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KEEPING TABS ON YOUR INVESTMENT

If you hired someone to take care of your money, would you check to make sure they were doing a good job?

Throw away your shareholder reports without reading them, and you're throwing away your main chance to find out how your money managers are doing. After all - it is your money! Sure, someone else has the responsibility to manage your money, but you can keep track of it by reading the shareholder reports for your investments.

Everything in a shareholder report is designed to tell you whether or not your money grew and why.

  • The President's Letter gives you a "big picture" overview on factors that affected the performance of the fund.
  • The Portfolio Manager's Report builds on the President's Letter, explaining the reasons the fund made or lost money and how it performed relative to the market.

Pay attention to the reasons given for the fund's performance. Do they make sense? If you are invested in a mutual fund: Did the fund do well because its investment style is in favor, or poorly because the types of equities or bonds it buys lost money as a group? It might be that your mutual fund earned money because all bond funds made money, or perhaps poor performance could be explained if your fund lost money when the rest of the market did too.

Did the manager invest in things the fund is designed to buy? If the fund is a large-cap growth fund, you would expect that most of the growth would come from large-cap companies. But, if the report says that the growth in your large-cap fund came from small-cap value companies, that should be a red flag.

Consider the manager's overall tone. Is the fund manager always taking the credit for good performance but finding blame when things look bad? Managers should be open and honest about both good and bad returns. They will all have a mix of both during their careers.

For an even more detailed look at the fund's holdings, go to the "Portfolio of Investments" section of your annual report. This is the place to see the industries where the fund is concentrated. This section also tells you what each holding was worth at the review period's end. Compare reports over time and you can see whether the manager is selling big positions, adding to a sector, or making other changes. Do those changes fit the manager's vision for the future?

Still hungry for more?
The tables in the back of the report tell you every last detail of how the fund handled your money, from how much the fund paid its managers and what accounting rules it uses to whether more people are buying or selling shares in the fund. It's the final part of the fund manager's report - and the last word on what's happening to your money.



 
 
Please consider the objectives, risks, charges and expenses of any Columbia fund carefully before investing. Contact your financial advisor for a prospectus, which contains this and other important information about the fund. You should read it carefully before investing.