Columbia Value and Restructuring Fund Q2 2015 Commentary

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Fund performance

? Class A shares of Columbia Value and Restructuring Fund returned 1.70% (excluding sales charge) for the second quarter, outperforming both the Russell 1000 Value Index and the S&P 500 Index. For monthly fund performance information, please visit columbiathreadneedle.com/us.

? The benchmark Russell 1000 Value Index and the S&P 500 Index returned 0.11% and 0.28%, respectively, for the same period.

? For the quarter, the portfolio benefited from strong stock selection in the information technology, financials, consumer staples, industrials and materials sectors. The detractors were driven primarily from stock selection in the consumer discretionary and telecommunication services sectors. An underweight to the poor-performing utilities sector also contributed.

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Market overview

After a modest contraction in gross domestic product earlier in the year, economic growth rebounded in the second quarter. Overall economic data was mixed but highlighted by strong job growth, an uptick in consumer spending, a rebound in manufacturing activity and solid housing activity buoyed confidence. However, events in Greece, slackening growth in China and uncertainty about the timing of a Federal Reserve (Fed) interest rate increase dampened the enthusiasm of forward-looking investors. Stocks eked out a fractional gain and the U.S. bond market was mostly in the red.

? Robust job growth drove the unemployment rate down to 5.3%. On average, 220,000 new jobs were added monthly during the second quarter.

? Consumers finally loosened the purse strings, as retail sales rose strongly and consumer confidence surged higher.

? Manufacturing activity stabilized after a harsh winter put a damper on both production and demand earlier in the year.

? The housing market gained momentum as first-time homebuyers entered the market in increasing numbers. Sales of existing and new homes rose, and prices moved higher as inventories tightened.

Against this backdrop, the S&P 500 Index returned 0.28% after a sharp one-day downturn late in June wiped out most of the quarter’s modest gains. Bonds, as measured by the Barclays U.S. Aggregate Bond Index, returned -1.68%. Health care, consumer discretionary and financials led the S&P 500 Index, with modest single-digit gains. Health care stocks were up 8.7% for the first half of the year, while the broad index remained nearly flat. Utilities, industrials and energy lagged, with single-digit losses for the quarter. Small-caps outperformed large- and mid-cap stocks, while growth outperformed value across all capitalization ranges.

Contributors and detractors

Stock selection was, once again, the primary driver of performance for the period, with strong stock selection in the information technology, financials, consumer staples, industrials and materials sectors. The detractors were driven primarily from stock selection in the consumer discretionary and telecommunication services sectors. An underweight to the poor-performing utilities sector also contributed.

? In the technology sector, the top contributor for the period was semi-conductor company Broadcom (NASDAQ:BRCM). The stock rallied after it was announced that it would be bought by fellow chipmaker Avago Technologies (NASDAQ:AVGO). The move would be a cost saving venture for both firms and would help to integrate technology in hopes of establishing cheaper chips for internet-connected gadgets. Broadcom has been successful in creating efficient chips for products like smartphones and tablets, and ultimately the move should assist Avago with product diversification.

? During the period, the banking industry outperformed, as JPMorgan Chase (NYSE:JPM), Bank of America and Citigroup were all relative contributors. In June, financials benefited from the indication that rates will likely increase in September. Higher rates should increase profit margins for large banks. In the meantime, bank fundamentals are slowly improving, and the group continues to return more capital to shareholders.

? The top contributor in the portfolio during the period was Cigna (NYSE:CI). Cigna continued its rally following an ongoing takeover attempt by health insurance giant Anthem. The bid by Anthem represented a substantial per share premium for Cigna. This transaction would be the largest ever United States health insurance merger and has the potential to create billions of dollars in cost-cutting synergies over time.

? A top detractor in the period was Tyco International (NYSE:TYC). Despite outpacing first-quarter earnings estimates, Tyco sold off on weak guidance for the remainder of 2015. Because of its international diversification, Tyco is negatively affected by the strengthening dollar. Nonetheless, the company, which remains the industry leader in the fire and security businesses, serves a wide array of customers in a fragmented market and should continue to gain market share in the long run.

? CBS (NYSE:CBS) was also a top detractor for the period. Poor ratings and a slow ad environment continue to weigh on many media companies. CBS hopes to combat the tough environment with share buybacks, increased retransmission fees, healthier international markets and improved content.

Outlook

During the first two quarters, market volatility remained low due to investor complacency, but we expect volatility to increase throughout the rest of the year. Global markets could be affected by a few different headwinds. The resolution of Greece’s debt issues might set a precedent for European economies moving forward if Greece abandons the euro. Short- term domestic returns will likely be affected by the Fed’s decision to raise interest rates and the type of resolution and its impact that occurs in Greece. With no rate movements in June, the market anticipates gradual increases later this year, possibly getting pushed into 2016.

Investors should consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. For a free prospectus or a summary prospectus, which contains this and other important information about the funds, visit columbiathreadneedle.com/us. Read the prospectus carefully before investing. Columbia Threadneedle Investments (Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies. Columbia funds are distributed by Columbia Management Investment Distributors, Inc., member FINRA and managed by Columbia Management Investment Advisers, LLC. The views expressed are as of the date given, may change as market or other conditions change, and may differ from views expressed by other Columbia Management Investment Advisers, LLC (CMIA) associates or affiliates. Actual investments or investment decisions made by CMIA and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon, and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results and no forecast should be considered a guarantee either. Since economic and market conditions change frequently, there can be no assurance that the trends described here will continue or that any forecasts are accurate. Additional performance information: All results shown assume reinvestment of distributions and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The fund returns shown include the performance of Excelsior Value and Restructuring Fund, a series of Excelsior Funds, Inc. and the predecessor to the Fund, for periods prior to March 31, 2008. 1The returns shown for periods prior to the share class inception date (including returns since inception, which are since fund inception) include the returns of the fund’s oldest share class. These returns are adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable. Please visit columbiathreadneedle.com/us/mutual-funds/ appended-performance for more information. Performance attribution is used to help explain the impact of the manager’s investment decisions with regard to overall investment policy, asset allocation, security selection and activity. Sector Allocation represents the contribution of the various sectors to a fund or portfolio’s return. Stock Selection represents the contribution to return of the specific stocks within a particular sector and the Net Value Added represents the combination of both. 2Expense ratios are generally based on the fund’s most recently completed fiscal year and are not adjusted for current asset levels or other changes. In general, expense ratios increase as net assets decrease. See the fund’s prospectus for additional details. The Russell 1000 Value Index measures the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values. The S&P 500 Index tracks the performance of 500 widely held, large-capitalization U.S. stocks. The Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM passthroughs), ABS, and CMBS. Indices shown are unmanaged and do not reflect the impact of fees. It is not possible to invest directly in an index

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