of the portfolio other than bonds are categorized under other.
30 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
71.63 --
81.07 --
80.38 --Turnover (5 Yr)
Turnover (1 Yr)
Turnover (3 Yr)
g p gCredit ratings are subjective opinions and not statements of fact. Please refer to the full composite presentation in the Appendix for more information on performance, calculation methodology and benchmarks. This page contains supplemental data. Please see the standard disclosure page at the end of this presentation for more information.
Columbia Institutional High Yield Fixed Income –Portfolio Characteristics
% Portfolio % Index Overweights Underweights Market Weights
2 12% 1 65% Capital Goods Real Estate Healthcare
Industry Over/Underweights as of 12/31/2011Top 10 Issuers* as of 12/31/2011Issuer/Issue
SPRINT NEXTEL 2.12% 1.65% Capital Goods Real Estate Healthcare
SPRINT NEXTEL 1.96% 1.32% Media Insurance Basic Industry
SPRINT CAPITAL 0.16% 0.15% Automotive Consumer Non-Cyclical Services
ALLY FINANCIAL 2.04% 0.97% Energy Banking Financial Services
HCA INC 1 81% 1 63% Telecommunications Consumer Cyclical Technology & Electronics
SPRINT NEXTEL
HCA, INC 1.81% 1.63% Telecommunications Consumer Cyclical Technology & Electronics
REGENCY ENERGY 1.50% 1.77% Utility
FORD MOTOR COMPANY 1.48% 0.02%
REYNOLDS GROUP 1.45% 2.00%
WINDSTREAM CORP 1 43% 0 43%WINDSTREAM CORP 1.43% 0.43%
PAETEC HOLDING CORP 0.90% 0.26%
WINDSTREAM CORP 0.52% 0.06%
FORTESCUE METALS 1.40% 1.18%
CIT GROUP 1 36% 0 36%CIT GROUP 1.36% 0.36%
AIG 1.34% 0.27%
*Excludes cash
Source: Columbia Management Investment Advisers, LLC. This information is based on a representative account in the Columbia Institutional High Yield Fixed Income Composite. Data above is compared to the BofA ML High Yield Cash Pay Constrained Index. Please refer to the full composite presentation in the Appendix for more information on performance, calculation methodology and benchmarks. This page contains supplemental data. Please see the standard disclosure page at the end of this presentation for more information.
31 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Columbia Institutional High Yield Fixed IncomeAdvantage
> A deep and stable team of high yield specialists striving to deliver consistent and repeatable investment results through:results through: A disciplined and well-defined credit selection process that seeks to maximize the
return per unit of risk Rigorous, independent, in-house credit research and a proprietary rating system Tactical portfolio management to exploit varying market conditions Tactical portfolio management to exploit varying market conditions A constant focus on downside risk management
> A commitment to client-driven, customized investment solutions and service
32 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Appendix
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Standard Fee Schedule
Columbia Institutional High Yield Fixed Income -Separate Account Fee Schedule
First $50 Million 0.50%
Next $50 Million 0.40%
Over $100 Million Negotiable
34 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Biographies
Colin Moore, ASIP Chief Investment OfficerColin Moore is the Chief Investment Officer for Columbia Management Investment Advisers LLC His responsibilities include ensuring that a disciplined investment process isColin Moore is the Chief Investment Officer for Columbia Management Investment Advisers, LLC. His responsibilities include ensuring that a disciplined investment process is in place across all asset classes, including equity, fixed income and cash. He joined Columbia Management Group (“CMG”) in 2002 and was appointed Chief Investment Officer in October 2007. Mr. Moore transitioned to Columbia Management Investment Advisers, LLC as part of its acquisition of the long-term asset management business of CMG from Bank of America. He was Head of Fundamental and Quantitative Equity Investments from 2002 to January 2008. He was Head of Fixed Income and Liquidity Strategies from 2009 to 2010. He has been a member of the investment community since 1983. Prior to joining the firm, Mr. Moore was chief investment officer of global and international value equities and associate director of research at Putnam Investments. Previously, Mr. Moore was director of research and chief investment officer for Rockefeller & Co. in New York and London. Throughout his career in the investment industry, he has held portfolio management positions with three London-based asset management firms as ell as a role in prod ct de elopment Mr Moore attended the London B siness School here he completed its In estment Management Program andmanagement firms, as well as a role in product development. Mr. Moore attended the London Business School where he completed its Investment Management Program and he is an associate by examination of the Institute of Investment Management and Research (IIMR).
Colin J. Lundgren, CFAManaging Director, Head of Fixed IncomeColin Lundgren is Managing Director and Head of Fixed Income at Columbia Management Investment Advisers, LLC. In this role, Mr. Lundgren is responsible for investment oversight of managed and owned fixed income portfolios, leading a team of experienced sector team leaders. Prior to his current role which commenced in 2010, he was a sector leader for institutional fixed income and asset allocation products from 2003 to 2010. In addition, he held positions of responsibility for the development and operation of enhanced equity index products, fixed income quantitative analysis, mortgage analysis and management of the investment statistical analysis group. He began his investment career at the firm in 1986. Mr. Lundgren holds a B.A. in Political Science from Lake Forest College. He earned the Chartered Financial Analyst designation in 1995 and is a member of the CFA Society of Minnesota.
Timothy (Tim) J. Masek, CFAVice President Director of Fixed Income ResearchVice President, Director of Fixed Income ResearchTim Masek is Vice President, Director of Fixed Income Research at Columbia Management Investment Advisers, LLC. He joined the firm in 1993 and was promoted to his current capacity in 1994. He has been in the investment industry since 1987. Prior to joining the firm, he worked as a fixed income analyst in the public and private markets for two money management firms. Mr. Masek earned a B.S. and an M.B.A. from the University of Minnesota. He earned the Chartered Financial Analyst designation in 1990 andis a member of the CFA Society of Minnesota.
Jennifer Ponce de LeonVice President, Sector Leader, High Yield Fixed IncomeJennifer Ponce de Leon is Vice President and Sector Leader for High Yield Fixed Income at Columbia Management Investment Advisers, LLC. She joined the firm in 1997 as a Senior Credit Analyst covering high yield bonds and was promoted to Portfolio Manager in 2000. She assumed her current capacity as Sector Leader in 2003. Ms. Ponce de Leon has been in the investment industry, specializing in high yield bonds, since 1989. She was previously employed at T. Rowe Price Associates as a vice president and senior credit analyst covering high yield bonds. Prior to that, she held a similar position at Stein Roe & Farnham. She graduated from Augustana College, Rock Island, Illinois, with a B.A. in Business Administration in 1989, and earned an M.B.A with a concentration in Finance from De Paul University, Chicago, Illinois in 1995. She also holds her Series 7 and 63 licenses with FINRA.Series 7 and 63 licenses with FINRA.
35 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
BiographiesBrian J. Lavin, CFAVice President, Sector Manager, High Yield Fixed IncomeBrian Lavin is a Vice President and Sector Manager for High Yield Fixed Income at Columbia Management Investment Advisers, LLC. He joined the firm in April 1994 as a Credit Analyst covering high yield bonds, was promoted to Associate Portfolio Manager in 1999 and to Portfolio Manager in 2000. He has been in the investment industry since 1986. Before joining the firm, Mr. Lavin was a high yield analyst at Van Kampen Merrit. He has experience in both non-investment grade and investment grade issuers and has covered a variety of industries. Mr. Lavin earned a B.A. in Business Administration from the University of St. Thomas and an M.B.A. from the University of Wisconsin - Milwaukee. He earned the Chartered Financial Analyst designation in 1991.
Daniel Segner, CFAVice President, Sector Manager, High Yield Fixed IncomeDaniel Segner is a Vice President and Sector Manager for High Yield Fixed Income at Columbia Management Investment Advisers, LLC. He began his investment career at the firm in 1984 and has held positions in both equity and fixed income research. He was promoted to Associate Portfolio Manager in 1994 and to Portfolio Manager in 1995 He has been in his current position since 1995 Mr Segner earned a B B A from the University of Minnesota – Duluth and his M B A from the University of1995. He has been in his current position since 1995. Mr. Segner earned a B.B.A. from the University of Minnesota Duluth and his M.B.A. from the University of Minnesota. He earned the Chartered Financial Analyst designation and is a member of the CFA Society of Minnesota.
Mark A. Van Holland, CFAVice President, Sector Manager, High Yield Fixed IncomeMark A. Van Holland is a Vice President and High Yield Sector Manager at Columbia Management Investment Advisers, LLC. He joined the firm as a High Yield Credit Analyst in 1998 and was promoted to his current position in 2010. He has been in the investment industry since 1995. Prior to joining the firm, he worked for Lutheran B th h d S i A l t i hi h i ld i t t d d i t l t iti P i t th t M V H ll d id d i tit ti l ll id itBrotherhood as a Senior Analyst covering high yield, investment grade and private placement securities. Prior to that, Mr. Van Holland provided institutional sell-side equity research coverage, focusing on wholesale distributors. Mr. Van Holland earned a B.A. in Business Administration from Northwestern College in Orange City, Iowa, and an M.B.A. with a concentration in Finance from the University of Iowa. He earned the Chartered Financial Analyst designation in 1997.
David J. GreavuVice President, Sector Manager, High Yield Fixed IncomeDavid Greavu is a Vice President and Sector Manager for High Yield Fixed Income at Columbia Management Investment Advisers, LLC. He began his investment career at the firm in 1977 in the operations and settlement area of the investment department and became an equity trader in 1981. He began working as a senior fixed income trader in 1986 and was promoted to the Director of Fixed Income Trading in 2000. Mr. Greavu assumed his current capacity as Sector Manager in 2003 and still maintains a primary focus on trading. He is a former President of the Board of Governors for the Minnesota Security Dealers, and earned a B.A. and an M.B.A. from the University of St. Thomas.
Michael Roberts, CFASector Manager High Yield Fixed IncomeSector Manager, High Yield Fixed IncomeMichael Roberts is a Sector Manager for High Yield Fixed Income at Columbia Management Investment Advisers, LLC, with a focus on trading. He began his career at the firm in 1998. Prior to moving into his current role in May 2010, Mr. Roberts worked to support the high yield strategies since 2004, most recently as an associate analyst from 2007 to 2010 and prior to that as a portfolio analyst from 2004 to 2007. Mr. Roberts earned a B.A. in International Relations from the University of Wisconsin and the Chartered Financial Analyst designation in 2007.
Jason Sittko, CFA Senior Portfolio Analyst High Yield Fixed IncomeSenior Portfolio Analyst, High Yield Fixed IncomeJason Sittko is a Senior Portfolio Analyst supporting the High Yield Fixed Income Sector Team at Columbia Management Investment Advisers, LLC. He joined the firm in 2007 as Sr. Business Analyst and has been in his current position since 2007. Prior to joining the firm, he served as a Senior Equity Analyst covering the technology sector at Lowry Hill (Wells Fargo) from 6/1994 to 9/2002. Mr. Sittko holds a B.S. in Economics from the University of Minnesota and earned the Chartered Financial Analyst designation in 1999. He has been in the investment industry since 1991.
36 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Biographies
Chris JorelPortfolio Analyst, High Yield Fixed IncomeChris Jorel is a Portfolio Analyst supporting the High Yield Fixed Income Sector Team at Columbia Management Investment Advisers, LLC. Mr. Jorel began his investment career at the firm in 2006 in the Finance Department and assumed his current capacity on the High Yield Sector Team in July 2010. Mr. Jorel holds a B.A. in Finance from Lindenwood University and is a Level III Candidate in the CFA Program.
Charles (Chuck) R. Fear, Jr., CFAVice President, High Yield Research Sector LeaderChuck Fear is a Vice President and High Yield Research Sector Leader at Columbia Management Investment Advisers, LLC. He joined the firm in May 2000 and has been in the investment industry since 1995. He was previously employed as a financial analyst for the Purdue Research Foundation. He has additional experience as an intern for InvistaCapital Management where he focused on international equities. Mr. Fear earned a B.S. in Management and Accounting from Purdue University and an M.B.A. with a concentration in Finance from Indiana University. He earned the Chartered Financial Analyst designation in 2001 and is a member of the CFA Society of Minnesota.
Julie Grey CPA CFAJulie Grey, CPA, CFAVice President, Senior Analyst, High Yield Fixed IncomeJulie Grey is a Vice President and Senior Analyst for High Yield Fixed Income at Columbia Management Investment Advisers, LLC. She joined the firm in 1997 and has been in the investment industry since 1992. Before joining the firm, she worked as a credit analyst at Piper Capital Management in Minneapolis, Minnesota. Ms. Grey earned a B.B.A. in Accounting from the University of Wisconsin-Madison and is a Certified Public Accountant. She earned the Chartered Financial Analyst designation in 1998 and is a member of the CFA Society of Minnesota.
Brett Kaufman, CFAVice President, Senior Analyst, High Yield Fixed IncomeBrett Kaufman is a Vice President and Senior Analyst for High Yield Fixed Income at Columbia Management Investment Advisers, LLC. He joined the firm in September 2002 as a High Yield Bond Analyst and has been in the investment industry since 1995. He was previously employed by Strong Capital Management as a high yield bond analyst covering wireless telecommunications, lodging, retail, and textiles. Mr. Kaufman earned a B.S. in Finance from Miami University and an M.B.A. with a concentration in Finance from the Indiana University Kelly School of Business in 2001. He earned the Chartered Financial Analyst designation in 2002.
Michael J. Skatrud, CFAVice President Senior Analyst High Yield Fixed IncomeVice President, Senior Analyst, High Yield Fixed IncomeMichael Skatrud is a Vice President and Senior Analyst for High Yield Fixed Income at Columbia Management Investment Advisers, LLC. He joined the firm in March 2010 and has been in the investment industry since 1995. Prior to joining the firm, Mr. Skatrud served in various senior credit research roles at Columbia Management Group, LLC, OFI Institutional Management (OppenheimerFunds, Inc.), and Putnam Investments. He has additional experience as a fixed income research assistant at Miller Anderson & Sherrerd, LLP (Morgan Stanley Investment Management) and an investment banking associate with Firstar Bank Milwaukee. Mr. Skatrud holds a B.S. in Economics from the University of Wisconsin-Madison and received his M.B.A. in Finance from the Wharton School of Business at the University of Pennsylvania. He holds the Chartered Financial Analyst designation.
Spencer Sutcliffe Vice President, Senior Analyst, High Yield Fixed Income Spencer Sutcliffe is a Vice President and Senior Analyst for High Yield Fixed Income at Columbia Management Investment Advisers, LLC. He is responsible for energy and chemicals analysis. He joined the firm in October 2010 and has been in the investment industry since 2001. Prior to joining the firm, Mr. Sutcliffe was a senior high yield analyst for Principal Global Investors. He has additional experience as an assistant vice president for 40/86 Advisors and as a financial Analyst for Conseco. Mr. Sutcliffe holds a B.B.A. in Economics from Marshall University and received his M.B.A. in Finance from Butler University.y y
37 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
BiographiesChristopher T. Thyssen, CFAVice President, Senior Analyst, High Yield Fixed IncomeChris Thyssen is a Vice President and Senior Analyst for High Yield Fixed Income at Columbia Management Investment Advisers, LLC. He joined the firm in February 2000 as a Credit Analyst covering high yield bonds and has been in the investment industry since 1997. Previously, he was a high yield analyst with Northwestern Investment Management Company. Mr. Thyssen earned an M.S. in Finance, Investments and Banking from the Applied Security Analysis Program at the University of Wisconsin-Madison. He has earned the Chartered Financial Analyst designation.
Thomas M. TracyVice President, Senior Analyst, High Yield Fixed IncomeTom Tracy is a Vice President and Senior Analyst for High Yield Fixed Income at Columbia Management Investment Advisers, LLC. He joined the firm in August 1998 and has been in the investment industry since 1977. Prior to joining the firm, he worked as a commercial loan officer with National City Bank of Minneapolis. Mr. Tracy earned a B.A. in Business Administration from St. Thomas University.
Patricia VannelliSenior Analyst, High Yield Fixed IncomePatti Vannelli is a Senior Analyst for High Yield Fixed Income at Columbia Management Investment Advisers, LLC. She joined the firm in July 2008 and has been in theinvestment industry since 2004. Prior to joining the firm, Patti spent three years at JP Morgan Securities, Inc. as an Analyst in Energy Investment Banking. Ms. Vannelli holds a B.B.A. in Finance, Investment and Banking, from the University of Wisconsin – Madison.
Jason WeinbergSenior Analyst, High Yield Fixed IncomeJ W i b i S i A l t f Hi h Yi ld Fi d I t C l bi M t I t t Ad i LLC H j i d th fi i N b 2011 d h b i thJason Weinberg is a Senior Analyst for High Yield Fixed Income at Columbia Management Investment Advisers, LLC. He joined the firm in November 2011 and has been in the investment industry since 2005. Previously, he was a High Yield analyst for Allstate Investments, LLC where he covered the Aerospace and Defense, Environmental Services, Airlines, Metals and Mining and Utility sectors. Mr. Weinberg holds a B.B.A. in Finance and Management from Florida Atlantic University and earned the Chartered Financial Analyst designation in 2009.
Christina PlutaAnalyst, High Yield Fixed Income Christina Pluta is an Analyst for High Yield Fixed Income at Columbia Management Investment Advisers LLC She joined the firm in 2010 as a High Yield Research AssociateChristina Pluta is an Analyst for High Yield Fixed Income at Columbia Management Investment Advisers, LLC. She joined the firm in 2010 as a High Yield Research Associate and was promoted to Analyst in February 2012. Ms. Pluta has been a member of the investment community since 2005. She was previously employed with RBC Capital Markets as a research associate and prior to that she worked as an investment associate for Putnam Investments. Ms. Pluta earned a B.B.A. in Cellular and Molecular Biology from Colby College.
Wendy PriceDirector, Institutional Product Management, Credit StrategiesWendy Price is a Director for Institutional Product Management – Credit Strategies at Columbia Management Investment Advisers, LLC responsible for representing the firm'sWendy Price is a Director for Institutional Product Management Credit Strategies at Columbia Management Investment Advisers, LLC responsible for representing the firm s high yield, investment grade and bank loan strategies in a product specialist capacity with institutional clients, prospects and consultants. She joined the firm in January 2007 and has been a member of the investment community since 2003. She was previously employed with Eaton Vance and Putnam Investments in institutional product and marketing roles. Ms. Price earned a B.A. in Economics and English from Bowdoin College. She is also a Level III Candidate in the CFA program.
Brian A. ReedRegional Vice President (Western Region), Global Institutional DistributionBrian is Regional Vice President for Institutional Sales in the West at Columbia Management Investment Advisers LLC He joined the firm in 2007 and has been in the financialBrian is Regional Vice President for Institutional Sales in the West at Columbia Management Investment Advisers, LLC. He joined the firm in 2007 and has been in the financial services industry since 2001. Brian was previously employed as Vice President and Senior Marketing Executive at CRT Capital Group, where he was responsible for institutional sales and consultant relations. Prior to that, he was employed by Fidelity Investments, where he served as a Relationship Manager distributing Fidelity’s institutional investment strategies to endowments, foundations, and corporate defined benefit plans. Brian graduated from the University of Vermont with a degree in Community Development and Applied Economics and holds series 7 and 63 licenses with FINRA.
38 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
High Yield Investment Strategies
Together, the high yield team manages a broad array of strategies, which helps them better identify the market and credit trends important for tactical portfolio executionmarket and credit trends important for tactical portfolio execution.
Lower QualityTactical Total ReturnHigher Quality
Insurance Assets BB – B rated bonds
Buy and hold
y
High QualityHigh Yield
BB B t d b d
High Yield Institutional Strategy
Full spectrum of
High Yield Traditional Broad Based
Full spectrum of
Higher Quality
Buy and hold BB – B rated bonds Full spectrum of high yield market
Full spectrum of high yield market
39
Like many high yield managers, Columbia Management invests a significant portion of its high yield portfolios in Rule 144A securities that may only be purchased by Qualified Institutional Buyers (QIBs). Investors who do not qualify as QIBs will not be eligible to purchase Rule 144A securities, and should consider how their investment guidelines, performance, and holdings may differ from those of QIB client accounts.
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
High Yield Trading Operations
We strive to maintain a fully integrated process of decision making and implementation for effectiveness and efficiencyefficiency.
Experience:> Two sector managers serve as dedicated traders with four additional sector managers that are available to> Two sector managers serve as dedicated traders, with four additional sector managers that are available to
trade when needed> Sector managers and traders sit at the trading desk, allowing for seamless interaction> Effective and ongoing communication between analysts, traders and sector managers enables disciplined
d ti l ti f idand timely execution of ideas> Experienced managers and strong relationships with brokers are key to efficient trade execution
Technology platform:> L di tf li t t di d i k t t l> Leading portfolio management, trading and risk management tool > Order entry, pre-and post-trade compliance, risk analysis, report management, scenario analysis, and
performance attribution
Trade Execution:Trade Execution:> Required to seek best execution on each trade> Our trading procedures are designed to address conflicts of interest that arise from managing multiple types
of accounts> Trades are allocated pro-rata based on account size
40 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Benchmark Change
Benchmark Change
Effective December 1 2011 we changed the benchmark of the Columbia Institutional High Yield FixedEffective December 1, 2011, we changed the benchmark of the Columbia Institutional High Yield Fixed Income Composite from the JPMorgan Global High Yield Bond Index to the BofA Merrill Lynch U.S. High Yield Cash Pay Constrained Index
RationaleRationale> The JPMorgan Global High Yield Bond Index was chosen in 2002 when very few constrained index
options existed> Since 2002, most of the major high yield index families began offering issuer constrained options> Recent changes to the definition of emerging markets countries within the BofA Merrill Lynch high yield
indices will result in zero exposure to emerging markets effective 1/1/2012> As a result of this change and some existing construction methodology differences between JPM and
BofA Merrill Lynch indices, we believe the BofA Merrill Lynch U.S. High Yield Cash Pay Constrained y , y g yIndex is a better representation of our investable universe
Benchmark Comparison
JPMorgan Global High Yield BofA Merrill Lynch U S High Yield Cash Pay ConstrainedJPMorgan Global High Yield BofA Merrill Lynch U.S. High Yield Cash Pay Constrained
Includes defaulted securities Does not include defaulted securities
Constrained at two largest securities per issuer Constrained at 2% per issuer
Includes emerging market corporate bonds Removed non G10 countries effective 1/1/2012Includes emerging market corporate bonds Removed non-G10 countries effective 1/1/2012
Adds new issues upon issuance Adds new issues at month-end
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
U.S. High Yield Index Summary
Comparison of U.S. High Yield Indices As of December 31, 2011
JP Morgan Global HY
JP Morgan Developed HY
Barclays HY Merrill Lynch HY Master II
Merrill Lynch HYCP Constrained
Merrill Lynch HY BB/B
CSFB HY CSFB Developed HY
CSFB Inst'l HY
Citigroup HY Mkt
Citigroup HY Mkt Capped
Bloomberg Ticker CHYI JPDV BCS H0A0 JUC0 JUC4 CSHY None None SBHYMI SBHCMCAPPrimary Contact Peter Acciavatti Peter Acciavatti None Phil Galdi Phil Galdi Phil Galdi Jonathan Blau Jonathan Blau Jonathan Blau Sau-Man Kam Sau-Man KamPhone 212-270-9633 212-270-9633 212-526-1000 212-449-5545 212-449-5545 212-449-5545 212-538-3533 212-538-3533 212-538-3533 212-816-8495 212-816-8495Inception Date January 1994 January 1995 July 1983 August 1986 January 1997 January 1997 January 1986 January 1999 January 1986 January 1989 July 2002Inception Date January 1994 January 1995 July 1983 August 1986 January 1997 January 1997 January 1986 January 1999 January 1986 January 1989 July 2002As of 12/31/11Par Amount (MM) 775,485 679,964 954,698 953,974 927,575 777,492 699,146 692,789 661,671 791,070 748,380Market Value (MM) 763,930 676,700 944,769 935,729 915,419 787,577 682,453 677,667 662,120 796,400 752,870# of Issues 1,625 1,427 1,847 2,003 1,948 1,599 1,445 1,426 1,313 1,588 1,588Inclusion RulesNew Issue Inclusion Timing On Issuance On Issuance Monthly Rebalancing Monthly Rebalancing Monthly Rebalancing Monthly Rebalancing On Issuance On Issuance On Issuance Monthly Rebalancing Monthly RebalancingMinimum Amount Outstanding (par value)
$75 million $75 million $150 million $100 million $100 million $100 million $75 million $75 million $150 million $100 million $100 million
Minimum Amount before $50 illi $50 illi $150 illi $100 illi $100 illi $100 illi $50 illi $50 illi $150 illi $100 illi $100 illi
being removed$50 million $50 million $150 million $100 million $100 million $100 million $50 million $50 million $150 million $100 million $100 million
144As Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
Rating RequirementMoody and S&P rated
5B and LowerMoody and S&P rated
5B and Lower(1) Moody and S&P rated 5B and Lower
(2) Composite rating of BB1 and Lower
(2) Composite rating of BB1 and Lower
(2) Composite rating of BB1 to B3
5B or Lower 5B or Lower(3) CC, C, and Default
excluded
Max of BB+/Ba1 by BOTH S&P and Mdy. Min of C
by S&P or Mdy.
Max of BB+/Ba1 by BOTH S&P and Mdy. Min of C by
S&P or Mdy.
Defaulted Issues Yes Yes No No No No Yes Yes No No NoZero Coupon Yes Yes Yes Yes No No Yes Yes Yes Yes YesPay-in-kind Yes Yes No Yes No No Yes Yes Yes Yes YesFloating Rate No No No No No No No No No No NoFloating Rate No No No No No No No No No No NoConvertibles No No No No No No No No No No NoPreferred Securities No No No No No No No No No No NoYankees Yes Yes Yes Yes Yes Yes Yes Yes Yes No NoEmerging Market Yes - corporates only No No No No No Yes - corporates only No Yes - corporates only No No
Foreign CurrencyOnly $US-
denominatedOnly $US-
denominatedOnly $US-
denominatedOnly $US-
denominatedOnly $US-
denominatedOnly $US-
denominatedOnly $US-
denominatedOnly $US-
denominatedOnly $US-
denominatedOnly $US-denominated Only $US-denominated
Issuer Limitations (4) 2 most liquid (4) 2 most liquid None None Capped at 2%Capitalization
weighted, not to (4) 2 most liquid (4) 2 most liquid (4) 2 most liquid NoneCapped at $5 billion par
t( ) q ( ) q pp g ,
exceed 2% of index( ) q ( ) q ( ) q
amount
Fallen Angels
(5) Added after 3 month seasoning
(market value used for inclusion requirement
instead of par value)
(5) Added after 3 month seasoning
(market value used for inclusion
requirement instead of par value)
No Seasoning No Seasoning No Seasoning No Seasoning
(5) Added after 3 month seasoning
(market value used for inclusion requirement
instead of par value)
(5) Added after 3 month seasoning
(market value used for inclusion
requirement instead of par value)
(5) Added after 3 month seasoning
(market value used for inclusion requirement
instead of par value)
No Seasoning
Added after one full calendar month (if
downgraded in Jan, will be included in Mar)
Rising StarsRemoved
immediately onRemoved
immediately on On rebalance On rebalance On rebalance On rebalanceRemoved
immediately onRemoved
immediately onRemoved
immediately on On rebalance On rebalanceRising Stars immediately on upgrade
immediately on upgrade
On rebalance On rebalance On rebalance On rebalance immediately on upgrade
immediately on upgrade
immediately on upgrade
On rebalance On rebalance
Remaining Term-to-Maturity > or = 1 yr > or = 1 yr > or = 1 yr > or = 1 yr > or = 1 yr > or = 1 yr > or = 1 yr > or = 1 yr > or = 1 yr > or = 1 yr > or = 1 yr
Pricing RequirementExcludes those < 60% of par at the beginning
of each month
42 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
U.S. High Yield Index SummaryComparison of U.S. High Yield Indices As of December 31, 2011
JP Morgan Global HY
JP Morgan Developed HY
BarCap HY Merrill Lynch HY Master II
Merrill Lynch HYCP Constrained
Merrill Lynch HY BB/B
CSFB HY CSFB Developed HY
Citigroup HY Mkt Capped
1984 9.701985 25.641986 17.45 15.64 18.271987 4.99 4.47 6.53 8.141988 12.53 13.36 13.66 14.641989 0.83 2.31 0.39 3.261990 (9.59) (4.36) (6.38) (2.52)1991 46.19 39.17 43.75 38.931992 15.75 17.44 16.66 17.781993 17.12 16.69 18.91 18.981994 (1.57) (1.03) (1.03) (0.97) (2.20)1995 19 52 19 47 19 17 20 46 17 38 21 171995 19.52 19.47 19.17 20.46 17.38 21.171996 13.01 12.90 11.35 11.27 12.42 12.701997 12.39 12.93 12.76 13.27 12.58 12.52 12.63 12.291998 0.97 1.70 1.87 2.95 3.63 4.48 0.58 1.521999 3.38 2.34 2.39 2.51 1.57 2.21 3.28 2.26 4.502000 (5.83) (6.33) (5.86) (5.12) (3.87) (2.69) (5.21) (6.19) (3.62)2001 5.48 5.70 5.28 4.48 6.24 6.67 5.80 6.25 7.372002 2.14 1.98 (1.41) (1.89) 0.14 1.32 3.10 3.03 2.202003 27.50 27.47 28.97 28.15 27.01 22.78 27.94 27.90 28.672004 11.55 11.25 11.13 10.87 10.76 9.91 11.95 11.75 10.642005 3.07 2.62 2.74 2.74 2.86 3.41 2.26 2.03 2.652006 11.45 11.58 11.85 11.77 10.61 9.27 11.92 11.84 10.212007 2.88 2.69 1.87 2.19 2.50 3.18 2.65 2.54 2.612008 (26.83) (26.80) (26.16) (26.39) (25.96) (23.71) (26.17) (26.09) (25.87)2009 58.90 58.77 58.21 57.51 56.78 45.98 54.22 54.33 54.112010 15 05 14 86 15 12 15 18 15 10 14 25 14 41 14 39 13 982010 15.05 14.86 15.12 15.18 15.10 14.25 14.41 14.39 13.982011 5.73 6.58 4.98 4.38 4.49 5.43 5.47 5.46 5.75
The JP Morgan Global High Yield Index is designed to mirror the investable universe of the JP Morgan global high yield corporate debt market, including domestic and international issues. International issues are comprised of both developed and emerging market issues. The JP Morgan Developed High Yield Index is designed to mirror the investable universe of the US$ global high yield corporate debt market, including domestic and internationalissues. International issues exclude emerging market debt. The Barclays Capital High Yield Index covers the universe of fixed rate, non-investment grade debt. Pay-in-kind (PIK) bonds, Eurobonds, and debt issues from countries designated asemerging markets (e.g., Argentina, Brazil, Venezuela, etc.) are excluded, but Canadian and global bonds (SEC registered) of issuers in non-EMG countries are included. Original issuezeroes step up coupon structures and 144 As are also includedzeroes, step-up coupon structures, and 144-As are also included. The BofA Merrill Lynch High Yield Master II Index tracks the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market. The Bof A Merrill Lynch High Yield Cash Pay Constrained Index tracks the performance of non-investment grade corporate bonds publicly issued in the U.S. domestic market. The BofA Merrill Lynch High Yield Index BB/B is a subindex of the Merrill Lynch High Yield Cash Pay Constrained Index. It only includes those rated BB and B. The Credit Suisse High Yield Index is designed to mirror the investable universe of the US$ denominated high yield debt market. The Credit Suisse Developed High Yield Index is designed to mirror the investable universe of the US$ denominated high yield debt market, excluding emerging market debt. The Citigroup High Yield Market Capped Index is a subindex of the Citigroup High Yield Market Index. It caps the total debt of any single individual issuer at US$5 billion par amount outstanding and delays the entry of a fallen angel issuer's debt for a minimum of one month from its downgrade to high-yield status. Sources: JP Morgan, Chase, Barclays Capital, Bear Stearns, Merrill Lynch, and Credit Suisse First Boston. 1)Effective July 1, 2005, Barclays Capital indices use the middle rating of Moody's, S&P, and Fitch (dropping the highest and lowest ratings) to determine a security's index classification. Since October 1, 2003, Barclays Capital used the lower of Moody's and S&P
43
lower of Moody s and S&P. 2) Before 1/1/05, Merrill Lynch's composite rating was the average of Moody's and S&P and rounding down when necessary. For example, Baa3/BB+ would be rated a BB1 composite rating and included in the High Yield Index. As of 1/1/05, composite ratings are the average of Moody's, S&P, and Fitch. 3) CSFB Institutional High Yield Index includes split CCC/CC issues. 4) In general largest issues are considered most liquid, but there may be some variation between the CSFB and JPM indices due to this criteria. 5) Fallen angels are added to the index on the third month end following the downgrade. For example, if the downgrade occurs in December, it will be added in March's index. Columbia Management Investment Advisers, LLC is an SEC-registered investment adviser that offers investment products and services under the names Columbia Management Investments, Columbia Management Capital Advisers, and Seligman Investments.
For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Columbia Institutional High Yield Fixed Income Composite Presentation and Disclosures
Calendar Gross-of-
fees Net-of-fees R t
Primary Index
Secondary Index
Composite 3-Yr St
Primary Index 3-
Y St
Secondary Index 3-Yr Internal
Di iNumber of Total Composite
A t
Total Firm
Columbia Institutional High Yield Fixed Income CompositeStatement of Performance Results
Year Return (%)
Return (%)
Return (%)
Return (%)
Dev (%)
Yr St Dev (%)
St Dev (%)
Dispersion (%)
Portfolios Assets ($ mil.)
Assets ($ bil.)
2011 7.14 6.61 4.49 5.47 9.68 10.83 9.70 0.26 9 2,332 2992010 14.49 13.92 15.10 14.42 13.12 16.71 15.64 0.62 9 2,568 2662009 47 48 46 77 56 78 54 22 12 92 16 58 15 54 N A ≤ 5 768 972009 47.48 46.77 56.78 54.22 12.92 16.58 15.54 N.A. ≤ 5 768 972008 -18.45 -18.87 -25.96 -26.17 10.12 13.13 12.54 N.A. ≤ 5 52 812007 3.95 3.43 2.50 2.67 4.32 4.39 4.24 N.A. ≤ 5 69 1012006 11.04 10.49 10.61 11.92 3.51 3.75 3.56 N.A. ≤ 5 71 962005 5.41 4.88 2.86 2.26 4.55 5.24 4.91 N.A. ≤ 5 64 912004 12 90 12 34 10 76 11 96 4 97 7 45 6 19 N A ≤ 5 71 1012004 12.90 12.34 10.76 11.96 4.97 7.45 6.19 N.A. ≤ 5 71 1012003 24.49 23.88 27.01 27.93 N.A. N.A. N.A. N.A. ≤ 5 68 1052002 7.07 6.54 0.14 3.11 N.A. N.A. N.A. N.A. ≤ 5 43 98
Inception Date 6/30/1999
Columbia M anagement Investments claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Columbia M anagement Investments has been independently verified for the periods of January 1, 1993 to December 31, 2009. A copy of the verification report is available upon request. Verification assesses whether (1) the firm has complied with all the composite construction requirements o f the GIPS standards on a firm-wide basis and (2) the firm's po licies and procedures are designed to calculate and present performance in compliance with the GIPS standards. Verification does not ensure the accuracy of any specific composite presentation.
Columbia M anagement Investment Advisers, LLC, an SEC-registered investment adviser (formerly known as RiverSource Investments, LLC prior to M ay 1, 2010), o ffers investment products and services to institutional and retail markets. For purposes of compliance with the GIPS standards, Columbia M anagement Investment Advisers, LLC has defined the Firm as Columbia M anagement Investments (prior to M ay 1, 2010 the Firm was known as RiverSource Institutional Advisors; prior to August 1, 2005 the Firm was known as American Express Asset M anagement), an operating division of Columbia M anagement Investment Advisers, LLC that o ffers investment management and related services to institutional clients. The Firm was redefined in January 2011 to more fully encompass its asset management capabilities and in November 2008 and M ay 2010 due to acquisitions.
As of M ay 1, 2010, certain long-term assets o f Columbia M anagement Advisors, LLC (“ CM A” ) were merged into Columbia M anagement Investments and included in firm assets as o f that date.
1. A complete list and description of Columbia M anagement Investments composites is available upon request.1. A complete list and description o f Columbia M anagement Investments composites is available upon request.
2. Past performance is no guarantee of future results and there is the possibility o f loss o f value. There can be no assurance that an investment objective will be met or that return expectations will be achieved. Care should be used when comparing these results to those published by other investment advisers, o ther investment vehicles and unmanaged indices due to possible differences in calculation methods.
44 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Columbia Institutional High Yield Fixed Income Composite Presentation and Disclosures
Columbia Institutional High Yield Fixed Income Composite3. Portfo lios are valued, and returns are calculated and stated in U.S. do llars. Security transactions are recognized based on trade date accounting. Accruals for dividends are recorded on the ex-dividend date. Interest income is recognized on an accrual basis. Returns are calculated net o f non-reclaimable withholding taxes on dividends, interest, and capital gains. Reclaimable withholding taxes are accrued. Additional information regarding the firm’s policies and procedures for calculating and reporting performance results and preparing compliant presentations is available upon request.
4. Internal dispersion is calculated using the equal-weighted standard deviation o f the annual gross returns o f all portfo lios that were included in the Composite for the entire year. If the composite contains five or fewer accounts, a measure of dispersion is not statistically representative and is therefore not shown.
5. The composite consists o f discretionary High Yield Fixed Income Institutional portfo lios which primarily invest in marketable high yield debt securities o f companies located within the United States. Prior to September 30, 2010, the Columbia Institutional High Yield Fixed Income composite was referred to as the RiverSource Institutional High Yield Fixed Income composite. Prior to August 1, 2005, the RiverSource Institutional High Yield Fixed Income composite was referred to as the High Yield Fixed Income Institutional composite.
6. Effective July 1, 2009, the composite includes all portfo lios managed according to its investment strategy on a discretionary basis with a minimum account value of $10 million. Prior to July 1, 2009, the minimum account value for composite inclusion was $5 million. Beginning January 1, 2004, portfo lios are included in the composite the first full month under management. For periods prior to January 1, 2004, portfo lios were included in the composite after the first full calendar quarter under management. The composite was created January 1, 2002.
7. The composite performance results presented are calculated on an asset-weighted average basis using beginning of period values. The gross of fees returns are time-weighted rates o f return net o f commissions and other transaction costs. The net o f fee returns are time-weighted rates of return net o f commissions and other transaction costs, and reflect the maximum representative fee schedule used as a starting po int for fee negotiations for separate account strategies with institutional clients. M onthly returns reflect the reinvestment o f dividends and other earnings and are geometrically linked to calculate annual returns. Each portfo lio in the composite is valued on at least a monthly basis.
8. Gross of fee performance information does not reflect the deduction o f management fees. The fo llowing statement demonstrates, with a hypothetical example, the compound effect fees have on investment return: If a US $50.0 million portfo lio 's annual rate o f return is 5% for 5 years and the annual management fee is 50 basis points, the gross to tal 5-year return would be 27.6% and the 5-year return net o f fees would be 24.5%.
9. The primary benchmark is the Bank of America M errill Lynch High Yield Cash Pay Constrained Index that tracks the performance of non-investment-grade corporate bonds. Prior to December 1, 2011 the benchmark was the JP M organ Global High Yield Index. CM I believes the new benchmark is a better representation o f the Strategy and should provide a better measure of investment team abilities to manage sector, duration and yield curve positioning then the previous benchmark.
10.The secondary Index is the Credit Suisse First Boston High Yield Index is an unmanaged list o f high yield issues with a minimum issue size of US$100 million and an average maturity range of seven to ten years frequently used as a measure of market performance and is not necessarily similar to our High Yield Fixed Income Institutional portfo lios. Index returns reflect the reinvestment of dividends and other earnings and are not covered by the report of the independent verifiers.
11. The fo llowing fee schedule represents the current representative fee schedule used as the starting po int for fee negotiations for institutional clients seeking investment management services in the designated strategy: 0.50% on the first $50 million; 0.40% on the next $50 million; negotiable on all assets over $100 million.
45 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.
Standard Disclosures
Additional Performance DisclosuresThis document contains supplemental information, including portfolio holdings, portfolio characteristics, historical risk and return analysis, and supplemental performance information, which complements the composite presentation provided in this booklet. The supplemental information is designed to provide the proper context in which to , p p p p pp g p p pbetter understand the composite presentation. Please see the composite presentation and disclosures for more information on performance, calculation methodology and benchmarks. Information provided by third parties is deemed to be reliable but may be derived using methodologies or techniques that are proprietary or unique to the third party source.The portfolio holdings information provided by Columbia Management Investment Advisers, LLC and/or its agents or affiliates is proprietary and confidential. References to specific securities are included as an illustration of the investment management strategy and are not a recommendation to buy or sell. Holdings may represent only a small percentage of the portfolio and are subject to change based on market and other conditions. It should not be assumed that any particular security was or will prove to be profitable or that decisions in the future will be profitable or provide similar results to the securities discussed. p p pThese materials may only be used in one-on-one presentations with institutional investors. Notice to Consultants: Performance data contained in these materials may only be used with this limited audience and should be accompanied by the standard performance disclosures provided.
Entity Definitions and DisclosuresColumbia Management Investment Advisers, LLC is an SEC-registered investment adviser that offers investment products and services under the names Columbia Management Investments, Columbia Management Capital Advisers, and Seligman Investments.For purposes of compliance with the Global Investment Performance Standards (GIPS®), Columbia Management Investment Advisers, LLC (“Columbia Management” or “CMIA”) has defined the Firm as Columbia Management Investments, an operating division of Columbia Management Investment Advisers, LLC that offers investment management and related services to institutional clients. The Firm was redefined in January 2011 to more fully encompass its asset management capabilities.
46 For institutional use only. © 2012 Columbia Management Investment Advisers, LLC. All Rights Reserved.