COLUMBIA ALTERNATIVE FUND DIVERSIFYING DIFFERENTLY

Share class A Advisor C Institutional Institutional 2 Institutional 3 R Symbol CLAAX CLFUX CLABX CLAZX CLIVX CLAYX CRRLX

This is a specialized fund. Please see risk disclosure for important information. “AS INVESTORS URGENTLY SEEK WAYS TO TRULY DIVERSIFY THEIR PORTFOLIOS, ALTERNATIVE BETA STRATEGIES OFFER A LOW-COST, LIQUID ALTERNATIVE TO MULTI-STRATEGY AND FUND-OF-HEDGE FUNDS.”

BILL LANDES HEAD OF GLOBAL INVESTMENT SOLUTIONS THINK DIFFERENTLY TO ACHIEVE YOUR GOALS

Over the last several decades, a portfolio invested across and bonds struck a nice balance between risk and return. But in today’s environment of subpar economic conditions around the world, in which and returns are likely to remain modest, achieving improved risk-adjusted returns through traditional asset class diversification has become extraordinarily challenging. And while formerly considered a valuable diversification tool, even hedge funds are coming up short.

To respond to this environment, you need to think differently. It’s time to consider new sources of return — and new sources of diversification — and look for meaningful ways to incorporate them into your portfolio.

FOLLOW AN ALTERNATIVE PATH TO DIVERSIFICATION

Based on a highly respected body of academic research spanning nearly 40 years, alternative beta strategies target absolute returns that are not market directional and therefore lowly correlated to major asset classes. They are also more liquid and transparent than traditional hedge funds and carry far lower fees.

Given today’s low interest rates and the potential for rates to rise, it is critical to make sure that your portfolio can withstand increasing market volatility. Columbia Alternative Beta Fund offers the opportunity to achieve a more diversified portfolio.

Diversification does not assure a profit or protect against loss.

Columbia Alternative Beta Fund 3 UNDERSTANDING HOW ALTERNATIVE BETA STRATEGIES WORK

THE TOOLS AND RESOURCES TO GENERATE PORTFOLIO RETURNS HAVE EVOLVED

WHAT IS A FACTOR? A factor is a characteristic of a group of securities that is important to explaining its risk and return. Some of the more common factors include: ■ Manager skill ■■ Market Higher cost and elusive ■■ Momentum ALPHA ■■ Size ■■ Risk/volatility ■■ Credit ■ Style ■ Carry Lower cost and ■ Momentum ■ Curve BETA harder to replicate ■ Value ■ Volatility ALTERNATIVE

■ Equity ■ Rates Low cost ■ Credit ■ Currency BETA and prevalent ■ Commodities TRADITIONAL

Capital markets have embedded systematic risks, and those risks are typically measured by market betas. Historically investors have extracted the payoffs — or risk premia — associated with market betas in traditional ways, such as owning stocks and taking advantage of the equity risk premia, or owning high-yield bonds as a way to earn the credit risk premia. Earning the return is the reward for taking the risk associated with the specific strategy or asset class.

Alternative betas are no different. They attempt to extract payoffs (excess returns) associated with systematic risks, but they use non-traditional techniques such as long/short and arbitrage to garner those returns. Sometimes called liquid risk premia, alternative betas allow the investor to isolate return opportunities from style factors, such as value or momentum, without taking on market directionality in order to earn those returns.

Alternative betas exist across equity, fixed-income, credit, currency and commodity asset classes and may be excellent diversifiers for a broad-based asset allocation portfolio.

4 BREAKING DOWN NON-TRADITIONAL INVESTMENTS

Investors have always been interested in understanding alpha, the return derived from active decisions to buy certain stocks or to overweight or underweight certain securities or sectors, as well as beta, the return derived from passive exposure to the market. Recent research has revealed that some returns previously categorized as alpha are actually alternative beta.

NON-TRADITIONAL INVESTMENTS 101: A SIDE-BY-SIDE LOOK AT THE OPTIONS

ALTERNATIVE NON- BETA TRADITIONAL STRATEGIES STRATEGIES ASSET CLASSES

What are they? What are they? What are they? Beta is a measure of the A high-conviction portfolio of Non-traditional asset classes systematic risk of a market strategies managed by hedge are those other than traditional (e.g., U.S. equity) that can be fund advisers. Hedge fund stocks and bonds, which exploited by traditional investing. advisers can employ various may include real assets Alternative beta is a measure of strategies such as fundamental, (commodities, REITs, inflation- the systematic risks in markets quantitative, opportunistic linked bonds) and listed private that can be exploited through trading, global macro and equities that are often less techniques such as long/short, multi-strategy. correlated to traditional markets. value, momentum, size, quality or volatility. Alternative beta can be captured through rules-based trading strategies.

What is the benefit What is the benefit What is the benefit to the investor? to the investor? to the investor? Alternative beta strategies offer Hedge fund strategies Exposure to non-traditional asset additional return sources to offer potential for alpha classes is dynamically adjusted enhance portfolio diversification (excess return) and low to potentially capitalize on and maximize risk-adjusted correlation to traditional opportunities during favorable returns while being mindful of stock and bond markets. market environments and protect systematic risk exposures from during unfavorable conditions. other strategies in the portfolio.

Columbia Alternative Beta Fund 5 ANALYZING HOW RISK PREMIA WORKS

Targeting an isolated alternative beta allows an investor to directly own the value risk premia with little to no market directionality. This technique, applied across a range of diverse alternative beta factors, offers many of the same exposures an investor would get from owning a multi-strategy “The key is to access the hedge fund but with daily liquidity and much lower fees. most cost-effective and capital- efficient array of risk premia structures available. Investors should not get hung up on who is manufacturing them. ALTERNATIVE BETA STRATEGIES USE SYSTEMATIC TRADING RULES TO CAPTURE RISK PREMIA We think that the emphasis should be on assembling the The theory behind the construction of the indices is pretty straightforward. Let’s say that we want to most advantageous diversified portfolio possible ­— the capture the value premia, meaning the tendency of cheaper stocks to outperform expensive stocks principle of best ingredients.” over time. For this example, we will use price-to-book as the measure of value and the S&P 500 Index as the building blocks. To create an alternative beta index, we would rank the S&P 500 top to Bill Landes bottom based on price-to-book, from the cheapest stocks to the most expensive stocks. We would Head of Global Investment Solutions go long the top 20% cheapest stocks, go short the bottom 20% most expensive stocks and remove the middle 60%, which market-neutralizes the holdings. In the end we have a risk premia with limited directional market bias, and we have isolated the value component. Consequently, we have only limited equity beta — we are just long cheap stocks, short expensive stocks and beta-neutral (or near that) and sector-neutral.

■■ VALUE PREMIUM ■■ MOMENTUM PREMIUM ■■ CARRY PREMIUM ALTERNATIVE BETA ALTERNATIVE BETA ALTERNATIVE BETA captures the tendency captures the tendency for captures the tendency for cheap assets to have assets that have performed for higher yielding assets above-market returns and well in the recent past to to outperform lower yielding expensive assets to have continue to perform well, assets over time. below-market returns. This is and assets that have perhaps the best known performed poorly in the premium. An extensive recent past to continue library of academic research to perform poorly. explores its existence across asset classes.

6 TAKING ADVANTAGE OF LOW CORRELATION

An important advantage of alternative betas is their low correlation to broad equity and fixed-income markets, and to each other. This makes them especially appealing to investors seeking to reduce overall portfolio volatility.

Our internal research demonstrates two very important characteristics of alternative beta structures. First, the average pair-wise correlation among a diversified collection of multi-strategy alternative beta positions is an extremely low 0.04%. This unique statistical independence makes them powerful portfolio building blocks. Second, the low pair-wise correlation relationship is persistent over and across market cycles. In other words, alternative beta exposures maintain their low correlations across shifting market environments. The addition of an alternative beta allocation to an overall portfolio can improve portfolio diversification and provide a compelling story for any investor seeking lower drawdowns and greater overall portfolio efficiency through diversification.

HISTORICAL AVERAGE PAIR-WISE CORRELATIONS HAVE DEMONSTRATED STABILITY THROUGH TIME

0.20

0.15

0.10

0.05

(%) 0.00

– 0.05

– 0.10 GLOBAL FINANCIAL CRISIS – 0.15

– 0.20

06/30/0512/30/0506/30/0612/29/0606/29/0712/31/0706/30/0812/31/0806/30/0912/31/0906/30/1012/31/1006/30/1112/30/1106/29/1212/31/1206/28/1312/31/1306/30/1412/31/1406/30/1512/31/1506/30/1612/30/16

24-month average pair-wise correlation

Average

Source: Columbia Management Investment Advisers, LLC Percentages shown indicate rolling 24-month correlations among a diversified basket of risk premia representing various styles among equity, fixed income, credit, currency and commodity asset classes over March 31, 2003–December 31, 2016. A full description of the risk premia used is available upon request.

Columbia Alternative Beta Fund 7 WHY COLUMBIA ALTERNATIVE BETA FUND?

COLUMBIA ALTERNATIVE BETA FUND seeks to identify and capitalize on systemic and structural inefficiencies and behavioral biases (the risk premia) present within the equity, fixed-income, interest- rate, commodities and currency markets. It does so by employing a number of strategies such as carry, curve, low beta, momentum, value and volatility premia, which may be pursued through investments in a portfolio of long/short securities positions, derivatives and other instruments and assets.

8 MARKET-NEUTRAL, CONVENIENCE OF A RULES-BASED DAILY LIQUIDITY FUND AND SKILL-RELIANT ■■ Shares may be redeemed on ■■ Portfolio returns dependent on manager any business day skill and a rules-based construction process ■■ Available in multiple share classes

■■ Less reliant on market directionality

■■ Position-level detail and risk management tools via BlackRock Aladdin and internal proprietary reporting tools

ACTIVE APPROACH TO CAPTURE RETURN ALPHA

■■ Uses alternative betas to systematically COLUMBIA THREADNEEDLE capture returns from well-established risk ALTERNATIVE BETA APPROACH premia embedded in the markets

■■ Portfolio managers also part of 20-person global asset allocation team, providing the TRADITIONAL BETA foundation for an active macro approach to alternative beta management

■■ Research team dedicated to analyzing alternative beta algorithms and factor exposures, providing the foundation for a micro approach to alternative beta management

TOTAL TRANSPARENCY TRUE PORTFOLIO AND LOWER COST DIVERSIFICATION

■■ 100% position-level transparency to ■■ Complement to a traditional equity ensure that underlying investments truly and fixed-income portfolio represent what we are trying to capture ■■ May be used to augment, replace ■■ Significantly lower costs than traditional or complement existing hedge hedge funds fund exposure

Columbia Alternative Beta Fund 9 LEARN MORE: KEY CONCEPTS

ABSOLUTE RETURN FORWARD CONTRACT Absolute return is a strategy with a primary objective of generating returns A non-standardized, private, over-the-counter instrument that over cash over a full-market cycle that are agnostic of a benchmark, rather requires one party to sell, and another party to buy, a security at a preset than relative to a particular benchmark. price on an agreed-upon date. Forward contracts are highly customizable.

ALTERNATIVE BETA FUTURES CONTRACT Alternative betas represent payoffs associated with the systematic risks A futures contract is a standardized, exchange-traded derivative instrument embedded in capital markets and are driven by: academically supported that requires one party to sell, and another party to buy, a security at a forms of risk premia (e.g., value, momentum, etc.) and investor-based preset price loan on an agreed-upon date. behavioral biases, industry needs, structures and constraints (e.g., short volatility, commodity, curve). Alternative betas are systematically HEDGING constructed to capture returns from structure (style, liquidity, momentum, A technique to reduce risk by entering into an offsetting trade or position carry, curve, volatility, etc.) and asset classes (equity, fixed income, with an existing portfolio exposure. Hedging may be used to lower a commodities, currency, credit). portfolio’s volatility, albeit at a cost. Some alternative investments actively hedge portfolio exposures, resulting in lower volatility. ARBITRAGE A strategy designed to generate profits from price differentials and HEDGE FUND inefficiencies in the market, such as spreads between various types of asset- A commingled investment vehicle, such as a limited partnership, that buys backed securities and traditional fixed income. Asset-backed arbitrage and sells securities, borrows money and uses derivatives to generate returns. strategies use bottom-up investment analysis to identify attractive assets Hedge funds implement strategies and are offered such as car loans or credit cards. Managers attempt to create portfolios as private funds, limited to qualifying high-net-worth individuals. Advisors that capture mispricing and hedge against interest rate movements. to private funds may earn both a management fee and a performance incentive fee. BETA Beta is a measure of the amount of risk inherent to a portfolio’s exposure IDIOSYNCRATIC RISK to the broad market. Investors in U.S. equities often use indices such as the The risk of incurring volatility or loss of capital based on the unique Russell 1000 Index as proxies for the broad market. Therefore, a portfolio circumstances of a security, rather than general market movements, is that replicates the broad market or its proxies has a beta of exactly 1. Beta called idiosyncratic risk. Alternative investments with low idiosyncratic risk 1 investing is also known as indexing or passive investing. may provide diversification and help mitigate risk.

CORRELATION LEVERAGE A statistical relationship between two things. A correlation coefficient of Market exposure in excess of assets. Leverage uses various financial 1 indicates two things move in tandem, and a correlation coefficient of 0 instruments or borrowed capital to increase the buying power and exposure indicates two things move independently. Investors often seek alternative to an investment. While its use in mutual funds is limited by the Investment investments to potentially provide less correlated returns. Company Act of 1940, leverage is widely used in alternative investing strategies. Leverage can both amplify investment gains and exacerbate DERIVATIVE investment losses. A derivative is a financial instrument whose value is based on (or derived from) traditional securities (such as a stock or bond), assets such as a LONG POSITION commodity (like gold or a foreign currency), reference rates (such as the The buying of a security. A long position will make money when the security London Interbank Offered Rate, commonly known as LIBOR) or market purchased rises in value and lose money when the security value falls. indices (such as the S&P 500 Index). Many alternative investment managers can take both long and short positions when constructing a portfolio. LONG/SHORT STANDARD DEVIATION A strategy that can buy securities and sell borrowed securities to create Standard deviation is a measure of the historical variability of an exposures (see long position and short position). Strategies vary widely investment’s return around its average return. The standard deviation of and can be concentrated in a particular geographical area, industry or returns is the most common measure of risk or volatility for both traditional other specialty focus, or may be highly diversified. and alternative investments. Standard deviation works best when an investment’s returns are normally distributed around the average. MARGIN The margin is the amount of capital that has to be deposited as collateral STRUCTURED PRODUCT in order to enter into a leveraged position (see leverage). Investments created to exhibit specific attributes, such as specific risk or return profiles. The structuring process creates investments that are very NOTIONAL EXPOSURE different from traditional stock and bond investments. The value of a derivative instrument, such as a futures contract, stated in terms of the underlying asset. It is referred to as notional because the SWAP amount generally does not exchange hands. Notional exposure values can A swap is a type of derivative contract in which one party agrees to pay the often be found in a fund’s risk disclosures or the footnotes to its financial return of an underlying asset in exchange for periodic payments based on statements. fixed or variable rates.

OPTION VALUE AT RISK (VAR) A type of derivative contract that allows the buyer to purchase or sell a A risk measure that assigns the probability that an investment will lose a security at a predetermined price. The right to buy is known as a call option. certain amount of money. VAR can be useful for assessing the maximum The right to sell is known as a put option. loss expected based on historical returns. VAR is expressed relative to a confidence level. For example, at a 95% confidence level, a $10 million RELATIVE VALUE value at risk means there is a 5% chance the investment may lose more Relative value is a strategy that seeks to construct a portfolio by taking than $10 million in a certain time frame. advantage of pricing anomalies identified between individual securities, asset classes or markets. VOLATILITY Describes the variation of an investment’s return over time. The most SHARPE RATIO common measure of volatility is the standard deviation of an investment A measure of return, adjusted for risk. Return is measured as the excess (see standard deviation). Volatility measures can be used to assess the return above a risk-free rate, and risk is measured as standard deviation riskiness of an investment.

The ratio divides the excess return by the standard deviation and can be used to evaluate the return per unit of risk. When comparing a Sharpe ratio of 1.1 to a Sharpe ratio of 1.5, the investment with a 1.5 Sharpe ratio has achieved more return per unit of risk. A higher Sharpe ratio may indicate the investment is able to achieve greater return for the risk that it takes.

SHORT POSITION The selling of a borrowed security. A short position makes money when the security price falls and loses money when it rises. Short positions can be used to speculate on a stock or bond falling in value or as a hedge to lower a portfolio’s volatility. Many alternative investment managers can take both long and short positions when constructing a portfolio. STRATEGICALLY INCORPORATING ALTERNATIVE BETA INTO YOUR PORTFOLIO

Application Potential

Complement to a traditional ■■ Introduces alternative risk premia to a portfolio multi-asset portfolio of traditional market betas ■■ May provide greater diversification and reduce market drawdown during periods of high market correlations

Multi-strategy hedge fund replacement ■■ Exposure to risk premia that drive much of traditional hedge fund performance ■■ Lower costs, greater liquidity and more transparency than traditional hedge fund structures

Direct, simple and broad access ■■ Efficient and liquid exposure to alternative market to core non-traditional strategies betas at low cost ■■ Allows manager selection process to focus on true alpha/skill managers

Consider incorporating Columbia Alternative Beta Fund into your portfolio to take advantage of a strategy that is less tied to market movement and offers compelling return opportunities. FOR MORE INFORMATION, PLEASE CONTACT YOUR FINANCIAL ADVISOR Columbia Threadneedle Investments is a leading global asset manager that provides a broad range of investment strategies for individual and institutional clients. With 450 investment professionals across 19 countries, we manage $473 billion* across asset classes. Our global investment team debates and challenges their best ideas to make better decisions, leading to better outcomes for you and your clients.

To find out more, call 800.426.3750 or visit columbiathreadneedle.com/us

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. Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. Alternative investments cover a broad range of strategies and structures designed to be low or non-correlated to traditional equity and fixed-income markets and involve substantial risks and are more volatile than traditional investments, making them more suitable for investors with an above average-tolerance for risk. The fund’s use of leverage allows for investment exposure in excess of net assets, thereby magnifying volatility of returns and risk of loss. Commodity investments may be affected by the overall market and industry- and commodity-specific factors, and may be more volatile and less liquid than other investments. Investing in derivatives is a specialized activity that involves special risks that subject the fund to significant loss potential, including when used as leverage, and may result in greater fluctuation in fund value. Foreign investments subject the fund to risks, including political, economic, market, social and others within a particular country, as well as to currency instabilities and less stringent financial and accounting standards generally applicable to U.S. issuers. The sales price the fund (or its underlying investments) could receive for any particular investment may differ from the fund’s (or underlying investments’) valuation of the investment. As a non-diversified fund, fewer investments could have a greater effect on performance. Effective 10/1/2016 the Columbia Adaptive Alternatives Fund name changed to Columbia Alternative Beta Fund On November 1, 2017, Class Z, R4, R5 and Y shares were renamed to Institutional, Advisor, Institutional 2 and Institutional 3, respectively. * In U.S. dollars as of June 30, 2017. Source: Ameriprise Q2 Earnings Release. Contact us for more current data.

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. Columbia Management Investment Distributors, Inc., 225 Franklin Street, Boston, MA 02110-2804 © 2017 Columbia Management Investment Advisers, LLC. All rights reserved. CT-MK/113071 D (05/18) C6MR/2131192