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COLUMBIA TRUST STABLE INCOME FUNDDISCLOSURE MEMORANDUMFebruary 18, 2014Collective trust funds maintained by Ameriprise Trust Company that seek to preserveprincipal while maximizing current income.There can be no guarantee or assurance that a Fund will achieve its investment objective.Each Participating Trust solely bears the risk of a decrease in value of its investment in aFund.NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
CONTENTSGENERAL INFORMATION .2INVESTMENT INFORMATION .4SECURITIES LENDING . 10INVESTMENT RISKS . 11PARTICIPATING TRUSTS . 18VALUATION OF UNITS . 19PURCHASES AND REDEMPTIONS. 21FEES AND EXPENSES. 24FUND MANAGEMENT . 29REGULATION OF THE COLLECTIVE TRUST . 29REPORTS TO PARTICIPATING TRUSTS . 30ADDITIONAL INFORMATION . 30
PLEASE TAKE NOTE OF THE FOLLOWING:This Disclosure Memorandum (“Memorandum”) has been prepared for sponsors or otherauthorized representatives of Eligible Trusts to assist them and their advisers in considering whetherto allow an Eligible Trust to become a Participating Trust in any of Columbia Trust Stable IncomeI-0 Fund, Columbia Trust Stable Income I-5 Fund, Columbia Trust Stable Income I-10 Fund,Columbia Trust Stable Income I-15 Fund, Columbia Trust Stable Income I-25 Fund, ColumbiaTrust Stable Income I-30 Fund, Columbia Trust Stable Income I-35 Fund, Columbia Trust StableIncome I-50 Fund, Columbia Trust Stable Income II-0 Fund, Columbia Trust Stable Income II-5Fund, Columbia Trust Stable Income II-10 Fund, Columbia Trust Stable Income II-15 Fund,Columbia Trust Stable Income II-25 Fund, Columbia Trust Stable Income II-30 Fund, ColumbiaTrust Stable Income II-35 Fund, Columbia Trust Stable Income II-50 Fund, Columbia Trust StableIncome III-0 Fund, Columbia Trust Stable Income III-5 Fund, Columbia Trust Stable Income III10 Fund, Columbia Trust Stable Income III-15 Fund, Columbia Trust Stable Income III-25 Fund,Columbia Trust Stable Income III-30 Fund, Columbia Trust Stable Income III-35 Fund, ColumbiaTrust Stable Income III-50 Fund, Columbia Trust Stable Income Fund IV and Columbia TrustStable Income Fund Z (sometimes referred to herein for convenience as “Sub-Funds”). Each of theSub-Funds intends to invest substantially all of its assets in the Columbia Trust Stable Income Fund(the “Fund”). The Fund and the Sub-Funds are collective trust funds maintained by AmeripriseTrust Company. References to the Fund herein shall include each Sub-Fund, unless the contextrequires otherwise. This Memorandum may not be reproduced or used for any other purpose.This Memorandum does not constitute an offer to sell units of beneficial interest in the Fund or anySub-Fund (“Units”) to, or a solicitation of an offer to buy from, any person or entity that does notconstitute an Eligible Trust, nor does it constitute such an offer or solicitation in any jurisdictionwhere the same would be prohibited by law. The Units are not registered under the Securities Act inreliance on an exemption under that Act for interests in a collective trust fund maintained by a bankfor certain types of employee benefit trusts. Neither the U.S. Securities and Exchange Commissionnor any other federal or state regulatory agency has passed upon or approved the merits of aninvestment in Units or the accuracy or adequacy of this Memorandum.This Memorandum is not to be construed as investment, tax or legal advice. A fiduciary of eachEligible Trust should review this Memorandum and the legal, tax, economic and relatedconsequences of an investment in the Units with its legal counsel or other professional advisors.The Units are available for purchase only by Eligible Trusts that are accepted as Participating Trusts.“Eligible Trusts” are defined in the Declaration of Trust and below; a “Participating Trust” is anEligible Trust that has been accepted for participation in the Collective Trust.See“PARTICIPATING TRUSTS.” The Units are not transferable or redeemable except as describedunder “PURCHASES AND REDEMPTIONS.”This Memorandum contains summaries, believed and intended to be accurate, of certain terms ofcertain documents relating to the Fund. For complete information concerning the rights andobligations of the Trustee and Participating Trusts, reference is hereby made to the actualdocuments, copies of which will be furnished to Eligible Trusts at or before their acceptance asParticipating Trusts. All such summaries are qualified in their entirety by this reference.-1-
Certain references used in this Memorandum are defined as follows:Advisers Act – the U.S. Investment Advisers Act of 1940, as amended.Code – the U.S. Internal Revenue Code of 1986, as amended.ERISA – the U.S. Employee Retirement Income Security Act of 1974, as amended.Exchange Act – the U.S. Securities Exchange Act of 1934, as amended.Fitch - Fitch, Inc.Investment Company Act – the U.S. Investment Company Act of 1940, as amended.Moody’s - Moody’s Investors Service, Inc.Securities Act – the U.S. Securities Act of 1933, as amended.S&P -Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“Standard & Poor’s” and“S&P” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by theAdviser. The Fund is not sponsored, endorsed, sold or promoted by Standard & Poor’s andStandard & Poor’s makes no representation regarding the advisability of investing in the Fund).GENERAL INFORMATIONAmeriprise Trust Company (“ATC”) maintains the Ameriprise Trust Company CollectiveInvestment Trust for Employee Benefit Plans (the “Collective Trust”) and its constituent fundspursuant to a Declaration of Trust by ATC, as trustee (the “Trustee”), dated September 19, 2011, asamended from time to time (the “Declaration of Trust”). The Trustee established and maintains theFund and Sub-Funds pursuant to a Supplemental Declaration, dated February 18, 2014, as amendedfrom time to time.The Fund invests principally in the types of securities and instruments discussed below. Each of theSub-Funds intends to invest substantially all of its assets in the Fund. Each Participating Trust maybe subject to different fee arrangements depending on the amount the Participating Trust invests inthe Fund and whether or not an authorized fiduciary of the Participating Trust wishes to direct thatproviders of other administrative services to the Participating Trust be compensated for suchservices out of Participating Trust assets invested in the Fund. To accommodate ParticipatingTrusts with differing needs and objectives, the Trustee maintains separate Sub-Funds with differentlevels of required investments and Trustee and administrative services fee arrangements describedunder “FEES AND EXPENSES” below, each of which invests all of its assets in the Fund.Consequently, the disclosures and descriptions in this Memorandum relating to investments of theFund apply equally to the Sub-Funds described above. See “INVESTMENT INFORMATION”and “INVESTMENT RISKS.”ATC is a trust company chartered and regulated by the State of Minnesota and is a wholly ownedsubsidiary of Ameriprise Financial, Inc. ATC is headquartered in Minneapolis, Minnesota.The Trustee has retained Columbia Management Investment Advisers, LLC, an affiliate of theTrustee (the “Adviser”), as investment adviser to the Trustee with respect to the Fund. The Adviseris registered as an investment adviser under the Advisers Act. The Adviser is headquartered inBoston, Massachusetts, and, as of September 30, 2013, had staff of more than 1,100 in nine officesand total client assets under management of approximately 314.4 billion.-2-
FUND SUMMARYColumbia Trust Stable Income Fund is a stable value fund investing primarily in stable valueinvestment contracts (“Investment Contracts”) and certain fixed-income securities. In a typicalInvestment Contract, an insurance company, bank or other financial institution agrees to “wrap”some of the Fund’s fixed-income securities, units of a fixed-income collective trust fund or securitiesheld in an insurance company separate account, and to allow redemptions from the InvestmentContract to pay Fund redemptions directed by Participating Trust participants for certain purposesat the “book value” of the Investment Contract. Investment Contract book value is equal to theaccumulated amount contributed to the contract by the Fund (a) less withdrawals from theInvestment Contract and certain fees and charges and (b) plus a rate of return based on a formulaspecified in the contract known as the “crediting rate”. The crediting rate, which is adjustedperiodically, is designed to amortize the market value gain or loss of the wrapped assets backing thecontract over the duration of these assets as well as reflect actual interest paid on the wrappedsecurities and cash flows in and out of the Investment Contract. Generally, if the market value of thewrapped securities falls below the Investment Contract’s book value, the crediting rate is reducedbelow the securities’ interest rate to the extent necessary to recover the deficit over time, and insome cases, the crediting rate may be reduced to, but not below, 0%. Another type of InvestmentContract utilized by the Fund is the traditional guaranteed investment contract, which may be issuedby an insurance company and generally provides a fixed rate of interest over a set period of time.The Fund also holds positions in short-term investments which are used to manage the liquidity ofthe Fund.It is important to note that Participating Trust redemptions that are not certain types of participantdirected redemptions may be subject to a delay in payment of up to 12 months. This includesredemptions directed by a fiduciary of a Participating Trust in order to redeem all or a portion of theParticipating Trust’s interest in the Fund. See “OTHER REDEMPTION PROCEDURES”.Investment Contracts typically do not provide protection against credit quality risk of the underlyingsecurities in the Fund or the separate account and will not cover securities that become impaired.Impaired securities may include those that fail to make interest or principal payments, are in default,whose issuers are insolvent, or that are rated below the Fund’s quality guidelines. Consequently, acredit downgrade or default with respect to a security could result in a decrease in the value of theunderlying securities, which will cause a decrease in the crediting rate of the Fund Units in futureperiods. See “INVESTMENT RISKS – CREDIT RISK”.Income from Investment Contracts and other assets of the Fund is reinvested in the Fund and notdistributed in the form of additional Units of the Fund or otherwise. Income from the InvestmentContracts and short-term investments is credited to the Fund on each Business Day. Consequently,the value of the Units will change rather than maintain a constant value.-3-
INVESTMENT INFORMATIONINVESTMENT OBJECTIVEThe Fund’s and each Sub-Fund’s investment objective is to seek to preserve principal whilemaximizing current income. While there is no assurance that the Fund or any Sub-Fund will achieveits investment objective, it endeavors to do so by following the policies described in thisMemorandum. It is possible to lose money by investing in the Fund, including the principalinvested.PERFORMANCE BENCHMARKSThe Fund’s performance benchmark is the Citigroup Three-Month U.S. Treasury Bill Index. TheFund’s performance is also benchmarked against the average historic yield of Three-Year U.S.Treasury notes. There is no assurance that the Fund’s performance or yield will meet or exceedthese benchmarks.INVESTMENT STRATEGIESEach Sub-Fund will pursue its investment objective by investing substantially all of its assets in theFund. The Trustee established investment guidelines and parameters for Fund investments. Actingin accordance with these guidelines and parameters, the Adviser may select and dispose ofinvestments. However, the Trustee retains ultimate authority and responsibility with respect toFund investments. Although investments are made at the Fund level, the guidelines discussed belowalso relate to each Sub-Fund indirectly through its investment in the Fund.Investment ContractsThe Fund invests in Investment Contracts which may consist of: (1) traditional insurance companyguaranteed investment contracts (“Guaranteed Investment Contracts”), (2) book value investmentcontracts backed by assets held in trust by the Trustee or its agent (“Book Value Contracts”) and (3)insurance company separate account investment contracts backed by assets held in a separateaccount maintained by the relevant Separate Account Contract issuer (“Separate AccountContracts”). The assets backing Separate Account Contracts may be held in distinct separateaccounts or pooled in separate accounts with other investors. The assets backing certain InvestmentContracts may be managed by the Adviser or the relevant Investment Contract issuer or its advisoryaffiliate. In some cases, the Adviser may retain portfolio management of the assets by acting as subadviser to such Investment Contract issuer or its advisory affiliate.A Guaranteed Investment Contract issuer may not represent more than 15% of the Fund’s assets atthe time of placement. If a Separate Account Contract issuer or its advisory affiliate manages all or aportion of the assets being wrapped, such issuer-managed portion may represent up to 15% of theFund’s assets at the time of placement. If the Adviser manages the assets being wrapped, suchSeparate Account Contract issuer may represent up to 20% of the Fund’s assets. If a Book ValueContract issuer or its advisory affiliate manages all or a portion of the assets being wrapped, suchissuer-managed portion may represent up to 20% of the Fund’s assets at the time of placement. Ifthe Adviser manages the assets being wrapped, such Book Value Contract issuer may represent upto 25% of the Fund’s assets. Notwithstanding the foregoing, no single Investment Contract issuer-4-
may represent more than 25% of the Fund’s assets at the time of any Investment Contract’splacement.Investment Contract TypeAsset Management byTrusteeAsset Management byInvestment Contract Issueror its Advisory AffiliateBook Value Contracts25%20%Separate Account Contracts20%15%Not Applicable15%Guaranteed InvestmentContractsEach Investment Contract issuer must meet the Trustee’s internal credit quality standards at the timeof placement.Fixed-Income Bond PortfoliosThe Fund invests in one or more fixed-income portfolios managed by the Adviser or other parties,as set forth above, which assets are used to back the Investment Contracts and provide liquidity.Such investments may include U.S. Government and agency securities, mortgage-backed securities(including collateralized mortgage obligations), asset-backed and commercial mortgage-backedsecurities, U.S. dollar denominated corporate, sovereign and supranational fixed-income securities,futures contracts on securities and indices, forward commitments to purchase or sell securities, andother financial instruments that seek to provide similar characteristics as assets permitted hereunder.In addition, to the extent the Fund qualifies as a “Qualified Institutional Buyer” under Rule 144A ofthe Securities Act, the Fund may invest in Rule 144A securities.Such assets may be managed (1) on a constant duration basis without a fixed maturity date or (2) ona declining duration or fixed maturity basis, toward a fixed maturity date.Futures may be utilized in such fixed-income portfolios for hedging purposes or to provideincremental returns.With the exception of U.S. Government securities, all fixed-income securities must be investmentgrade, rated Baa by Moody’s Investors Service or BBB by Standard and Poor’s or higher, at the timeof purchase.Cash and Cash EquivalentsThe Fund may invest in short-term investments which may include: (1) Investment Contracts withput options of three months or less, (2) fixed-income investments with thirteen months or less toexpected maturity, including short-term securities issued or guaranteed as to principal and interest bythe government of the United States or by instrumentalities or agencies thereof, (3) repurchaseagreements collateralized by U.S. Government securities, (4) units of money market collective trust-5-
funds or shares of money market mutual funds, including, to the extent permitted by applicable law,funds managed by affiliates of the Trustee, (5) bank certificates of deposit, time deposits (includingcertificates of deposit and time deposits denominated in Eurodollars), bankers acceptances andletters of credit issued by U.S. banks and U.S. subsidiaries or branches of foreign banks with capital,surplus and undivided profits (as of the date of the most recently published annual financialstatements) in excess of 100 million and (6) readily marketable short-term commercial paper andfloating rate notes rated as of the date of investment A-1 or P-1 by Standard & Poor’s or byMoody’s Investors Services Inc., respectively.The Trustee intends to maintain short-term investments in a target range of 3-10% of Fund assets,but the actual amount may vary at any time based on market conditions, the Fund’s anticipatedliquidity requirements or other factors as may be determined by the Trustee. At the Trustee’sdiscretion, up to 100% of the Fund may be placed in short-term investments, including cash andcash equivalents.Other InvestmentsThe Fund may also invest in (1) collective trust funds with similar investment objectives, investmentstrategies and/or investments as those of the Fund, including collective trust funds managed by theTrustee or other non-affiliated investment managers and (2) other investments with substantiallysimilar characteristics to those described herein. Such assets may also be used to back InvestmentContracts.DurationThe Trustee intends to maintain the weighted average duration of the Fund within a target range of1.5 to 4 years under normal circumstances, but the actual weighted average duration of the Fundmay vary at any time based on Fund or market conditions, as determined by the Trustee. Forpurposes of calculating the weighted average duration of the Fund, the duration of the assets in thefixed-income bond portfolios (as determined by the Trustee), the average duration of any collectivetrust funds in which the Fund invests (as reported by the Trustee) and the stated final maturity dateson Guaranteed Investment Contracts and short-term investments will be utilized.INCOME AND GAINSNet income and realized capital gains of the Fund are accumulated and added to, and reinvested as apart of, the principal of the Fund. Consequently, the value of the Units will change rather thanmaintain a constant value.SECURITIES IN WHICH THE FUND INVESTSIn addition to the Investment Contracts discussed above, the Fund invests principally in the types ofsecurities and instruments listed below, which are generally wrapped by the Investment Contracts.Debt ObligationsMany different types of debt obligations exist (for example, bills, bonds, and notes). Issuers of debtobligations have a contractual obligation to pay interest at a fixed, variable or floating rate on-6-
specified dates and to repay principal by a specified maturity date. Certain debt obligations (usuallyintermediate and long-term bonds) have provisions that allow the issuer to redeem or “call” a bondbefore its maturity. Issuers are most likely to call these securities during periods of falling interestrates. When this happens, an investor may have to replace these securities with lower yieldingsecurities, which could result in a lower return.Corporate Debt SecuritiesCorporate debt securities are long and short term fixed income securities typically issued bybusinesses to finance their operations. Corporate debt securities are issued by public or privatecompanies, as distinct from debt securities issued by a government or its agencies. The issuer of acorporate debt security often has a contractual obligation to pay interest at a stated rate on specificdates and to repay principal periodically or on a specified maturity date. Corporate debt securitiestypically have four distinguishing features: (i) they are taxable; (ii) they have a par value of 1,000;(iii) they have a term maturity, which means they come due at a specified time period; and (iv) manyare traded on major securities exchanges. Notes, bonds, debentures and commercial paper are themost common types of corporate debt securities, with the primary difference being their interestrates, maturity dates and secured or unsecured status. Commercial paper has the shortest term andusually is unsecured, as are debentures. The broad category of corporate debt securities includesdebt issued by domestic or foreign companies of all kinds, including those with small-, mid- andlarge-capitalizations. The category also includes bank loans, as well as assignments, participationsand other interests in bank loans. Corporate debt securities may be rated investment grade or belowinvestment grade and may be structured as fixed-, variable or floating-rate obligations or as zerocoupon, pay-in-kind and step-coupon securities and may be privately placed or publicly offered.They may also be senior or subordinated obligations.Agency and Government SecuritiesThe U.S. Government, its agencies and instrumentalities, and government-sponsored enterprisesissue many different types of securities. U.S. Treasury bonds, notes, and bills and securities,including mortgage pass through certificates of the Government National Mortgage Association(“GNMA”), are guaranteed by the U.S. Government. Other U.S. Government securities are issuedor guaranteed by federal agencies or instrumentalities or government-sponsored enterprises but arenot guaranteed by the U.S. Government. This may increase the credit risk associated with theseinvestments. Government-sponsored entities issuing securities include privately owned, publiclychartered entities created to reduce borrowing costs for certain sectors of the economy, such asfarmers, homeowners, and students. They include the Federal Farm Credit Bank System, FarmCredit Financial Assistance Corporation, Federal Home Loan Bank, Federal Home Loan MortgageCorporation (“FHLMC”), Federal National Mortgage Association (“FNMA”). Governmentsponsored entities may issue discount notes (with maturities ranging from overnight to 360 days)and bonds.Mortgage-Backed SecuritiesMortgage-backed securities represent interests in, or are backed by, pools of mortgages from whichpayments of interest and principal (net of fees paid to the issuer or guarantor of the securities) aredistributed to the holders of the mortgage-backed securities. Pools of mortgages may be residentialor commercial mortgages. Mortgage-backed securities can have a fixed or an adjustable rate.-7-
Payment of principal and interest on some mortgage-backed securities (but not the market value ofthe securities themselves) may be guaranteed (i) by the full faith and credit of the U.S. Government(in the case of securities guaranteed by the GNMA) or (ii) by its agencies, authorities, enterprises orinstrumentalities (in the case of securities guaranteed by the FNMA or the FHLMC), which are notinsured or guaranteed by the U.S. Government (although FNMA and FHLMC may be able toaccess capital from the U.S. Treasury to meet their obligations under such securities).Forward Contracts and Dollar RollsA forward is a contract between two parties to buy or sell an asset at a specified future time at aprice agreed today. Forwards are traded in the over-the-counter markets. The Fund may purchaseforward contracts, including those on mortgage-backed securities in the “to be announced” (“TBA”)market. In the TBA market, the seller agrees to deliver the mortgage-backed securities for an agreedupon price on an agreed upon date, but makes no guarantee as to which or how many securities areto be delivered.Dollar rolls involve selling securities (e.g., mortgage-backed securities or U.S. Treasury securities)and simultaneously entering into a commitment to purchase those or similar (same collateral type,coupon and maturity) securities on a specified future date and price. Mortgage dollar rolls and U.S.Treasury rolls are types of dollar rolls. A fund foregoes principal and interest paid on the securitiesduring the “roll” period. A fund is compensated by the difference between the current sales priceand the lower forward price for the future purchase of the securities as well as the interest earned onthe cash proceeds of the initial sale.Asset-Backed SecuritiesAsset-backed securities represent interests in, or debt instruments that are backed by, pools ofvarious types of assets that generate cash payments generally over fixed periods of time, such as,among others, motor vehicle installment sales, contracts, installment loan contracts, leases of varioustypes of real and personal property, and receivables from revolving (credit card) agreements. Suchsecurities entitle the security holders to receive distributions (i.e., principal and interest) that are tiedto the payments made by the borrower on the underlying assets (less fees paid to the originator,servicer, or other parties, and fees paid for credit enhancement), so that the payments made on theunderlying assets effectively pass through to such security holders. Asset-backed securities typicallyare created by an originator of loans or owner of accounts receivable that sells such underlying assetsto a special purpose entity in a process called a securitization. The special purpose entity issuessecurities that are backed by the payments on the underlying assets, and have a minimumdenomination and specific term. Asset-backed securities may be structured as fixed-, variable- orfloating-rate obligations or as zero-coupon, pay-in-kind and step-coupon securities and may beprivately placed or publicly offered.Collective Investment FundsThe Fund may invest its assets in securities of other pooled investment vehicles, including othercollective investment funds managed by the Trustee, affiliates of the Trustee (to the extent permittedby applicable law) or other non-affiliated investment managers.-8-
Money Market InstrumentsMoney market instruments are high-quality, short-term debt obligations, which include: (a)repurchase agreements; (b) obligations of the United States and its agencies and instrumentalities,and (c) units of money market collective trust funds or shares of mutual funds. Money marketinstruments may be structured as fixed-, variable- or floating-rate obligations and may be privatelyplaced or publicly offered.DerivativesDerivatives are financial instruments whose values are based on (or “derived” from) traditionalsecurities (such as a stock or a bond), assets (such as a commodity, like gold), reference rates (suchas LIBOR), market indices (such as the S&P 500 Index) or customized baskets of securities orinstruments. Some forms of derivatives, such as exchange-traded futures and options on securities,commodities, or indices, are traded on regulated exchanges. These types of derivatives arestandardized contracts that can easily be bought and sold, and whose market values are determinedand published daily. Non-standardized derivatives, on the other hand, tend to be more specialized orcomplex, and may be harder to value. Many derivative instruments often require little or no initialpayment and therefore often create inherent economic leverage. Derivatives, when used properly,can enhance returns and be useful in hedging portfolios and managing risk. Some common types ofderivatives include futures; forward contracts on securities and securities indices; linked securitiesand structured products; CMOs; stripped securities; and warrants.Futures ContractsA futures contract sale creates an obligation by the seller to deliver the type of security or other assetcalled for in the contract at a specified delivery time for a stated price. A futures contract purchasecreates an obligation by the purchaser to take delivery of the type of security or other asset called forin the contract at a specified delivery time for a stated price. The specific security or other assetdelivered or taken at the settlement date is not determined until on or near that date. Thedetermination is made in accordance with the rules of the exchange on which the futures contractwas made. The Fund may enter into futures contracts which are traded on national or foreignfutures exchanges and are standardized as to maturity date and underlying security or other asset.Futures exchanges and trading in the United States are regulated under the Commodity ExchangeAct (the “CEA”) by the Commodity Futures Trading Commission (the “CFTC”), a U.S.Government agency.Traders in futures contracts may be broadly classified as either “hedgers” or “speculators.” Hedgersuse the futures markets primarily to offset unfavorable changes (anticipated or potential) in the valueof securities or other assets currently owned or expected to be acquired by them. Speculators lesso
COLUMBIA TRUST STABLE INCOME FUND . D I S C L O S U R E M E M O R A N D U M . February 18, 2014 . reliance on an exemption under that Act for interests in a collective trust fund maintained by a bank . Columbia Trust Stable Income Fund is a stable value fund investing primarily in stable value investment contracts ("Investment Contracts .
