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Market Environment
International equities in developed markets, similar to their U.S. counterparts, were once again able to reach positive territory during August, boosted by a variety of data pointing toward a brightening global economic growth outlook. Developed international equity markets, as represented by the MSCI EAFE Index, gained 5.44% in dollar terms. Currency translation for U.S.-based international equity investors had a modestly positive effect; the MSCI EAFE Index’s monthly return measured in local currency terms was 4.40%. Emerging markets, for one month at least, took a breather from the torrid pace they had set recently. The MSCI Emerging Markets Index edged lower by 0.33% in August, based, in part, on concerns regarding the durability of Chinese economic growth. The “BRIC” countries (encompassing Brazil, Russia, India, and China) slipped 2% as a group. Year to date, however, the Emerging Markets Index and BRIC group produced robust gains of 51% and 58%, respectively — far in excess of the performance produced in both international and U.S. markets.
At a country level, performance strength was widespread, although not quite up to the powerful gains that characterized the previous several months. More than 90% of the MSCI EAFE Index’s country-level constituents (21 out of 23) posted gains, with only holdouts Hong Kong (-7%) and Singapore (-3%) preventing a clean sweep. The MSCI EAFE Index’s overall return was driven by its largest country-level constituents — Japan, the United Kingdom, France, Germany, Switzerland and Australia — which produced positive monthly returns clustered in a relatively tight range of 4% (Germany and Japan) to 8% (France and Australia). On average, this group represented 77% of the index during the month.
From an economic sector standpoint (using the MSCI EAFE Index as a reference), it was also hard to go wrong from a performance standpoint, although gains overall were relatively modest in nature. All 10 GICS sectors in the index rose. The resurgent financials sector led the way upward and there was a strong showing of strength elsewhere.
Product Performance
For August, Columbia Marsico International Opportunities Fund underperformed its primary benchmark, the MSCI EAFE Index, which had a 5.44% return.
Sector Performance
Industry-level performance presented a similarly upbeat story line. Eighteen (out of 20) groups were in positive territory, many substantially so, and there were no significant declines. In terms of international investment style, it was a value-led market, and decisively so. The MSCI EAFE Value Index and MSCI EAFE Growth Index posted total quarterly returns of 7.59% and 3.24%, respectively. The Value Index’s higher weighting in financial-services-related holdings was the primary underlying reason for its substantial outperformance.
data quoted represents past performance, and current performance may be lower or higher. Past performance is no guarantee of future results.
Please read and consider the investment objectives, risks, charges and expenses for any fund carefully before investing. For a prospectus, which contains this and other important information about the fund, contact your Columbia Management representative or financial advisor or go to www.columbiamanagement.com.
The Morgan Stanley Capital International Europe, Australasia, Far East (MSCI EAFE) Index is a capitalization-weighted index that tracks the total return of common stocks in 21 developed-market countries within Europe, Australasia and the Far East.
The Morgan Stanley Capital International Emerging Markets Index (MSCI EMI) is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. As of June 2006, the MSCI Emerging Markets Index consisted of the following 25 emerging market country indices: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand and Turkey.
The Morgan Stanley Capital International Europe, Australasia, Far East (MSCI EAFE) Growth Index is a subset of the MSCI EAFE Index, and constituents of the index include securities from Europe, Australasia and the Far East. The index generally represents approximately 50% of the free float-adjusted market capitalization of the MSCI EAFE Index, and consists of those securities classified by Morgan Stanley Capital International, Inc. (MSCI) as most representing the growth style, such as higher forecasted growth rates, lower book-value-to-price ratios, lower forward earnings-to-price ratios and lower dividend yields than securities representing the value style.
The Morgan Stanley Capital International Europe, Australasia, Far East (MSCI EAFE) Value Index is a subset of the MSCI EAFE Index, and constituents of the index include securities from Europe, Australasia and the Far East. The index generally represents approximately 50% of the free float-adjusted market capitalization of the underlying MSCI EAFE Index, and consists of those securities classified by Morgan Stanley Capital International, Inc. (MSCI) as most representing the value style, such as higher book-value-to-price ratios, higher forward earnings-to-price ratios, higher dividend yields and lower forecasted growth rates than securities representing the growth style.
Unlike mutual funds, indices are not managed and do not incur fees or expenses. It is not possible to invest directly in an index.
Since economic and market conditions change frequently, there can be no assurance that the trends described here will continue or that the forecasts will come to pass. The views and opinions expressed are those of the portfolio managers and analysts of the affiliated advisors of Columbia Management Group, are subject to change without notice at any time, may not come to pass and may differ from views expressed by other Columbia Management associates or other divisions of Bank of America. These materials are provided for informational purposes only and should not be used or construed as a recommendation of any security or sector.
There is no assurance that any securities discussed herein will remain in an account’s portfolio at the time you receive this report or that securities sold have not been repurchased. It should not be assumed that any securities transaction or holdings discussed were or will prove to be profitable, or that the investment recommendations or decisions made in the future will be profitable or will equal the investment performance of the securities discussed herein.
Columbia Management Group, LLC ("Columbia Management") is the investment management division of Bank of America Corporation. Columbia Management entities furnish investment management services and products for institutional and individual investors. Columbia Funds are distributed by Columbia Management Distributors, Inc., member FINRA and SIPC. Columbia Management Distributors, Inc. is part of Columbia Management and an affiliate of Bank of America Corporation.
Columbia Management Advisors, LLC ("CMA") has retained Marsico Capital Management, LLC ("MCM") to serve as investment subadviser to the Columbia Marsico International Opportunities Fund. As the investment subadviser, MCM makes the investment decisions and manages all or a portion of the fund or strategy. MCM is an investment adviser registered with the Securities and Exchange Commission. MCM is not affiliated with Bank of America. |