Columbia Funds Trust I – ‘497’ on 7/22/05

On:  Friday, 7/22/05, at 9:30pm ET   ·   As of:  7/25/05   ·   Effective:  7/25/05   ·   Accession #:  1193125-5-147435   ·   File #:  333-125748

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Document/Exhibit                   Description                      Pages   Size 

 1: 497         Columbia Funds Trust I                               226   1.25M 

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NATIONS STRATEGIC INCOME FUND 
c/o BACAP Distributors LLC, 
One Bank of America Plaza, 33/rd/ Floor, Charlotte, NC 28255  

Dear Shareholder:                                                               

I am writing to ask for your vote on the proposed merger of Nations       
Strategic Income Fund, a series of Nations Funds Trust (the "Acquired Fund"),   
and Columbia Strategic Income Fund, a series of Columbia Funds Trust I (the     
"Acquiring Fund"). This matter will be considered at a special meeting of       
shareholders of the Acquired Fund to be held on September 16, 2005.             

The proposed merger is one of several mergers recommended by Columbia     
Management Group Advisors, Inc. ("Columbia Management"), the investment adviser 
to the Columbia Funds, including the Acquiring Fund, and Banc of America        
Capital Management, LLC ("BACAP"), the investment adviser to the Nations Funds, 
including the Acquired Fund. Columbia Management and BACAP's overall goal in    
proposing these fund mergers is two-fold. First, by merging funds with similar  
investment strategies, Columbia Management and BACAP can create larger, more    
efficient investment portfolios. Second, by streamlining their product          
offerings, Columbia Management and BACAP can more effectively concentrate their 
investment management and distribution resources on a more focused group of     
portfolios. Columbia Management and BACAP recommended the merger of the         
Acquired Fund to enable shareholders to invest in a larger, more efficient      
investment portfolio while continuing to access a similar investment strategy.  

Should the Acquired Fund's merger be approved and other conditions to the 
merger satisfied, your current fund investment will be exchanged, without       
immediate tax consequences, for an equal investment (that is, dollar value) in  
the Acquiring Fund. Shareholders of the Acquired Fund will receive shares of    
the Acquiring Fund of the same class as the shares they currently own (except   
that Primary A shareholders of the Acquired Fund will receive Class Z shares of 
the Acquiring Fund). It is also expected that, if shareholders of the Acquiring 
Fund approve the election of all nominees for Trustee of the Acquiring Fund     
(pursuant to a separate proxy statement), the Acquiring Fund will be            
reorganized as a series of Columbia Funds Trust IX, a Massachusetts business    
trust into which the legal entities of all of the retail Columbia Funds are     
expected to be consolidated. We believe this consolidation will enhance the     
efficiency of administration and compliance monitoring for the Columbia Funds.  
More information on the specific details and reasons for the Acquired Fund's    
merger is contained in the enclosed combined Prospectus/Proxy Statement. Please 
read it carefully.                                                              

 THE TRUSTEES OF NATIONS FUNDS TRUST UNANIMOUSLY RECOMMEND THAT YOU VOTE FOR
THE MERGER.                                                                     

 YOUR VOTE IS IMPORTANT. YOU CAN VOTE BY COMPLETING THE ENCLOSED PROXY CARD.
A SELF-ADDRESSED POSTAGE-PAID ENVELOPE HAS BEEN ENCLOSED FOR YOUR CONVENIENCE.  

We appreciate your participation and prompt response in these matters and 
thank you for your continued support.                                           

                            Sincerely,

                                       Christopher L. Wilson
                                               President and Chief Executive
                           Officer

July 25, 2005                                                                   

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NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD SEPTEMBER 16, 2005 

NATIONS STRATEGIC INCOME FUND 
A Series of Nations Funds Trust 

c/o BACAP Distributors LLC  
One Bank of America Plaza 33/rd/ Floor  
Charlotte, NC 28255 
1-866-348-1468  

To the shareholders of Nations Strategic Income Fund:                           

  NOTICE IS HEREBY GIVEN that a Special Meeting of the shareholders of Nations
Strategic Income Fund (the "Acquired Fund") will be held at 10:00 a.m. Eastern  
time on September 16, 2005, at the offices of Columbia Management Advisors,     
Inc., One Financial Center, Boston, Massachusetts 02111, for the following      
purpose:                                                                        

   1. To approve an Agreement and Plan of Reorganization providing for (i)
 the sale of all of the assets of Nations Strategic Income Fund, a series of
Nations Funds Trust, to, and the assumption of all of the liabilities of  
Nations Strategic Income Fund by, Columbia Strategic Income Fund, a series
 of Columbia Funds Trust I (the "Acquiring Fund"), in exchange for shares of
the Acquiring Fund and (ii) the distribution of such shares to the        
shareholders of the Acquired Fund in complete liquidation of the Acquired 
Fund.                                                                     

    2. To consider and act upon such other matters that properly come before
the meeting or any adjourned session of the meeting.                      

  Shareholders of record of the Acquired Fund at the close of business on July
5, 2005, are entitled to notice of and to vote at the meeting and any adjourned 
session of the meeting.                                                         

                                            By Order of the Board of Trustees,

                                       R. Scott Henderson, Secretary

July 25, 2005                                                                   

NOTICE: YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.     
      PLEASE SEE THE ENCLOSED PROSPECTUS/PROXY STATEMENT AND OTHER MATERIALS
FOR INSTRUCTIONS ON HOW TO VOTE EASILY AND QUICKLY.             

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                                                Filed pursuant to Rule 497(b).
                                                           File No: 333-125748

PROSPECTUS/PROXY STATEMENT  
July 13, 2005 

Acquisition of the Assets and Liabilities of  

NATIONS STRATEGIC INCOME FUND 

c/o BACAP Distributors LLC  
One Bank of America Plaza 
33/rd/ Floor  
Charlotte, NC 28255 
1-866-348-1468  

by and in Exchange for Shares of  

COLUMBIA STRATEGIC INCOME FUND  

c/o Columbia Funds Trust I  
One Financial Center  
Boston, Massachusetts 02111 
1-866-348-1468  

TABLE OF CONTENTS                                                               

                                                                [Download Table]
                                                                       
I.   Questions and Answers Regarding Approval of the Merger........   3
II.  Proposal -- Merger of the Acquired Fund and the Acquiring Fund  11
     The Proposal..................................................  11
     Principal Investment Risks....................................  11
     Information about the Merger..................................  13
III. General.......................................................  20
     Voting Information............................................  20
     Information about Proxies and the Conduct of the Meeting......  20
Appendix A -- Agreement and Plan of Reorganization................. A-1
Appendix B -- Acquired Fund and Acquiring Fund Information......... B-1
Appendix C -- Capitalization....................................... C-1
Appendix D -- Information Applicable to the Acquiring Fund......... D-1
Appendix E -- Financial Highlights for the Acquiring Fund.......... E-1
Appendix F -- Comparison of Organizational Documents............... F-1

 The Meeting notice, this prospectus/proxy statement (this "Prospectus/Proxy
Statement") and the enclosed proxy card are expected to be mailed to            
shareholders beginning on or about July 25, 2005. This Prospectus/Proxy         
Statement contains information that a shareholder should know before voting on  
the following proposal (the "Proposal"):                                        

Approval of the Agreement and Plan of Reorganization, dated June 1,   
2005, between Columbia Funds Trust I ("Trust I"), on behalf of        
Columbia Strategic Income Fund (the "Acquiring Fund"), and Nations    
Funds Trust, on behalf of Nations Strategic Income Fund (the          
"Acquired Fund"), and Columbia Management Advisors, Inc. ("Columbia   
Management) (the "Agreement and Plan of Reorganization") relating to  
the proposed merger between the Acquired Fund and the Acquiring Fund. 

This Proposal will be considered by shareholders of the Acquired Fund at a
special meeting of shareholders of the Acquired Fund (the "Meeting") that will  
be held at the offices of Columbia Management, One Financial Center, Boston,    
Massachusetts 02111. Although the Agreement and Plan of Reorganization          
contemplates a                                                                  

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transaction in which the Acquired Fund transfers substantially all of its       
assets and liabilities to the Acquiring Fund in exchange for shares of the      
Acquiring Fund, this Prospectus/Proxy statement refers to the transaction as a  
"Merger." Each of the Acquiring Fund and the Acquired Fund is referred to as a  
"Fund" and together, the "Funds." Each of the Funds is a series of a registered 
open-end management investment company. Please read this Prospectus/Proxy       
Statement and keep it for future reference.                                     

The Acquiring Fund seeks current income consistent with prudent risk and  
maximum total return by investing, under normal market conditions, primarily in 
debt securities. If the Agreement and Plan of Reorganization is approved by the 
shareholders of the Acquired Fund and the Merger occurs, the Acquired Fund will 
transfer all of the assets attributable to its Investor A, Investor B, Investor 
C and Primary A shares to the Acquiring Fund and the Acquiring Fund will assume 
all of the liabilities in exchange for Class A, Class B, Class C and Class Z    
shares, respectively, of the Acquiring Fund with the same aggregate net asset   
value as the net value of the assets transferred and liabilities assumed. After 
that exchange, shares of each class received by the Acquired Fund will be       
distributed pro rata to its shareholders of the corresponding class and such    
shareholders will become shareholders of the Acquiring Fund.                    

The following documents have been filed with the Securities and Exchange  
Commission (the "SEC") and are incorporated into this Prospectus/Proxy          
Statement by reference:                                                         

.   The Statement of Additional Information of the Acquiring Fund dated July
13, 2005, relating to this Prospectus/Proxy Statement.              

.   The Prospectuses of the Acquired Fund dated August 1, 2004, as          
supplemented.                                                       

 .   The Statement of Additional Information of the Acquired Fund dated August
1, 2004, as supplemented.                                           

.   The Report of Independent Registered Public Accounting Firm and the     
audited financial statements included in the Annual Report to       
Shareholders of the Acquired Fund dated March 31, 2005.             

  The Acquired Fund has previously sent its Annual Report to its shareholders.
For a free copy of this report or any of the documents listed above, call       
1-866-348-1468 or write to the Acquired Fund at the address listed on the cover 
of this Prospectus/Proxy Statement. Shareholders may also obtain many of these  
documents by accessing the Internet site for the Acquired Fund at               
www.nationsfunds.com. Text-only versions of all Acquired Fund and Acquiring     
Fund documents can be viewed online or downloaded from the EDGAR database on    
the SEC's Internet site at www.sec.gov. Shareholders can review and copy        
information about the Funds by visiting the Public Reference Room, U.S.         
Securities and Exchange Commission, 100 F Street, N.E., Washington, DC          
20549-0102. Shareholders can obtain copies, upon payment of a duplicating fee,  
by sending an e-mail request to publicinfo@sec.gov or by writing the Public     
Reference Room at the address above. Information on the operation of the Public 
Reference Room may be obtained by calling 1-202-942-8090.                       

The SEC has not approved or disapproved these securities or determined if 
this Prospectus/Proxy Statement is truthful or complete. Any representation to  
the contrary is a criminal offense.                                             

An investment in a Fund is not a bank deposit and is not insured or       
guaranteed by the Federal Deposit Insurance Corporation or any other government 
agency.                                                                         

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I.  QUESTIONS AND ANSWERS REGARDING APPROVAL OF THE MERGER  

The following questions and answers provide an overview of key features of
the Merger and of the information contained in this Prospectus/Proxy Statement. 
Please review the Prospectus/Proxy Statement prior to casting a vote. Please    
call 1-866-348-1468 with any questions about the Merger or this                 
Prospectus/Proxy Statement generally.                                           

1. What Merger is being proposed?                                               

The Board of Trustees of Nations Funds Trust is recommending that the     
Acquiring Fund acquire the Acquired Fund. This means that the Acquiring Fund    
would acquire all of the assets and assume all of the liabilities of the        
Acquired Fund in exchange for shares of the Acquiring Fund. If the Merger is    
approved and completed, shareholders of the Acquired Fund will receive shares   
of the Acquiring Fund of a class corresponding to the class of their Acquired   
Fund shares and with a dollar value equal to the value of their Acquired Fund   
shares on the business day prior to the closing of the Merger. The Merger is    
currently scheduled to take place on or around September 23, 2005 or such other 
date as the parties may agree.                                                  

2. Why is the Merger being proposed?                                            

The Trustees recommend approval of the Merger because the Merger offers   
shareholders of the Acquired Fund the opportunity to invest in a larger         
combined portfolio that has similar investment goals and principal investment   
strategies. Spreading fixed costs over a broader asset base allows the          
potential for more efficient operation, and lower overall expenses. In          
reviewing the Merger, the Trustees also considered that, based on estimated     
expense ratios as of November 30, 2004, shareholders of the Acquired Fund are   
expected to experience lower expenses as a result of the Merger.                

Please review "Reasons for the Merger and Trustees' Considerations" in    
Section II of this Prospectus/Proxy Statement for more information regarding    
the factors considered by the Trustees.                                         

3. How do the management fees and expenses of the Funds compare and what are    
they estimated to be following the Merger?                                

The tables below allow shareholders to compare the sales charges and      
management fees and expenses of each Fund and to analyze the estimated expenses 
that Columbia Management, Inc. ("Columbia Management") expects the combined     
Fund to bear in the first year following the Merger. The shareholder fees       
presented below for the Acquiring Fund apply both before and after giving       
effect to the Merger. Sales charges, if applicable, are paid directly by        
shareholders of the Acquired Fund to BACAP Distributors, LLC, the Acquired      
Fund's distributor, and by shareholders of the Acquiring fund to Columbia Funds 
Distributor, Inc., the Acquiring Fund's distributor. Annual Fund Operating      
Expenses are paid by each Fund. They include management fees, distribution and  
service (12b-1) fees (if applicable) and administrative costs, including        
pricing and custody services.                                                   

In addition, following the presentation of that information, Annual Fund  
Operating Expenses and Example Expenses are presented on a pro forma combined   
basis. The Annual Fund Operating Expenses shown in the table below represent    
expenses as of each Fund's most recent fiscal year (year ended March 31, 2005   
for the Acquired Fund and May 31, 2005 for the Acquiring Fund) and those        
projected for the combined Fund on a pro forma basis after giving effect to the 
proposed Merger and based on pro forma combined net assets as of November 30,   
2004.                                                                           

Shareholders of the Acquired Fund and the Acquiring Fund will not pay     
additional sales charges as a result of the Merger, although contingent         
deferred sales charges ("CDSCs") applicable to share purchases made prior to    
the Merger will continue to apply.                                              

Based on the expense ratios shown below, net expenses of each class of    
shares of the Acquiring Fund are expected to be lower than the net expenses of  
each corresponding class of shares of the Acquired Fund. If the                 

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Merger occurs, Merger expenses will be allocated to the Acquired Fund, which    
will reduce the Acquired Fund's net asset value immediately prior to the        
closing of the Merger (by approximately $0.0002 per share based on shares       
outstanding as of April 29, 2005). Based on the expense ratios shown below, it  
is projected that, after the Merger, former Acquired Fund shareholders will     
benefit from expense savings that will offset the allocated Merger expenses.    
However, the benefit of these projected expense savings will not be realized    
immediately. It is projected that the aggregate expense savings will not exceed 
the allocated Merger expenses until approximately eleven months after the       
Merger. If a shareholder redeems his or her shares prior to that time, the      
shareholder will receive no net benefit from the projected expense savings.     

Shareholder Fees                                                                
(paid directly from an investment)                                              

Nations Strategic Income Fund 

                                                        [Enlarge/Download Table]

                                                                    Investor A      Investor B      Investor C     Primary A/(1)/
                                                                   ----------      ----------      ----------      ------------- 
                                                                                                                                 
Maximum sales charge (load) imposed on purchases (%) (as a                                                                       
  percentage of the offering price)...............................    4.75            0.00            0.00             0.00      
Maximum deferred sales charge (load) on redemptions (%) (as a                                                                    
  percentage of the lesser of original purchase price or net asset                                                               
  value)..........................................................    0.00/(2)(8)/    5.00/(3)(8)/    1.00/(4)(8)/     0.00      

Columbia Strategic Income Fund/(5)/ 

                                                        [Enlarge/Download Table]

                                                                   Class A    Class B    Class C    Class Z  
                                                                  -------    -------    -------    -------   
                                                                                                             
Maximum sales charge (load) on purchases (%) (as a percentage                                                
  of the offering price).........................................  4.75       0.00       0.00       0.00     
Maximum deferred sales charge (load) on redemptions (%) (as a                                                
  percentage of the lesser of purchase price or redemption price)  1.00/(6)/  5.00/(3)/  1.00/(4)/  0.00     
Redemption fee (%) (as a percentage of amount redeemed, if                                                   
  applicable)....................................................   -- /(7)/   -- /(7)/   -- /(7)/   -- /(7)/

Columbia Strategic Income Fund/(5)/ 
(pro forma combined)  

                                                        [Enlarge/Download Table]

                                                                   Class A    Class B    Class C    Class Z  
                                                                  -------    -------    -------    -------   
                                                                                                             
Maximum sales charge (load) on purchases (%) (as a percentage                                                
  of the offering price).........................................  4.75       0.00       0.00       0.00     
Maximum deferred sales charge (load) on redemptions (%) (as a                                                
  percentage of the lesser of purchase price or redemption price)  1.00/(6)/  5.00/(3)/  1.00/(4)/  0.00     
Redemption fee (%) (as a percentage of amount redeemed, if                                                   
  applicable)....................................................   -- /(7)/   -- /(7)/   -- /(7)/   -- /(7)/

--------                                                                        
(1)Shareholders of Primary A shares of the Acquired Fund will receive Class Z   
shares of the Acquiring Fund.                                             
(2)A 1.00% maximum deferred sales charge applies to investors who buy $1        
million or more of Investor A Shares and sell them within 18 months of    
buying them.                                                              
(3)This charge decreases over time.                                             
(4)This charge applies to investors who buy shares and sell them within one     
year of buying them.                                                      
(5)A $10 annual fee is deducted from accounts of less than $1,000 and paid to   
the transfer agent.                                                       
(6)This charge applies only to Class A shares bought without an initial sales   
charge that are sold within 18 months of purchase.                        

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(7)There is a $7.50 charge for wiring sale proceeds to a bank.                  
(8)As of April 11, 2005, any otherwise applicable contingent deferred sales     
charge described in footnotes (2)-(4) above will be waived for redemptions
of Investor A, Investor B or Investor C shares prior to the Merger.       
Following the Merger, if approved, redemptions of such shares will be     
 subject to any applicable contingent deferred sales charge of the Acquiring
 Fund. Any such contingent deferred sales charge will be calculated based on
such shareholder's original Investor A, Investor B or Investor C shares   
purchase date, as applicable.                                             

Annual Fund Operating Expenses                                                  
(deducted directly from fund assets)                                            

Nations Strategic Income Fund 

                                                        [Enlarge/Download Table]

                                                        Investor A Investor B Investor C Primary A
                                                        ---------- ---------- ---------- ---------
                                                                                                  
Management fee (%)/(1)/................................    0.60       0.60       0.60      0.60   
Distribution (12b-1) and shareholder servicing fees (%)    0.25       1.00       1.00      0.00   
Other expenses (%).....................................    0.16       0.16       0.16      0.16   
Total annual fund operating expenses (%)...............    1.01       1.76       1.76      0.76   

Columbia Strategic Income Fund  

                                                                [Download Table]

                                               Class A Class B  Class C   Class Z
                                               ------- ------- -------    -------
                                                                                 
Management fees (%)/(2)/......................  0.56    0.56    0.56       0.56  
Distribution and service (12b-1) fees (%)/(3)/  0.24    0.99    0.99/(4)/  0.00  
Other expenses (%)............................  0.28    0.28    0.28       0.28  
Total annual fund operating expenses (%)......  1.08    1.83    1.83       0.84  

Columbia Strategic Income Fund  
(pro forma combined)  

                                                                [Download Table]

                                               Class A Class B  Class C   Class Z
                                               ------- ------- -------    -------
                                                                                 
Management fees (%)/(2)/......................  0.56    0.56    0.56       0.56  
Distribution and service (12b-1) fees (%)/(3)/  0.24    0.99    0.99/(5)/  0.00  
Other expenses (%)............................  0.14    0.14    0.14       0.14  
Total annual fund operating expenses (%)......  0.94    1.69    1.69       0.70  

--------                                                                        
(1)The Acquired Fund pays a management fee of 0.46% and an administration fee   
 of 0.14%. Management fees have been restated to reflect contractual changes
to the management fee for the Acquired Fund effective December 1, 2004. In
  order to facilitate comparison of the fees in this table, the management fee
 has been restated to show the combination of management fees (i.e. advisory
fees) and administration fees. The effective management fee (excluding    
administration fees) paid by the Acquired Fund for the year was 0.49%.    
(2)The Acquiring Fund pays a management fee of 0.56% and an administration fee  
 of 0.00%. Management fees have been restated to reflect contractual changes
effective November 1, 2004.                                               
(3)The annual service fee portion of the 12b-1 fee may equal up to 0.15% on net 
assets attributable to shares issued prior to January 1, 1993 and 0.25% on
net assets attributable to shares issued thereafter. This arrangement     
 results in a rate of service fee for all shares that is a blend between the
0.15% and 0.25% rates.                                                    
(4)The Acquiring Fund's distributor has voluntarily agreed to waive a portion   
of the 12b-1 fee for Class C shares. If this waiver were reflected in the 
  table, the 12b-1 fee for Class C shares would be 0.84% and total annual fund
operating expenses for Class C shares would be 1.68%. This arrangement may
be modified or terminated by the distributor at any time.                 

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(5)The Acquiring Fund's distributor has voluntarily agreed to waive a portion   
of the 12b-1 fee for Class C shares. If this waiver were reflected in the 
  table, the 12b-1 fee for Class C shares would be 0.84% and total annual fund
operating expenses for Class C shares would be 1.54%. This arrangement may
be modified or terminated by the distributor at any time.                 

Example Expenses                                                                

Example Expenses help shareholders compare the cost of investing in each  
Fund currently with the cost of investing in the combined Fund on a pro forma   
combined basis and also allow shareholders to compare these costs with the cost 
of investing in other mutual funds. It uses the following hypothetical          
conditions.                                                                     

.   $10,000 initial investment                                              

.   5% total return for each year                                           

.   Each Fund's operating expenses remain the same                          

.   Reinvestment of all dividends and distributions                         

.   Class B shares of the Acquiring Fund convert to Class A shares of the   
Acquiring Fund after eight years                                    

.   Investor B shares of the Acquired Fund convert to Investor A shares of  
the Acquired Fund after eight years (note that the actual conversion
     schedule for Investor B shares of the Acquired Fund may vary depending on
when the shares were purchased and the number of shares purchased)  

Example Expenses                                                                
(actual costs may be higher or lower)                                           

                                                                [Download Table]

                                             1 Year 3 Years 5 Years 10 Years
                                             ------ ------- ------- --------
Nations Strategic Income Fund                                               
-----------------------------                                               
                                                                            
Investor A                                    $573   $781   $1,006   $1,653 
Investor B: did not sell shares               $179   $554   $  954   $1,875 
            sold all shares at end of period  $679   $854   $1,154   $1,875 
Investor C: did not sell shares               $179   $554   $  954   $2,073 
            sold all shares at end of period  $279   $554   $  954   $2,073 
Primary A                                     $ 78   $243   $  422   $  942 

Columbia Strategic Income Fund                                              
------------------------------                                              
Class A                                       $580   $802   $1,042   $1,730 
Class B:    did not sell shares               $186   $576   $  990   $1,951 
            sold all shares at end of period  $686   $876   $1,190   $1,951 
Class C:    did not sell shares               $186   $576   $  990   $2,148 
            sold all shares at end of period  $286   $576   $  990   $2,148 
Class Z                                       $ 86   $268   $  466   $1,037 

Columbia Strategic Income Fund                                              
------------------------------                                              
(pro forma combined)                                                        
Class A                                       $566   $760   $  970   $1,575 
Class B:    did not sell shares               $172   $533   $  918   $1,799 
            sold all shares at end of period  $672   $833   $1,118   $1,799 
Class C:    did not sell shares               $172   $533   $  918   $1,998 
            sold all shares at end of period  $272   $533   $  918   $1,998 
Class Z                                       $ 72   $224   $  390   $  871 

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 The projected post-Merger pro forma combined Annual Fund Operating Expenses
and Example Expenses presented above are based upon numerous material           
assumptions, including that (1) the current contractual agreements will remain  
in place; and (2) certain fixed costs involved in operating the Acquired Fund   
and the Acquiring Fund will be eliminated. Although these projections represent 
good faith estimates, there can be no assurance that any particular level of    
expenses or expense savings will be achieved because expenses depend on a       
variety of factors, including the future level of Fund assets, many of which    
are beyond the control of the Acquiring Fund or Columbia Management.            

HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION                                 

 Please see Appendix D for information relating to supplemental hypothetical
investment expense information that provides additional information in a        
different format from the preceding Annual Fund Operating Expenses and Example  
Expenses tables about the effect of the expenses of the Acquiring Fund,         
including investment advisory fees and other Acquiring Fund costs, on the       
Acquiring Fund's returns over a 10-year period.                                 

4. How do the investment goals/objectives, principal investment strategies and  
policies of the Funds compare?                                            

This table shows the investment goal/objective and principal investment   
strategies of each Fund:                                                        

                                                        [Enlarge/Download Table]

Nations Strategic Income Fund                           Columbia Strategic Income Fund                           
-----------------------------                           ------------------------------                           
                                                                                                                 
Investment Goal/Objective: The Acquired Fund seeks      Investment Goal: The Acquiring Fund seeks current        
total return with an emphasis on current income by      income consistent with prudent risk. The Acquiring       
investing in a diversified portfolio of fixed income    Fund also seeks maximum total return.                    
securities.                                                                                                      

Principal Investment Strategies: The Acquired Fund      Principal Investment Strategies: The Acquiring           
seeks to achieve its goal as follows:                   Fund seeks to achieve its goal as follows:               

..Under normal circumstances, the Acquired Fund will     .Under normal circumstances, the Acquiring Fund         
 invest at least 80% of its assets in income-producing   will invest primarily in debt securities issued by the  
 securities.                                             U.S. government, including mortgage-backed              
                                                         securities issued by U.S. government agencies;          
..The Acquired Fund normally invests at least 65% of      debt securities issued by foreign governments and      
 its assets in investment grade debt securities.         foreign companies, including securities issued in       
                                                         emerging market countries; and lower-rated              
..The Acquired Fund may invest up to 35% of its assets    corporate debt securities. Columbia Management         
 in lower-quality fixed income securities ("junk         allocates the Acquiring Fund's investments based        
 bonds" or "high yield bonds") rated "Ba" or "B" by      on its estimate of the expected performance and         
 Moody's Investors Service, Inc. or "BB" or "B" by       risk of each type of investment.                        
 Standard & Poor's Corporation.                                                                                  

..The Acquired Fund may invest in corporate debt         .The Acquiring Fund may purchase derivative             
 securities, U.S. Government obligations, foreign debt   instruments, such as futures, options, swap             
 securities denominated in U.S. dollars or foreign       contracts, and inverse floaters, to gain or reduce      
 currencies, mortgage-related securities issued by       exposure to particular securities or segments of the    
 governments and non-government issuers and asset-       bond markets. Derivatives are financial instruments     
 backed securities.                                      whose values depend on, or are derived from, the        
                                                         value of an underlying security, index or currency.     
..The Acquired Fund will limit its investments in         The Acquiring Fund may use derivatives for both        
 foreign securities to one-third of its total assets.    hedging and non-hedging purposes, such as to            
                                                         adjust the Acquiring Fund's sensitivity to changes      
..The Acquired Fund may engage in forward foreign         in interest rates, or to offset a potential loss in one
 currency contracts, reverse repurchase agreements       position by establishing an opposite position.          
 and forward purchase agreements to seek to protect                                                              
 against movements in the value of foreign currencies                                                            
 in which its foreign securities may be denominated.                                                             

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                                                                [Download Table]

Nations Strategic Income Fund                                 
-----------------------------                              -  
                                                              

.The Acquired Fund may also engage in repurchase,             
 reverse repurchase and forward purchase agreements           
 to seek to enhance returns and manage liquidity.             

.The Acquired Fund may use futures, interest rate             
 swaps, total return swaps, options and other derivative      
 instruments to seek to enhance return, to hedge some         
 of the risks of its fixed income securities investments      
 or as a substitute for a position in the underlying          
 asset.                                                       

.The Acquired Fund may also invest in private                 
 placements to seek to enhance its yield.                     

.The Acquired Fund may also invest in securities that         
 are not part of its principal investment strategies, but     
 will not hold more than 10% of its assets in any one         
 type of these securities, which are described in the         
 Acquired Fund's Statement of Additional                      
 Information.                                                 


The shareholders of the Acquiring Fund are currently scheduled to vote on 
changes to the fundamental investment restrictions for the Acquiring Fund.      
Shareholders of record of the Acquiring Fund on June 28, 2005, will vote        
separately on each proposed change to the fundamental investment restrictions   
for the Acquiring Fund. The following highlights the current differences in     
investment restrictions and certain investment strategies that the Funds use to 
achieve their investment goals, as well as the differences in the investment    
restrictions and certain investment strategies if the changes to the Acquiring  
Fund's fundamental investment restrictions are approved. For purposes of this   
discussion, a "fundamental investment restriction" is one that may not be       
changed without shareholder approval:                                           

.   The Acquiring Fund currently has a fundamental investment restriction   
under which it may purchase and sell futures contracts and related  
     options so long as the total initial margin and premiums on the contracts
     do not exceed 5% of its total assets. The Acquired Fund has a fundamental
  investment restriction under which it may not buy or sell commodities.
However, the Acquired Fund may, to the extent consistent with its   
    investment objective, invest in securities of companies that purchase or
    sell commodities or which invest in such programs, and purchase and sell
 options, forward contracts, futures contracts, and options on futures
   contracts. This policy does not apply to foreign currency transactions,
including, without limitation, forward currency contracts. If the   
proposed changes to the Acquiring Fund's fundamental investment     
  restrictions are approved, the Acquiring Fund's fundamental investment
restriction will be identical to the Acquired Fund's fundamental    
investment restriction.                                             

.   The Acquiring Fund has a fundamental investment restriction under which 
   it may only own real estate acquired as the result of owning securities
but not exceeding 5% of its total assets. The Acquired Fund has a   
 fundamental investment restriction under which it may not purchase or
     sell real estate, except that it may purchase securities of issuers which
deal or invest in real estate and may purchase securities which are 
secured by real estate or interests in real estate. If the proposed 
   changes to the Acquiring Fund's fundamental investment restrictions are
     approved, the Acquiring Fund's fundamental investment restriction will be
identical to the Acquired Fund's fundamental investment restriction.

.   The Acquiring Fund has a fundamental investment restriction under which 
it may make loans (a) through lending of securities, (b) through the
purchase of debt instruments or similar evidences of indebtedness   
typically sold privately to financial institutions, (c) through an  
  interfund lending program with other affiliated funds provided that no
    such loan may be made if, as a result, the aggregate of such loans would
     exceed 33 1/3% of the value of its total assets (taken at market value at
the time of such                                                    

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loans), and (d) through repurchase agreements. The Acquired Fund has a
 fundamental investment restriction under which it may not make loans,
    except to the extent permitted by the Investment Company Act of 1940, as
  amended (the "1940 Act"), the rules and regulations thereunder and any
   exemptive relief obtained by the Acquired Fund. Generally, the 1940 Act
permits an investment company to borrow up to 33 1/3% of its total  
 assets, including the amount borrowed. If the proposed changes to the
  Acquiring Fund's fundamental investment restrictions are approved, the
    Acquiring Fund's fundamental investment restriction will be identical to
the Acquired Fund's fundamental investment restriction.             

.   Each of the Acquiring Fund and the Acquired Fund has a fundamental      
   investment restriction under which it may not concentrate more than 25%
    of its total assets in any industry. While the Acquiring Fund may invest
 more than 25% of its assets in obligations of the U.S. government and
  cash items, including receivables, the Acquired Fund has a fundamental
 investment restriction under which it may invest more than 25% of its
total assets in (i) obligations issued or guaranteed by the U.S.    
    government, any state or territory of the United States, or any of their
agencies, instrumentalities or political subdivisions, and          
 (ii) securities of one or more management investment companies to the
   extent permitted by the 1940 Act, the rules and regulations thereunder,
  or any exemptive relief obtained by the Acquired Fund. If the proposed
   changes to the Acquiring Fund's fundamental investment restrictions are
     approved, the Acquiring Fund's fundamental investment restriction will be
identical to the Acquired Fund's fundamental investment restriction.

.   The Acquiring Fund has a fundamental investment restriction under which 
  it may not, with respect to 75% of its assets, purchase the securities
(except securities issued or guaranteed by the U.S. government, its 
    agencies or instrumentalities) of any one issuer if, as a result of such
purchase, more than 5% of its total assets would be invested in the 
    securities of such issuer or if it would own more than 10% of the voting
  securities of such issuer. The Acquired Fund has a similar fundamental
   investment restriction, except that (a) securities issued or guaranteed
  by the U.S. government, its agencies or instrumentalities are excluded
   for purposes of this restriction and (b) the Acquired Fund's assets may
be invested in the securities of one or more management investment  
companies to the extent permitted by the 1940 Act, the rules and    
    regulations thereunder, or any exemptive relief obtained by the Acquired
Fund. This restriction does not limit the Acquired Fund's ability to
    invest in securities issued by other registered investment companies. If
the proposed changes to the Acquiring Fund's fundamental investment 
  restrictions are approved, the Acquiring Fund's fundamental investment
restriction will be identical to the Acquired Fund's fundamental    
investment restriction.                                             

.   The Acquiring Fund has a fundamental investment restriction under which 
it may underwrite securities issued by others only when disposing of
portfolio securities. This restriction does not limit the Acquiring 
Fund's ability to invest in securities issued by other registered   
   investment companies. The Acquired Fund may not underwrite any issue of
    securities within the meaning of the Securities Act of 1933, as amended,
except when it might be deemed to be an underwriter either: (a) in  
connection with the disposition of a portfolio security; or (b) in  
connection with the purchase of securities directly from the issuer 
thereof in accordance with its investment objective. If the proposed
   changes to the Acquiring Fund's fundamental investment restrictions are
     approved, the Acquiring Fund's fundamental investment restriction will be
identical to the Acquired Fund's fundamental investment restriction.

.   The Acquiring Fund has a non-fundamental policy under which it may not  
 purchase securities on margin but it may receive short-term credit to
    clear securities transactions and may make initial or maintenance margin
     deposits in connection with futures transactions. The Acquiring Fund also
 may not have short positions, unless it owns the rights to acquire an
    equal amount of such securities. The Acquired Fund has a non-fundamental
  policy under which it may not sell securities short, unless it owns or
   has the right to obtain securities equivalent in kind and amount to the
  securities sold short (short sales "against the box") or it segregates
    assets in the amount at least equal to the underlying security or asset.

For more information regarding the Funds' investment policies and         
restrictions, see each Fund's Statement of Additional Information.              

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5. What class of the Acquiring Fund shares will shareholders receive if the     
Merger occurs?                                                            

 If a shareholder own Investor A, Investor B, Investor C or Primary A shares
of the Acquired Fund, the shareholder will receive Class A, Class B, Class C or 
Class Z shares, respectively, of the Acquiring Fund. It is expected that, in    
connection with the consolidation of certain service providers to the Columbia  
Funds and the Nations Funds prior to the Merger, the procedures for purchasing, 
redeeming and exchanging shares of the Columbia Funds and the Nations Funds     
will be aligned by modifying the current procedures of both complexes.          
Accordingly, although changes to such procedures are anticipated, the Merger    
will not itself result in any changes to such procedures. As a result of these  
modifications to the procedures, the Acquiring Fund shares will be subject to   
the same CDSCs upon redemption as the Acquired Fund shares. For more            
information on the Acquiring Fund's current distribution, purchase, redemption  
and exchange policies, see Appendix D to this Prospectus/Proxy Statement.       

6. What are the federal income tax consequences of the Merger?                  

  The Merger is expected to be tax-free to shareholders for federal income tax
purposes. This means that neither shareholders nor the Acquired Fund are        
expected to recognize a gain or loss directly as a result of the Merger.        
However, because the Merger will end the tax year of the Acquired Fund, it may  
accelerate distributions from the Acquired Fund to shareholders. Specifically,  
the Acquired Fund will recognize any net investment company taxable income and  
any net capital gains, including those realized on disposition of portfolio     
securities in connection with the Merger (after reduction by any available      
capital loss carryforwards) or net capital losses in the short tax year ending  
on the date of the Merger, and will declare and pay a distribution of such      
income and any such net capital gains remaining after reduction of any          
available capital loss carryforwards to its shareholders on or before that date.

The cost basis and holding period of the Acquired Fund shares are expected
to carry over to the new shares in the Acquiring Fund. At any time prior to the 
consummation of the Merger, a shareholder may redeem shares, likely resulting   
in the recognition of gain or loss to such shareholder for federal income tax   
purposes.                                                                       

  Certain other tax consequences are discussed below under "Federal Income Tax
Consequences."                                                                  

7. Who bears the expenses associated with the Merger?                           

  Columbia Management, the Acquiring Fund and the Acquired Fund each will bear
a portion of the out-of-pocket expenses associated with the Merger.             
Out-of-pocket expenses associated with the Merger include, but are not limited  
to: (1) the expenses associated with the preparation, printing and mailing of   
any shareholder communications, including this Prospectus/Proxy Statement, and  
any filings with the SEC and/or other governmental authorities in connection    
with the Merger; (2) the fees and expenses of any proxy solicitation firm       
retained in connection with the Merger; (3) the legal fees and expenses         
incurred by the Funds in connection with the Merger; and (4) the Trustees' fees 
and out-of-pocket expenses incurred in connection with the Merger.              

The out-of-pocket expenses of the Merger are first allocated to the       
Acquiring Fund or to the Acquired Fund. Merger-related costs that are           
specifically allocable to one Fund are allocated to that Fund (e.g., the costs  
of printing and mailing this Prospectus/Proxy Statement are allocated           
exclusively to the Acquired Fund). Costs of the Merger that are not             
specifically allocable to either Fund are divided equally between the Funds.    
Following this initial allocation between the Funds, Columbia Management limits 
the expenses actually allocated to a Fund in the Merger to the lesser of (i)    
the anticipated reductions in expenses borne by that Fund over the first year   
following the Merger and (ii) 75% of the initial allocation to that Fund. Any   
reduction in the Merger expenses allocable to a Fund as a result of these       
limitations is borne by Columbia Management, not the other Fund. The estimated  
costs of the Merger to be borne by the Acquired Fund and the Acquiring Fund are 
approximately $31,182 and $57,959, respectively, assuming completion of the     
Merger. Should the Merger fail to occur, Columbia Management will bear all      
costs associated with the Merger.                                               

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8. Why is the Acquiring Fund expected to be reorganized following the Merger?   

  At a meeting held on May 11, 2005, the Board, including all Trustees who are
not "interested persons" of the Acquiring Fund (as defined in section 2(a)(19)  
of the 1940 Act) (each, an "independent Trustee"), unanimously approved the     
reorganization of open-end retail Columbia Funds, including the Acquiring Fund  
(provided that shareholders of the Acquiring Fund as of June 28, 2005 approve   
the election of all nominees for Trustee), as series of an existing             
Massachusetts business trust, Columbia Funds Trust IX (the "Trust               
Reorganization"). In the Trust Reorganization, the Acquiring Fund will be       
reorganized as a newly-formed series of Columbia Funds Trust IX. The primary    
purpose of the Trust Reorganization is to facilitate compliance monitoring and  
administration for the Columbia Funds.                                          

 Consummation of the Trust Reorganization with respect to the Acquiring Fund
is expected to occur immediately following completion of the Merger. The Merger 
is not conditioned on the completion of the Trust Reorganization. Shareholders  
of the Acquired Fund are not being asked to approve the Trust Reorganization.   

For a summary of significant differences between the organizational       
documents of the Acquired Fund, Trust I and Columbia Funds Trust IX, the trust  
into which the Acquiring Fund is expected to be reorganized, please see         
Appendix F.                                                                     

II.  PROPOSAL: MERGER OF THE ACQUIRED FUND AND THE ACQUIRING FUND 

The Proposal                                                                    

Shareholders of the Acquired Fund are being asked to approve the Agreement
and Plan of Reorganization, a copy of which is attached as Appendix A to this   
Prospectus/Proxy Statement. By approving the Agreement and Plan of              
Reorganization, shareholders are approving the merger of the Acquired Fund and  
the Acquiring Fund.                                                             

Principal Investment Risks                                                      

What are the principal investment risks of the Acquiring Fund, and how do   
they compare with those of the Acquired Fund?                               

  The principal risks associated with the Acquired Fund and the Acquiring Fund
are generally similar because they have generally similar investment goals and  
principal investment strategies. The actual risks of investing in the Acquired  
Fund and the Acquiring Fund depend on the securities held in their portfolios   
and on market conditions, both of which change over time. Both the Acquired     
Fund and the Acquiring Fund are subject to the following risks:                 

The Acquiring Fund is subject to both management risk and market risk.    
Management risk means that Columbia Management's investment decisions might     
produce losses or cause the Acquiring Fund to underperform when compared to     
other funds with a similar investment goal. Market risk means that security     
prices in a market, sector or industry may fall, reducing the value of one's    
investment. Because of management and market risk, there is no guarantee that   
the Acquiring Fund will achieve its investment goal or perform favorably among  
comparable funds.                                                               

The Acquiring Fund may also be subject to interest rate risk, which is the
risk of a change in the price of a bond when prevailing interest rates increase 
or decline. In general, if interest rates rise, bond prices fall, and if        
interest rates fall, bond prices rise. Changes in the values of bonds usually   
will not affect the amount of income the Acquiring Fund receives from them but  
will affect the value of the Acquiring Fund's shares. Interest rate risk is     
generally greater for bonds with longer maturities.                             

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  Because the Acquiring Fund may invest in debt securities issued or supported
by private entities, including corporate bonds and mortgage-backed and          
asset-backed securities, the Acquiring Fund is subject to issuer risk. Issuer   
risk is the possibility that changes in the financial condition of the issuer   
of a security, changes in general economic conditions, or changes in economic   
conditions that affect the issuer may impact its actual or perceived            
willingness or ability to make timely payments of interest or principal. This   
could result in a decrease in the price of the security and in some cases a     
decrease in income. The Acquiring Fund's investments in securities issued by    
U.S. government-sponsored enterprises, such as the Federal Home Loan Mortgage   
Corporation and the Federal National Mortgage Association, are not funded by    
Congressional appropriations and are neither guaranteed nor insured by the U.S. 
government. Furthermore, no assurances can be given that the U.S. government    
would provide financial support to its agencies or instrumentalities where it   
is not obligated to do so.                                                      

The Acquiring Fund may also be subject to structure risk and prepayment   
risk. Structure risk is the risk that an event will occur (such as a security   
being prepaid or called) that alters the security's cash flows. Prepayment risk 
is a particular type of structure risk that is associated with investments in   
asset-backed and mortgage-backed securities. With respect to investments in     
mortgage-backed securities, prepayment risk is the possibility that, as         
prevailing interest rates fall, homeowners are more likely to refinance their   
home mortgages. When mortgages are refinanced, the principal on mortgage-backed 
securities is paid earlier than expected. In an environment of declining        
interest rates, asset-backed and mortgage-backed securities may offer less      
potential for gain than other debt securities. During periods of rising         
interest rates, asset-backed and mortgage-backed securities have a high risk of 
declining in price because the declining prepayment rates effectively increase  
the expected life of the security. In addition, the potential impact of         
prepayment on the price of asset-backed and mortgage-backed securities may be   
difficult to predict and result in greater volatility.                          

The Acquiring Fund is also subject to reinvestment risk, which is the risk
that income from the Acquiring Fund's debt securities will decline if and when  
the Acquiring Fund invests the proceeds from matured, traded or called          
securities at market interest rates that are below the current earnings rate of 
the Acquiring Fund's portfolio.                                                 

The Acquiring Fund is subject to the risks associated with investing in   
lower-rated debt securities. Commonly referred to as "junk bonds," lower-rated  
debt securities involve greater risk of loss due to credit deterioration and    
are less liquid, especially during periods of economic uncertainty or change,   
than higher-quality debt securities. Lower-rated debt securities generally have 
a higher risk that the issuer of the security may default and not make payment  
of interest or principal.                                                       

The Acquiring Fund may also be subject to the risks associated with       
investing in foreign securities. Foreign securities are subject to special      
risks. Foreign markets can be extremely volatile. Fluctuations in currency      
exchange rates may impact the value of foreign securities without a change in   
the intrinsic value of those securities. The liquidity of foreign securities    
may be more limited than that of domestic securities, which means that the      
Acquiring Fund may, at times, be unable to sell foreign securities at desirable 
prices. Brokerage commissions, custodial fees and other fees are generally      
higher for foreign investments. The Acquiring Fund may have limited legal       
recourse in the event of default with respect to certain debt securities issued 
by foreign governments. In addition, foreign governments may impose withholding 
taxes which would reduce the amount of income and capital gains available to    
distribute to shareholders. Other risks include possible delays in the          
settlement of transactions or in the notification of income; less publicly      
available information about companies; the impact of political, social or       
diplomatic events; possible seizure, expropriation or nationalization of the    
company or its assets; and possible imposition of currency exchange controls.   

In addition, the Acquiring Fund may invest in emerging markets, which are 
subject to additional risk. The risks of foreign investments are typically      
increased in less developed countries, which are sometimes referred to as       
emerging markets. For example, political and economic structures in these       
countries may be new and developing rapidly, which may cause instability. These 
countries are also more likely to experience high levels of inflation,          
deflation or currency devaluations, which could hurt their economies and        
securities markets.                                                             

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Derivatives involve special risks and may result in losses. Derivative    
strategies often involve leverage, which may exaggerate a loss, potentially     
causing the Acquiring Fund to lose more money than it would have had it         
invested in the underlying security. The values of derivatives may move in      
unexpected ways, especially in unusual market conditions, and may result in     
increased volatility. The use of derivatives may also increase the amount of    
taxes payable by shareholders. Other risks arise from the Acquiring Fund's      
potential inability to terminate or sell derivative positions. A liquid         
secondary market may not always exist for the Acquiring Fund's derivative       
positions at times when the Acquiring Fund might wish to terminate or sell such 
positions. Over-the-counter instruments (investments not traded on an exchange) 
may be illiquid, and transactions in derivatives traded in the over-the-counter 
market are subject to the risk that the other party will not meet its           
obligations. The Acquiring Fund may not be able to find a suitable derivative   
transaction counterparty, and thus may be unable to invest in derivatives       
altogether. For more information on the risks of derivative strategies, see the 
Statement of Additional Information. There are many circumstances (including    
additional risks that are not described here) which could prevent the Funds     
from achieving their investment goals. Shareholders may lose money by investing 
in the Acquiring Fund.                                                          

 Please see the answer to question 4 above under "Questions and Answers" for
more information comparing the investment goals, principal investment           
strategies and investment restrictions of the Funds.                            

Information about the Merger                                                    

Terms of the Agreement and Plan of Reorganization                           

  If approved by the shareholders of the Acquired Fund, the Merger is expected
to occur on or around September 23, 2005, or such other date as the parties may 
agree, under the Agreement and Plan of Reorganization. The following is a brief 
summary of the principal terms of the Agreement and Plan of Reorganization.     
Please review Appendix A to this Prospectus/Proxy Statement for more            
information regarding the Agreement and Plan of Reorganization.                 

.   The Acquired Fund will transfer all of the assets and liabilities to the
   Acquiring Fund in exchange for shares of the corresponding class of the
   Acquiring Fund with an aggregate net asset value equal to the net value
of the transferred assets and liabilities.                          

.   The Merger will occur on the next business day after the time (currently
 scheduled to be 4:00 p.m. Eastern Time on September 22, 2005, or such
     other date and time as the parties may determine) when the assets of each
Fund are valued for purposes of the Merger.                         

.   The shares of each class of the Acquiring Fund received by the Acquired 
   Fund will be distributed to the shareholders of the corresponding class
of the Acquired Fund pro rata in accordance with their percentage   
ownership of such class of the shares of the Acquired Fund in full  
liquidation of the Acquired Fund.                                   

.   After the Merger, the Acquired Fund's affairs will be wound up in an    
orderly fashion and it will be terminated under state law.          

.   The Merger requires approval by the Acquired Fund's shareholders and    
satisfaction of a number of other conditions; the Merger may be     
terminated at any time with the approval of the Trustees of each of 
Nations Funds Trust and Trust I.                                    

 Shareholders should be aware that the Merger as proposed is not expected to
result in recognition of gain or loss to shareholders for federal income tax    
purposes.                                                                       

Shares Shareholders Will Receive                                            

  If the Merger occurs, shareholders of Investor A, Investor B, Investor C and
Primary A shares of the Acquired Fund will receive shares of Class A, Class B,  
Class C and Class Z shares, respectively, in the Acquiring                      

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Fund. In comparison to the shares that shareholders currently own, the shares   
shareholders receive will have the following characteristics:                   

.   They will have an aggregate net asset value equal to the aggregate net  
asset value of the current shares as of the business day before the 
closing of the Merger.                                              

.   It is expected that, in connection with the consolidation of certain    
  service providers to the Columbia Funds and the Nations Funds prior to
the Merger, the procedures for purchasing, redeeming and exchanging 
 shares of the Columbia Funds and the Nations Funds will be aligned by
     modifying the current procedures of both complexes. Accordingly, although
  changes to such procedures are anticipated, the Merger will not itself
result in any changes to such procedures.                           

.   Taking into account the modifications to the procedures, they will bear 
     the same sales charges (including CDSCs, if any) as the current shares to
   the extent such charges and fees apply. For purposes of determining the
    CDSC applicable to any redemption and/or conversion of Class B shares to
   Class A shares, the Acquiring Fund shares will continue to age from the
date a shareholder purchased Acquired Fund shares.                  

.   The procedures will entitle shareholders to voting and other rights     
generally similar to those currently enjoyed by shareholders of the 
 Acquired Fund, but as a shareholder of the Acquiring Fund. Appendix F
     identifies certain differences in voting rights that will result from the
    Trust Reorganization, including a change from voting rights based on one
vote per share to the use of dollar-based voting.                   

 .   The account options a shareholder has selected for handling distributions
from the Acquired Fund will not change as a result of the Merger.   

 Information concerning the capitalization of each of the Funds is contained
in Appendix C to this Prospectus/Proxy Statement.                               

Reasons for the Merger and Trustees' Considerations                         

  The Trustees of Nations Funds Trust, including all Trustees of Nations Funds
Trust who are not "interested persons" of Nations Funds Trust, have determined  
on behalf of the Acquired Fund that the Merger would be in the best interests   
of the Acquired Fund's shareholders and that the interests of existing          
shareholders in the Acquired Fund would not be diluted as a result of the       
Merger. The Trustees have unanimously approved the Agreement and Plan of        
Reorganization and the Merger, and recommend that the Acquired Fund             
shareholders vote in favor of the Merger by approving the Agreement and Plan of 
Reorganization.                                                                 

Columbia Management and Banc of America Capital Management, LLC ("BACAP") 
proposed the Merger to the Trustees of Nations Funds Trust at a meeting held on 
February 8-9, 2005 because the Merger is expected to create a larger fund with  
an investment goal and principal investment strategies generally similar to     
those of the Acquired Fund.                                                     

 At the meeting, the Trustees (with the advice and assistance of independent
counsel) considered, among other things:                                        

  1. the Merger as part of a continuing initiative to streamline and improve
   the offerings of the Columbia and Nations funds family by eliminating
overlapping funds and clarifying investor choices;                

2. various potential shareholder benefits of the Merger;                

  3. the current asset level of the Acquired Fund and the combined pro forma
asset level of the Acquiring Fund;                                

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4. the historical performance results of the Funds (see "Performance    
Information" below), although no assurances can be given that the 
   Acquiring Fund will achieve any particular level of performance after
the Merger;                                                       

5. the investment objectives and principal investment strategies of the 
Funds;                                                            

6. that the Acquiring Fund is expected to have lower total operating    
expenses than the Acquired Fund;                                  

7. the expected U.S. federal income tax consequences of the Merger,     
    including limitations on the use of realized and unrealized losses for
  U.S. federal income tax purposes and the potential diminution of the
    ability to use such losses to offset future gains (see "Federal Income
Tax Consequences" below);                                         

   8. that the Acquired Fund will only bear costs related to the Merger to the
    extent that Columbia Management anticipates a reduction in expenses to
   shareholders of such Fund in the first year following the Merger; and

 9. the potential benefits of the Merger to Columbia Management, BACAP and
  their affiliates (e.g. the benefit of consolidating resources within
Columbia Management and BACAP).                                   

If the Merger is approved by the shareholders of the Acquired Fund, the   
transactions will combine the Acquired Fund's assets with those of the          
Acquiring Fund, resulting in a combined portfolio that is significantly larger  
than the Acquired Fund. Larger mutual funds often have more buying power (for   
example, they have greater opportunity to purchase round lots of securities)    
and are generally better able to diversify their portfolios.                    

Columbia Management also believes that the Merger helps eliminate         
overlapping products. Both Funds are intermediate fixed income funds. Columbia  
Management believes that streamlining its product offerings in a particular     
asset segment will help minimize investor confusion.                            

Performance Information                                                     

 The bar charts below show the percentage gain or loss in each calendar year
for the 10-year period ending December 31, 2004, for the Investor A shares of   
the Acquired Fund and Class A shares of the Acquiring Fund. The bar charts      
should provide a general idea of how each Fund's returns have varied from year  
to year. The bar charts include the effect of Fund expenses, but do not include 
the effect of sales charges. Returns would be lower if any applicable sales     
charges were included. The calculations of total return assume the reinvestment 
of all dividends and capital gain distributions on the reinvestment date.       
Performance results include the effect of expense reduction arrangements, if    
any. If these arrangements had not been in place, the performance results would 
have been lower. AS WITH ALL MUTUAL FUNDS, PAST PERFORMANCE IS NOT AN           
INDICATION OF FUTURE RESULTS. No assurance can be given that the Acquiring Fund 
will achieve any particular level of performance after the Merger.              

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Additional discussion of the manner of calculation of total return is     
contained in each Fund's respective Prospectuses and Statement of Additional    
Information.                                                                    

Nations Strategic Income Fund (Investor A)  

[CHART] 

1995   1996   1997   1998    1999    2000    2001    2002    2003   2004    
----   ----   ----   ----    ----    ----    ----    ----    ----   ----    
20.61%  2.21%  8.32%  7.27%  -2.93%   7.77%   6.40%   4.74%   9.48%  6.37%    

                                                                [Download Table]
                                                                              
The Class's year-to-date             For the period shown in bar chart:       
total return through June 30, 2005   Best quarter: 2/nd/ quarter 1995, 7.42%  
was 0.35%                            Worst quarter: 1/st/ quarter 1996, -3.24%

Columbia Strategic Income Fund (Class A)  

[CHART] 

1995    1996   1997   1998    1999    2000   2001   2002    2003    2004      
----    ----   ----   ----    ----    ----   ----   ----    ----    ----      
20.18%  10.25%  8.62%  5.17%   1.28%  -0.68%  3.07%  7.97%  19.29%  10.04%      

                                                                [Download Table]
                                                                              
The Class's year-to-date             For period shown in bar chart:           
total return through June 30, 2005   Best quarter: 2/nd/ quarter 2003, 7.54%  
was 0.21%                            Worst quarter: 2/nd/ quarter 2004, -2.17%

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The following tables list each Fund's average annual total return for each
class of its shares for the one-year, five-year and 10-year or since inception  
periods ending December 31, 2004, (including applicable sales charges), for     
Investor A, Investor B, Investor C and Primary A shares of the Acquired Fund    
and for Class A, B, C and Z shares of the Acquiring Fund. These tables are      
intended to provide some indication of the risks of investing in the Funds. At  
the bottom of each table, shareholders can compare the Funds' performance with  
one or more broad-based market indices.                                         

After-tax returns are calculated using the historical highest individual  
federal income tax rates and do not reflect the impact of state and local       
taxes. Actual after-tax returns depend on an investor's tax situation and may   
differ from those shown, and may not be relevant to investors who hold shares   
through tax-deferred arrangements, such as 401(k) plans or individual           
retirement accounts.                                                            

Nations Strategic Income Fund                                                   

Average Annual Total Returns -- For Periods Ended December 31, 2004             

                                                        [Enlarge/Download Table]

                                                                                      1 Year  5 Years  10 Years
                                                                                      ------  -------  --------
                                                                                                               
Investor A (%)                                                                                                 
   Return Before Taxes...............................................................  1.35     5.90     6.36  
   Return After Taxes on Distributions............................................... -0.10     3.80     3.93  
   Return After Taxes on Distributions and Sale of Fund Shares.......................  0.84     3.72     3.90  
Investor B (%)                                                                                                 
   Return Before Taxes...............................................................  0.57     5.82     6.19  
Investor C (%)                                                                                                 
   Return Before Taxes...............................................................  4.58     6.14     6.21  
Primary A (%)                                                                                                  
   Return Before Taxes...............................................................  6.63     7.20     7.15  
   Return After Taxes on Distributions...............................................  5.01     4.97     4.60  
   Return After Taxes on Distributions and Sale of Fund Shares.......................  4.27     4.77     4.52  
Lehman Brothers U.S. Aggregate Index (%)(reflects no deductions for fees, expenses or                          
  taxes).............................................................................  4.34     7.71     7.72  
Blended Lehman Aggregate Bond, Citigroup All BB&B-Rated High Yield Market                                      
  Index and J.P. Morgan Emerging Market Bond Global Index (reflects no                                         
  deductions for fees, expenses or taxes)............................................ 11.41     7.20     7.58  

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Columbia Strategic Income Fund                                                  

Average Annual Total Returns -- For Periods Ended December 31, 2004             

                                                        [Enlarge/Download Table]

                                                                1 Year  5 Years     10 Years  
                                                                ------ -------     --------   
                                                                                              
Class A (%)                                                                                   
   Return Before Taxes.........................................  4.81    6.67        7.79     
   Return After Taxes on Distributions.........................  2.05    3.47        4.44     
   Return After Taxes on Distributions and Sale of Fund Shares.  3.03    3.64        4.52     
Class B (%)                                                                                   
   Return Before Taxes.........................................  4.06    6.59        7.49     
   Return After Taxes on Distributions.........................  1.45    3.63        4.45     
   Return After Taxes on Distributions and Sale of Fund Shares.  2.56    3.73        4.48     
Class C (%)                                                                                   
   Return Before Taxes.........................................  8.39    7.07        7.63/(1)/
   Return After Taxes on Distributions.........................  5.72    4.09        4.54/(1)/
   Return After Taxes on Distributions and Sale of Fund Shares.  5.36    4.14        4.57/(1)/
Class Z (%)                                                                                   
   Return Before Taxes......................................... 10.21    7.84/(2)/   8.40/(2)/
   Return After Taxes on Distributions.........................  7.19    4.50/(2)/   4.97/(2)/
   Return After Taxes on Distributions and Sale of Fund Shares.  6.53    4.56/(2)/   5.01/(2)/
Lehman Brothers Index (%)......................................  4.19    8.00        7.80     
Lipper Average (%).............................................  8.35    7.21        7.53     

--------                                                                        
(1)Class C is a newer class of shares. Its performance information includes     
returns of the Acquiring Fund's Class B shares for periods prior to its   
inception. Class B Shares would have substantially similar annual returns 
because Class B and Class C shares generally have similar expense         
  structures. Class A shares were initially offered on April 21, 1977, Class B
shares were initially offered on May 15, 1992 and Class C shares were     
initially offered on July 1, 1997.                                        
(2)Class Z is a newer class of shares. Its performance information includes     
returns of the Acquiring Fund's Class A shares (the oldest existing fund  
class) for periods prior to its inception. These returns have not been    
restated to reflect any differences in expenses (such as Rule 12b-1 fees) 
between Class A shares and the Class Z shares. The Class A share returns  
have been adjusted to take into account the fact that Class Z shares are  
sold without sales charges. If differences in expenses had been reflected,
  the returns shown for periods prior to the inception of the newer classes of
shares would have been higher, since Class Z shares are not subject to any
Rule 12b-1 fees. Class A shares were initially offered on April 21, 1977, 
and Class Z shares were initially offered on January 11, 1999.            

Federal Income Tax Consequences                                             

The Merger is intended to be a tax-free reorganization. Ropes & Gray LLP  
will deliver to the Acquiring Fund and the Acquired Fund an opinion, and the    
closing of the Merger will be conditioned on receipt by such Funds of such      
opinion, to the effect that, on the basis of existing provisions of the         
Internal Revenue Code of 1986, as amended (the "Code"), the Treasury            
regulations promulgated thereunder, current administrative rules and court      
decisions, generally for federal income tax purposes:                           

 .   the Merger will constitute a reorganization within the meaning of Section
 368(a) of the Code, and the Acquired Fund and the Acquiring Fund will
each be a "party to a reorganization" within the meaning of Section 
368(b) of the Code;                                                 

.   under Section 361 of the Code, no gain or loss will be recognized by the
  Acquired Fund upon the transfer of its assets to the Acquiring Fund in
  exchange for Acquiring Fund shares and the assumption by the Acquiring
Fund of the Acquired Fund's liabilities, or upon the distribution of
Acquiring Fund shares by the Acquired Fund to its shareholders in   
liquidation;                                                        

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.   under Section 354 of the Code, no gain or loss will be recognized by    
   shareholders of the Acquired Fund on the distribution of Acquiring Fund
shares to them in exchange for their shares of the Acquired Fund;   

.   under Section 358 of the Code, the aggregate tax basis of the Acquiring 
     Fund shares that the Acquired Fund's shareholders receive in exchange for
     their Acquired Fund shares will be the same as the aggregate tax basis of
the Acquired Fund shares exchanged therefor;                        

 .   under Section 1223(1) of the Code, an Acquired Fund shareholder's holding
period for the Acquiring Fund shares received will be determined by 
including the holding period for the Acquired Fund shares exchanged 
    therefor, provided that the shareholder held the Acquired Fund shares as
a capital asset;                                                    

 .   under Section 1032 of the Code, no gain or loss will be recognized by the
  Acquiring Fund upon receipt of the assets transferred to the Acquiring
Fund in exchange for Acquiring Fund shares and the assumption by the
Acquiring Fund of the liabilities of the Acquired Fund;             

.   under Section 362(b) of the Code, the Acquiring Fund's tax basis in the 
  assets that the Acquiring Fund receives from the Acquired Fund will be
the same as the Acquired Fund's tax basis in such assets immediately
prior to such exchange;                                             

.   under Section 1223(2) of the Code, the Acquiring Fund's holding periods 
   in such assets will include the Acquired Fund's holding periods in such
assets; and                                                         

.   under Section 381 of the Code, the Acquiring Fund will succeed to the   
    capital loss carryovers of the Acquired Fund, if any, but the use by the
   Acquiring Fund of any such capital loss carryovers (and of capital loss
carryovers of the Acquiring Fund) may be subject to limitation under
Section 383 of the Code.                                            

  The opinion will be qualified to reflect that the Code requires that certain
contracts or securities (including, in particular, futures contracts, certain   
foreign currency contracts, "nonequity" options and investments in "passive     
foreign investment companies") be marked-to-market (treated as sold for their   
fair market value) at the end of a taxable year (or upon their termination or   
transfer).                                                                      

  The opinion will be based on certain factual certifications made by officers
of the Acquired Fund and the Acquiring Fund and will also be based on customary 
assumptions. The opinion is not a guarantee that the tax consequences of the    
Merger will be as described above. The opinion will note and distinguish        
certain published precedent. There is no assurance that the Internal Revenue    
Service or a court would agree with the opinion.                                

Prior to the closing of the Merger, the Acquired Fund will, and the       
Acquiring Fund may, declare a distribution to shareholders, which together with 
all previous distributions, will have the effect of distributing to             
shareholders all of its investment company taxable income (computed without     
regard to the deduction for dividends paid) and net capital gains, including    
those realized on disposition of portfolio securities in connection with the    
Merger (after reduction by any available capital loss carryforwards), if any,   
through the closing of the Merger. Such distributions will be taxable to        
shareholders.                                                                   

The Acquiring Fund's ability to utilize the pre-Merger losses of the      
Acquired Fund to offset post-Merger gains of the combined Fund is expected to   
be limited as a result of the Merger due to the application of loss limitation  
rules under federal tax law. In addition, for five years beginning after the    
Closing Date, the combined Fund will not be allowed to offset gains "built in"  
to either Fund at the time of the Merger against capital losses (including      
capital loss carryforwards) built in to the other Fund. The effect of these     
limitations, however, will depend on the amount of losses in each Fund at the   
time of the Merger. As a result, under certain circumstances, the Acquired Fund 
shareholders could receive taxable distributions earlier than they would if the 
Merger were not to have occurred.                                               

This description of the federal income tax consequences of the Merger is  
made without regard to the particular facts and circumstances of any            
shareholder. Shareholders are urged to consult their own tax advisors as        

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to the specific consequences to them of the Merger, including the applicability 
and effect of state, local, non-U.S. and other tax laws.                        

THE TRUSTEES OF NATIONS FUNDS TRUST ON BEHALF OF THE ACQUIRED FUND        
UNANIMOUSLY RECOMMEND APPROVAL OF THE AGREEMENT AND PLAN OF REORGANIZATION.     

Required Vote for the Proposal                                              

Approval of the Merger requires the affirmative vote of holders of the    
lesser of (1) more than 50% of the Acquired Fund's outstanding shares or (2)    
67% or more of the Acquired Fund's shares present at the Meeting, if more than  
50% of the outstanding shares of the Acquired Fund are represented at the       
Meeting in person or by proxy. A vote of shareholders of the Acquiring Fund is  
not needed to approve the Merger.                                               

III.  GENERAL 

Voting Information                                                              

The Board is soliciting proxies from the shareholders of the Acquired Fund
in connection with the Meeting, which has been called to be held at 10:00 a.m.  
Eastern time on September 16, 2005, at Columbia's offices at One Financial      
Center, Boston, Massachusetts 02111.                                            

Information about Proxies and the Conduct of the Meeting                        

  Solicitation of Proxies. Proxies will be solicited primarily by mailing this
Prospectus/Proxy Statement and its enclosures, but proxies may also be          
solicited through further mailings, telephone calls, personal interviews or     
e-mail by officers of the Acquired Fund or by employees or agents of Columbia   
Management and its affiliated companies. In addition, Alamo Direct Mail         
Services, Inc., 280 Oser Avenue, Hauppauge, NY 11788, has been engaged to       
assist in the solicitation of proxies, at an estimated cost of approximately    
$14,555.                                                                        

Voting Process                                                              

Shareholders can vote in any one of the following ways:                   

a. By mail, by filling out and returning the enclosed proxy card;       

   b. By phone, fax or Internet (see enclosed proxy card for instructions); or

c. In person at the Meeting.                                            

  Shareholders who owned shares on the record date, July 5, 2005, are entitled
to vote at the Meeting. Shareholders of the Acquired Fund are entitled to cast  
one vote for each share owned on the record date. If a shareholder chooses to   
vote by mail or fax and is an individual account owner, please sign exactly as  
the name appears on the proxy card. Either owner of a joint account may sign    
the proxy card, but the signer's name must exactly match the name that appears  
on the card.                                                                    

  Quorum and Method of Tabulation. Shares represented by duly executed proxies
will be voted as instructed on the proxy. If no instructions are given, the     
proxy will be voted in favor of the Proposal. A shareholder can revoke his or   
her proxy by sending a signed, written letter of revocation to the Secretary of 
the Acquired Fund, by properly executing and submitting a later-dated proxy or  
by attending the Meeting and voting in person.                                  

Votes cast in person or by proxy at the Meeting will be counted by persons
appointed by the Acquired Fund as tellers for the Meeting (the "Tellers").      
Thirty and one-third percent (33 1/3%) of the shares entitled to vote on        

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the record date, present in person or represented by proxy, constitute a quorum 
for the transaction of business by the shareholders of the Nations Funds Trust  
at the Meeting. In determining whether a quorum is present, the Tellers will    
count shares represented by proxies that reflect abstentions and "broker        
non-votes" as shares that are present and entitled to vote. Abstentions and     
broker non-votes have the effect of a negative vote on the Proposal. "Broker    
non-votes" are shares held by brokers or nominees as to which (i) the broker or 
nominee does not have discretionary voting power and (ii) the broker or nominee 
has not received instructions from the beneficial owner or other person who is  
entitled to instruct how the shares will be voted.                              

Underwriters' Addresses. The address of the Acquired Fund's principal     
underwriter, BACAP Distributors, LLC, is One Bank of America Plaza, 33/rd/      
Floor, Charlotte, North Carolina 28255. The address of the Acquiring Fund's     
principal underwriter, Columbia Funds Distributor, Inc., is One Financial       
Center, Boston, Massachusetts 02111.                                            

Share Ownership. Appendix B to this Prospectus/Proxy Statement lists the  
total number of shares outstanding as of July 5, 2005, for each class of the    
Acquired Fund entitled to vote at the Meeting. It also identifies holders of    
more than five percent of any class of shares of the Acquired Fund and the      
Acquiring Fund, and contains information about the executive officers, Trustees 
of each of the Acquired Fund and the Acquiring Fund and their shareholdings in  
the Acquired Fund and the Acquiring Fund, respectively.                         

Adjournments; Other Business. If the Acquired Fund has not received enough
votes by the time of the Meeting to approve the Proposal, the persons named as  
proxies may propose that such Meeting be adjourned one or more times to permit  
further solicitation of proxies. Any adjournment requires the affirmative vote  
of a majority of the total number of shares voted on the matter, but, for       
purposes of adjournment only, any number of shares present at the Meeting or    
represented by proxy constitutes a quorum. The persons named as proxies will    
vote in favor of any such adjournment all proxies that they are entitled to     
vote in favor of the Proposal. They will vote against any such adjournment any  
proxy that directs them to vote against the Proposal. They will not vote any    
proxy that directs them to abstain from voting on the Proposal.                 

The Meeting has been called to transact any business that properly comes  
before it. The only business that management of the Acquired Fund intends to    
present or knows that others will present is the Proposal. If any other matters 
properly come before the Meeting, and on all matters incidental to the conduct  
of the Meeting, the persons named as proxies intend to vote the proxies in      
accordance with their judgment, unless the Secretary of the Acquired Fund has   
previously received written instructions to the contrary from the shareholder   
entitled to vote the shares.                                                    

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APPENDIX A -- AGREEMENT AND PLAN OF REORGANIZATION  

AGREEMENT AND PLAN OF REORGANIZATION  

THIS AGREEMENT AND PLAN OF REORGANIZATION dated as of June 1, 2005, is by 
and among Nations Funds Trust (the "Acquired Trust"), a Delaware business       
trust, on behalf of Nations Strategic Income Fund (the "Acquired Fund"); and    
Columbia Funds Trust I (the "Acquiring Trust"), a Massachusetts business trust, 
on behalf of Columbia Strategic Income Fund (the "Acquiring Fund"); and         
Columbia Management Advisors, Inc. ("Columbia").                                

 This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Sections 361(a) and Section 368(a) of the 
United States Internal Revenue Code of 1986, as amended (the "Code"), and any   
successor provision. The reorganization will consist of the transfer of all of  
the assets of the Acquired Fund attributable to its Investor A shares in        
exchange for Class A shares of beneficial interest of the Acquiring Fund        
("Class A Acquisition Shares"), the transfer of all of the assets of the        
Acquired Fund attributable to its Investor B shares in exchange for Class B     
shares of beneficial interest of the Acquiring Fund ("Class B Acquisition       
Shares"), the transfer of all of the assets of the Acquired Fund attributable   
to its Investor C shares in exchange for Class C shares of beneficial interest  
of the Acquiring Fund ("Class C Acquisition Shares"), the transfer of all of    
the assets of the Acquired Fund attributable to its Primary A shares in         
exchange for Class Z shares of beneficial interest of the Acquiring Fund        
("Class Z Acquisition Shares" and together with the Class A Acquisition Shares, 
Class B Acquisition Shares and Class C Acquisition Shares, the "Acquisition     
Shares") and the assumption by the Acquiring Fund of the liabilities of the     
Acquired Fund (other than certain expenses of the reorganization contemplated   
hereby) and the distribution of the Class A Acquisition Shares, the Class B     
Acquisition Shares, the Class C Acquisition Shares, and the Class Z Acquisition 
Shares to the Investor A, Investor B, Investor C and Primary A shareholders,    
respectively, of the Acquired Fund in liquidation of the Acquired Fund, all     
upon the terms and conditions set forth in this Agreement.                      

In consideration of the premises and of the covenants and agreements      
hereinafter set forth, the parties hereto covenant and agree as follows:        

1. TRANSFER OF ASSETS OF ACQUIRED FUND IN EXCHANGE FOR ASSUMPTION OF            
LIABILITIES AND ACQUISITION SHARES AND LIQUIDATION OF ACQUIRED FUND.      

   1.1Subject to the terms and conditions herein set forth and on the basis of
the representations and warranties contained herein,              

   (a)The Acquired Fund will transfer and deliver to the Acquiring Fund,
       and the Acquiring Fund will acquire, all the assets of the Acquired
Fund as set forth in paragraph 1.2;                         

      (b)The Acquiring Fund will assume all of the Acquired Fund's liabilities
      and obligations of any kind whatsoever, whether absolute, accrued,
         contingent or otherwise, in existence on the Closing Date (as defined
         in paragraph 1.2 hereof) (the "Obligations"); except that expenses of
     the reorganization contemplated hereby to be paid by the Acquired
      Fund pursuant to paragraph 9.2 shall not be assumed or paid by the
Acquiring Fund; and                                         

  (c)The Acquiring Fund will issue and deliver to the Acquired Fund in
         exchange for such assets the number of Class A, Class B, Class C, and
    Class Z Acquisition Shares (including fractional shares, if any)
  determined by dividing the net asset values of the Investor A,
     Investor B, Investor C and Primary A shares of the Acquired Fund,
        respectively, computed in the manner and as of the time and date set
        forth in paragraph 2.1, by the net asset value of one Class A, Class
       B, Class C or Class Z Acquisition Share, as applicable, computed in
      the manner and as of the time and date set forth in paragraph 2.2.
     Such transactions shall take place at the closing provided for in
paragraph 3.1 (the "Closing").                              

1.2The assets of the Acquired Fund to be acquired by the Acquiring Fund 
shall consist of all cash, securities, dividends and interest     
    receivable, receivables for shares sold and all other assets which are

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      owned by the Acquired Fund on the closing date provided in paragraph 3.1
    (the "Closing Date") and any deferred expenses, other than unamortized
     organizational expenses, shown as an asset on the books of the Acquired
    Fund on the Closing Date. The Acquiring Fund agrees that all rights to
   indemnification and all limitations of liability existing in favor of
     the Acquired Fund's current and former Trustees and officers, acting in
      their capacities as such, under the Acquired Fund's Declaration of Trust
    and Bylaws as in effect as of the date of this Agreement shall survive
the reorganization as obligations of the Acquiring Fund and shall 
   continue in full force and effect, without any amendment thereto, and
      shall constitute rights which may be asserted against the Acquired Fund,
its successors or assigns.                                        

1.3As provided in paragraph 3.4, as soon after the Closing Date as is   
  conveniently practicable (the "Liquidation Date"), the Acquired Fund
   will liquidate and distribute pro rata to its Class A shareholders of
 record ("Acquired Fund Class A Shareholders"), determined as of the
    close of business on the Valuation Date (as defined in paragraph 2.1),
  Class A Acquisition Shares received by the Acquired Fund pursuant to
  paragraph 1.1; to its Class B shareholders of record ("Acquired Fund
   Class B Shareholders"), determined as of the close of business on the
      Valuation Date, Class B Acquisition Shares received by the Acquired Fund
pursuant to paragraph 1.1; to its Class C shareholders of record  
   ("Acquired Fund Class C Shareholders"), determined as of the close of
    business on the Valuation Date, Class C Acquisition Shares received by
the Acquired Fund pursuant to paragraph 1.1; and to its Class Z   
shareholders of record ("Acquired Fund Class Z Shareholders," and 
 collectively with Acquired Fund Class A Shareholders, Acquired Fund
Class B Shareholders and Acquired Fund Class C Shareholders, the  
      "Acquired Fund Shareholders"), determined as of the close of business on
     the Valuation Date, Class Z Acquisition Shares received by the Acquired
    Fund pursuant to paragraph 1.1. Such liquidation and distribution will
     be accomplished by the transfer of the Acquisition Shares then credited
    to the account of the Acquired Fund on the books of the Acquiring Fund
      to open accounts on the share records of the Acquiring Fund in the names
   of the Acquired Fund Shareholders and representing the respective pro
    rata number of Acquisition Shares due such shareholders. The Acquiring
Fund shall not be obligated to issue certificates representing    
Acquisition Shares in connection with such exchange.              

 1.4With respect to Acquisition Shares distributable pursuant to paragraph
1.3 to an Acquired Fund Shareholder holding a certificate or      
    certificates for shares of the Acquired Fund, if any, on the Valuation
  Date, the Acquiring Fund will not permit such shareholder to receive
Acquisition Share certificates therefor, exchange such Acquisition
Shares for shares of other investment companies, effect an account
transfer of such Acquisition Shares, or pledge or redeem such     
  Acquisition Shares until the Acquiring Fund has been notified by the
Acquired Fund or its agent that such Acquired Fund Shareholder has
   surrendered all his or her outstanding certificates for Acquired Fund
 shares or, in the event of lost certificates, posted adequate bond.

 1.5As soon as practicable after the Closing Date, the Acquired Fund shall
 make all filings and take all other steps as shall be necessary and
proper to effects its complete dissolution.                       

2. VALUATION.                                                                   

  2.1For the purpose of paragraph 1, the value of the Acquired Fund's assets
   to be acquired by the Acquiring Fund hereunder shall be the net asset
     value computed as of the close of regular trading on the New York Stock
    Exchange on the business day next preceding the Closing (such time and
date being herein called the "Valuation Date") using the valuation
    procedures set forth in the Declaration of Trust of the Acquiring Fund
and the then current prospectus or prospectuses or statement or   
statements of additional information of the Acquiring Fund        
(collectively, as amended or supplemented from time to time, the  
   "Acquiring Fund Prospectus"), after deduction for the expenses of the
reorganization contemplated hereby to be paid by the Acquired Fund
     pursuant to paragraph 9.2, and shall be certified by the Acquired Fund.

2.2For the purpose of paragraph 2.1, the net asset value of a Class A,  
   Class B, Class C and Class Z Acquisition Share shall be the net asset
    value per share computed as of the close of regular trading on the New
York Stock Exchange on the Valuation Date, using the valuation    
    procedures set forth in the Declaration of Trust of the Acquiring Fund
and the Acquiring Fund Prospectus.                                

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3. CLOSING AND CLOSING DATE.                                                    

 3.1The Closing Date shall be on September 23, 2005, or on such other date
 as the parties may agree. The Closing shall be held at 5:00 p.m. at
    Columbia's offices, One Financial Center, Boston, Massachusetts 02111,
or at such other time and/or place as the parties may agree.      

   3.2The portfolio securities of the Acquired Fund shall be made available by
    the Acquired Fund to State Street Bank and Trust Company, as custodian
     for the Acquiring Fund (the "Custodian"), for examination no later than
   five business days preceding the Valuation Date. On the Closing Date,
 such portfolio securities and all the Acquired Fund's cash shall be
    delivered by the Acquired Fund to the Custodian for the account of the
     Acquiring Fund, such portfolio securities to be duly endorsed in proper
  form for transfer in such manner and condition as to constitute good
  delivery thereof in accordance with the custom of brokers or, in the
 case of portfolio securities held in the U.S. Treasury Department's
      book-entry system or by the Depository Trust Company, Participants Trust
      Company or other third party depositories, by transfer to the account of
    the Custodian in accordance with Rule 17f-4, Rule 17f-5 or Rule 17f-7,
      as the case may be, under the Investment Company Act of 1940, as amended
 (the "1940 Act") and accompanied by all necessary federal and state
 stock transfer stamps or a check for the appropriate purchase price
thereof. The cash delivered shall be in the form of currency or   
      certified or official bank checks, payable to the order of "State Street
    Bank and Trust Company, custodian for Columbia Strategic Income Fund."

  3.3In the event that on the Valuation Date (a) the New York Stock Exchange
   shall be closed to trading or trading thereon shall be restricted, or
   (b) trading or the reporting of trading on said Exchange or elsewhere
   shall be disrupted so that accurate appraisal of the value of the net
     assets of the Acquired Fund or the Acquiring Fund is impracticable, the
    Closing Date shall be postponed until the first business day after the
     day when trading shall have been fully resumed and reporting shall have
    been restored; provided that if trading shall not be fully resumed and
  reporting restored within three business days of the Valuation Date,
    this Agreement may be terminated by the Acquiring Fund upon the giving
of written notice to the other party.                             

   3.4At the Closing, the Acquired Fund or its transfer agent shall deliver to
the Acquiring Fund or its designated agent a list of the names and
addresses of the Acquired Fund Shareholders and the number of     
     outstanding shares of beneficial interest of the Acquired Fund owned by
    each Acquired Fund Shareholder, all as of the close of business on the
     Valuation Date, certified by any Vice President, Secretary or Assistant
    Secretary of the Acquired Fund. The Acquiring Fund will provide to the
Acquired Fund evidence satisfactory to the Acquired Fund that the 
      Acquisition Shares issuable pursuant to paragraph 1.1 have been credited
   to the Acquired Fund's account on the books of the Acquiring Fund. On
   the Liquidation Date, the Acquiring Fund will provide to the Acquired
   Fund evidence satisfactory to the Acquired Fund that such Acquisition
     Shares have been credited pro rata to open accounts in the names of the
Acquired Fund Shareholders as provided in paragraph 1.3.          

   3.5At the Closing each party shall deliver to the other such bills of sale,
  instruments of assumption of liabilities, checks, assignments, stock
  certificates, receipts or other documents as such other party or its
counsel may reasonably request in connection with the transfer of 
assets, assumption of liabilities and liquidation contemplated by 
paragraph 1.                                                      

4. REPRESENTATIONS AND WARRANTIES.                                              

4.1The Acquired Trust, on behalf of the Acquired Fund represents and    
    warrants the following to the Acquiring Fund as of the date hereof and
agrees to confirm the continuing accuracy and completeness in all 
material respects of the following on the Closing Date:           

(a)The Acquired Trust is a business trust duly organized, validly 
          existing and in good standing under the laws of the state of Delaware;

      (b)The Acquired Trust is a duly registered investment company classified
     as a management company of the open-end type and its registration
with the Securities and Exchange Commission as an           

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      investment company under the 1940 Act is in full force and effect,
         and the Acquired Fund is a separate series thereof duly designated in
         accordance with the applicable provisions of the Declaration of Trust
of the Trust and the 1940 Act;                              

     (c)The Acquired Fund is not in violation in any material respect of any
        provision of its Declaration of Trust or Bylaws or of any agreement,
        indenture, instrument, contract, lease or other undertaking to which
        the Acquired Fund is a party or by which the Acquired Fund is bound,
      and the execution, delivery and performance of this Agreement will
not result in any such violation;                           

 (d)The Acquired Fund has no material contracts or other commitments
         (other than this Agreement and such other contracts as may be entered
        into in the ordinary course of its business) which if terminated may
    result in material liability to the Acquired Fund or under which
 (whether or not terminated) any material payments for periods
      subsequent to the Closing Date will be due from the Acquired Fund;

    (e)To the knowledge of the Acquired Fund, except as has been disclosed
     in writing to the Acquiring Fund, no litigation or administrative
      proceeding or investigation of or before any court or governmental
      body is presently pending or threatened as to the Acquired Fund or
        any of its properties or assets or any person whom the Acquired Fund
     may be obligated to indemnify in connection with such litigation,
        proceeding or investigation, and the Acquired Fund is not a party to
        or subject to the provisions of any order, decree or judgment of any
      court or governmental body, which materially and adversely affects
its business or its ability to consummate the transactions  
contemplated hereby;                                        

      (f)The statement of assets and liabilities, the statement of operations,
the statement of changes in net assets, and the schedule of 
      investments of the Acquired Fund at, as of and for the fiscal year
       ended March 31, 2005, audited by PricewaterhouseCoopers LLP, copies
      of which have been furnished to the Acquiring Fund, fairly reflect
     the financial condition and results of operations of the Acquired
         Fund as of such date and for the period then ended in accordance with
      generally accepted accounting principles consistently applied, and
    the Acquired Fund has no known liabilities of a material amount,
        contingent or otherwise, other than those shown on the statements of
        assets referred to above or those incurred in the ordinary course of
its business since March 31, 2005;                          

     (g)Since March 31, 2005, there has not been any material adverse change
      in the Acquired Fund's financial condition, assets, liabilities or
    business (other than changes occurring in the ordinary course of
      business), or any incurrence by the Acquired Fund of indebtedness,
 except as disclosed in writing to the Acquiring Fund. For the
      purposes of this subparagraph (g), distributions of net investment
income and net realized capital gains, changes in portfolio 
      securities, changes in the market value of portfolio securities or
   net redemptions shall be deemed to be in the ordinary course of
business;                                                   

      (h)As of the Closing Date, all federal and other tax returns and reports
        of the Acquired Fund required by law to have been filed by such date
        (giving effect to extensions) shall have been filed, and all federal
         and other taxes shown to be due on such returns and reports or on any
      assessment received shall have been paid, or provisions shall have
     been made for the payment thereof. All of the Acquired Fund's tax
       liabilities will have been adequately provided for on its books. To
       the best of the Acquired Fund's knowledge, it will not have had any
    tax deficiency or liability asserted against it or question with
 respect thereto raised, and it will not be under audit by the
       Internal Revenue Service or by any state or local tax authority for
taxes in excess of those already paid;                      

  (i)The Acquired Fund has met the requirements of subchapter M of the
     Code for treatment as a "regulated investment company" within the
      meaning of Section 851 of the Code in respect of each taxable year
        since the commencement of operations, and will continue to meet such
         requirements at all times through the Closing Date. The Acquired Fund
      has not at any time since its inception been liable for nor is now
        liable for any material income or excise tax pursuant to Section 852
or                                                          

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        4982 of the Code. The Acquired Fund is in compliance in all material
        respects with applicable regulations of the Internal Revenue Service
       pertaining to the reporting of dividends and other distributions on
         and redemptions of its capital stock and to withholding in respect of
        dividends and other distributions to shareholders, and is not liable
 for any material penalties which could be imposed thereunder;

      (j)The authorized capital of the Acquired Trust consists of an unlimited
         number of shares of beneficial interest, no par value, of such number
        of different series as the Board of Trustees may authorize from time
 to time. The outstanding shares of beneficial interest in the
    Acquired Fund are, and at the Closing Date will be, divided into
      Class A shares, Class B shares, Class C shares and Class Z shares,
         each having the characteristics described in the Acquired Fund's then
     current prospectus or prospectuses and statement or statements of
         additional information (collectively, as amended or supplemented from
 time to time, the "Acquired Fund Prospectus"). All issued and
        outstanding shares of the Acquired Fund are, and at the Closing Date
    will be, duly and validly issued and outstanding, fully paid and
        non-assessable (except as set forth in the Acquired Fund Prospectus)
      by the Acquired Fund, and will have been issued in compliance with
        all applicable registration or qualification requirements of federal
         and state securities laws. Except for Class B shares which convert to
         Class A shares, no options, warrants or other rights to subscribe for
         or purchase, or securities convertible into, any shares of beneficial
       interest in the Acquired Fund of any class are outstanding and none
will be outstanding on the Closing Date;                    

     (k)The Acquired Fund's investment operations from inception to the date
    hereof have been in compliance in all material respects with the
    investment policies and investment restrictions set forth in its
        prospectus or prospectuses and statement or statements of additional
    information as in effect from time to time, except as previously
disclosed in writing to the Acquiring Fund;                 

   (l)The execution, delivery and performance of this Agreement has been
         duly authorized by the Board of the Acquired Fund, and, upon approval
        thereof by the required majority of the shareholders of the Acquired
         Fund, this Agreement will constitute the valid and binding obligation
        of the Acquired Fund enforceable in accordance with its terms except
        as the same may be limited by bankruptcy, insolvency, reorganization
        or other similar laws affecting the enforcement of creditors' rights
generally and other equitable principles;                   

     (m)The Acquisition Shares to be issued to the Acquired Fund pursuant to
  paragraph 1 will not be acquired for the purpose of making any
        distribution thereof other than to the Acquired Fund Shareholders as
provided in paragraph 1.3;                                  

(n)The information provided by the Acquired Fund for use in the   
        Registration Statement and Prospectus/Proxy Statement referred to in
         paragraph 5.3 shall be accurate and complete in all material respects
and shall comply with federal securities and other laws and 
regulations as applicable thereto;                          

(o)No consent, approval, authorization or order of any court or   
  governmental authority is required for the consummation by the
     Acquired Fund of the transactions contemplated by this Agreement,
       except such as may be required under the Securities Act of 1933, as
     amended (the "1933 Act"), the Securities Exchange Act of 1934, as
        amended (the "1934 Act"), the 1940 Act and state securities or "Blue
    Sky" laws (which terms used herein shall include the laws of the
District of Columbia and of Puerto Rico);                   

     (p)At the Closing Date, the Acquired Fund will have good and marketable
        title to its assets to be transferred to the Acquiring Fund pursuant
     to paragraph 1.1 and will have full right, power and authority to
         sell, assign, transfer and deliver the Investments (as defined below)
   and any other assets and liabilities of the Acquired Fund to be
        transferred to the Acquiring Fund pursuant to this Agreement. At the
         Closing Date, subject only to the delivery of the Investments and any
such other assets and liabilities and payment therefor as   
contemplated by this Agreement, the Acquiring               

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        Fund will acquire good and marketable title thereto and will acquire
        the Investments and any such other assets and liabilities subject to
       no encumbrances, liens or security interests whatsoever and without
    any restrictions upon the transfer thereof, except as previously
        disclosed to the Acquiring Fund. As used in this Agreement, the term
         "Investments" shall mean the Acquired Fund's investments shown on the
    schedule of its investments as of March 31, 2005, referred to in
        subparagraph 4.1(f) hereof, as supplemented with such changes in the
         portfolio as the Acquired Fund shall make, and changes resulting from
   stock dividends, stock split-ups, mergers and similar corporate
actions through the Closing Date;                           

  (q)At the Closing Date, the Acquired Fund will have sold such of its
        assets, if any, as are necessary to assure that, after giving effect
     to the acquisition of the assets of the Acquired Fund pursuant to
 this Agreement, the Acquiring Fund will remain a "diversified
         company" within the meaning of Section 5(b)(1) of the 1940 Act and in
       compliance with such other mandatory investment restrictions as are
      set forth in the Acquiring Fund Prospectus, as amended through the
Closing Date; and                                           

    (r)No registration of any of the Investments would be required if they
  were, as of the time of such transfer, the subject of a public
      distribution by either of the Acquiring Fund or the Acquired Fund,
        except as previously disclosed by the Acquired Fund to the Acquiring
Fund.                                                       

4.2The Acquiring Trust, on behalf of the Acquiring Fund, represents and 
   warrants the following to the Acquired Fund as of the date hereof and
agrees to confirm the continuing accuracy and completeness in all 
material respects of the following on the Closing Date:           

(a)The Acquiring Trust is a business trust duly organized, validly
       existing and in good standing under the laws of The Commonwealth of
Massachusetts;                                              

(b)The Acquiring Trust is a duly registered investment company    
   classified as a management company of the open-end type and its
  registration with the Securities and Exchange Commission as an
      investment company under the 1940 Act is in full force and effect,
       and the Acquiring Fund is a separate series thereof duly designated
      in accordance with the applicable provisions of the Declaration of
Trust of the Trust and the 1940 Act;                        

   (c)The Acquiring Fund Prospectus conforms in all material respects to
 the applicable requirements of the 1933 Act and the rules and
        regulations of the Securities and Exchange Commission thereunder and
       does not include any untrue statement of a material fact or omit to
         state any material fact required to be stated therein or necessary to
    make the statements therein, in light of the circumstances under
   which they were made, not misleading, and there are no material
 contracts to which the Acquiring Fund is a party that are not
      referred to in such Prospectus or in the registration statement of
which it is a part;                                         

      (d)At the Closing Date, the Acquiring Fund will have good and marketable
title to its assets;                                        

      (e)The Acquiring Fund is not in violation in any material respect of any
         provisions of its Declaration of Trust or Bylaws or of any agreement,
        indenture, instrument, contract, lease or other undertaking to which
   the Acquiring Fund is a party or by which the Acquiring Fund is
        bound, and the execution, delivery and performance of this Agreement
will not result in any such violation;                      

     (f)To the knowledge of the Acquiring Fund, except as has been disclosed
    in writing to the Acquired Fund, no litigation or administrative
      proceeding or investigation of or before any court or governmental
       body is presently pending or threatened as to the Acquiring Fund or
         any of its properties or assets or any person whom the Acquiring Fund
     may be obligated to indemnify in connection with such litigation,
         proceeding or investigation, and the Acquiring Fund is not a party to
        or subject to the provisions of any order, decree or judgment of any
      court or governmental body, which materially and adversely affects
its business or its ability to consummate the transactions  
contemplated hereby;                                        

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      (g)The statement of assets and liabilities, the statement of operations,
the statement of changes in net assets, and the schedule of 
        investments at, as of and for the fiscal year ended May 31, 2004, of
      the Acquiring Fund, audited by PricewaterhouseCoopers LLP, and the
         statement of assets and liabilities, the statement of operations, the
      statement of changes in net assets and the schedule of investments
       at, as of and for the six months ended November 30, 2004, copies of
      which have been furnished to the Acquired Fund, fairly reflect the
       financial condition and results of operations of the Acquiring Fund
    as of such date and for the period then ended in accordance with
      generally accepted accounting principles consistently applied, and
     the Acquiring Fund has no known liabilities of a material amount,
        contingent or otherwise, other than those shown on the statements of
        assets referred to above or those incurred in the ordinary course of
its business since November 30, 2004;                       

 (h)Since November 30, 2004, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, 
         liabilities or business (other than changes occurring in the ordinary
   course of business), or any incurrence by the Acquiring Fund of
       indebtedness. For the purposes of this subparagraph (h), changes in
  portfolio securities, changes in the market value of portfolio
       securities or net redemptions shall be deemed to be in the ordinary
course of business;                                         

      (i)As of the Closing Date, all federal and other tax returns and reports
         of the Acquiring Fund required by law to have been filed by such date
        (giving effect to extensions) shall have been filed, and all federal
      and other taxes shown to be due on such returns and reports or any
       assessments received shall have been paid, or provisions shall have
      been made for the payment thereof. All of the Acquiring Fund's tax
       liabilities will have been adequately provided for on its books. To
         the best of the Acquiring Fund's knowledge, it will not have not have
       had any tax deficiency or liability asserted against it or question
      with respect thereto raised, and it will not be under audit by the
       Internal Revenue Service or by any state or local tax authority for
taxes in excess of those already paid;                      

   (j)The Acquiring Fund has met the requirements of subchapter M of the
     Code for treatment as a "regulated investment company" within the
      meaning of Section 851 of the Code in respect of each taxable year
        since the commencement of operations, and will continue to meet such
     requirements at all times through the Closing Date. The Acquiring
       Fund has not at any time since its inception been liable for nor is
        now liable for any material income or excise tax pursuant to Section
       852 or 4982 of the Code. The Acquiring Fund is in compliance in all
         material respects with applicable regulations of the Internal Revenue
Service pertaining to the reporting of dividends and other  
distributions on and redemptions of its capital stock and to
  withholding in respect of dividends and other distributions to
    shareholders, and is not liable for any material penalties which
could be imposed thereunder;                                

(k)The authorized capital of the Acquiring Trust consists of an   
       unlimited number of shares of beneficial interest, no par value, of
such number of different series as the Board of Trustees may
     authorize from time to time. The outstanding shares of beneficial
        interest in the Acquiring Fund are, and at the Closing Date will be,
        divided into Class A shares, Class B shares, Class C shares, Class J
        shares and Class Z shares, each having the characteristics described
       in the Acquiring Fund Prospectus. All issued and outstanding shares
        of the Acquiring Fund are, and at the Closing Date will be, duly and
         validly issued and outstanding, fully paid and non-assessable (except
         as set forth in the Acquiring Fund Prospectus) by the Acquiring Fund,
and will have been issued in compliance with all applicable 
   registration or qualification requirements of federal and state
       securities laws. Except for Class B shares which convert to Class A
   shares no options, warrants or other rights to subscribe for or
      purchase, or securities convertible into, any shares of beneficial
        interest in the Acquiring Fund of any class are outstanding and none
will be outstanding on the Closing Date;                    

      (l)The Acquiring Fund's investment operations from inception to the date
    hereof have been in compliance in all material respects with the
    investment policies and investment restrictions set forth in the
Acquiring Fund Prospectus;                                  

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    (m)The execution, delivery and performance of this Agreement have been
        duly authorized by all necessary action on the part of the Acquiring
         Fund, and this Agreement constitutes the valid and binding obligation
   of the Acquiring Fund enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency,
     reorganization or other similar laws affecting the enforcement of
creditors' rights generally and other equitable principles; 

  (n)The Acquisition Shares to be issued and delivered to the Acquired
         Fund pursuant to the terms of this Agreement will at the Closing Date
        have been duly authorized and, when so issued and delivered, will be
        duly and validly issued Class A, Class B, Class C and Class Z shares
        of beneficial interest in the Acquiring Fund, and will be fully paid
 and non-assessable (except as set forth in the Acquiring Fund
Prospectus) by the Acquiring Fund, and no shareholder of the
    Acquiring Fund will have any preemptive right of subscription or
purchase in respect thereof;                                

     (o)The information to be furnished by the Acquiring Fund for use in the
        Registration Statement and Prospectus/Proxy Statement referred to in
         paragraph 5.3 shall be accurate and complete in all material respects
and shall comply with federal securities and other laws and 
regulations applicable thereto; and                         

(p)No consent, approval, authorization or order of any court or   
  governmental authority is required for the consummation by the
      Acquiring Fund of the transactions contemplated by this Agreement,
        except such as may be required under the 1933 Act, the 1934 Act, the
        1940 Act and state securities or "Blue Sky" laws (which term as used
    herein shall include the laws of the District of Columbia and of
Puerto Rico).                                               

5. COVENANTS OF THE ACQUIRED FUND AND THE ACQUIRING FUND.                       

The Acquired Fund and Acquiring Fund hereby covenant and agree as follows:

  5.1The Acquiring Fund and the Acquired Fund each will operate its business
     in the ordinary course between the date hereof and the Closing Date, it
 being understood that such ordinary course of business will include
regular and customary periodic dividends and distributions.       

5.2The Acquired Fund will call a meeting of its shareholders to be held 
   prior to the Closing Date to consider and act upon this Agreement and
take all other reasonable action necessary to obtain the required 
shareholder approval of the transactions contemplated hereby.     

 5.3In connection with the Acquired Fund shareholders' meeting referred to
 in paragraph 5.2, the Acquired Fund will prepare a Prospectus/Proxy
    Statement for such meeting, to be included in a Registration Statement
  on Form N-14 (the "Registration Statement") which the Acquiring Fund
  will prepare and file for the registration under the 1933 Act of the
    Acquisition Shares to be distributed to the Acquired Fund shareholders
    pursuant hereto, all in compliance with the applicable requirements of
the 1933 Act, the 1934 Act, and the 1940 Act.                     

5.4The information to be furnished by the Acquired Fund for use in the  
Registration Statement and the information to be furnished by the 
Acquiring Fund for use in the Prospectus/Proxy Statement, each as 
 referred to in paragraph 5.3, shall be accurate and complete in all
  material respects and shall comply with federal securities and other
laws and regulations thereunder applicable thereto.               

   5.5The Acquiring Fund will advise the Acquired Fund promptly if at any time
   prior to the Closing Date the assets of the Acquired Fund include any
securities which the Acquiring Fund is not permitted to acquire.  

 5.6Subject to the provisions of this Agreement, the Acquired Fund and the
     Acquiring Fund will each take, or cause to be taken, all action, and do
or cause to be done, all things reasonably necessary, proper or   
   advisable to cause the conditions to the other party's obligations to
    consummate the transactions contemplated hereby to be met or fulfilled
and otherwise to consummate and make effective such transactions. 

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5.7The Acquiring Fund will use all reasonable efforts to obtain the     
     approvals and authorizations required by the 1933 Act, the 1940 Act and
such of the state securities or "Blue Sky" laws as it may deem    
     appropriate in order to continue its operations after the Closing Date.

6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND.                    

  The obligations of the Acquired Fund to consummate the transactions provided
for herein shall be subject, at its election, to the performance by the         
Acquiring Fund of all the obligations to be performed by it hereunder on or     
before the Closing Date and, in addition thereto, to the following further      
conditions:                                                                     

6.1The Acquiring Fund shall have delivered to the Acquired Fund a       
     certificate executed in its name by its President or Vice President and
      its Treasurer or Assistant Treasurer, in form and substance satisfactory
  to the Acquired Fund and dated as of the Closing Date, to the effect
   that the representations and warranties of the Acquiring Fund made in
this Agreement are true and correct at and as of the Closing Date,
     except as they may be affected by the transactions contemplated by this
Agreement, and that the Acquiring Fund has complied with all the  
   covenants and agreements and satisfied all of the conditions on their
    parts to be performed or satisfied under this Agreement at or prior to
the Closing Date.                                                 

6.2The Acquired Fund shall have received a favorable opinion of Ropes & 
Gray LLP, counsel to the Acquiring Fund for the transactions      
     contemplated hereby, dated the Closing Date and, in a form satisfactory
to the Acquired Fund, to the following effect:                    

   (a)The Acquiring Trust is a business trust duly organized and validly
        existing under the laws of The Commonwealth of Massachusetts and has
     power to own all of its properties and assets and to carry on its
         business as presently conducted, and the Acquiring Fund is a separate
     series thereof duly constituted in accordance with the applicable
         provisions of the 1940 Act and the Declaration of Trust and Bylaws of
the Trust;                                                  

   (b)This Agreement has been duly authorized, executed and delivered on
         behalf of the Acquiring Fund and, assuming the Registration Statement
   and the Prospectus/Proxy Statement referred to in paragraph 5.3
       comply with applicable federal securities laws and assuming the due
  authorization, execution and delivery of this Agreement by the
      Acquired Fund is the valid and binding obligation of the Acquiring
      Fund enforceable against the Acquiring Fund in accordance with its
       terms, except as the same may be limited by bankruptcy, insolvency,
     reorganization or other similar laws affecting the enforcement of
creditors' rights generally and other equitable principles; 

 (c)The Acquiring Fund has the power to assume the liabilities to be
     assumed by it hereunder and upon consummation of the transactions
      contemplated hereby the Acquiring Fund will have duly assumed such
liabilities;                                                

      (d)The Acquisition Shares to be issued for transfer to the Acquired Fund
      Shareholders as provided by this Agreement are duly authorized and
upon such transfer and delivery will be validly issued and  
        outstanding and fully paid and nonassessable Class A, Class B, Class
      C and Class Z shares of beneficial interest in the Acquiring Fund,
        and no shareholder of the Acquiring Fund has any preemptive right of
subscription or purchase in respect thereof;                

(e)The execution and delivery of this Agreement did not, and the  
       performance by the Acquiring Fund of its obligations hereunder will
        not, violate the Acquiring Fund's Declaration of Trust or Bylaws, or
     any provision of any agreement known to such counsel to which the
Acquiring Fund is a party or by which it is bound or, to the
knowledge of such counsel, result in the acceleration of any
    obligation or the imposition of any penalty under any agreement,
    judgment, or decree to which the Acquiring Fund is a party or by
which it is bound;                                          

      (f)To the knowledge of such counsel, no consent, approval, authorization
       or order of any court or governmental authority is required for the
       consummation by the Acquiring Fund of the transactions contemplated
by this Agreement except such as may be required under state
securities or "Blue Sky" laws or such as have been obtained;

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    (g)Such counsel does not know of any legal or governmental proceedings
    relating to the Acquiring Fund existing on or before the date of
      mailing of the Prospectus/Proxy Statement referred to in paragraph
        5.3 or the Closing Date required to be described in the Registration
Statement which are not described as required;              

   (h)The Acquiring Trust is registered with the Securities and Exchange
Commission as an investment company under the 1940 Act; and 

  (i)To the knowledge of such counsel, except as has been disclosed in
 writing to the Acquired Fund, no litigation or administrative
      proceeding or investigation of or before any court or governmental
       body is presently pending or threatened as to the Acquiring Fund or
         any of its properties or assets or any person whom the Acquiring Fund
     may be obligated to indemnify in connection with such litigation,
         proceeding or investigation, and the Acquiring Fund is not a party to
        or subject to the provisions of any order, decree or judgment of any
      court or governmental body, which materially and adversely affects
its business or its ability to consummate the transactions  
contemplated hereby.                                        

7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.                   

 The obligations of the Acquiring Fund to complete the transactions provided
for herein shall be subject, at its election, to the performance by the         
Acquired Fund of all the obligations to be performed by it hereunder on or      
before the Closing Date and, in addition thereto, to the following further      
conditions:                                                                     

7.1The Acquired Fund shall have delivered to the Acquiring Fund a       
     certificate executed in its name by its President or Vice President and
      its Treasurer or Assistant Treasurer, in form and substance satisfactory
   to the Acquiring Fund and dated as of the Closing Date, to the effect
  that the representations and warranties of the Acquired Fund made in
this Agreement are true and correct at and as of the Closing Date,
     except as they may be affected by the transactions contemplated by this
Agreement, and that the Acquired Fund have complied with all the  
   covenants and agreements and satisfied all of the conditions on their
    parts to be performed or satisfied under this Agreement at or prior to
the Closing Date;                                                 

   7.2The Acquiring Fund shall have received a favorable opinion of Morrison &
Foerster LLP counsel to the Acquired Fund for the transactions    
    contemplated hereby, dated the Closing Date and in a form satisfactory
to the Acquiring Fund, to the following effect:                   

  (a)The Acquired Trust is a business trust duly organized and validly
         existing under the laws of the state of Delaware and has power to own
    all of its properties and assets and to carry on its business as
   presently conducted, and the Acquired Fund is a separate series
         thereof duly constituted in accordance with the applicable provisions
  of the 1940 Act and the Declaration of Trust and Bylaws of the
Acquired Trust;                                             

   (b)This Agreement has been duly authorized, executed and delivered on
        behalf of the Acquired Fund and, assuming the Registration Statement
   and the Prospectus/Proxy Statement referred to in paragraph 5.3
       comply with applicable federal securities laws and assuming the due
  authorization, execution and delivery of this Agreement by the
      Acquiring Fund is the valid and binding obligation of the Acquired
     Fund enforceable against the Acquired Fund in accordance with its
       terms, except as the same may be limited by bankruptcy, insolvency,
     reorganization or other similar laws affecting the enforcement of
creditors' rights generally and other equitable principles; 

      (c)The Acquired Fund has the power to sell, assign, transfer and deliver
        the assets to be transferred by it hereunder, and, upon consummation
        of the transactions contemplated hereby, the Acquired Fund will have
duly transferred such assets to the Acquiring Fund;         

(d)The execution and delivery of this Agreement did not, and the  
      performance by the Acquired Fund of its obligations hereunder will
       not, violate the Acquired Fund's Declaration of Trust or Bylaws, or
     any provision of any agreement known to such counsel to which the
         Acquired Fund is a party or by which it is bound or, to the knowledge
of such counsel, result in the acceleration of any          

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    obligation or the imposition of any penalty under any agreement,
         judgment, or decree to which the Acquired Fund is a party or by which
it is bound;                                                

      (e)To the knowledge of such counsel, no consent, approval, authorization
       or order of any court or governmental authority is required for the
         consummation by the Acquired Fund of the transactions contemplated by
this Agreement, except such as have been obtained;          

    (f)Such counsel does not know of any legal or governmental proceedings
   relating to the Acquired Fund existing on or before the date of
      mailing of the Prospectus/Proxy Statement referred to in paragraph
        5.3 or the Closing Date required to be described in the Registration
Statement which are not described as required;              

  (g)The Acquired Trust is registered with the Securities and Exchange
Commission as an investment company under the 1940 Act; and 

  (h)To the knowledge of such counsel, except as has been disclosed in
  writing to the Acquiring Fund, no litigation or administrative
      proceeding or investigation of or before any court or governmental
      body is presently pending or threatened as to the Acquired Fund or
        any of its properties or assets or any person whom the Acquired Fund
     may be obligated to indemnify in connection with such litigation,
        proceeding or investigation, and the Acquired Fund is not a party to
        or subject to the provisions of any order, decree or judgment of any
      court or governmental body, which materially and adversely affects
its business or its ability to consummate the transactions  
contemplated hereby.                                        

7.3Prior to the Closing Date, the Acquired Fund shall have declared a   
      dividend or dividends which, together with all previous dividends, shall
   have the effect of distributing all of the Acquired Fund's investment
   company taxable income for its taxable years ending on or after March
    31, 2005, and on or prior to the Closing Date (computed without regard
    to any deduction for dividends paid), and all of its net capital gains
      realized in each of its taxable years ending on or after March 31, 2005,
and on or prior to the Closing Date.                              

7.4The Acquired Fund shall have furnished to the Acquiring Fund a       
  certificate, signed by the President (or any Vice President) and the
 Treasurer of the Acquired Fund, as to the adjusted tax basis in the
     hands of the Acquired Fund of the securities delivered to the Acquiring
Fund pursuant to this Agreement.                                  

   7.5The custodian of the Acquired Fund shall have delivered to the Acquiring
   Fund a certificate identifying all of the assets of the Acquired Fund
held by such custodian as of the Valuation Date.                  

8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH OF THE ACQUIRING FUND    
AND THE ACQUIRED FUND.                                                    

The respective obligations of the Acquired Fund and the Acquiring Fund    
hereunder are subject to the further conditions that on or before the Closing   
Date:                                                                           

8.1This Agreement and the transactions contemplated herein shall have   
received all necessary shareholder approvals at the meeting of    
shareholders of the Acquired Fund referred to in paragraph 5.2.   

   8.2On the Closing Date no action, suit or other proceeding shall be pending
before any court or governmental agency in which it is sought to  
   restrain or prohibit, or obtain damages or other relief in connection
with, this Agreement or the transactions contemplated hereby.     

   8.3All consents of other parties and all other consents, orders and permits
    of federal, state and local regulatory authorities (including those of
the Securities and Exchange Commission and of state "Blue Sky" and
   securities authorities) deemed necessary by the Acquired Fund and the
     Acquiring Fund to permit consummation, in all material respects, of the
     transactions contemplated hereby shall have been obtained, except where
     failure to obtain any such consent, order or permit would not involve a
  risk of a material adverse effect on the assets or properties of the
Acquiring Fund or the Acquired Fund.                              

8.4The Registration Statement shall have become effective under the 1933
   Act and no stop order suspending the effectiveness thereof shall have
been issued and, to the best knowledge of the parties             

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     hereto, no investigation or proceeding for that purpose shall have been
      instituted or be pending, threatened or contemplated under the 1933 Act.

   8.5The Acquired Fund and the Acquiring Fund shall have received a favorable
  opinion of Ropes & Gray LLP dated on the Closing Date (which opinion
     will be subject to certain qualifications) satisfactory to both parties
substantially to the effect that, on the basis of the existing    
  provisions of the Code, Treasury regulations promulgated thereunder,
      current administrative rules, and court decisions, generally for federal
income tax purposes:                                              

    (a)The acquisition by the Acquiring Fund of the assets of the Acquired
Fund in exchange for the Acquiring Fund's assumption of the 
    Obligations of the Acquired Fund and issuance of the Acquisition
     Shares, followed by the distribution by the Acquired Fund of such
  Acquisition Shares to the shareholders of the Acquired Fund in
      exchange for their shares of the Acquired Fund, all as provided in
   paragraph 1 hereof, will constitute a reorganization within the
        meaning of Section 368(a) of the Code, and the Acquired Fund and the
        Acquiring Fund will each be "a party to a reorganization" within the
meaning of Section 368(b) of the Code;                      

     (b)No gain or loss will be recognized by the Acquired Fund (i) upon the
    transfer of its assets to the Acquiring Fund in exchange for the
      Acquisition Shares and the assumption by the Acquiring Fund of the
         Obligations of the Acquired Fund or (ii) upon the distribution of the
  Acquisition Shares by the Acquired Fund to its shareholders in
liquidation, as contemplated in paragraph 1 hereof;         

  (c)No gain or loss will be recognized by the Acquiring Fund upon the
  receipt of the assets of the Acquired Fund in exchange for the
      assumption of the Obligations of the Acquired Fund and issuance of
 the Acquisition Shares as contemplated in paragraph 1 hereof;

 (d)The tax basis of the assets of the Acquired Fund acquired by the
      Acquiring Fund will be the same as the tax basis of such assets in
     the hands of the Acquired Fund immediately prior to the transfer;

    (e)The holding periods of the assets of the Acquired Fund in the hands
    of the Acquiring Fund will include the periods during which such
assets were held by the Acquired Fund;                      

     (f)No gain or loss will be recognized by the Acquired Fund shareholders
  upon the exchange of all of their Acquired Fund shares for the
Acquisition Shares;                                         

    (g)The aggregate tax basis of the Acquisition Shares to be received by
 each shareholder of the Acquired Fund will be the same as the
       aggregate tax basis of the Acquired Fund shares exchanged therefor;

  (h)An Acquired Fund shareholder's holding period for the Acquisition
  Shares to be received will include the period during which the
        Acquired Fund shares exchanged therefor were held, provided that the
       shareholder held the Acquired Fund shares as a capital asset on the
date of the exchange; and                                   

      (i)The Acquiring Fund will succeed to and take into account the items of
         the Acquired Fund described in Section 381(c) of the Code, subject to
      the conditions and limitations specified in Sections 381, 382, 383
and 384 of the Code and the regulations thereunder.         

  The opinion will be qualified to reflect that the Code requires that certain
contracts or securities (including, in particular, futures contracts, certain   
foreign currency contracts, "nonequity" options and investments in "passive     
foreign investment companies") be marked-to-market (treated as sold for their   
fair market value) at the end of a taxable year (or upon their termination or   
transfer).                                                                      

  The opinion will be based on certain factual certifications made by officers
of the Acquired Fund and the Acquiring Fund and will also be based on customary 
assumptions. The opinion is not a guarantee that the tax consequences of the    
Merger will be as described above. The opinion will note and distinguish        
certain published precedent. There is no assurance that the Internal Revenue    
Service or a court would agree with the opinion.                                

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8.6At any time prior to the Closing, any of the foregoing conditions of 
    this Agreement may be waived by the Board of the Acquired Fund and the
Acquiring Fund, if, in its judgment, such waiver will not have a  
 material adverse effect on the interests of the shareholders of the
Acquired Fund or the Acquiring Fund.                              

9. BROKERAGE FEES AND EXPENSES.                                                 

   9.1The Acquired Fund and the Acquiring Fund each represents and warrants to
    the other that there are no brokers or finders entitled to receive any
payments in connection with the transactions provided for herein. 

9.2All fees paid to governmental authorities for the registration or    
   qualification of the Acquisition Shares and all transfer agency costs
   related to the Acquisition Shares shall be allocated to the Acquiring
    Fund. All fees and expenses related to printing, mailing, solicitation
    of proxies and tabulation of votes of Acquired Fund shareholders shall
 be allocated to the Acquired Fund. All of the other expenses of the
transactions, including without limitation, accounting, legal and 
   custodial expenses, contemplated by this Agreement shall be allocated
     equally between the Acquired Fund, and the Acquiring Fund. The expenses
    detailed above shall be borne as follows: (a) as to expenses allocable
to the Acquired Fund, 75% of such expenses shall be borne by the  
    Acquired Fund and 25% of such expenses shall be borne by Columbia; and
      (b) as to expenses allocable to the Acquiring Fund, 50% of such expenses
    shall be borne by the Acquiring Fund and 50% of such expenses shall be
borne by Columbia; provided that in no event shall the expenses   
   allocated to the Acquired Fund or Acquiring Fund hereunder exceed the
    reductions anticipated by Columbia in expenses borne by that Fund over
the first year following the Merger.                              

10.ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES.                                    

10.1The Acquired Fund and the Acquiring Fund, agree that neither party has
    made any representation, warranty or covenant not set forth herein and
       that this Agreement constitutes the entire agreement between the parties.

10.2The representations, warranties and covenants contained in this       
     Agreement or in any document delivered pursuant hereto or in connection
herewith shall not survive the consummation of the transactions   
    contemplated hereunder except paragraphs 1.1, 1.3, 1.5, 5.4, 9, 10, 13
and 14.                                                           

11.TERMINATION.                                                                 

  11.1This Agreement may be terminated by the mutual agreement of the Acquired
   Fund and the Acquiring Fund. In addition, either the Acquired Fund or
 the Acquiring Fund may at its option terminate this Agreement at or
prior to the Closing Date because:                                

   (a)Of a material breach by the other of any representation, warranty,
       covenant or agreement contained herein to be performed by the other
party at or prior to the Closing Date;                      

   (b)A condition herein expressed to be precedent to the obligations of
         the terminating party has not been met and it reasonably appears that
it will not or cannot be met; or                            

(c)Any governmental authority of competent jurisdiction shall have
         issued any judgment, injunction, order, ruling or decree or taken any
     other action restraining, enjoining or otherwise prohibiting this
         Agreement or the consummation of any of the transactions contemplated
        herein and such judgment, injunction, order, ruling, decree or other
    action becomes final and non-appealable; provided that the party
        seeking to terminate this Agreement pursuant to this Section 11.1(c)
      shall have used its reasonable best efforts to have such judgment,
        injunction, order, ruling, decree or other action lifted, vacated or
denied.                                                     

If the transactions contemplated by this Agreement have not been  
substantially completed by December 31, 2006, this Agreement shall
      automatically terminate on that date unless a later date is agreed to by
both the Acquired Fund and the Acquiring Fund.                    

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11.2If for any reason the transactions contemplated by this Agreement are 
  not consummated, no party shall be liable to any other party for any
     damages resulting therefrom, including without limitation consequential
damages.                                                          

12.AMENDMENTS.                                                                  

This Agreement may be amended, modified or supplemented in such manner as 
may be mutually agreed upon in writing by the authorized officers of the        
Acquired Fund and the Acquiring Fund; provided, however, that following the     
shareholders' meeting called by the Acquired Fund pursuant to paragraph 5.2 no  
such amendment may have the effect of changing the provisions for determining   
the number of the Acquisition Shares to be issued to shareholders of the        
Acquired Fund under this Agreement to the detriment of such shareholders        
without their further approval.                                                 

13.NOTICES.                                                                     

Any notice, report, statement or demand required or permitted by any      
provisions of this Agreement shall be in writing and shall be given by prepaid  
telegraph, telecopy or certified mail addressed to the Acquired Fund or the     
Acquiring Fund at One Financial Center, Boston, Massachusetts 02111, Attention: 
Secretary.                                                                      

14.HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; NON-RECOURSE.             

14.1The article and paragraph headings contained in this Agreement are for
    reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.                                 

14.2This Agreement may be executed in any number of counterparts, each of 
which shall be deemed an original.                                

  14.3This Agreement shall be governed by and construed in accordance with the
     domestic substantive laws of The Commonwealth of Massachusetts, without
    giving effect to any choice or conflicts of law rule or provision that
     would result in the application of the domestic substantive laws of any
other jurisdiction.                                               

  14.4This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but no assignment or 
     transfer hereof or of any rights or obligations hereunder shall be made
  by any party without the written consent of the other party. Nothing
     herein expressed or implied is intended or shall be construed to confer
  upon or give any person, firm or corporation, other than the parties
hereto and their respective successors and assigns, any rights or 
remedies under or by reason of this Agreement.                    

14.5A copy of the Declaration of Trust of the Acquired Fund and the       
   Acquiring Fund is on file with the Secretary of the state of Delaware
   and the Secretary of The Commonwealth of Massachusetts, respectively,
    and notice is hereby given that no trustee, officer, agent or employee
   of such trust shall have any personal liability under this Agreement,
    and that this Agreement is binding only upon the assets and properties
of the Acquired Fund and the Acquiring Fund.                      

[The rest of this page intentionally left blank.] 

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 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its President, a Vice President or Treasurer.                    

                         NATIONS FUNDS TRUST
                                    on behalf of Nations Strategic
                     Income Fund

         By:
                                                 -----------------------------

           Name:
                                                 -----------------------------

            Title:
                                                 -----------------------------

                            COLUMBIA FUNDS TRUST I
                                     on behalf of Columbia Strategic
                     Income Fund

                                          By:    -----------------------------

                                  Name:  Christopher L. Wilson
                                                 -----------------------------

                      Title: President
                                                 -----------------------------

                                   Solely for purposes of Paragraph 9.2 of
the Agreement                                                                   

                                        COLUMBIA MANAGEMENT ADVISORS, INC.

         By:
                                                 -----------------------------

           Name:
                                                 -----------------------------

            Title:
                                                 -----------------------------

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Appendix B -- Acquired Fund and Acquiring Fund Information  

Shares Outstanding and Entitled to Vote of the Acquired Fund                    

For each class of the Acquired Fund's shares entitled to vote at the      
meeting, the number of shares outstanding as of July 5, 2005 was as follows:    

                                                                [Download Table]

                                              Number of Shares    
                                          Outstanding and Entitled
             Fund                Class            to Vote         
             ----              ---------- ------------------------
                                                                  
 Nations Strategic Income Fund Investor A       2,667,959.93      
                               Investor B       2,815,000.62      
                               Investor C          73,788.61      
                                Primary A      15,660,462.33      

Ownership of Shares                                                             

As of July 5, 2005, each of the Acquired Fund and the Acquiring Fund      
believes that, as a group, the Trustees and officers, as the case may be, of    
the Acquired Fund and the Acquiring Fund owned less than one percent of each    
class of shares of the Acquired Fund and the Acquiring Fund, respectively. As   
of July 5, 2005, the following shareholders of record owned five percent or     
more of the outstanding shares of the noted class of shares of the Acquired     
Fund or the Acquiring Fund.                                                     

                                                        [Enlarge/Download Table]

                                                                                             Percentage of   
                                                                                           Outstanding Shares
                                                                                             of Class Owned  
                                                         Number of        Percentage of           Upon       
                                                     Outstanding Shares Outstanding Shares  Consummation of  
Fund and Class    Name and Address of Shareholder      of Class Owned     of Class Owned        Merger*      
--------------    -------------------------------    ------------------ ------------------ ------------------
                                                                                                             
Nations Strategic Income Fund                                                                                
   Investor C  Merrill Lynch, Pierce,                    56,944.149           20.79%             1.014%      
               Fenner & Smith Inc                                                                            
               For the Sole Benefit of its                                                                   
               Customers                                                                                     
               Attention Service Team                                                                        
               4800 Deer Lake Drive East 3/rd/ Floor                                                         
               Jacksonville FL 32246                                                                         

               NFSC FEBO                                 26,136.247            9.54%             0.465%      
               J David Paisley                                                                               
               16 Westminster                                                                                
               Lake Oswego OR 97034                                                                          

               NFSC FEBO                                 20,310.599            7.41%             0.362%      
               NFS/FMTC                                                                                      
               Linda G Walker                                                                                
               7 Sally St                                                                                    
               Spartanburg SC 29301                                                                          

               NFSC FEBO                                 18,318.815            6.69%             0.326%      
               John L Manning III                                                                            
               Orgain Ready Mix Pft Shring PL                                                                
               240 Kraft St                                                                                  
               Clarksville TN 37040                                                                          

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                                                        [Enlarge/Download Table]

                                                                                       Percentage of   
                                                                                     Outstanding Shares
                                                                                       of Class Owned  
                                                   Number of        Percentage of           Upon       
                                               Outstanding Shares Outstanding Shares  Consummation of  
Fund and Class Name and Address of Shareholder   of Class Owned     of Class Owned        Merger*      
-------------- ------------------------------- ------------------ ------------------ ------------------
                                                                                                       
               First Clearning, LLC                  17,223.543          6.29%              0.307%     
               Louis J Guntzelman                                                                      
               10709 Adventure Lane                                                                    
               Cincinnati OH 45242-4246                                                                

               National Philanthropic Trust          15,866.782          5.79%              0.282%     
               Attn: Accounting Department                                                             
               165 Township Line Road                                                                  
               Suite #150                                                                              
               Jenkintown PA 19046-3594                                                                

   Primary A   Bank of America NA                15,531,974.019         99.17%             72.688%     
               Attn Funds Accounting (ACI)                                                             
               411 N Akard St                                                                          
               Dallas TX 75201-3307                                                                    

Columbia Strategic Income Fund                                                                         
   Class C     Merrill Lynch Pierce                 616,183.366          7.04%              6.670%     
               Fenner & Smith                                                                          
               For the Sole Benefit of its                                                             
               Customers                                                                               
               Attn Fund Administration                                                                
               4800 Deer Lake Dr E FL 2                                                                
               Jacksonville FL 32246-6484                                                              

   Class Z     Bank of America NA                 8,829,726.131         93.62%             25.006%     
               Attn Joan Wray/Funds Accounting                                                         
               411 N Akard St                                                                          
               Dallas TX 75201-3307                                                                    

   Class J     Tokai Tokyo Securities            31,884,565.596         93.20%              93.20%     
               Shinyaesu Bldg 7-1                                                                      
               Kyobashi 1-Chome                                                                        
               Chuo-Ku                                                                                 
               Tokyo Japan 104-0031                                                                    

               Mitsubishi Securities Co Ltd       2,326,710.000          6.80%               6.80%     
               Investment Trust Division                                                               
               Mitsubishi Building                                                                     
               2-5-2 Marunouchi                                                                        
               Chiyoda-Ku Tokyo 100-0005                                                               
               Japan                                                                                   

--------                                                                        
*  Percentage owned assuming completion of the Merger on July 5, 2005.          

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Appendix C -- Capitalization  

The following table shows on an unaudited basis the capitalization of the 
Acquired Fund and the Acquiring Fund as of April 29, 2005, and on a pro forma   
combined basis, giving effect to the acquisition of the assets and assumption   
of the liabilities of the Acquired Fund by the Acquiring Fund at net asset      
value as of that date:                                                          

                                                        [Enlarge/Download Table]

                                                                                   Columbia   
                              Nations         Columbia                            Strategic   
                             Strategic    Strategic Income                       Income Fund  
                            Income Fund         Fund             Pro Forma        Pro Forma   
                          (Acquired Fund) (Acquiring Fund)      Adjustments      Combined/(1)/
                          --------------- ---------------- -------------         ------------ 
                                                                                              
Class A                                                                                       
Net asset value..........  $         --     $611,338,541   $  27,668,811/(2)(3)/ $639,007,352 
Shares outstanding.......            --       99,441,519       4,501,440/(3)/     103,942,959 
Net asset value per share  $         --     $       6.15                         $       6.15 
Class B                                                                                       
Net asset value..........  $         --     $353,149,993   $  28,861,152/(2)(4)/ $382,011,145 
Shares outstanding.......            --       57,484,165       4,701,929/(4)/      62,186,094 
Net asset value per share  $         --     $       6.14                         $       6.14 
Class C                                                                                       
Net asset value..........  $         --     $ 45,735,329   $   2,745,982/(2)(5)/ $ 48,481,311 
Shares outstanding.......            --        7,438,459         446,684/(5)/       7,885,143 
Net asset value per share  $         --     $       6.15                         $       6.15 
Class J                                                                                       
Net asset value..........  $         --     $214,785,792   $      (5,287)/(2)/   $214,780,505 
Shares outstanding.......            --       35,014,696              --           35,014,696 
Net asset value per share  $         --     $       6.13                         $       6.13 
Class Z                                                                                       
Net asset value..........  $         --     $ 41,855,113   $ 163,549,845/(2)(6)/ $205,404,958 
Shares outstanding.......            --        6,861,539      26,811,619/(6)/      33,673,158 
Net asset value per share  $         --     $       6.10                         $       6.10 
Investor A(7)                                                                                 
Net asset value..........  $ 27,691,058     $         --   $ (27,691,058)        $         -- 
Shares outstanding.......     2,750,349               --      (2,750,349)                  -- 
Net asset value per share  $      10.07     $         --                         $         -- 
Investor B(7)                                                                                 
Net asset value..........  $ 28,877,352     $         --   $ (28,877,352)        $         -- 
Shares outstanding.......     2,866,281               --      (2,866,281)                  -- 
Net asset value per share  $      10.07     $         --                         $         -- 
Investor C(7)                                                                                 
Net asset value..........  $  2,747,822     $         --   $  (2,747,822)        $         -- 
Shares outstanding.......       272,903               --        (272,903)                  -- 
Net asset value per share  $      10.07     $         --                         $         -- 
Primary A(7)                                                                                  
Net asset value..........  $163,593,412     $         --   $(163,593,412)        $         -- 
Shares outstanding.......    16,231,871               --     (16,231,871)                  -- 
Net asset value per share  $      10.08     $         --                         $         -- 

--------                                                                        
(1)Assumes the Merger was consummated on April 29, 2005 and is for information  
purposes only. No assurance can be given as to how many shares of the     
 Acquiring Fund will be received by the shareholders of the Acquired Fund on
  the date the Merger takes place, and the foregoing should not be relied upon
 to reflect the number of shares of the Acquiring Fund that actually will be
received on or after such date.                                           

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(2)Adjustments reflect one time proxy, accounting, legal and other costs of the 
reorganization as approved by the Board of Trustees of $57,959 and $31,182
to be borne by the Acquired Fund and the Acquiring Fund, respectively.    
(3)Includes net assets and shares from Investor A. Investor A shares will merge 
into Class A on the date of the Merger.                                   
(4)Includes net assets and shares from Investor B. Investor B shares will merge 
into Class B on the date of the Merger.                                   
(5)Includes net assets and shares from Investor C. Investor C shares will merge 
into Class C on the date of the Merger.                                   
(6)Includes net assets and shares from Primary A. Primary A shares will merge   
into Class Z on the date of the Merger.                                   
(7)Investor A, B, C and Primary A shares of the Acquired Fund are exchanged for 
Class A, B, C and Z shares of the Acquiring Fund based on the net asset   
value per share of the Acquiring Fund's Class A, B, C and Z shares,       
respectively, at the time of the Merger.                                  

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Appendix D -- Information Applicable to the Acquiring Fund  

HOW TO BUY SHARES                                                               

Class A, B and C shares                                                         

 A financial advisor can help establish an appropriate investment portfolio,
buy shares and monitor investments. When the Fund receives a purchase request   
in "good form," shares will be bought at the next calculated public price.      
"Good form" means that an order has been placed with a financial advisor or     
that payment has been received and the application is complete, including all   
necessary signatures. The USA PATRIOT Act may require the Fund to obtain        
certain personal information which will be used to verify a shareholder's       
identity. If a shareholder does not provide the information, the Fund may not   
be able to open the account. If the Fund is unable to verify customer           
information, the Fund reserves the right to close the account or take such      
other steps as it deems reasonable.                                             

                                                                [Download Table]
                                                      
Investment Minimums for Class A, B and C Shares       
Initial Investment............................. $1,000
Subsequent Investments......................... $   50
Automatic Investment Plan...................... $   50
Retirement Plan................................ $   25

The Fund reserves the right to change these investment minimums. The Fund 
also reserves the right to refuse a purchase order for any reason, including if 
it believes that doing so would be in the best interest of the Fund and its     
shareholders.                                                                   

Eligible Investors For Class Z Shares                                           

  Only Eligible Investors may purchase Class Z shares of the Fund, directly or
by exchange. Class Z shares of the Fund generally are available only to certain 
"grandfathered" shareholders and to investors holding accounts with             
intermediaries that assess account level fees for the services they provide.    
Please read the following section for a more detailed description of the        
eligibility requirements. The Eligible Investors described below are subject to 
different minimum initial investment requirements.                              

Important Things to Consider When Deciding on a Class of Shares:                

Broker-dealers, investment advisers or financial planners selling mutual  
fund shares may offer their clients more than one class of shares in the Fund   
with different pricing options. This allows a shareholder and a shareholder's   
financial advisor to choose among different types of sales charges and          
different levels of ongoing operating expenses, depending on the investment     
programs a financial advisor offers. Investors should consider carefully any    
separate transactions and other fees charged by these programs in connection    
with investing in any available share class before selecting a share class.     

Eligibility for certain waivers, exemptions or share classes by new or    
existing investors may not be readily available or accessible through all       
intermediaries or all types of accounts offered by an intermediary.             
Accessibility of these waivers through a particular intermediary may also       
change at any time. If a shareholder believes he or she is eligible to purchase 
shares under a specific exemption, but is not permitted by his or her           
intermediary to do so, please contact the intermediary. A shareholder may be    
asked to provide information, including account statements and other records,   
regarding eligibility.                                                          

 Eligible Investors and their applicable investment minimums are as follows:

No minimum initial investment                                                   

.   Any client of Bank of America Corporation or a subsidiary purchasing    
shares through an asset management company, trust, retirement plan  
     administration or similar arrangement with Bank of America Corporation or
the subsidiary;                                                     

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.   Any group retirement plan, including defined benefit and defined        
contribution plans such as: 401(k), 403(b), and 457(b) plans (but   
excluding individual retirement accounts (IRAs)), for which an      
    intermediary or other entity provides services and is not compensated by
the Funds for those services, other than payments for shareholder   
      servicing or sub-accounting performed in place of a Fund's transfer agent;

 .   Any investor purchasing through a Columbia Management Group state tuition
plan organized under Section 529 of the Internal Revenue Code; or   

.   Any person investing all or part of the proceeds of a distribution,     
rollover or transfer of assets into a Columbia Management Individual
Retirement Account, from any deferred compensation plan which was a 
   shareholder of any of the funds of Columbia Acorn Trust (formerly named
   Liberty Acorn Trust) on September 29, 2000, in which the investor was a
     participant and through which the investor invested in one or more of the
funds of Columbia Acorn Trust immediately prior to the distribution,
transfer or rollover.                                               

$1,000 minimum initial investment                                               

.   Any shareholder (as well as any family member of a shareholder or person
    listed on an account registration for any account of the shareholder) of
a fund distributed by Columbia Funds Distributor, Inc. (i) who holds
Class Z shares; (ii) who holds Class A shares that were obtained by 
     exchange of Class Z shares; or (iii) who purchased certain no-load shares
   of a fund merged with a fund distributed by Columbia Funds Distributor,
Inc.;                                                               

.   Any trustee or director (or family member of a trustee or director) of  
any fund distributed by Columbia Funds Distributor, Inc.;           

.   Any employee (or family member of an employee) of Bank of America       
Corporation or a subsidiary;                                        

.   Any investor participating in an account offered by an intermediary or  
other entity that provides services to such an account, is paid an  
   asset-based fee by the investor and is not compensated by the Funds for
those services, other than payments for shareholder servicing or    
sub-accounting performed in place of the Fund's transfer agent (each
  investor purchasing through an intermediary must independently satisfy
the $1,000 minimum investment requirement); or                      

 .   Any insurance company, trust company, bank, endowment, investment company
or foundation purchasing shares for its own account.                

The Fund reserves the right to change the criteria for eligible investors 
and the investment minimums. No minimum investment applies to accounts          
participating in the automatic investment plan; however, each investment        
requires a $50 minimum purchase. The Fund also reserves the right to refuse a   
purchase order for any reason, including if it believes that doing so would be  
in the best interest of the Fund and its shareholders.                          

How to Buy Shares                                                               

Outlined below are the various options for buying shares:                 

                                                        [Enlarge/Download Table]

Method            Instructions                                                                              
------            ------------                                                                              
                                                                                                            
Through a         A financial advisor can help establish an account and buy Fund shares on a shareholder's  
financial advisor behalf. To receive the current trading day's price, a financial advisor must receive a    
                  shareholder's request prior to the close of regular trading on the New York Stock Exchange
                  (NYSE), usually 4:00 p.m. Eastern Time. A financial advisor may charge fees for executing 
                  the purchase.                                                                             
By check (new     For new accounts, send a completed application and check made payable to the Fund and mail
account)          to the transfer agent, Columbia Funds Services, Inc., P.O. Box 8081, Boston, MA02266-8081.

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Method          Instructions                                                                                      
------          ------------                                                                                      
                                                                                                                  
By check        For existing accounts, fill out and return the additional investment stub included in the account 
(existing       statement, or send a letter of instruction including the Fund name and account number with a check
account)        made payable to the Fund to Columbia Funds Services, Inc., P.O. Box 8081, Boston,                 
                MA 02266-8081.                                                                                    
By exchange     A shareholder or a shareholder's financial advisor may acquire shares of the Fund for an account  
                by exchanging shares owned in a different fund distributed by Columbia Funds Distributor, Inc.    
                for shares of the same class (and, in some cases, certain other classes) of the Fund at no        
                additional cost. There may be an additional charge if exchanging from a money market fund. To     
                exchange by telephone, call 1-800-422-3737.                                                       
By wire         A shareholder may purchase shares of the Fund by wiring money from a bank account to a            
                Fund account. To wire funds to a Fund account, call 1-800-422-3737 for wiring instructions.       
By electronic   A shareholder may purchase shares of the Fund by electronically transferring money from a         
funds transfer  bank account to a Fund account by calling 1-800-422-3737. An electronic funds transfer may        
                take up to two business days to settle and be considered in "good form." A shareholder must       
                set up this feature prior to a telephone request. Be sure to complete the appropriate section of  
                the application.                                                                                  
Automatic       A shareholder may make monthly or quarterly investments automatically from a bank account         
investment plan to a Fund account. A shareholder may select a pre-authorized amount to be sent via electronic     
                funds transfer. Be sure to complete the appropriate section of the application for this feature.  
Automated       A shareholder may purchase shares of the Fund for an account by exchanging $100 or more           
dollar cost     each month from another Fund for shares of the same class of the Fund at no additional cost.      
averaging       Exchanges will continue so long as a Fund balance is sufficient to complete the transfers. A      
                shareholder may terminate the program or change the amount of the exchange (subject to the        
                $100 minimum) by calling 1-800-345-6611. Be sure to complete the appropriate section of           
                the account application for this feature.                                                         
By dividend     A shareholder may automatically invest dividends distributed by another fund into the same        
diversification class of shares (and, in some cases, certain other classes) of the Fund at no additional sales    
                charge. There may be an additional sales charge if exchanging from a money market fund. To        
                invest dividends in the Fund, call 1-800-345-6611.                                                

SALES CHARGES                                                                   

Choosing a Share Class                                                          

The Fund offers Class A, B, C and Z shares in this Prospectus/Proxy       
Statement.                                                                      

Each of Class A, Class B and Class C shares has its own sales charge and  
expense structure. Determining which of Class A, Class B or Class C shares is   
best for a shareholder depends on the dollar amount a shareholder is investing  
and the number of years for which a shareholder is willing to invest. If a      
financial advisor does not participate in the Class B discount program,         
purchases of $250,000 or more but less than $1 million can be made only in      
Class A or Class C shares. Purchases of $1 million or more can be made only in  
Class A shares. Based on a shareholder's personal situation, a financial        
advisor can help decide which class of shares makes the most sense.             

The Fund also offers an additional class of shares, Class J shares, which 
are made available only to residents or citizens of Japan through a separate    
prospectus.                                                                     

The Fund also offers Class Z shares in this Prospectus/Proxy Statement,   
which are available exclusively to certain institutional and other investors.   
In general, anyone who is eligible to purchase Class Z shares, which do not     
incur Rule 12b-1 fees or sales charges, should do so in preference over other   
classes.                                                                        

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Sales Charges for Class A, B and C Shares                                       

 A shareholder may be subject to an initial sales charge when purchasing, or
a contingent deferred sales charge (CDSC) when selling, shares of the Fund.     
These sales charges are described below. In certain circumstances, the sales    
charge may be waived, as described below and in the Statement of Additional     
Information.                                                                    

 Class A shares. Purchases of Class A shares are made at the public offering
price for these shares. This price includes a sales charge that is based on the 
amount of an initial investment when opening an account. The sales charge a     
shareholder pays on an additional investment is based on the total amount of    
the purchase and the current value of the account. Shares purchased with        
reinvested dividends or other distributions are not subject to a sales charge.  
A portion of the sales charge is paid as a commission to the financial advisor  
on the sale of Class A shares. The amount of the sales charge differs depending 
on the amount invested as shown in the table below.                             

Class A Sales Charges                                                           

                                                                [Download Table]

                                   As a % of                    % of offering  
                                   the public     As a % of   price retained by
Amount purchased                 offering price an investment financial advisor
----------------                 -------------- ------------- -----------------
                                                                               
Less than $50,000...............      4.75          4.99            4.25       
$50,000 to less than $100,000...      4.50          4.71            4.00       
$100,000 to less than $250,000..      3.50          3.63            3.00       
$250,000 to less than $500,000..      2.50          2.56            2.00       
$500,000 to less than $1,000,000      2.00          2.04            1.75       
$1,000,000 or more..............      0.00          0.00            0.00       

Class A shares bought without an initial sales charge in accounts         
aggregating $1 million to $25 million at the time of purchase are subject to a  
1.00% CDSC if the shares are sold within 18 months of the time of purchase.     
Subsequent Class A share purchases that bring an account value above $1 million 
(but less than $25 million) are subject to a CDSC if redeemed within 18 months  
of the date of purchase. The 18-month period begins on the first day of the     
month in which the purchase was made. The CDSC does not apply to retirement     
plans purchasing through a fee-based program.                                   

For Class A share purchases of $1 million or more, financial advisors     
receive a cumulative commission from the distributor as follows:                

Purchases Over $1 Million                                                       

                                                                [Download Table]

Amount purchased                    Commission %
----------------                    ------------
                                                
Less than $3 million...............     1.00    
$3 million to less than $5 million.     0.80    
$5 million to less than $25 million     0.50    
$25 million or more................     0.25    

The commission to financial advisors for Class A share purchases of $25   
million or more is paid over 12 months but only to the extent the shares remain 
outstanding.                                                                    

For Class A share purchases by participants in certain group retirement   
plans offered through a fee-based program, financial advisors receive a 1.00%   
commission from the distributor on all purchases of less than $3 million.       

Understanding Contingent Deferred Sales Charges                                 

Certain investments in Class A, B and C shares are subject to a CDSC, a   
sales charge applied at the time a shareholder sells shares. A shareholder will 
pay the CDSC only on shares a shareholder sells within a certain amount of time 
after purchase. The CDSC generally declines each year until there is no charge  
for selling shares.                                                             

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The CDSC is applied to the net asset value at the time of purchase or sale,     
whichever is lower. For purposes of calculating the CDSC, the start of the      
holding period is the first day of the month in which the purchase was made.    
Shares purchased with reinvested dividends or capital gains are not subject to  
a CDSC. When placing an order to sell shares, the Fund will automatically sell  
first those shares not subject to a CDSC and then those held the longest.       

Reduced Sales Charges for Larger Investments                                    

A. What are the principal ways to obtain a breakpoint discount?                 

There are two principal ways a shareholder may pay a lower sales charge   
(often referred to as "breakpoint discounts") when purchasing Class A shares of 
the Fund and other funds in the Columbia family of funds.                       

  Rights of Accumulation. The value of eligible accounts (regardless of class)
maintained by a shareholder and each member of a shareholder's immediate family 
may be combined with the value of the current purchase to reach a sales charge  
discount level (according to the chart on the previous page) and to obtain the  
lower sales charge for a shareholder's current purchase. To calculate the       
combined value of the accounts, the Fund will use the shares' current public    
offering price.                                                                 

Statement of Intent. A shareholder also may pay a lower sales charge when 
purchasing Class A shares by signing a Statement of Intent. By doing so, a      
shareholder would be able to pay the lower sales charge on all purchases made   
under the Statement of Intent within 13 months. As described in the chart on    
the previous page, the first breakpoint discount will be applied when total     
purchases reach $50,000. If a shareholder's Statement of Intent purchases are   
not completed within 13 months, a shareholder will be charged the applicable    
sales charge on the amount a shareholder's invested to that date. To calculate  
the total value of a shareholder's Statement of Intent purchases, the Fund will 
use the historic cost (i.e. dollars invested) of the shares held in each        
eligible account. A shareholder must retain all records necessary to            
substantiate historic costs because the Fund and a financial intermediary may   
not maintain this information. Upon request, a Statement of Intent may apply to 
purchases made 90 days prior to the date the Statement of Intent is received by 
the Fund.                                                                       

B. What accounts are eligible for breakpoint discounts?                         

 The types of eligible accounts that may be aggregated to obtain one or both
of the breakpoint discounts described above include:                            

.   Individual accounts                                                     

.   Joint accounts                                                          

.   Certain IRA accounts                                                    

.   Certain trusts                                                          

.   UTMA/UGMA accounts                                                      

For the purposes of obtaining a breakpoint discount, members of a         
shareholder's "immediate family" include a shareholder's spouse, parent, step   
parent, legal guardian, child, step child, father-in-law and mother-in-law.     
Eligible accounts include those registered in the name of a dealer or other     
financial intermediary through which a shareholder owns Columbia fund shares.   
The value of an investment in a Columbia money market fund held in an eligible  
account may be aggregated with investments in other funds in the Columbia       
family of funds to obtain a breakpoint discount through a Right of              
Accumulation. Money market funds may also be included in the aggregation for a  
Statement of Intent for shares that have been charged a commission. For         
purposes of obtaining either breakpoint discount, purchases of Galaxy money     
market funds are not included.                                                  

C. How do I obtain a breakpoint discount?                                       

The steps necessary to obtain a breakpoint discount depends on how an     
account is maintained with the Columbia family of funds. To obtain any of the   
above breakpoint discounts, a shareholder must notify a financial advisor at    
the time a shareholder purchases shares of the existence of each eligible       
account maintained by a                                                         

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shareholder or a shareholder's immediate family. It is the sole responsibility  
of a financial advisor to ensure that a shareholder receives discounts for      
which a shareholder is eligible and the Fund is not responsible for a financial 
advisor's failure to apply the eligible discount to an account. A shareholder   
may be asked by the Fund or financial advisor for account statements or other   
records to verify discount eligibility, including, where applicable, records    
for accounts opened with a different financial advisor and records of accounts  
established by members of a shareholder's immediate family. If a shareholder    
owns shares exclusively through an account maintained with the Fund's transfer  
agent, Columbia Funds Services, Inc., a shareholder will need to provide the    
foregoing information to a Columbia Funds Services, Inc. representative at the  
time a shareholder purchases shares.                                            

D. How can I obtain more information about breakpoint discounts?                

  Certain investors may purchase shares at a reduced sales charge or net asset
value, which is the value of a Fund share excluding any sales charges.          
Restrictions may apply to certain accounts and certain transactions. Further    
information regarding these discounts may be found in the Fund's Statement of   
Additional Information and at www.columbiafunds.com.                            

 Class B Shares. Purchases of Class B shares are made at Class B's net asset
value. Class B shares have no front-end sales charge, but they do carry a CDSC  
that is imposed only on shares sold prior to elimination of the CDSC as shown   
in the applicable chart below. The CDSC generally declines each year and        
eventually disappears over time. The distributor pays the financial advisor an  
up-front commission on sales of Class B shares as described in the charts below.

Purchases of less than $250,000:                                                

Class B Sales Charges                                                           

                                                                [Download Table]

                              % deducted when
Holding period after purchase shares are sold
----------------------------- ---------------
                                             
    Through first year.......      5.00      
    Through second year......      4.00      
    Through third year.......      3.00      
    Through fourth year......      3.00      
    Through fifth year.......      2.00      
    Through sixth year.......      1.00      
    Longer than six years....      0.00      

Commission to financial advisors is 4.00%.                                

Automatic conversion to Class A shares occurs eight years after purchase. 

  A shareholder can pay a lower CDSC and reduce the period during which a CDSC
would apply when making purchases of Class B shares through a financial advisor 
that participates in the Class B share discount program for larger purchases as 
described in the charts below. Some financial advisors are not able to          
participate because their record keeping or transaction processing systems are  
not designed to accommodate these reductions. For non-participating financial   
advisors, purchases of Class B shares must be less than $250,000. Consult a     
financial advisor to see whether it participates in the discount program for    
larger purchases. For participating financial advisors, Rights of Accumulation  
(as described above) apply, so that if the combined value of the eligible Fund  
accounts in all classes maintained by a shareholder and each member of a        
shareholder's immediate family (as defined above), together with the value of a 
shareholder's current purchase, is at or above a discount level, a              
shareholder's current purchase will be subject to a lower CDSC and the          
applicable reduced holding period, provided that a shareholder has notified a   
financial advisor in writing of the identity of such other accounts and the     
relationship to the other account holders. It is the sole responsibility of the 
financial advisor to ensure that a shareholder receives discounts for which a   
shareholder is eligible and the Fund                                            

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is not responsible for a financial advisor's failure to apply the eligible      
discount to an account. A shareholder may be asked by the Fund or a financial   
advisor for account statements or other records to verify discount eligibility, 
including, where applicable, records for accounts opened with a different       
financial advisor and records of accounts established by members of a           
shareholder's immediate family. This Class B share discount program for larger  
purchases (as further described in the charts below) is not applicable to Class 
B shares received by former Galaxy Fund Prime B shareholders in connection with 
the reorganization of the former Galaxy Fund.                                   

Purchases of $250,000 to less than $500,000:                                    

Class B Sales Charges                                                           

                                                                [Download Table]

                              % deducted when
Holding period after purchase shares are sold
----------------------------- ---------------
                                             
   Through first year........      3.00      
   Through second year.......      2.00      
   Through third year........      1.00      
   Longer than three years...      0.00      

Commission to financial advisors is 2.50%.                                

Automatic conversion to Class A shares occurs four years after purchase.  

Purchases of $500,000 to less than $1 million:                                  

Class B Sales Charges                                                           

                                                                [Download Table]

                              % deducted when
Holding period after purchase shares are sold
----------------------------- ---------------
                                             
     Through first year......      3.00      
     Through second year.....      2.00      
     Through third year......      1.00      

Commission to financial advisors is 1.75%.                                

Automatic conversion to Class A shares occurs three years after purchase. 

If exchanging into a fund participating in the Class B share discount     
program or transferring a Fund account from a financial advisor that does not   
participate in the program to one that does, the exchanged or transferred       
shares will retain the pre-existing CDSC but any additional purchases of Class  
B shares which, together with the exchanged or transferred account, exceed the  
applicable discount level will be subject to the lower CDSC and the reduced     
holding period for amounts in excess of the discount level. A financial advisor 
will receive the lower commission for purchases in excess of the applicable     
discount level. If exchanging from a participating fund or transferring an      
account from a financial advisor that does participate in the program into a    
non-participating fund or financial advisor that does not participate in the    
program, the exchanged or transferred shares will retain the pre-existing CDSC  
schedule and holding period but all additional purchases of Class B shares will 
be subject to the higher CDSC and longer holding period of the                  
non-participating fund or applicable to the non-participating financial advisor.

 Class C shares. Purchases of Class C shares are made at Class C's net asset
value. Although Class C shares have no front-end sales charge, they carry a     
CDSC of 1.00% that is applied to shares sold within the first year after they   
are purchased. After holding shares for one year, a shareholder may sell them   
at any time without paying a CDSC. The distributor pays the financial advisor   
an up-front commission of 1.00% on sales of Class C shares.                     

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Class C Sales Charges                                                           

                                                                [Download Table]

                              % deducted when
Holding period after purchase shares are sold
----------------------------- ---------------
                                             
    Through first year.......      1.00      
    Longer than one year.....      0.00      

  Class Z shares. Purchases of Class Z shares are at net asset value, which is
the value of a Class Z share excluding any sales charge. Class Z shares are not 
subject to an initial sales charge when purchased or a CDSC.                    

HOW TO EXCHANGE SHARES                                                          

Trust shares may not be exchanged for shares of any other fund distributed
by Columbia Funds Distributor, Inc. A shareholder may exchange shares for       
shares of the same share class (and in some cases, certain other classes) of    
another fund distributed by Columbia Funds Distributor, Inc. at net asset       
value. If a shareholder's shares are subject to a CDSC, a shareholder will not  
be charged a CDSC upon the exchange. However, when selling the shares acquired  
through the exchange, the shares sold may be subject to a CDSC, depending upon  
when the shares being exchanged were originally purchased. For purposes of      
computing the CDSC, the length of time a shareholder has owned shares will be   
computed from the date of the original purchase and the applicable CDSC will be 
the CDSC of the original fund. Unless an account is part of a tax-deferred      
retirement plan, an exchange is a taxable event, and may realize a gain or a    
loss for tax purposes. The Fund may terminate a shareholder's exchange          
privilege if the adviser determines that a shareholder's exchange activity is   
likely to adversely impact its ability to manage the Fund. See "Fund Policy on  
Trading of Fund Shares" for the fund's policy. To exchange by telephone, call   
1-800-422-3737. Please have account and taxpayer identification numbers         
available when calling.                                                         

HOW TO SELL SHARES                                                              

A financial advisor can help determine if and when to sell shares. A      
shareholder may sell shares of the Fund on any regular business day that the    
NYSE is open.                                                                   

When the Fund receives a sales request in "good form," shares will be sold
at the next calculated price. "Good form" means that money used to purchase the 
shares is fully collected. When selling shares by letter of instruction, "good  
form" also means (i) the letter has complete instructions, the proper           
signatures and Medallion Signature Guarantees, (ii) any certificates for shares 
to be sold are included, and (iii) any other required documents are attached.   
For additional documents required for sales by corporations, agents,            
fiduciaries, surviving joint owners and other legal entities, please call       
1-800-345-6611. Retirement plan accounts have special requirements; please call 
1-800-799-7526 for more information.                                            

The Fund will generally send proceeds from the sale within seven days     
(usually on the next business day after a request is received in "good form").  
However, if shares were purchased by check, the Fund may delay sending the      
proceeds from the sale of shares for up to 15 days after the purchase to        
protect against checks that are returned. No interest will be paid on uncashed  
redemption checks. Redemption proceeds may be paid in securities, rather than   
in cash, under certain circumstances. For more information, see the paragraph   
"Non-Cash Redemptions" under the section "How to Sell Shares" in the Statement  
of Additional Information.                                                      

Outlined below are the various options for selling shares:                

                                                        [Enlarge/Download Table]

Method            Instructions                                                                                    
------            ------------                                                                                    
                                                                                                                  
Through a         A shareholder may call a financial advisor to place a sell order. To receive the current trading
financial advisor day's price, a financial advisor must receive a request prior to the close of regular trading on
                  the NYSE, usually 4:00 p.m. Eastern Time. A financial advisor may charge fees for executing     
                  a redemption.                                                                                   

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Method                                                     Instructions                                            
------                                                     ------------                                            
                                                                                                                   
By exchange     A shareholder or a shareholder's financial advisor may sell shares of the Fund by exchanging       
                from the Fund into the same share class (and, in some cases, certain other classes) of another     
                fund distributed by Columbia Funds Distributor, Inc. at no additional cost. To exchange by         
                telephone, call                                                                                    
                1-800-422-3737.                                                                                    
By telephone    A shareholder or a shareholder's financial advisor may sell shares of the Fund by telephone        
                and request that a check be sent to the address of record by calling 1-800-422-3737, unless the    
                Fund has been notified of an address change within the previous 30 days. The dollar limit for      
                telephone sales is $100,000 in a 30-day period. A shareholder does not need to set up this         
                feature in advance of a call. Certain restrictions apply to retirement accounts. For details,      
                call 1-800-799-7526.                                                                               
By mail         A shareholder may send a signed letter of instruction or stock power form along with any           
                share certificates to be sold to the address below. In a letter of instruction, note the Fund's    
                name, share class, account number, and the dollar value or number of shares wished to sell.        
                All account owners must sign the letter. Signatures must be guaranteed by either a bank, a         
                member firm of a national stock exchange or another eligible guarantor institution that            
                participates in the Medallion Signature Guarantee Program for amounts over $100,000 or for         
                alternate payee or mailing instructions. Additional documentation is required for sales by         
                corporations, agents, fiduciaries, surviving joint owners and individual retirement account        
                owners. For details, call1-800-345-6611.                                                           
                Mail the letter of instruction to Columbia Funds Services, Inc., P.O. Box 8081, Boston,            
                MA 02266-8081.                                                                                     
By check        A shareholder may sell shares of the Fund by check writing. The check must be at least $500        
writing         and no more than $100,000. A shareholder will continue to earn dividends on shares until the       
                check is presented to the bank for payment. When the check is presented to the bank a              
                sufficient number of full and fractional shares will be sold at the next determined net asset      
                value to cover the amount of the check. Certificate shares may not be sold by check writing.       
                Check writing is available only for Class A shares. Be sure to complete the appropriate            
                section of the account application for this feature.                                               
By wire         A shareholder may sell shares of the Fund and request that the proceeds be wired to a bank. A      
                shareholder must set up this feature prior to the request. Be sure to complete the appropriate     
                section of the account application for this feature.                                               
By systematic   A shareholder may automatically sell a specified dollar amount or withdrawal plan percentage       
withdrawal plan of an account on a monthly, quarterly or semi-annual basis and have the proceeds sent if the       
                account balance is at least $5,000. This feature is not available if shares are held in certificate
                form. All dividend and capital gains distributions must be reinvested. Be sure to complete the     
                appropriate section of the account application for this feature.                                   
By electronic   A shareholder may sell shares of the Fund and request that the proceeds be electronically          
funds transfer  transferred to a bank. Proceeds may take up to two business days to be received by a bank. A       
                shareholder must set up this feature prior to a request. Be sure to complete the appropriate       
                section of the account application for this feature.                                               

FUND POLICY ON TRADING OF FUND SHARES                                           

  The interests of the Fund's long-term shareholders may be adversely affected
by certain short-term trading activity by Fund shareholders. Such short-term    
trading activity, when excessive, has the potential to interfere with efficient 
portfolio management, generate transaction and other costs, dilute the value of 
Fund shares held by long-term shareholders and have other adverse effects on    
the Fund. This type of excessive short-term trading activity is referred to     
herein as "market timing." The Columbia funds are not intended as vehicles for  
market timing. The Board of Trustees of the Fund has adopted the policies and   
procedures set forth below with respect to frequent trading of the Fund's       
shares.                                                                         

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The Fund, directly and through its agents, takes various steps designed to
deter and curtail market timing. For example, if the Fund detects that any      
shareholder has conducted two "round trips" (as defined below) in the Fund in   
any 28-day period, except as noted below with respect to orders received        
through omnibus accounts, the Fund will reject the shareholder's future         
purchase orders, including exchange purchase orders, involving any Columbia     
fund (other than a Money Market Fund). In addition, if the Fund determines that 
any person, group or account has engaged in any type of market timing activity  
(independent of the two-round-trip limit), the Fund may, in its discretion,     
reject future purchase orders by the person, group or account, including        
exchange purchase orders, involving the same or any other Columbia fund, and    
also retains the right to modify these market timing policies at any time       
without prior notice.                                                           

 The rights of shareholders to redeem shares of the Fund are not affected by
any of the limits mentioned above. However, certain funds impose a redemption   
fee on the proceeds of fund shares that are redeemed or exchanged within 60     
days of their purchase.                                                         

For these purposes, a "round trip" is a purchase by any means into a      
Columbia fund followed by a redemption, of any amount, by any means out of the  
same Columbia fund. Under this definition, an exchange into the Fund followed   
by an exchange out of the Fund is treated as a single round trip. Also for      
these purposes, where known, accounts under common ownership or control         
generally will be counted together. Accounts maintained or managed by a common  
intermediary, such as an adviser, selling agent or trust department, generally  
will not be considered to be under common ownership or control.                 

Purchases, redemptions and exchanges made through the Columbia funds'     
Automatic Investment Plan, Systematic Withdrawal Plan or similar automated      
plans are not subject to the two-round-trip limit. The two-round-trip limit may 
be modified for, or may not be applied to, accounts held by certain retirement  
plans to conform to plan limits, considerations relating to the Employee        
Retirement Income Security Act of 1974 or regulations of the Department of      
Labor, and for certain asset allocation or wrap programs.                       

  The practices and policies described above are intended to deter and curtail
market timing in the Fund. However, there can be no assurance that these        
policies, individually or collectively, will be totally effective in this       
regard because of various factors. In particular, a substantial portion of      
purchase, redemption and exchange orders are received through omnibus accounts. 
Omnibus accounts, in which shares are held in the name of an intermediary on    
behalf of multiple beneficial owners, are a common form of holding shares among 
financial intermediaries and retirement plans. The Fund typically is not able   
to identify trading by a particular beneficial owner through an omnibus         
account, which may make it difficult or impossible to determine if a particular 
account is engaged in market timing. Certain financial intermediaries have      
different policies regarding monitoring and restricting market timing in the    
underlying beneficial owner accounts that they maintain through an omnibus      
account that may be more or less restrictive than the Fund practices discussed  
above.                                                                          

The Fund seeks to act in a manner that it believes is consistent with the 
best interests of Fund shareholders in making any judgments regarding market    
timing. Neither the Fund nor its agents shall be held liable for any loss       
resulting from rejected purchase orders or exchanges.                           

DISTRIBUTION AND SERVICE FEES                                                   

Rule 12b-1 Plan. The Fund has adopted a plan under Rule 12b-1 that permits
it to pay its distributor marketing and other fees to support the sale and      
distribution of Class A, B and C shares and certain services provided by a      
financial advisor. The annual service fee is calculated by adding (1) 0.15% on  
net assets attributable to shares issued prior to January 1, 1993 and (2) 0.25% 
on net assets attributable to shares issued thereafter. This arrangement        
results in a rate of service fee payable by the Fund that is a blend between    
the 0.15% and 0.25% rates. For the fiscal year ended May 31, 2004, the combined 
service fee was 0.24% of the Fund's average net assets. The annual distribution 
fee may equal up to 0.75% for each of Class B and Class C shares. Distribution  
and service fees are paid out of the assets of these classes. The distributor   
has voluntarily agreed to waive a portion of the Class C share distribution fee 
so that it does not exceed 0.60% annually. Over time, these                     

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fees will reduce the return on an investment and may cost more than paying      
other types of sales charges. Class B shares automatically convert to Class A   
shares after a certain number of years, eliminating the distribution fee upon   
conversion. Conversion may occur three, four or eight years after purchase,     
depending on the program under which shares were purchased. See "Sales Charges" 
for the conversion schedules applicable to Class B shares.                      

Additional Intermediary Compensation. In addition to the commissions      
specified in this Prospectus/Proxy Statement, the distributor, or its advisory  
affiliates, from their own resources, may make cash payments to financial       
service firms that agree to promote the sale of shares of funds that the        
distributor distributes. A number of factors may be considered in determining   
the amount of those payments, including the financial service firm's sales,     
client assets invested in the Funds and redemption rates, the quality of the    
financial service firm's relationship with the distributor and/or its           
affiliates, and the nature of the services provided by financial service firms  
to its clients. The payments may be made in recognition of such factors as      
marketing support, access to sales meetings and the financial service firm's    
representatives, and inclusion of the Fund on focus, select or other similar    
lists.                                                                          

Subject to applicable rules, the distributor may also pay non-cash        
compensation to financial service firms and their representatives, including:   
(i) occasional gifts (ii) occasional meals, or other entertainment; and/or      
(iii) support for financial service firm educational or training events.        

  In addition, the distributor, and/or the Fund's investment adviser, transfer
agent or their affiliates, may pay service, administrative or other similar     
fees to broker/dealers, banks, third-party administrators or other financial    
institutions (each commonly referred to as an "intermediary"). Those fees are   
generally for subaccounting, sub-transfer agency and other shareholder services 
associated with shareholders whose shares are held of record in omnibus or      
other group accounts. The rate of those fees may vary and is generally          
calculated on the average daily net assets of a Fund attributable to a          
particular intermediary.                                                        

 In some circumstances, the payments discussed above may create an incentive
for an intermediary or its employees or associated persons to recommend or sell 
shares of the fund. For further information about payments made by the          
distributor and its affiliates to financial service firms and intermediaries,   
please see the Statement of Additional Information. Please also contact the     
financial service firm or intermediary for details about payments it may        
receive.                                                                        

OTHER INFORMATION ABOUT AN ACCOUNT                                              

How the Fund's Share Price is Determined. The price of each class of the  
Fund's shares is based on its net asset value. The net asset value is           
determined at the close of regular trading on the NYSE, usually 4:00 p.m.       
Eastern Time, on each business day that the NYSE is open for trading (typically 
Monday through Friday). Shares are not priced the days on which the NYSE is     
closed for trading.                                                             

When a shareholder requests a transaction, it will be processed at the net
asset value (plus any applicable sales charges) next determined after a request 
is received in "good form" by the distributor. In most cases, in order to       
receive that day's price, the distributor must receive an order before that     
day's transactions are processed. If a shareholder requests a transaction       
through a financial advisor, the financial advisor must receive the order by    
the close of trading on the NYSE to receive that day's price.                   

The Fund determines its net asset value for each share class by dividing  
each class's total net assets by the number of that class's outstanding shares. 
In determining the net asset value, the Fund must determine the price of each   
security in its portfolio at the close of each trading day. Because the Fund    
holds securities that are traded on foreign exchanges, the value of the Fund's  
securities may change on days when shareholders will not be able to buy or sell 
fund shares. Securities for which market quotations are available are valued    
each day at the current market value. However, where market quotations are      
unavailable, or when the adviser believes that subsequent events have made them 
unreliable, the Fund may use other data to determine the fair value of the      
securities.                                                                     

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  The Fund has retained an independent fair value pricing service to assist in
the fair valuation process for securities principally traded in a foreign       
market in order to adjust for possible changes in value that may occur between  
the close of the foreign exchange and the time at which Fund shares are priced. 
If a security is valued at a "fair value," that value may be different from the 
last quoted market price for the security.                                      

A shareholder can find the daily prices of some share classes for the Fund
in most major daily newspapers under the heading "Columbia." A shareholder can  
find daily prices for all share classes by visiting www.columbiafunds.com.      

  Account Fees. If an account value falls below $1,000 (other than as a result
of depreciation in share value) the account may be subject to an annual fee of  
$10. The Fund's transfer agent will send a written notification of any such     
action and provide details on how to add money to the account to avoid this     
penalty.                                                                        

Share Certificates. Share certificates are not available for any class of 
shares offered by the Fund. If a shareholder currently holds previously issued  
share certificates, a shareholder will not be able to sell shares until the     
shareholder has endorsed the certificates and returned them to the transfer     
agent.                                                                          

Dividends, Distributions and Taxes. The Fund has the potential to make the
following distributions:                                                        

Types of Distributions                                                          

                                                        [Enlarge/Download Table]
                                                                                                                  
Dividends     Represents interest and dividends earned from securities held by the Fund, net of expenses          
              incurred by the Fund.                                                                               
------------------------------------------------------------------------------------------------------------------
Capital gains Represents net long-term capital gains on sales of securities held for more than 12 months and net  
              short-term capital gains, which are gains on sales of securities held for a 12-month period or less.

Understanding Fund Distributions. The Fund may earn income from the       
securities it holds. The Fund also may realize capital gains or losses on sales 
of its securities. The Fund distributes substantially all of its net investment 
income and capital gains to shareholders. Shareholders are entitled to a        
portion of the Fund's income and capital gains based on the number of shares    
owned at the time these distributions are declared.                             

Distribution Options. The Fund distributes any dividends annually and any 
capital gains (including short-term capital gains) at least annually. Shares    
begin to earn dividends on the first day following the purchase payment date.   
Shares stop earning dividends on the day after the shares leave the account. A  
shareholder can choose one of the options listed in the table below for these   
distributions when opening an account. To change distribution options, call     
1-800-345-6611.                                                                 

If a shareholder does not indicate on the application or at the time the  
account is established a preference for handling distributions, the fund will   
automatically reinvest all distributions in additional shares of the Fund.      

Distribution Options                                                            

Reinvest all distributions in additional shares of the current fund       
Reinvest all distributions in shares of another fund                      
Receive dividends in cash (see options below) and reinvest capital gains  
Receive all distributions in cash (with one of the following options):    

.   send the check to a shareholder's address of record                     

.   send the check to a third party address                                 

.   transfer the money to a shareholder's bank via electronic funds transfer

 Distributions of $10 or less will automatically be reinvested in additional
Fund shares. If a shareholder elects to receive distributions by check and the  
check is returned as undeliverable, or if a shareholder does not cash a         
distribution check within six months of the check date, the distribution, and   
all subsequent distributions, will be reinvested in additional shares of the    
Fund.                                                                           

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  Tax Consequences. Unless a shareholder is an entity exempt from income taxes
or invest under a retirement account, regardless of whether the shareholder     
receives distributions in cash or reinvest them in additional Fund shares, all  
Fund distributions are subject to federal income tax. Depending on where a      
shareholder lives, distributions also may be subject to state and local income  
taxes.                                                                          

 In general, any distributions of dividends, interest and short-term capital
gains are taxable as ordinary income unless such dividends are "qualified       
dividend income" (as defined in the Internal Revenue Code) eligible for a       
reduced rate of tax. Distributions of long-term capital gains are generally     
taxable as such, regardless of how long a shareholder has held Fund shares. A   
shareholder will be provided with information each year regarding the amount of 
ordinary income and capital gains distributed for the previous year and any     
portion of distribution which is exempt from state and local taxes. Under the   
Columbia Gift Plan, the trustee will file all income tax returns and pay all    
income taxes for income earned prior to the trust's termination. Under the      
Columbia Advantage Plan, the beneficiary will be obligated to report any income 
earned by the trust on his or her tax returns and to pay any applicable income  
taxes. An investment in the Fund may have additional personal tax implications. 
Please consult a tax advisor about foreign, federal, state, local or other      
applicable tax laws.                                                            

In addition to the dividends and capital gains distributions made by the  
Fund, a shareholder may realize a capital gain or loss when selling or          
exchanging shares of the Fund. Such transactions also may be subject to         
federal, state and local income tax.                                            

MANAGING THE FUND                                                               

Investment Adviser                                                              

Columbia Management, located at 100 Federal Street, Boston, Massachusetts 
02110, is the Fund's investment adviser. The investment adviser is responsible  
for the Fund's management, subject to oversight by the Fund's Board of          
Trustees. In its duties as investment adviser, Columbia Management runs the     
Fund's day-to-day business, including placing all orders for the purchase and   
sale of the Fund's portfolio securities. Columbia Management is a direct wholly 
owned subsidiary of Columbia Management Group, LLC ("CMG"), which is an         
indirect wholly owned subsidiary of Bank of America Corporation. Prior to June  
15, 2005, CMG was a corporation. Effective June 15, 2005, CMG converted to a    
limited liability company. Columbia Management, a registered investment         
adviser, has been an investment adviser since 1969.                             

For the 2004 fiscal year, aggregate advisory fees paid to Columbia        
Management by the Fund, not including administration, pricing and bookkeeping   
and other fees paid to Columbia Management by the Fund, amounted to 0.64% of    
average daily net assets of the Fund.                                           

Portfolio Managers                                                              

Laura A. Ostrander, a senior vice president of Columbia Management, is the
lead manager for the Fund and has managed or co-managed the Fund since          
September, 2000. Ms. Ostrander has been associated with Columbia Management or  
its predecessors since December, 1996.                                          

Thomas A. LaPointe, a senior vice president of Columbia Management, is a  
co-manager for the Fund and has co-managed the Fund since June, 2005. Mr.       
LaPointe has been associated with Columbia Management or its predecessors since 
February, 1999.                                                                 

Kevin L. Cronk, a senior vice president of Columbia Management, is a      
co-manager for the Fund and has co-managed the Fund since June, 2005. Mr. Cronk 
has been associated with Columbia Management or its predecessors since August,  
1999.                                                                           

LEGAL PROCEEDINGS                                                               

On February 9, 2005, Columbia Management and CFD (collectively, the       
"Columbia Group") entered into an Assurance of Discontinuance with the New York 
Attorney General ("NYAG") (the "NYAG Settlement") and                           

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consented to the entry of a cease-and-desist order by the Securities and        
Exchange Commission ("SEC") (the "SEC Order"). The SEC Order and the NYAG       
Settlement are referred to collectively as the "Settlements". The Settlements   
contain substantially the same terms and conditions as outlined in the          
agreements in principle which Columbia Group entered into with the SEC and NYAG 
in March 2004.                                                                  

 Under the terms of the SEC Order, the Columbia Group has agreed among other
things, to: pay $70 million in disgorgement and $70 million in civil money      
penalties; cease and desist from violations of the antifraud provisions and     
certain other provisions of the federal securities laws; maintain certain       
compliance and ethics oversight structures; retain an independent consultant to 
review the Columbia Group's applicable supervisory, compliance, control and     
other policies and procedures; and retain an independent distribution           
consultant (see below). The Columbia Funds have also voluntarily undertaken to  
implement certain governance measures designed to maintain the independence of  
their boards of trustees. The NYAG Settlement also, among other things,         
requires Columbia Management and its affiliates, Banc of America Capital        
Management, LLC and BACAP Distributors, LLC, to reduce certain Columbia Funds,  
Nations Funds and other mutual funds management fees collectively by $32        
million per year for five years, for a projected total of $160 million in       
management fee reductions.                                                      

Pursuant to the procedures set forth in the SEC order, the $140 million in
settlement amounts described above will be distributed in accordance with a     
distribution plan to be developed by an independent distribution consultant,    
who is acceptable to the SEC staff and the Columbia Funds' independent          
trustees. The distribution plan must be based on a methodology developed in     
consultation with the Columbia Group and the Funds' independent trustees and    
not unacceptable to the staff of the SEC. At this time, the distribution plan   
is still under development. As such, any gain to the fund or its shareholders   
can not currently be determined.                                                

 As a result of these matters or any adverse publicity or other developments
resulting from them, there may be increased redemptions or reduced sales of     
Fund shares, which could increase transaction costs or operating expenses, or   
have other adverse consequences for the Columbia Funds.                         

A copy of the SEC Order is available on the SEC website at                
http://www.sec.gov. A copy of the NYAG Settlement is available as part of the   
Bank of America Corporation Form 8-K filing on February 10, 2005.               

In connection with events described in detail above, various parties have 
filed suit against certain funds, the Trustees of the Columbia Funds,           
FleetBoston Financial Corporation and its affiliated entities and/or Bank of    
America Corporation and its affiliated entities. More than 300 cases including  
those filed against entities unaffiliated with the funds, their Boards,         
FleetBoston Financial Corporation and its affiliated entities and/or Bank of    
America Corporation and its affiliated entities have been transferred to the    
Federal District Court in Maryland and consolidated in a multi-district         
proceeding (the "MDL")./1/ The MDL is ongoing.                                  

On January 11, 2005, a putative class action lawsuit was filed in federal 
district court in Massachusetts against, among others, the Trustees of the      
Funds and Columbia. The lawsuit alleges that defendants violated common law     
duties to fund shareholders as well as sections of the Investment Company Act   
of 1940, by failing to ensure that the Funds and other affiliated funds         
participated in securities class action settlements for which the funds were    
eligible. Specifically, plaintiffs allege that defendants failed to submit      
proof of claims in connection with settlements of securities class action       
lawsuits filed against companies in which the funds held positions.             

In 2004, certain Columbia Funds, the Trustees of the Columbia Funds,      
advisers and affiliated entities were named as defendants in certain purported  
shareholder class and derivative actions/2/ making claims, including            

--------                                                                        
/1/  The derivative cases purportedly brought on behalf of the Columbia Funds   
  in the MDL have been consolidated under the lead case, Slaybe, et al. v.
    Columbia Management Advisers, Inc. et al, No. 04-CV-1768 (D. Md. Sept. 29,
    2004). The fund derivative plaintiffs allege that the funds were harmed by
market timing and late trading activity and seek, among other things, 
  removal of the trustees of the funds, removal of Columbia Management and
CFD, disgorgement of all management fees and monetary damages.        
/2/  Cohen, et al. v. FleetBoston Financial Corporation, et al., (D. Mass. Aug. 
    2, 2004); Osburn, et al. v. FleetBoston Financial Corporation, et al., (D.
Mass. Aug. 10, 2004); Slick er, et al. v. FleetBoston Financial       
Corporation, et al., (D. Mass. Aug. 11, 2004); Simmonds, et al. v.    
FleetBoston Financial Corporation, et al., (D. Mass. Sept. 8, 2004).  

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claims under the Investment Company and the Investment Advisers Acts of 1940    
and state law. The suits seek damages and allege, inter alia, that the fees and 
expenses paid by the funds are excessive and that the advisers and their        
affiliates inappropriately used fund assets to distribute the funds and for     
other improper purpose. On March 2, 2005, the actions were consolidated in the  
Massachusetts federal court as IN RE COLUMBIA ENTITIES LITIGATION. The          
plaintiffs filed a consolidated amended complaint on June 9, 2005.              

On March 21, 2005 purported class action plaintiffs filed suit in         
Massachusetts state court alleging that the conduct, including market timing,   
entitles Class B shareholders in certain Columbia funds to an exemption from    
contingent deferred sales charges upon early redemption (the "CDSC Lawsuit").   
The CDSC Lawsuit has been removed to federal court in Massachusetts and the     
federal Judicial Panel has conditionally ordered its transfer to the MDL.       

DISCLOSURE OF THE FUND'S PORTFOLIO HOLDINGS                                     

The Statement of Additional Information and the Fund's website            
(www.columbiafunds.com) include a description of the Fund's policies with       
respect to the disclosure of its portfolio holdings.                            

HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION                                 

The following supplemental hypothetical investment information provides   
additional information about the effect of the expenses of the Acquiring Fund,  
including investment advisory fees and other Acquiring Fund costs, on the       
Acquiring Fund's returns over a 10-year period. The chart shows the estimated   
expenses that would be charged on a hypothetical investment of $10,000 in Class 
A, B, C and Z shares of the Acquiring Fund assuming a 5% return each year. The  
chart also assumes that the annual expense ratios stay the same throughout the  
10-year period. The fee and expense information shown also assumes that all     
dividends and distributions are reinvested in the Acquiring Fund. The chart     
does not take into account any CDSC. The annual expense ratio used for the      
Acquiring Fund, which is the same as that stated in the Annual Fund Operating   
Expenses tables above, and is net of any fee waiver or expense reimbursement.   

                                                        [Enlarge/Download Table]

                 Cumulative       Hypothetical Cumulative Hypothetical                
                   Return           Year-End     Return     Year-End                  
                   Before           Balance      After      Balance                   
                   Fees &         Before Fees    Fees &   After Fees &  Annual Fees & 
Class A           Expenses         & Expenses   Expenses    Expenses   Expenses(*)(**)
   -------       ----------       ------------ ---------- ------------ ---------------
Year                                                                                  
                                                                                      
  1.............    5.00%          $10,001.25     3.92%    $ 9,898.38     $  579.89   
  2.............   10.25%          $10,501.31     7.99%    $10,286.40     $  109.00   
  3.............   15.76%          $11,026.38    12.23%    $10,689.62     $  113.27   
  4.............   21.55%          $11,577.70    16.63%    $11,108.66     $  117.71   
  5.............   27.63%          $12,156.58    21.20%    $11,544.12     $  122.32   
  6.............   34.01%          $12,764.41    25.95%    $11,996.65     $  127.12   
  7.............   40.71%          $13,402.63    30.89%    $12,466.91     $  132.10   
  8.............   47.75%          $14,072.76    36.02%    $12,955.62     $  137.28   
  9.............   55.13%          $14,776.40    41.35%    $13,463.48     $  142.66   
  10............   62.89%          $15,515.22    46.89%    $13,991.25     $  148.26   
Total Gain Before Fees & Expenses  $ 5,990.22                                         
Total Gain After Fees & Expenses                           $ 4,466.25                 
Total Annual Fees & Expenses Paid                                         $1,729.61   

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                                                        [Enlarge/Download Table]

                 Cumulative       Hypothetical Cumulative Hypothetical                
                   Return           Year-End     Return     Year-End                  
                   Before           Balance      After      Balance                   
                   Fees &         Before Fees    Fees &   After Fees &  Annual Fees & 
Class B           Expenses         & Expenses   Expenses    Expenses   Expenses(*)(**)
   -------       ----------       ------------ ---------- ------------ ---------------
Year                                                                                  
                                                                                      
  1.............    5.00%          $10,500.00     3.17%    $10,317.00     $  185.90   
  2.............   10.25%          $11,025.00     6.44%    $10,644.05     $  191.79   
  3.............   15.76%          $11,576.25     9.81%    $10,981.47     $  197.87   
  4.............   21.55%          $12,155.06    13.30%    $11,329.58     $  204.15   
  5.............   27.63%          $12,762.82    16.89%    $11,688.73     $  210.62   
  6.............   34.01%          $13,400.96    20.59%    $12,059.26     $  217.29   
  7.............   40.71%          $14,071.00    24.42%    $12,441.54     $  224.18   
  8.............   47.75%          $14,774.55    28.36%    $12,835.93     $  231.29   
  9.............   55.13%          $15,513.28    33.39%    $13,339.10     $  141.35   
  10............   62.89%          $16,288.95    38.62%    $13,861.99     $  146.89   
Total Gain Before Fees & Expenses  $ 6,288.95                                         
Total Gain After Fees & Expenses                           $ 3,861.99                 
Total Annual Fees & Expenses Paid                                         $1,951.33   

Class C                                                                               
   -------                                                                            
Year                                                                                  
  1.............    5.00%          $10,500.00     3.17%    $10,317.00     $  185.90   
  2.............   10.25%          $11,025.00     6.44%    $10,644.05     $  191.79   
  3.............   15.76%          $11,576.25     9.81%    $10,981.47     $  197.87   
  4.............   21.55%          $12,155.06    13.30%    $11,329.58     $  204.15   
  5.............   27.63%          $12,762.82    16.89%    $11,688.73     $  210.62   
  6.............   34.01%          $13,400.96    20.59%    $12,059.26     $  217.29   
  7.............   40.71%          $14,071.00    24.42%    $12,441.54     $  224.18   
  8.............   47.75%          $14,774.55    28.36%    $12,835.93     $  231.29   
  9.............   55.13%          $15,513.28    32.43%    $13,242.83     $  238.62   
  10............   62.89%          $16,288.95    36.63%    $13,662.63     $  246.18   
Total Gain Before Fees & Expenses  $ 6,288.95                                         
Total Gain After Fees & Expenses                           $ 3,662.63                 
Total Annual Fees & Expenses Paid                                         $2,147.90   

Class Z                                                                               
   -------                                                                            
Year                                                                                  
  1.............    5.00%          $10,500.00     4.16%    $10,416.00     $   85.75   
  2.............   10.25%          $11,025.00     8.49%    $10,849.31     $   89.31   
  3.............   15.76%          $11,576.25    13.01%    $11,300.64     $   93.03   
  4.............   21.55%          $12,155.06    17.71%    $11,770.74     $   96.90   
  5.............   27.63%          $12,762.82    22.60%    $12,260.41     $  100.93   
  6.............   34.01%          $13,400.96    27.70%    $12,770.44     $  105.13   
  7.............   40.71%          $14,071.00    33.02%    $13,301.69     $  109.50   
  8.............   47.75%          $14,774.55    38.55%    $13,855.04     $  114.06   
  9.............   55.13%          $15,513.28    44.31%    $14,431.41     $  118.80   
  10............   62.89%          $16,288.95    50.32%    $15,031.76     $  123.75   
Total Gain Before Fees & Expenses  $ 6,288.95                                         
Total Gain After Fees & Expenses                           $ 5,031.76                 
Total Annual Fees & Expenses Paid                                         $1,037.16   

--------                                                                        
(*)Annual Fees and Expenses are approximate and assume that the investor held   
 shares of the Acquiring Fund for the entire 10-year period. Annual Fees and
Expenses are calculated based on the average between the beginning and    
ending balance for each year. All information is calculated on an annual  
compounding basis.                                                        
(**)The year one Annual Fees & Expenses information shown include the dollar    
   amount and effect of any applicable front-end sales charge of the Acquiring
Fund.                                                                   

D-16  

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Appendix E -- Financial Highlights for the Acquiring Fund                       

The financial highlights table below is intended to help shareholders     
understand the Fund's financial performance. Certain information reflects       
financial results for a single Fund share. The total returns in the table       
represent the rate that shareholders would have earned (or lost) on an          
investment in the Fund (assuming reinvestment of all dividends and              
distributions). This information, other than the unaudited information for the  
six months ended November 30, 2004, is included in the Fund's financial         
statements which, have been audited by PricewaterhouseCoopers LLP, an           
Independent Registered Public Accounting Firm, whose report, along with the     
Fund's financial statements, is included in the Fund's annual report.           
Shareholders can request a free annual report by calling 1-866-348-1468.        

 Selected data for a share outstanding throughout each period is as follows:

                                                        [Enlarge/Download Table]

                                             Six Months       Year         Period                                             
                                               Ended          Ended        Ended                     Year Ended December 31,  
                                            November 30,     May 31,      May 31,    -----------------------------------------
              Class A Shares                    2004          2004       2003/(a)/       2002          2001           2000    
              --------------                ------------   -------      --------     -------      -------         -------     
                                            (unaudited)                                                                       
                                                                                                                              
Net asset value -- Beginning of Period ($)       6.02         6.09         5.63         5.64         6.00            6.62     
                                              -------      -------      -------      -------      -------         -------     
Income from Investment Operations ($):                                                                                        
   Net investment income (loss)............      0.18/(b)/    0.36/(b)/    0.16/(b)/    0.38/(b)/    0.48/(b)(c)/    0.58/(d)/
   Net realized and unrealized gain (loss)                                                                                    
     on investments and foreign                                                                                               
     currency..............................      0.39         0.01         0.46         0.05        (0.30)/(c)/     (0.62)    
                                              -------      -------      -------      -------      -------         -------     
Total from Investment Operations...........      0.57         0.37         0.62         0.43         0.18           (0.04)    
                                              -------      -------      -------      -------      -------         -------     
Less Distributions Declared to                                                                                                
  Shareholders ($):                                                                                                           
   From net investment income..............     (0.19)       (0.44)       (0.16)       (0.42)       (0.50)          (0.53)    
   Return of capital.......................        --           --           --        (0.02)       (0.04)          (0.05)    
                                              -------      -------      -------      -------      -------         -------     
Total Distributions Declared to                                                                                               
  Shareholders.............................     (0.19)       (0.44)       (0.16)       (0.44)       (0.54)          (0.58)    
                                              -------      -------      -------      -------      -------         -------     
Net asset value -- End of period ($)             6.40         6.02         6.09         5.63         5.64            6.00     
                                              -------      -------      -------      -------      -------         -------     
Total return (%)/(f)/......................      9.63/(g)/    6.21        11.10/(g)/    7.97         3.07           (0.68)    
                                              -------      -------      -------      -------      -------         -------     
Ratios to Average Net Assets/                                                                                                 
  Supplemental Data (%):                                                                                                      
   Expenses/(h)/...........................      1.13/(i)/    1.17         1.27/(i)/    1.23         1.21            1.17     
   Net investment income (loss)/(h)/.......      5.90/(i)/    5.90         6.52/(i)/    6.75         8.22/(c)/       9.12     
Portfolio turnover rate (%)................        29/(g)/      68           59/(g)/      62          106              35     
Net assets -- End of period (000's) ($)....   605,709      566,269      595,223      552,737      575,791         536,481     
                                                                [Download Table]


                                            --------     
              Class A Shares                    1999     
              --------------                -------      

                                                         
Net asset value -- Beginning of Period ($)     7.11      
                                            -------      
Income from Investment Operations ($):                   
   Net investment income (loss)............    0.57/(d)/ 
   Net realized and unrealized gain (loss)               
     on investments and foreign                          
     currency..............................   (0.48)     
                                            -------      
Total from Investment Operations...........    0.09      
                                            -------      
Less Distributions Declared to                           
  Shareholders ($):                                      
   From net investment income..............   (0.58)/(e)/
   Return of capital.......................      --      
                                            -------      
Total Distributions Declared to                          
  Shareholders.............................   (0.58)     
                                            -------      
Net asset value -- End of period ($)           6.62      
                                            -------      
Total return (%)/(f)/......................    1.28      
                                            -------      
Ratios to Average Net Assets/                            
  Supplemental Data (%):                                 
   Expenses/(h)/...........................    1.19      
   Net investment income (loss)/(h)/.......    8.30      
Portfolio turnover rate (%)................      44      
Net assets -- End of period (000's) ($).... 669,795      

--------                                                                        
(a)The Fund changed its fiscal year from December 31 to May 31.                 
(b)Per share data was calculated using average shares outstanding during the    
period.                                                                   
(c)Effective January 1, 2001, the Fund adopted the provisions of the AICPA      
Audit and Accounting Guide for Investment Companies and began amortizing  
premium and accreting discount on all debt securities. The effect of this 
 change for the year ended December 31, 2001, was to decrease net investment
income per share by $0.02, increase net realized and unrealized gain per  
share by $0.02 and decrease the ratio of net investment income to average 
 net assets from 8.60% to 8.22%. Per share data and ratios for periods prior
to December 31, 2001 have not been restated to reflect this change in     
presentation.                                                             
(d)The per share net investment income amount does not reflect the period's     
reclassifications of differences between book and tax basis net investment
income.                                                                   
(e)Distributions from income include currency gains and gains on securities     
treated as ordinary income for tax purposes.                              
(f)Total return at net asset value assuming all distributions reinvested and no 
initial sales charge or contingent deferred sales charge.                 
(g)Not annualized.                                                              
(h)The benefits derived from custody credits and directed brokerage             
arrangements, if applicable, had an impact of less than 0.01%.            
(i)Annualized.                                                                  

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                                                        [Enlarge/Download Table]

                                      Six Months       Year         Period                                             
                                        Ended          Ended        Ended                     Year Ended December 31,  
                                     November 30,     May 31,      May 31,    -----------------------------------------
          Class B Shares                 2004          2004       2003/(a)/       2002          2001           2000    
          --------------             ------------   -------      --------     -------      -------         -------     
                                     (unaudited)                                                                       
                                                                                                                       
Net asset value -- Beginning of                                                                                        
  Period ($)                              6.02         6.09         5.62         5.63         6.00            6.62     
                                       -------      -------      -------      -------      -------         -------     
Income from Investment                                                                                                 
  Operations ($):                                                                                                      
   Net investment income (loss).....      0.16/(b)/    0.32/(b)/    0.14/(b)/    0.34/(b)/    0.44/(b)(c)/    0.53/(d)/
   Net realized and unrealized gain                                                                                    
     (loss) on investments and                                                                                         
     foreign currency...............      0.38         0.01         0.47         0.04        (0.32)/(c)/     (0.62)    
                                       -------      -------      -------      -------      -------         -------     
   Total from Investment                                                                                               
     Operations.....................      0.54         0.33         0.61         0.38         0.12           (0.09)    
                                       -------      -------      -------      -------      -------         -------     
Less Distributions Declared to                                                                                         
  Shareholders ($):                                                                                                    
   From net investment income.......     (0.17)       (0.40)       (0.14)       (0.37)       (0.45)          (0.48)    
   Return of capital................        --           --           --        (0.02)       (0.04)          (0.05)    
                                       -------      -------      -------      -------      -------         -------     
Total Distributions Declared to                                                                                        
  Shareholders......................     (0.17)       (0.40)       (0.14)       (0.39)       (0.49)          (0.53)    
                                       -------      -------      -------      -------      -------         -------     
Net asset value -- End of                                                                                              
  period ($)                              6.39         6.02         6.09         5.62         5.63            6.00     
                                       -------      -------      -------      -------      -------         -------     
Total return (%)/(f)/...............      9.06/(g)/    5.42        10.95/(g)/    7.17         2.12           (1.41)    
                                       -------      -------      -------      -------      -------         -------     
Ratios to Average Net Assets/                                                                                          
  Supplemental Data (%):                                                                                               
   Expenses/(h)/....................      1.88/(i)/    1.92         2.02/(i)/    1.98         1.96            1.92     
   Net investment income/(h)/.......      5.15/(i)/    5.15         5.77/(i)/    6.00         7.47/(c)/       8.37     
Portfolio turnover rate (%).........        29/(g)/      68           59/(g)/      62          106              35     
Net assets -- End of                                                                                                   
  period (000's) ($)................   389,012      480,345      484,540      456,563      533,406         693,733     
                                                                [Download Table]


                                     --------     
          Class B Shares                 1999     
          --------------             -------      

                                                  
Net asset value -- Beginning of                   
  Period ($)                            7.11      
                                     -------      
Income from Investment                            
  Operations ($):                                 
   Net investment income (loss).....    0.51/(d)/ 
   Net realized and unrealized gain               
     (loss) on investments and                    
     foreign currency...............   (0.48)     
                                     -------      
   Total from Investment                          
     Operations.....................    0.03      
                                     -------      
Less Distributions Declared to                    
  Shareholders ($):                               
   From net investment income.......   (0.52)/(e)/
   Return of capital................      --      
                                     -------      
Total Distributions Declared to                   
  Shareholders......................   (0.52)     
                                     -------      
Net asset value -- End of                         
  period ($)                            6.62      
                                     -------      
Total return (%)/(f)/...............    0.52      
                                     -------      
Ratios to Average Net Assets/                     
  Supplemental Data (%):                          
   Expenses/(h)/....................    1.94      
   Net investment income/(h)/.......    7.55      
Portfolio turnover rate (%).........      44      
Net assets -- End of                              
  period (000's) ($)................ 914,145      

--------                                                                        
(a)The Fund changed its fiscal year from December 31 to May 31.                 
(b)Per share data was calculated using average shares outstanding during the    
period.                                                                   
(c)Effective January 1, 2001, the Fund adopted the provisions of the AICPA      
Audit and Accounting Guide for Investment Companies and began amortizing  
premium and accreting discount on all debt securities. The effect of this 
 change for the year ended December 31, 2001, was to decrease net investment
income per share by $0.02, increase net realized and unrealized loss per  
share by $0.02 and decrease the ratio of net investment income to average 
 net assets from 7.85% to 7.47%. Per share data and ratios for periods prior
to December 31, 2001 have not been restated to reflect this change in     
presentation.                                                             
(d)The per share net investment income amount does not reflect the period's     
reclassifications of differences between book and tax basis net investment
income.                                                                   
(e)Distributions from income include currency gains and gains on securities     
treated as ordinary income for tax purposes.                              
(f)Total return at net asset value assuming all distributions reinvested and no 
contingent deferred sales charge.                                         
(g)Not annualized.                                                              
(h)The benefits derived from custody credits and directed brokerage             
arrangements, if applicable, had an impact of less than 0.01%.            
(i)Annualized.                                                                  

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                                          Six Months         Year         Period                                               
                                            Ended            Ended        Ended                       Year Ended December 31,  
                                         November 30,       May 31,      May 31,      -----------------------------------------
            Class C Shares                   2004            2004       2003/(a)/        2002          2001           2000     
            --------------              ------------      -------     --------        ------      ------         ------        
                                         (unaudited)                                                                           
                                                                                                                               
Net asset value -- Beginning of                                                                                                
  Period ($)                                 6.02           6.09         5.63           5.64        6.00           6.62        
                                           ------         ------       ------         ------      ------         ------        
Income from Investment                                                                                                         
  Operations ($):                                                                                                              
   Net investment income (loss)........      0.16/(b)/      0.33/(b)/    0.14/(b)/      0.35/(b)/   0.45/(b)(c)/   0.54/(d)(e)/
   Net realized and unrealized gain                                                                                            
     (loss) on investments and foreign                                                                                         
     currency..........................      0.39           0.01         0.46           0.04       (0.31)/(c)/    (0.62)       
                                           ------         ------       ------         ------      ------         ------        
Total from Investment Operations.......      0.55           0.34         0.60           0.39        0.14          (0.08)       
                                           ------         ------       ------         ------      ------         ------        
Less Distributions Declared to                                                                                                 
  Shareholders ($):                                                                                                            
   From net investment income..........     (0.17)         (0.41)       (0.14)         (0.38)      (0.46)         (0.49)       
   Return of capital...................        --             --           --          (0.02)      (0.04)         (0.05)       
                                           ------         ------       ------         ------      ------         ------        
Total Distributions Declared to                                                                                                
  Shareholders.........................     (0.17)         (0.41)       (0.14)         (0.40)      (0.50)         (0.54)       
                                           ------         ------       ------         ------      ------         ------        
Net asset value -- End of period             6.40           6.02         6.09           5.63        5.64           6.00        
                                           ------         ------       ------         ------      ------         ------        
Total return (%)/(g)/..................      9.31/(h)(i)/   5.57/(h)/   10.82/(h)(i)/   7.32/(h)/   2.45          (1.26)/(h)/  
                                           ------         ------       ------         ------      ------         ------        
Ratios to Average Net Assets/                                                                                                  
  Supplemental                                                                                                                 
  Data (%):                                                                                                                    
   Expenses/(j)/.......................      1.73/(k)/      1.77         1.87/(k)/      1.83        1.81           1.77/(d)/   
   Net investment income (loss)/(j)/...      5.30/(k)/      5.31         5.92/(k)/      6.15        7.62/(c)/      8.52/(d)/   
   Waiver/reimbursement................      0.15/(k)/      0.15         0.15/(k)/      0.15          --           0.15        
Portfolio turnover rate (%)............        29/(i)/        68           59/(i)/        62         106             35        
Net assets -- End of period (000's) ($)    43,506         41,520       45,572         38,923      42,906         43,538        
                                                                [Download Table]


                                        -------       
            Class C Shares                   1999     
            --------------              ------        

                                                      
Net asset value -- Beginning of                       
  Period ($)                              7.11        
                                        ------        
Income from Investment                                
  Operations ($):                                     
   Net investment income (loss)........   0.52/(d)(e)/
   Net realized and unrealized gain                   
     (loss) on investments and foreign                
     currency..........................  (0.48)       
                                        ------        
Total from Investment Operations.......   0.04        
                                        ------        
Less Distributions Declared to                        
  Shareholders ($):                                   
   From net investment income..........  (0.53)/(f)/  
   Return of capital...................     --        
                                        ------        
Total Distributions Declared to                       
  Shareholders.........................  (0.53)       
                                        ------        
Net asset value -- End of period          6.62        
                                        ------        
Total return (%)/(g)/..................   0.67/(h)/   
                                        ------        
Ratios to Average Net Assets/                         
  Supplemental                                        
  Data (%):                                           
   Expenses/(j)/.......................   1.79/(d)/   
   Net investment income (loss)/(j)/...   7.70/(d)/   
   Waiver/reimbursement................   0.15        
Portfolio turnover rate (%)............     44        
Net assets -- End of period (000's) ($) 57,246        

--------                                                                        
(a)The Fund changed its fiscal year from December 31 to May 31.                 
(b)Per share data was calculated using average shares outstanding during the    
period.                                                                   
(c)Effective January 1, 2001, the Fund adopted the provisions of the AICPA      
Audit and Accounting Guide for Investment Companies and began amortizing  
premium and accreting discount on all debt securities. The effect of this 
 change for the year ended December 31, 2001, was to decrease net investment
income per share by $0.02, increase net realized and unrealized loss per  
share by $0.02 and decrease the ratio of net investment income to average 
 net assets from 8.00% to 7.62%. Per share data and ratios for periods prior
to December 31, 2001 have not been restated to reflect this change in     
presentation.                                                             
(d)Net of fees waived by the distributor which amounted to $0.02 and $0.01 per  
 share and 0.15%, and 0.15% for the periods ended December 31, 2000 and 1999
respectively.                                                             
(e)The per share net investment income amount does not reflect the period's     
reclassifications of differences between book and tax basis net investment
income.                                                                   
(f)Distributions from income include currency gains and gains on securities     
treated as ordinary income for tax purposes.                              
(g)Total return at net asset value assuming all distributions reinvested and no 
contingent deferred sales charge.                                         
(h)Had the distributor not waived a portion of expenses, total return would     
have been reduced.                                                        
(i)Not annualized.                                                              
(j)The benefits derived from custody credits and directed brokerage             
arrangements, if applicable, had an impact of less than 0.01%.            
(k)Annualized.                                                                  

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                                         Six Months     Year        Period                                                    
                                           Ended        Ended       Ended                 Year Ended December 31,             
                                        November 30,   May 31,     May 31,    ------------------------------------------      
            Class Z Shares                  2004        2004      2003/(a)/      2002        2001         2000     1999/(b)/  
            --------------              ------------  -------     --------    -----      -----         -----      --------    
                                        (unaudited)                                                                           
                                                                                                                              
Net asset value -- Beginning of Period                                                                                        
  ($)                                       5.98        6.05        5.59       5.62       5.99          6.62        7.10      
                                           -----       -----       -----      -----      -----         -----       -----      
Income from Investment Operations ($):                                                                                        
   Net investment income...............     0.19/(c)/   0.38/(c)/   0.17/(c)/  0.39/(c)/  0.49/(c)(d)/  0.59/(e)/   0.53/(e)/ 
   Net realized and unrealized gain                                                                                           
     (loss) on investments and foreign                                                                                        
     currency..........................     0.38        0.01        0.45       0.03      (0.31)/(d)/   (0.63)      (0.47)     
                                           -----       -----       -----      -----      -----         -----       -----      
Total from Investment Operations.......     0.57        0.39        0.62       0.42       0.18         (0.04)       0.06      
                                           -----       -----       -----      -----      -----         -----       -----      
Less Distributions Declared to                                                                                                
  Shareholders:                                                                                                               
   From net investment income..........    (0.20)      (0.46)      (0.16)     (0.43)     (0.51)        (0.54)      (0.54)/(f)/
   Return of capital...................       --          --          --      (0.02)     (0.04)        (0.05)         --      
                                           -----       -----       -----      -----      -----         -----       -----      
Total Distributions Declared to                                                                                               
  Shareholders.........................    (0.20)      (0.46)      (0.16)     (0.45)     (0.55)        (0.59)      (0.54)     
                                           -----       -----       -----      -----      -----         -----       -----      
Net asset value -- End of period ($)        6.35        5.98        6.05       5.59       5.62          5.99        6.62      
                                           -----       -----       -----      -----      -----         -----       -----      
Total return (%)/(g)/..................     9.66/(h)/   6.52       11.29/(h)/  7.87       3.14         (0.59)       1.50/(h)/ 
                                           -----       -----       -----      -----      -----         -----       -----      
Ratios to Average Net Assets/                                                                                                 
  Supplemental                                                                                                                
  Data (%):                                                                                                                   
   Expenses/(i)/.......................     0.89/(j)/   0.93        1.03/(j)/  0.99       0.98          0.93        0.95/(j)/ 
   Net investment income (loss)/(i)/...     6.14/(j)/   6.15        6.76/(j)/  6.99       8.45/(d)/     9.36        8.54/(j)/ 
Portfolio turnover rate (%)............       29/(h)/     68          59/(h)/    62        106            35          44      
Net assets -- End of period (000's) ($)    9,810       1,150       1,188          3      1,860             1       4,928      

--------                                                                        
(a)The Fund changed its fiscal year from December 31 to May 31.                 
(b)Class Z shares were initially offered on January 29, 1999. Per share data    
and total return reflect activity from that date.                         
(c)Per share data was calculated using average shares outstanding during the    
period.                                                                   
(d)Effective January 1, 2001, the Fund adopted the provisions of the AICPA      
Audit and Accounting Guide for Investment Companies and began amortizing  
premium and accreting discount on all debt securities. The effect of this 
 change for the year ended December 31, 2001, was to decrease net investment
income per share by $0.02, increase net realized and unrealized loss per  
share by $0.02 and decrease the ratio of net investment income to average 
 net assets from 8.84% to 8.45%. Per share data and ratios for periods prior
to December 31, 2001 have not been restated to reflect this change in     
presentation.                                                             
(e)The per share net investment income amount does not reflect the period's     
reclassifications of differences between book and tax basis net investment
income.                                                                   
(f)Distributions from income include currency gains and gains on securities     
treated as ordinary income for tax purposes.                              
(g)Total return at net asset value assuming all distributions reinvested.       
(h)Not annualized.                                                              
(i)The benefits derived from custody credits and directed brokerage             
arrangements, if applicable, had an impact of less than 0.01%.            
(j)Annualized.                                                                  

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Appendix F -- Comparison of Organizational Documents  

As a series of Nations Funds Trust, the Acquired Fund is subject to the   
provisions of Nations Funds Trust's agreement and declaration of trust and      
bylaws, as well as Delaware law. As a series of Trust I, the Acquiring Fund is  
subject to the provisions of Trust I's agreement and declaration of trust and   
bylaws, as well as Massachusetts law. If, as is expected, the Acquiring Fund is 
reorganized as a newly-formed series of Columbia Funds Trust IX, then the       
Acquiring Fund will be subject to the provisions of Columbia Funds Trust IX's   
agreement and declaration of trust and bylaws, as amended and restated, which   
are expected to become effective on August 10, 2005, as well as Massachusetts   
law. The following chart compares the organizational documents of the Acquired  
Fund (left column) with the organizational documents of the Acquiring Fund as   
currently in effect (middle column) and with the organizational documents of    
the Acquiring Fund if the proposal to reorganize the Acquiring Fund is approved 
(right column).                                                                 

                                                        [Enlarge/Download Table]

                            Nations Funds Trust         Columbia Funds Trust I      Columbia Funds Trust IX   
                       ----------------------------- ---------------------------- ----------------------------
                                                                                                              
Shareholder Liability: A shareholder or former       A shareholder or former      A shareholder or former     
                       shareholder held to be        shareholder held to be       shareholder held to be      
                       personally liable solely by   personally liable solely by  personally liable solely by 
                       reason of his or her being    reason of his or her being   reason of his or her being  
                       or having been a              or having been a             or having been a            
                       shareholder and not           shareholder and not          shareholder and not         
                       because of his or her acts    because of his or her acts   because of his or her acts  
                       or omissions or for some      or omissions or for some     or omissions or for some    
                       other reason is entitled out  other reason is entitled out other reason is entitled out
                       of the assets of the Trust to of the assets of the series  of the assets of the series 
                       be held harmless from and     of which he or she is a      (or attributable to the     
                       indemnified against all loss  shareholder or former        class) of which he or she is
                       and expense arising from      shareholder to be held       a shareholder or former     
                       such liability.               harmless from and            shareholder to be held      
                                                     indemnified against all loss harmless from and           
                                                     and expense arising from     indemnified against all loss
                                                     such liability.              and expense arising from    
                                                                                  such liability.             

                       No recital requirement.       Every note, bond, contract,  Every note, bond, contract, 
                                                     instrument, certificate or   instrument, certificate or  
                                                     undertaking made or          undertaking made or         
                                                     issued by any Trustees or    issued by any Trustees or   
                                                     Trustee or by any officers   Trustee or by any officers  
                                                     or officer must recite that  or officer must recite that 
                                                     the same was executed or     the same was executed or    
                                                     made by or on behalf of      made by or on behalf of     
                                                     the Trust and that           the Trust and that          
                                                     obligations of such          obligations of such         
                                                     instrument are not binding   instrument are not binding  
                                                     on any of them or            on any of them or           
                                                     shareholders individually.   shareholders individually.  

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                       Nations Funds Trust         Columbia Funds Trust I       Columbia Funds Trust IX    
                   ---------------------------- ---------------------------- ------------------------------
                                                                                                           
Shareholder Voting Shareholders have only the   Shareholders have the        Shareholders have the         
Rights:            voting powers expressly      power to vote only (i) for   power to vote only (i) for    
                   granted under Delaware       the election or removal of   the election or, to the       
                   law as applicable to         Trustees; (ii) with respect  extent required by law,       
                   business trusts or the 1940  to any investment adviser;   removal of Trustees;          
                   Act and with respect to      (iii) with respect to any    (ii) with respect to any      
                   matters deemed desirable     termination, by the          termination, by the           
                   and as authorized by the     shareholders, of the Trust   shareholders, of the Trust    
                   Board of Trustees.           or series or class of the    or series or class of the     
                                                Trust; (iv) with respect to  Trust; (iii) with respect to  
                                                any amendment, by the        derivative actions (iv) with  
                                                Trustees that requires       respect to any other          
                                                shareholder authorization;   matters required by law,      
                                                (v) with respect to          the organizational            
                                                derivative actions similar   documents or deemed           
                                                to a Massachusetts           desirable by the Board of     
                                                corporation; and (vi) with   Trustees.                     
                                                respect to any other                                       
                                                matters required by law,                                   
                                                the organizational                                         
                                                documents, or deemed                                       
                                                desirable by the Board of                                  
                                                Trustees.                                                  

                   No demand requirement        No demand requirement        No shareholder may bring      
                                                                             a derivative claim without    
                                                                             first requesting the          
                                                                             Trustees to bring or          
                                                                             maintain such action,         
                                                                             proceeding or claim. Such     
                                                                             demand shall be excused       
                                                                             only when the plaintiff       
                                                                             makes a specific showing      
                                                                             that irreparable injury to    
                                                                             the Trust or series would     
                                                                             otherwise result.             

                   On a record date, each       On a record date, each       Each whole share (or          
                   outstanding share or         outstanding share or         fractional share) outstanding 
                   fractional share is entitled fractional share is entitled on the record date is entitled
                   to one vote or a             to one vote or a             to a number of votes on any   
                   proportional fractional      proportional fractional      matter which it is entitled to
                   vote.                        vote.                        vote equal to the net asset   
                                                                             value of the share (or        
                                                                             fractional share) in U.S.     
                                                                             dollars determined at the     
                                                                             close of business on the      
                                                                             record date (for example, a   
                                                                             share having a net asset      
                                                                             value of $10.50 would be      
                                                                             entitled to 10.5 votes).      

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                            Nations Funds Trust       Columbia Funds Trust I      Columbia Funds Trust IX  
                        --------------------------- --------------------------- ---------------------------
                                                                                                           
Shareholders Meetings:  Shareholders have no        Shareholders have no        Shareholders have no       
                        specific right to call      specific right to call      specific right to call     
                        meetings except special     meetings, except as may be  meetings, except as may be 
                        meetings to remove          required by applicable law, required by applicable law,
                        Trustees, and then only if  including the Investment    including the Investment   
                        and to the extent that the  Company Act of 1940.        Company Act of 1940.       
                        SEC takes the position by                                                          
                        rule, interpretive or other                                                        
                        public release, or by no-                                                          
                        action letter, that Section                                                        
                        16(c) of the 1940 Act gives                                                        
                        them such right.                                                                   

Shareholder Quorum:     33 1/3% of the shares       30% of the shares entitled  30% of the shares entitled 
                        entitled to vote at the     to vote at the meeting      to vote at the meeting     
                        meeting, except when a      except when a larger        except when a larger       
                        larger quorum is required   quorum is required by       quorum is required by      
                        by applicable law or the    applicable law or the       applicable law or the      
                        Declaration of Trust.       Declaration of Trust.       Declaration of Trust.      

Shareholder Consent:    Shareholder action may be   Shareholder action may be   Shareholder action may be  
                        taken without a meeting if  taken without a meeting if  taken without a meeting if 
                        a majority of the           a majority of the           a majority of the          
                        shareholders entitled to    shareholders entitled to    shareholders entitled to   
                        vote on the matter consent  vote on the matter consent  vote on the matter consent 
                        in writing and such written in writing and such written in writing and such written
                        consents are filed with the consents are filed with the consents are filed with the
                        records of the meetings of  records of the meetings of  records of the meetings of 
                        shareholders.               shareholders.               shareholders.              

Notice to Shareholders: Notice of shareholder       Written notice of           Notice of shareholder      
                        meetings is to be mailed,   shareholder meetings must   meetings is to be mailed,  
                        postage prepaid, or sent by be given not less than      postage prepaid, or sent by
                        facsimile or other          seven days in advance.      facsimile or other         
                        electronic submission                                   electronic submission not  
                        between 7-120 days before                               less than seven days before
                        the meeting. Notice may                                 the date of such meeting.  
                        also be given personally or                                                        
                        by telephone.                                                                      

                        Notice shall specify the    Notice is not expressly     Notice is not expressly    
                        general nature of the       required to include the     required to include the    
                        business to be transacted.  purpose for which the       purpose for which the      
                                                    meeting is called.          meeting is called.         

Shareholder Proxies:    Shareholders may put a      Shareholders may put a      Shareholders may put a     
                        proxy in place for a        proxy in place for a        proxy in place for a       
                        duration of up to eleven    duration of up to six       duration of up to six      
                        months unless otherwise     months.                     months.                    
                        provided in the proxy.                                                             

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                           Nations Funds Trust         Columbia Funds Trust I      Columbia Funds Trust IX   
                      ----------------------------- ---------------------------- ----------------------------
                                                                                                             
Trustee's Power to    The Declaration of Trust      The Declaration of Trust     The Declaration of Trust    
Amend Declaration of  may be amended by the         may be amended at any        may be amended at any       
Trust:                Trustees without              time by an instrument in     time by an instrument in    
                      shareholder approval          writing signed by a          writing signed by a         
                      unless expressly required     majority of the then         majority of the then        
                      by the 1940 Act or            Trustees when authorized     Trustees, provided that, for
                      Delaware law or submitted     so to do by vote of a        non-ministerial             
                      to shareholders at the        majority of the shares       amendments, notice is       
                      Trustee's discretion.         entitled to vote with        mailed to shareholders      
                      Notice must be given to all   respect to such              promptly as of the day      
                      shareholders who purchase     amendment, except that       such amendment is           
                      shares that the Declaration   shareholder authorization    effective.                  
                      of Trust may be so            is not required for                                      
                      amended.                      amendments to change the                                 
                                                    name of the Trust, supply                                
                                                    any omission, cure any                                   
                                                    ambiguity or cure, correct                               
                                                    or supplement any                                        
                                                    defective or inconsistent                                
                                                    provision.                                               

Termination of Trust  To the extent the 1940 Act    Shareholders have the right  Shareholders have the right 
or Series of Trust    expressly grants              to terminate the Trust, or   to terminate the Trust, or  
(Liquidation):        shareholders the power to     series or class, upon        series or class, upon       
                      vote on such terminations,    approval of at least 66 2/3% approval of at least 66 2/3%
                      the Trust or any series       of the outstanding shares    of the outstanding shares   
                      thereof may be terminated     of the Trust or the affected of the Trust or the affected
                      by a majority of the          series or class.             series or class.            
                      outstanding shares of the                                                              
                      Trust or the affected series.                                                          

                      Trustees may terminate the    Trustees may terminate the   Trustees may terminate the  
                      Trust, or any series          Trust or series without      Trust, or any series or     
                      thereof, without              shareholder approval by      class, without shareholder  
                      shareholder approval by       written notice to the        approval by written notice  
                      written notice to             shareholders.                to shareholders.            
                      shareholders, unless the                                                               
                      1940 Act expressly grants                                                              
                      shareholders the right to                                                              
                      vote on such terminations.                                                             

Merger or             The Declaration of Trust      Shareholders have no         The Declaration of Trust    
Consolidation         provides that a               express right under the      provides that a             
of Trust or Series of consolidation, merger or      Declaration of Trust to      consolidation, merger or    
Trust:                transfer may be authorized    vote on mergers or           transfer may be authorized  
                      by the Board of Trustees      consolidations.              by vote of a majority of the
                      without shareholder                                        Trustees then in office     
                      approval with written                                      without shareholder         
                      notice to the shareholders,                                approval, unless otherwise  
                      except to the extent the                                   required by law.            
                      1940 Act expressly grants                                                              
                      shareholders the power to                                                              
                      vote on such transactions.                                                             

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                         Nations Funds Trust         Columbia Funds Trust I        Columbia Funds Trust IX   
                    ----------------------------- ----------------------------- -----------------------------
                                                                                                             
Removal of          A Trustee may be removed      Trustee may be removed,       A Trustee may be             
Trustees:           with or without cause by a    with or without cause, by     removed, with or without     
                    written instrument signed     (i) a majority of Trustees    cause, by a majority of      
                    by at least two-thirds of the then in office or (ii) by a   Trustees then in office.     
                    other Trustees specifying     vote of two-thirds of the                                  
                    the effective date of         holders of outstanding                                     
                    removal; however, a           shares, with, at a meeting                                 
                    Trustee who requests to be    called for the purpose.                                    
                    retired, or who has become                                                               
                    physically or mentally                                                                   
                    incapacitated or is                                                                      
                    otherwise unable to serve                                                                
                    fully may be retired by                                                                  
                    written instrument signed                                                                
                    by a majority of the other                                                               
                    Trustees specifying the                                                                  
                    effective date of removal.                                                               

Trustee Committees: A committee formed has        Not limited.                  Not limited.                 
                    the authority of the Board                                                               
                    of Trustees except with                                                                  
                    respect to: approving any                                                                
                    action which, under                                                                      
                    applicable law, requires                                                                 
                    shareholder approval or                                                                  
                    Board approval; filling                                                                  
                    vacancies on the board or                                                                
                    any committees; fixing                                                                   
                    compensation of the                                                                      
                    Trustees for serving on the                                                              
                    Board or any committee;                                                                  
                    amending or repealing the                                                                
                    Declaration of Trust;                                                                    
                    amending or repealing any                                                                
                    Board resolution that by its                                                             
                    terms is not amendable or                                                                
                    repealable; and appointing                                                               
                    any other committee or                                                                   
                    committee members.                                                                       

Trustee Liability:  Trustees are not personally   Trustees are not personally   Trustees are not personally  
                    liable for claims against the liable for claims against the liable for claims against the
                    Trust or for any neglect or   Trust or for any neglect or   Trust or for any neglect or  
                    wrongdoing of any officer,    wrongdoing of any officer,    wrongdoing of any officer,   
                    agent, employee,              agent, employee,              agent, employee,             
                    investment adviser, or        investment adviser, or        investment adviser, or       
                    principal underwriter of the  principal underwriter of the  principal underwriter of the 
                    Trust. Each Trustee is not    Trust. Each Trustee is not    Trust. Each Trustee is not   
                    responsible for the act or    responsible for the act or    responsible for the act or   
                    omission of any other         omission of any other         omission of any other        
                    Trustee and may be liable     Trustee and may be liable     Trustee and may be liable    
                    only by reason of willful     only by reason of willful     only by reason of willful    

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                      Nations Funds Trust          Columbia Funds Trust I      Columbia Funds Trust IX   
                 ------------------------------ ---------------------------- ----------------------------
                                                                                                         
                 misfeasance, bad faith,        misfeasance, bad faith,      misfeasance, bad faith,     
                 gross negligence or            gross negligence or          gross negligence or         
                 reckless disregard of the      reckless disregard of the    reckless disregard of the   
                 duties involved in the         duties involved in the       duties involved in the      
                 conduct of his office;         conduct of his office.       conduct of his office.      
                 personal benefit being                                                                  
                 improperly received,                                                                    
                 whether or not benefit                                                                  
                 resulted from an action                                                                 
                 taken in the person's                                                                   
                 official capacity; breach of                                                            
                 a duty to the Trust, unless                                                             
                 as the result of certain                                                                
                 disabling conduct.                                                                      

Trustee          In actions other than by the   The Declaration of Trust     The Bylaws state that the   
Indemnification: Trust, the Declaration of      states that the Trust will   Trust will indemnify each   
                 Trust states that the Trust    indemnify each of its        of its Trustees and officers
                 indemnifies each person        Trustees and officers        who are not employees or    
                 who is or has been a           against all liabilities and  officers of any investment  
                 Trustee, officer, employee     expenses, including          adviser to the Trust or any 
                 or other agent of the Trust    amounts paid in              affiliated person thereof   
                 against all amounts            satisfaction of judgments,   and may indemnify each of   
                 actually and reasonably        in compromise, as fines      its officers who are        
                 incurred in connection         and penalties, and as        employees or officers of    
                 with proceedings as a          counsel fees, reasonably     any investment adviser to   
                 result of the person being a   incurred by such person      the Trust or any affiliated 
                 Trustee, officer, employee     while in office or           person thereof against all  
                 or agent of the Trust if the   thereafter, by reason of the liabilities and expenses,   
                 person acted in good faith     indemnified person's         including amounts paid in   
                 and reasonably believed: in    service as a Trustee or      satisfaction of judgments,  
                 the case of conduct in his     officer. The Trust will not  in compromise, as fines     
                 official capacity as a         indemnify its Trustees and   and penalties, and as       
                 Trustee, that his conduct      officers against any         counsel fees, reasonably    
                 was in the Trust's best        liability to the Trust or to incurred by such person     
                 interests; in all other cases, its shareholders to which    while in office or          
                 that his conduct was at        he or she would otherwise    thereafter, by reason of the
                 least not opposed to the       be subject by reason of      indemnified person's        
                 Trust's best interests; and    willful misfeasance, bad     service as a Trustee or     
                 in the case of criminal        faith, gross negligence or   officer. The Trust will not 
                 proceedings, that he had no    reckless disregard of the    indemnify its Trustees and  
                 reasonable cause to believe    duties involved in the       officers against any        
                 the conduct was unlawful.      conduct of such person's     liability to the Trust or to
                                                office.                      its shareholders to which   
                 In actions by the Trust, the                                he or she would otherwise   
                 Trust indemnifies each         Under the Declaration of     be subject by reason of     
                 person who is or has been      Trust, in the absence of a   willful misfeasance, bad    
                 a Trustee, officer,            final decision on the merits faith, gross negligence or  
                 employee or other agent of     by an adjudicating body      reckless disregard of the   
                 the Trust against all          that such person is liable   duties involved in the      
                 amounts actually and           by reason of willful         conduct of his office.      
                 reasonably incurred by         misfeasance, bad faith,                                  

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      Nations Funds Trust           Columbia Funds Trust I           Columbia Funds Trust IX     
------------------------------- ------------------------------- ---------------------------------
                                                                                                 
that person in connection       gross negligence or reckless    Under the Bylaws, in the         
with the defense or             disregard of the duties         absence of a final decision on   
settlement of that action as a  involved in the conduct of      the merits by an adjudicating    
result of the person's being a  their office, indemnification   body that such person has not    
Trustee, officer, employee or   will be provided if             acted in good faith in the       
agent of the Trust if the       (a) approved as in the best     reasonable belief that such      
person acted in good faith, in  interests of the Trust, after   person's action was in the       
a manner that the person        notice that it involves such    best interests of the Trust or   
believed to be in the best      indemnification, by at least a  is liable to the Trust or its    
interests of the Trust and with majority of the disinterested   Shareholders by reason of        
such care, including            Trustees acting on the matter   willful misfeasance, bad         
reasonable inquiry, as an       (provided that a majority of    faith, gross negligence or       
ordinarily prudent person in a  the disinterested Trustees      reckless disregard of the        
like position would use under   then in office act on the       duties involved in the           
similar circumstances.          matter) upon a determination,   conduct of his or her office,    
                                based upon a review of          indemnification will be          
Indemnification will not be     readily available facts, that   provided if (a) approved,        
provided for amounts paid in    such person is not liable to    after notice that it involves    
settling or otherwise           the Trust or its shareholders   such indemnification, by at      
disposing of threatened or      by reason of willful            least a majority of the          
pending action, with or         misfeasance, bad faith, gross   disinterested Trustees acting    
without court approval, or the  negligence or reckless          on the matter (provided that a   
expenses incurred in            disregard of the duties         majority of the disinterested    
defending a threatened or       involved in the conduct of his  Trustees then in office act on   
pending action which is         or her office or (b) there has  the matter) upon a               
settled or otherwise disposed   been obtained an opinion in     determination, based upon a      
of without approval, unless     writing of independent legal    review of readily available      
approved by a majority of a     counsel to the effect that such facts, that such person has      
quorum of disinterested         indemnification would not       acted in good faith in the       
Trustees who are not parties    protect such person against     reasonable belief that such      
to the proceedings, or a        any liability to the Trust to   person's action was in the       
written opinion by legal        which such person would         best interests of the Trust and  
counsel that indemnification    otherwise be subject by         is not liable to the Trust or its
is proper because such person   reason of willful               shareholders by reason of        
met the applicable standard     misfeasance, bad faith, gross   willful misfeasance, bad         
of conduct and is not           negligence or reckless          faith, gross negligence or       
prohibited from                 disregard of the duties         reckless disregard of the        
indemnification.                involved in the conduct of his  duties involved in the           
                                or her office.                  conduct of his or her office     
                                                                or (b) there has been            
                                                                obtained an opinion in           
                                                                writing of independent legal     
                                                                counsel, based upon a review     
                                                                of readily available facts to    
                                                                the effect that such person      
                                                                appears to have acted in good    
                                                                faith in the reasonable belief   
                                                                that such person's action was    
                                                                in the best interests of the     
                                                                Trust and that such              

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Nations Funds Trust Columbia Funds Trust I      Columbia Funds Trust IX     
------------------- ---------------------- ---------------------------------
                                                                            
                                           indemnification would not        
                                           protect such person against      
                                           any liability to the Trust to    
                                           which such person would          
                                           otherwise be subject by          
                                           reason of willful                
                                           misfeasance, bad faith, gross    
                                           negligence or reckless           
                                           disregard of the duties          
                                           involved in the conduct of       
                                           his or her office.               

                                           The appointment,                 
                                           designation or identification    
                                           of a Trustee as the chairman     
                                           of the Board, the lead or        
                                           assistant lead independent       
                                           Trustee, a member or             
                                           chairman of a committee of       
                                           the Board, an expert on any      
                                           topic or in any area             
                                           (including an audit              
                                           committee financial expert)      
                                           or as having any other           
                                           special appointment,             
                                           designation or identification    
                                           shall not (a) impose on that     
                                           person any duty, obligation      
                                           or liability that is greater than
                                           the duties, obligations and      
                                           liabilities imposed on that      
                                           person as a Trustee in the       
                                           absence of the appointment,      
                                           designation or identification    
                                           or (b) affect in any way such    
                                           Trustee's rights or              
                                           entitlement to                   
                                           indemnification, and no          
                                           Trustee who has special          
                                           skills or expertise, or is       
                                           appointed, designated or         
                                           identified as aforesaid, shall   
                                           (x) be held to a higher          
                                           standard of care by virtue       
                                           thereof or (y) be limited with   
                                           respect to any                   
                                           indemnification to which         
                                           such Trustee would               
                                           otherwise be entitled.           

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                Nations Funds Trust           Columbia Funds Trust I          Columbia Funds Trust IX    
          ------------------------------- ------------------------------- -------------------------------
                                                                                                         

Legal     The Declaration of Trust        The Declaration of Trust        The Bylaws state that legal    
Expenses: states that legal expenses      states that legal expenses      expenses may be paid from      
          may be paid from time to        may be paid from time to        time to time by the Trust in   
          time by the Trust in advance    time by the Trust in advance    advance of the final           
          of the final disposition of any of the final disposition of any disposition of any such        
          such proceeding if the Trust    such proceeding if the Trust    proceeding if the Trust        
          receives a written              receives a written              receives a written             
          undertaking by the              undertaking by the              undertaking by the             
          indemnified person to           indemnified person to           indemnified person to          
          reimburse the Trust in the      reimburse the Trust in the      reimburse the Trust in the     
          event it is subsequently        event it is subsequently        event it is subsequently       
          determined that the             determined that the             determined that the            
          indemnified person is not       indemnified person is not       indemnified person is not      
          entitled to such                entitled to such                entitled to such               
          indemnification and (a) the     indemnification and (a) the     indemnification and (a) the    
          indemnified person provides     indemnified person provides     indemnified person provides    
          security for his undertaking,   security for his undertaking,   security for his undertaking,  
          or (b) the Trust is insured     or (b) the Trust is insured     or (b) the Trust is insured    
          against losses arising by       against losses arising by       against losses arising by      
          reason of any lawful            reason of any lawful            reason of any lawful           
          advances, or (c) a majority of  advances, or (c) a majority of  advances, or (c) a majority of 
          the disinterested, non-party    the disinterested, non-party    the disinterested, non-party   
          Trustees or an independent      Trustees, provided that a       Trustees, provided that a      
          legal counsel determines that   majority of the disinterested   majority of the disinterested  
          there is reason to believe that Trustees act on the matter, or  Trustees act on the matter, or 
          the indemnified person          an independent legal counsel,   an independent legal counsel,  
          ultimately will be found        as expressed in a written       as expressed in a written      
          entitled to indemnification.    opinion, determines that there  opinion, determines that       
                                          is reason to believe that the   there is reason to believe that
                                          indemnified person              the indemnified person         
                                          ultimately will be found        ultimately will be found       
                                          entitled to indemnification.    entitled to indemnification.   

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                                                 Filed pursuant to Rule 497(b)
                                                           File No: 333-125748
COLUMBIA STRATEGIC INCOME FUND  
A SERIES OF COLUMBIA FUNDS TRUST I  

Form N-14 
Part B  

STATEMENT OF ADDITIONAL INFORMATION 

July 13, 2005 

  This Statement of Additional Information (the "SAI") relates to the proposed
merger (the "Merger") of Nations Strategic Income Fund, a series of Nations     
Funds Trust, (the "Acquired Fund"), by Columbia Strategic Income Fund, a series 
of Columbia Funds Trust I (the "Acquiring Fund"). This SAI contains information 
which may be of interest to shareholders but which is not included in the       
Prospectus/Proxy Statement dated July 13, 2005 (the "Prospectus/Proxy           
Statement") which relates to the Merger. As described in the Prospectus/Proxy   
Statement, the Merger would involve the transfer of all the assets of the       
Acquired Fund in exchange for shares of the Acquiring Fund and the assumption   
of all the liabilities of the Acquired Fund by the Acquiring Fund. The Acquired 
Fund would distribute the Acquiring Fund shares it receives to its shareholders 
in complete liquidation of the Acquired Fund. The Acquiring Fund will be the    
survivor for accounting purposes                                                

This SAI is not a prospectus and should be read in conjunction with the   
Prospectus/Proxy Statement. The Prospectus/Proxy Statement has been filed with  
the Securities and Exchange Commission and is available upon request and        
without charge by writing to the Acquiring Fund at One Financial Center,        
Boston, Massachusetts 02111-2621, or by calling 1-866-348-1468.                 

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TABLE OF CONTENTS                                                               

                                                                [Download Table]
                                                                             
Additional Information about the Acquiring Fund..........................  2 
Fund Charges and Expenses................................................  2 
Trustees and Trustees' Fees..............................................  3 
Trustees and Officers....................................................  5 
Disclosure of Portfolio Information......................................  5 
Portfolio Manager........................................................  6 
Independent Registered Accounting Firm of the Funds--Financial Statements  9 
Appendix A--Statement of Additional Information of the Acquiring Fund.... 10 

ADDITIONAL INFORMATION ABOUT THE ACQUIRING FUND AND THE ACQUIRED FUND           

 Attached hereto as Appendix A is the Statement of Additional Information of
the Acquiring Fund dated October 1, 2004, as supplemented.                      

FUND CHARGES AND EXPENSES                                                       

Recent Fees Paid to the Advisor, CFD and CFS (dollars in thousands)             

                                                        [Enlarge/Download Table]

                                                                                 Year ended   
                                           Year ended May 31,   Five months     December 31,  
                                           ------------------      ended      --------------- 
                                            2005      2004    May 31, 2003(a)  2002     2001  
                                           --------  ------   --------------- ------  ------- 
                                                                                              
Management Fee............................ $7,515    $8,539       $3,534      $8,711  $10,406 
Bookkeeping fee...........................    397       418          211         553      548 
Shareholder service and transfer agent fee  2,059     2,806        1,634       3,888    4,183 
12b-1 fees:                                                                                   
   Service fee (Class A)..................  1,431     1,412          557       1,339    1,285 
   Service fee (Class B)..................    922     1,095          457       1,134    1,469 
   Service fee (Class C)..................    104       105           41          94      104 
   Service fee (Class J)..................    542       588          261         672      982 
   Distribution fee (Class B).............  2,874     3,436        1,444       3,606    4,751 
   Distribution fee (Class C).............    345       331          130         297      335 
   Distribution fee (Class J).............    788       861          383         993    1,476 
   Fees waived by CFD (Class C)...........    (65)      (66)         (26)        (59)     (65)

--------                                                                        
(a)The Fund changed its fiscal year end from December 31 to May 31 in 2003.     

Brokerage Commissions (dollars in thousands)                                    

                                                        [Enlarge/Download Table]

                                                                            Year ended  
                                         Year ended May 31,   Five months   December 31,
                                         ------------------      ended      ------------
                                         2005      2004     May 31, 2003(a) 2002   2001 
                                         ----      ----     --------------- ----   ---- 
                                                                                        
Total commissions.......................  $7        $1            $0         $0    $11  
Directed transactions(b)................   0         0             0          0      0  
Commissions on directed transactions....   0         0             0          0      0  

--------                                                                        
(a)The Fund changed its fiscal year end from December 31 to May 31 in 2003.     
(b)See "Management of the Fund" in Part 2 of this SAI                           

At May 31, 2005, the Fund held securities of their regular brokers or     
dealers as set forth below:                                                     

                                                                [Download Table]

Fund                      Broker/Dealer Value (in thousands)
----                      ------------- --------------------
                                                            
Acquiring Fund...........     None               $0         

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TRUSTEES AND TRUSTEES' FEES                                                     

 For the fiscal year ended May 31, 2005 and the calendar year ended December
31, 2004, the Trustees received the following compensation for serving as       
Trustees:                                                                       

                                                        [Enlarge/Download Table]

                                                                   Total Compensation   
                                                 Aggregate                from          
                                               Compensation         the Fund Complex    
                      Pension or Retirement from the Acquiring  Paid to the Trustees for
                       Benefits Accrued as  Fund for the Fiscal    the Calendar Year    
                          part of Fund          Year Ended               Ended          
Trustee(a)                 Expenses(b)         May 31, 2005       December 31, 2004(a)  
----------            --------------------- ------------------- ------------------------
                                                                                        
Douglas A. Hacker....          N/A                $2,955                $135,000        
Janet Langford Kelly.          N/A                 3,415                 148,500        
Richard W. Lowry.....          N/A                 2,722                 150,700        
William E. Mayer.....          N/A                 3,146                 166,700        
Charles R. Nelson....          N/A                 3,156                 141,500        
John J. Neuhauser....          N/A                 2,848                 158,284        
Patrick J. Simpson(c)          N/A                 2,839                 129,000        
Thomas E. Stitzel....          N/A                 3,187                 149,000        
Thomas C. Theobald(d)          N/A                 3,864                 172,500        
Anne-Lee Verville(e).          N/A                 3,399                 157,000        
Richard L. Woolworth.          N/A                 2,713                 131,000        

--------                                                                        
(a)As of December 31, 2004, the Fund Complex consisted of 127 open-end and 11   
closed-end management investment company portfolios. Effective October 8, 
2003, Patrick J. Simpson and Richard L. Woolworth, then directors/trustees
of the Columbia Funds, were appointed to the board of trustees of the     
Liberty Funds and Stein Roe Funds. Also effective October 8, 2003, the    
trustees of the Liberty Funds and the Stein Roe Funds were elected as     
directors/trustees of the Columbia Funds. A single combined board of      
trustees/directors now oversees all of the Liberty Funds, Stein Roe Funds 
and Columbia Funds. The All-Star Funds, Columbia Management Multi-Strategy
Hedge Fund, LLC, the Galaxy Funds, the Acorn Funds and the WAT Funds each 
have separate boards of trustees/directors.                               
(b)The Fund does not currently provide pension or retirement plan benefits to   
the Trustees.                                                             
(c)During the fiscal year ended May 31, 2005, Mr. Simpson deferred $2,839 of    
his compensation from the Acquiring Fund, pursuant to the deferred        
compensation plan.                                                        
(d)During the fiscal year ended May 31, 2005 and the calendar year ended        
  December 31, 2004, Mr. Theobald deferred $2,233 of his compensation from the
 Acquiring Fund, and $90,000 of his total compensation from the Fund Complex
 pursuant to the deferred compensation plan. At December 31, 2004, the value
of Mr. Theobald's account under that plan was $157,328.                   
(e)During the fiscal year ended May 31, 2005 and the calendar year ended        
December 31, 2004, Ms. Verville deferred $665 of her compensation from the
 Acquiring Fund, and $55,000 of her total compensation from the Fund Complex
 pursuant to the deferred compensation plan. At December 31, 2004, the value
of Ms. Verville's account under that plan was $653,275.                   

Audit Committee                                                                 

 For the fiscal year ended May 31, 2005, the Audit Committee convened eleven
times.                                                                          

Governance Committee                                                            

For the fiscal year ended May 31, 2005, the Governance Committee convened 
six times.                                                                      

Advisory Fees & Expenses Committee                                              

For the fiscal year ended May 31, 2005, the Advisory Fees & Expenses      
Committee convened eight times.                                                 

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Compliance Committee                                                            

For the fiscal year ended May 31, 2005, the Compliance Committee convened 
seven times.                                                                    

Share Ownership                                                                 

  The following table shows the dollar range of equity securities beneficially
owned by each Trustee as of December 31, 2004 (i) in the Fund and (ii) in the   
funds in the Fund Complex.                                                      

                                                                [Download Table]

                                              Aggregate Dollar   
                                               Range of Equity   
                                             Securities Owned in 
                     Dollar Range of Equity All Funds Overseen by
                      Securities Owned in        Trustee in      
Name of Trustee        the Acquiring Fund       Fund Complex     
---------------      ---------------------- ---------------------
                                                                 
Douglas A. Hacker...           $0              Over $100,000     
Janet Langford Kelly           $0              Over $100,000     
Richard W. Lowry....           $0              Over $100,000     
Charles R. Nelson...           $0              Over $100,000     
John J. Neuhauser...           $0              Over $100,000     
Patrick J. Simpson..           $0              Over $100,000     
Thomas E. Stitzel...           $0              Over $100,000     
Thomas C. Theobald..           $0              Over $100,000     
Anne-Lee Verville(a)           $0              Over $100,000     
Richard L. Woolworth           $0              Over $100,000     

Interested Trustee                                               
William E. Mayer....           $0             $50,001-$100,000   

Sales Charges (dollars in thousands)                                            

Class A Shares                                                                  

                                                        [Enlarge/Download Table]

                                                                                       Year ended  
                                                    Year ended May 31,   Five months   December 31,
                                                    -----------------       ended      ----------  
                                                     2005      2004    May 31, 2003(a) 2002   2001 
                                                     ------    -----   --------------- ----  ----- 
                                                                                                   
Aggregate initial sales charges on Fund share sales $1,074    $ 506         $173       $286  $ 476 
Initial sales charges retained by CFD..............    134       54           20         32     57 
Aggregate CDSC on Fund redemptions retained                                                        
  by CFD...........................................      1       (b)           2          1     (b)

Class B Shares                                                                  

                                                        [Enlarge/Download Table]

                                                                                Year ended  
                                            Year ended May 31,   Five months   December 31, 
                                            ------------------      ended      -------------
                                            2005      2004     May 31, 2003(a)  2002   2001 
                                            ----      ----     --------------- ------ ------
                                                                                            
Aggregate CDSC on Fund redemptions retained                                                 
  by CFD................................... $900      $999          $537       $1,470 $1,474

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Class C Shares                                                                  

                                                        [Enlarge/Download Table]

                                                                                      Year ended  
                                                   Year ended May 31,   Five months   December 31,
                                                   ------------------      ended      ------------
                                                   2005      2004     May 31, 2003(a) 2002   2001 
                                                   ----      ----     --------------- ----   ---- 
                                                                                                  
Aggregate CDSC on Fund redemptions retained by CFD  $6       $10            $3         $8     $8  

--------                                                                        
(a)The Fund changed its fiscal year end from December 31 to May 31 in 2003.     
(b)Rounds to less than one.                                                     

Sales-Related Expenses (dollars in thousands)                                   

                                                                [Download Table]

                                             Year ended May 31, 2005    
                                         -------------------------------
                                         Class A Class B Class C Class J
                                         ------- ------- ------- -------
                                                                        
Fees to FSFs............................ $1,238  $1,653   $426   $1,285 
Cost of sales material relating to the                                  
  Fund (including printing and mailing                                  
  expenses).............................    168      47     25        9 
Allocated travel, entertainment and                                     
  other promotional expenses (including                                 
  advertising)..........................    102      41     12        3 

TRUSTEES AND OFFICERS                                                           

Trustee Positions                                                               

 As of December 31, 2004, no disinterested Trustee or any of their immediate
family members owned beneficially or of record any class of securities of the   
Advisor, another investment advisor, sub-advisor or portfolio manager of any of 
the funds in the Fund Complex or any person controlling, controlled by or under 
common control with any such entity.                                            

DISCLOSURE OF PORTFOLIO INFORMATION                                             

  The Trustees of the Columbia Funds have adopted policies with respect to the
disclosure of the Funds' portfolio holdings by the Funds, Columbia Management,  
or their affiliates. These policies provide that Fund portfolio holdings        
information generally may not be disclosed to any party prior to (1) the day    
next following the posting of such information on the Funds' website at         
www.columbiafunds.com, (2) the day next following the filing of the information 
with the SEC in a required filing, or (3) for money market funds, such          
information is publicly available to all shareholders upon request on the fifth 
business day after each calendar month-end. Certain limited exceptions pursuant 
to the Fund's policies are described below. The Trustees shall be updated as    
needed regarding the Fund's compliance with the policies, including information 
relating to any potential conflicts of interest between the interests of Fund   
shareholders and those of Columbia Management and its affiliates. The Fund's    
policies prohibit Columbia Management and the Fund's other service providers    
from entering into any agreement to disclose Fund portfolio holdings            
information in exchange for any form of consideration. These policies apply to  
disclosures to all categories of persons, including, without limitation,        
individual investors, institutional investors, intermediaries that distribute   
the Fund's shares, third-party service providers, rating and ranking            
organizations and affiliated persons of the Fund.                               

  Public Disclosures. The Fund's portfolio holdings are currently disclosed to
the public through required filings with the SEC and, for equity and fixed      
income funds, on the Fund's website at www.columbiafunds.com. The Fund files    
its portfolio holdings with the SEC for each fiscal quarter on Form N-CSR (with 
respect to each annual period and semi-annual period) and Form N-Q (with        
respect to the first and third quarters of the Fund's fiscal year).             
Shareholders may obtain the Fund's Forms N-CSR and N-Q filings on the SEC's     
website at www.sec.gov. In addition, the Fund's Forms N-CSR and N-Q filings may 
be reviewed and copied at the SEC's public reference room in Washington, D.C.   
You may call the SEC at 1-800-SEC-0330 for information about the SEC's website  
or the operation of the public reference room.                                  

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The equity and fixed income Columbia Funds also currently make portfolio  
information publicly available at www.columbiafunds.com, as disclosed in the    
following table:                                                                

             Frequency of Information                  Date of Web
Type of Fund            Provided           Disclosure       Posting     
------------    ------------------------ --------------  -------------- 
Equity Funds...      Monthly             Full portfolio  30 calendar    
                                    holdings        days after
                                    information.    month-end.

Fixed Income         Quarterly           Full portfolio  60 calendar    
Funds........                          holdings        days after   
                                      information.    quarter-end.

 The scope of the information provided relating to the Fund's portfolio that
is made available on the website may change from time to time without prior     
notice.                                                                         

For Columbia's money market funds, a complete list of a Fund's portfolio  
holdings shall be publicly available on a monthly basis on the fifth business   
date after month-end. Shareholders may request such information by writing or   
calling the Fund's distributor, Columbia Funds Distributor, Inc. at the address 
listed on the cover of this SAI.                                                

A Fund, Columbia Management or their affiliates may include portfolio     
holdings information that has already been made public through a web posting or 
SEC filing in marketing literature and other communications to shareholders,    
advisors or other parties, provided that the information is disclosed no        
earlier than the day after the date the information is disclosed publicly.      

Other Disclosures. The Fund's policies provide that non-public disclosures
of the Fund's portfolio holdings may be made if (1) the Fund has a legitimate   
business purpose for making such disclosure, (2) the Fund's chief executive     
officer authorizes such non-public disclosure of information, and (3) the party 
receiving the non-public information enters into a confidentiality agreement,   
which includes a duty not to trade on the non-public information.               

 The Fund periodically discloses its portfolio information on a confidential
basis to various service providers that require such information in order to    
assist the Fund with its day-to-day business affairs. In addition to Columbia   
Management and its affiliates, these service providers include the Fund's       
custodian and sub-custodians, the Fund's independent registered public          
accounting firm, legal counsel, and financial printers, which currently include 
R.R. Donnelly & Sons and Bowne & Co., Inc., and the Fund's proxy voting         
service, currently Alamo Direct Mail Services, Inc. These service providers are 
required to keep such information confidential, and are prohibited from trading 
based on the information or otherwise using the information except as necessary 
in providing services to the Fund. The Fund may also disclose portfolio         
holdings information to broker/dealers and certain other entities related to    
potential transactions and management of the Fund, provided that reasonable     
precautions, including limitations on the scope of the portfolio holdings       
information disclosed, are taken to avoid any potential misuse of the disclosed 
information.                                                                    

Certain clients of the Fund's investment adviser(s) may follow a strategy 
similar to that of the Fund, and have access to portfolio holdings information  
for their account. It is possible that such information could be used to infer  
portfolio holdings information relating to the Fund.                            

PORTFOLIO MANAGERS                                                              

Other Accounts Managed by Portfolio Managers                                    

  The following table shows the number and assets of other investment accounts
(or portions of investment accounts) that the Acquiring Fund's portfolio        
managers managed as of the Acquiring Fund's fiscal year-end.                    

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                                                        [Enlarge/Download Table]

                    Other SEC-registered open-end Other pooled investment                        
Portfolio Manager     and closed-end funds                vehicles             Other accounts    
-----------------   ----------------------------- ------------------------ ----------------------
                    Number of                     Number of                Number of             
                    accounts         Assets       accounts      Assets     accounts     Assets   
                    ---------     --------------  --------- -------------- --------- ------------
                                                                                                 
Laura A. Ostrander.    4          $600,000,000        0           $0           5       $240,000  
Kevin L. Cronk*....    10        $5,504,000,000       8+    $1,300,000,000     3     $357,000,000
Thomas A. LaPointe*    10        $5,504,000,000       8+    $1,300,000,000     4     $357,000,000

--------                                                                        
*  Information provided as of March 31, 2005.                                   
+  Five of these accounts, with total assets of $934,000,000, have an advisory  
fee based on the performance of the account.                              

See "Potential Conflicts of Interest in Managing Multiple Accounts" below 
for information on how Columbia Management Advisors, Inc. ("Columbia"), the     
Acquiring Fund's investment adviser, addresses potential conflicts of interest  
resulting from an individual's management of more than one account.             

Ownership of Securities                                                         

The table below shows the dollar ranges of shares of the Acquiring Fund   
beneficially owned (as determined pursuant to Rule 16a-1(a)(2) under the        
Securities Exchange Act of 1934, as amended) by the portfolio managers listed   
above at the end of the Fund's most recent fiscal year:                         

                                                                [Download Table]

                   Dollar Range of Equity Securities in the Fund
Portfolio Manager               Beneficially Owned              
-----------------  ---------------------------------------------
                                                                
Laura A. Ostrander                $10,001-$50,000               
Kevin L. Cronk                         None                     
Thomas A. LaPointe                     None                     

Compensation                                                                    

As of the Acquiring Fund's most recent fiscal year end, the portfolio     
manager received all of the portfolio manager's compensation from Columbia and  
its parent company, Columbia Management Group, LLC, in the form of salary,      
bonus, stock options and restricted stock. A portfolio manager's bonus is       
variable and is generally based on (1) an evaluation of the manager's           
investment performance and (2) the results of a peer and/or management review   
of such individual, which takes into account skills and attributes such as team 
participation, investment process, communication and professionalism. In        
evaluating investment performance, Columbia generally considers the one-,       
three- and five-year performance of mutual funds and other accounts under the   
portfolio manager's oversight relative to the benchmark noted below,            
emphasizing the manager's three- and five-year performance. Columbia may also   
consider the portfolio manager's performance in managing client assets in       
sectors and industries assigned to the manager as part of his or her investment 
team responsibilities, where applicable. For portfolio managers who also have   
group management responsibilities, another factor in their evaluation is an     
assessment of the group's overall investment performance.                       

                                                                [Download Table]

Portfolio Manager         Performance Benchmark       
-----------------         ---------------------       
                                                      
Laura A. Ostrander Lehman Government/Credit Bond Index
Kevin L. Cronk     Lehman Government/Credit Bond Index
Thomas A. LaPointe Lehman Government/Credit Bond Index

The size of the overall bonus pool each year is determined by Columbia    
Management Group, LLC and depends in part on levels of compensation generally   
in the investment management industry (based on market compensation data) and   
Columbia's profitability for the year, which is influenced by assets under      
management.                                                                     

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Potential Conflicts of Interest in Managing Multiple Accounts                   

Like other investment professionals with multiple clients, a portfolio    
manager for the Acquiring Fund may face certain potential conflicts of interest 
in connection with managing both the Acquiring Fund and other accounts at the   
same time. The paragraphs below describe some of these potential conflicts,     
which Columbia believes are faced by investment professionals at most major     
financial firms. Columbia and the Trustees of the Columbia Funds have adopted   
compliance policies and procedures that attempt to address certain of these     
potential conflicts.                                                            

The management of accounts with different advisory fee rates and/or fee   
structures, including accounts that pay advisory fees based on account          
performance ("performance fee accounts"), may raise potential conflicts of      
interest by creating an incentive to favor higher-fee accounts.                 

These potential conflicts may include, among others:                      

 .   The most attractive investments could be allocated to higher-fee accounts
or performance fee accounts.                                        

.   The trading of higher-fee accounts could be favored as to timing and/or 
   execution price. For example, higher-fee accounts could be permitted to
sell securities earlier than other accounts when a prompt sale is   
 desirable or to buy securities at an earlier and more opportune time.

.   The trading of other accounts could be used to benefit higher-fee       
accounts (front- running).                                          

.   The investment management team could focus their time and efforts       
     primarily on higher-fee accounts due to a personal stake in compensation.

Potential conflicts of interest may also arise when the portfolio managers
have personal investments in other accounts that may create an incentive to     
favor those accounts. As a general matter and subject to limited exceptions,    
Columbia's investment professionals do not have the opportunity to invest in    
client accounts, other than the Columbia Funds.                                 

  A potential conflict of interest may arise when the Acquiring Fund and other
accounts purchase or sell the same securities. On occasions when a portfolio    
manager considers the purchase or sale of a security to be in the best          
interests of the Acquiring Fund as well as other accounts, Columbia's trading   
desk may, to the extent permitted by applicable laws and regulations, aggregate 
the securities to be sold or purchased in order to obtain the best execution    
and lower brokerage commissions, if any. Aggregation of trades may create the   
potential for unfairness to the Acquiring Fund or another account if one        
account is favored over another in allocating the securities purchased or sold  
- for example, by allocating a disproportionate amount of a security that is    
likely to increase in value to a favored account.                               

  "Cross trades," in which one Columbia account sells a particular security to
another account (potentially saving transaction costs for both accounts), may   
also pose a potential conflict of interest. Cross trades may be seen to involve 
a potential conflict of interest if, for example, one account is permitted to   
sell a security to another account at a higher price than an independent third  
party would pay. Columbia and the Acquiring Fund's Trustees have adopted        
compliance procedures that provide that any transactions between the Acquiring  
Fund and another Columbia-advised account are to be made at an independent      
current market price, as required by law.                                       

Another potential conflict of interest may arise based on the different   
investment objectives and strategies of the Acquiring Fund and other accounts.  
For example, another account may have a shorter-term investment horizon or      
different investment objectives, policies or restrictions than the Acquiring    
Fund. Depending on another account's objectives or other factors, a portfolio   
manager may give advice and make decisions that may differ from advice given,   
or the timing or nature of decisions made, with respect to the Acquiring Fund.  
In                                                                              

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addition, investment decisions are the product of many factors in addition to   
basic suitability for the particular account involved. Thus, a particular       
security may be bought or sold for certain accounts even though it could have   
been bought or sold for other accounts at the same time. More rarely, a         
particular security may be bought for one or more accounts managed by a         
portfolio manager when one or more other accounts are selling the security      
(including short sales). There may be circumstances when purchases or sales of  
portfolio securities for one or more accounts may have an adverse effect on     
other accounts.                                                                 

The Acquiring Fund's portfolio manager who is responsible for managing    
multiple funds and/or accounts may devote unequal time and attention to the     
management of those funds and/or accounts. As a result, the portfolio manager   
may not be able to formulate as complete a strategy or identify equally         
attractive investment opportunities for each of those accounts as might be the  
case if he or she were to devote substantially more attention to the management 
of a single fund. The effects of this potential conflict may be more pronounced 
where funds and/or accounts overseen by a particular portfolio manager have     
different investment strategies.                                                

The Acquiring Fund's portfolio managers may be able to select or influence
the selection of the brokers and dealers that are used to execute securities    
transactions for the Acquiring Fund. In addition to executing trades, some      
brokers and dealers provide portfolio managers with brokerage and research      
services (as those terms are defined in Section 28(e) of the Securities         
Exchange Act of 1934), which may result in the payment of higher brokerage fees 
than might have otherwise be available. These services may be more beneficial   
to certain funds or accounts than to others. Although the payment of brokerage  
commissions is subject to the requirement that the portfolio manager determine  
in good faith that the commissions are reasonable in relation to the value of   
the brokerage and research services provided to the fund, a portfolio manager's 
decision as to the selection of brokers and dealers could yield                 
disproportionate costs and benefits among the funds and/or accounts that he or  
she manages.                                                                    

 Columbia or an affiliate may provide more services (such as distribution or
recordkeeping) for some types of funds or accounts than for others. In such     
cases, a portfolio manager may benefit, either directly or indirectly, by       
devoting disproportionate attention to the management of fund and/or accounts   
that provide greater overall returns to the investment manager and its          
affiliates.                                                                     

The Acquiring Fund's portfolio managers may also face other potential     
conflicts of interest in managing the Acquiring Fund, and the description above 
is not a complete description of every conflict that could be deemed to exist   
in managing both the Acquiring Fund and other accounts. In addition, the        
Acquiring Fund's portfolio managers may also manage other accounts (including   
their personal assets or the assets of family members) in their personal        
capacity. The management of these accounts may also involve certain of the      
potential conflicts described above. Investment personnel at Columbia,          
including the Acquiring Fund's portfolio managers, are subject to restrictions  
on engaging in personal securities transactions pursuant to Codes of Ethics     
adopted by Columbia and the Acquiring Fund, which contain provisions and        
requirements designed to identify and address certain conflicts of interest     
between personal investment activities and the interests of the Acquiring Fund. 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF THE FUNDS                      

PricewaterhouseCoopers LLP, located at 125 High Street, Boston, MA        
02110-1707, is Independent Registered Public Accounting Firm for the Acquiring  
Fund, providing audit and tax return review of various Securities and Exchange  
Commission filings. The Report of Independent Registered Public Accounting      
Firm, Financial Highlights and Financial Statements included in the Acquiring   
Fund's and the Acquired Fund's Annual Report to Shareholders for the fiscal     
year ended May 31, 2004 and March 31, 2005, respectively, are incorporated by   
reference into this SAI. The audited financial statements for the Acquiring     
Fund are incorporated by reference into this SAI and the audited financial      
statements for the Acquired Fund are incorporated by reference into the         
Prospectus/Proxy Statement and this SAI have been so included and incorporated  
in reliance upon the report of PricewaterhouseCoopers LLP, given on their       
authority as experts in auditing and accounting.                                

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FINANCIAL STATEMENTS                                                            

Pro forma financial statements of the Acquiring Fund for the Merger are   
provided on the following pages.                                                

The accompanying unaudited pro forma combining investment portfolio and   
statement of assets and liabilities assumes that the exchange described in the  
next paragraph occurred as of December 1, 2003 and the unaudited pro forma      
combining statement of operations for the twelve months ended November 30, 2004 
presents the results of operations of the Acquiring Fund as if the combination  
with the Acquired Fund had been consummated at December 1, 2003. The pro forma  
results of operations are not necessarily indicative of future operations or    
the actual results that would have occurred had the combination been            
consummated at December 1, 2003. These historical statements have been derived  
from the Acquiring Fund and the Acquired Fund's books and records utilized in   
calculating daily net asset value at November 30, 2004, and for the twelve      
month period then ended.                                                        

 The pro forma statements give effect to the proposed transfer of all of the
assets of the Acquired Fund to the Acquiring Fund in exchange for the           
assumption by the Acquiring Fund of all of the liabilities of the Acquired Fund 
and for a number of the Acquiring Fund's shares equal in value to the value of  
the net assets of the Acquired Fund transferred to the Acquiring Fund. Under    
generally accepted accounting principles, the historical cost of investment     
securities will be carried forward to the surviving entity and the results of   
operations of the Acquiring Fund for pre-combination periods will not be        
restated. The pro forma statement of operations does not reflect the expenses   
of either fund in carrying out its obligations under the Agreement and Plan of  
Reorganization.                                                                 

 The Unaudited Financial Highlights and Financial Statements included in the
Acquiring Fund's Semi-Annual Report to Shareholders for the six-month period    
ended November 30, 2004 are incorporated by reference into this SAI. The        
unaudited pro forma combining statements should be read in conjunction with the 
separate financial statements of the Acquiring Fund and the Acquired Fund       
incorporated by reference in this SAI.                                          

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PRO-FORMA COMBINING INVESTMENT PORTFOLIO  

November 30, 2004 (Unaudited) 

                                                        [Enlarge/Download Table]

                                                        Nations Strategic  Columbia Strategic   Columbia Strategic 
                                                           Income Fund        Income Fund          Income Fund     
                                                          Acquired Fund      Acquiring Fund     Pro-Forma Combined 
                                                        ----------------- -------------------- --------------------
                                               % of Net                                                            
                                                Assets    Par   Value ($)    Par    Value ($)     Par    Value ($) 
                                               -------- ------- --------- --------- ---------- --------- ----------
                                                                                                                   
Corporate Fixed-Income Bonds & Notes             36.5%                                                             
BASIC MATERIALS                                   3.5%                                                             
Chemicals                                         1.9%                                                             
Agricultural Chemicals                            0.6%                                                             
IMC Global, Inc. 10.875% 08/01/13.............               --       --  1,835,000  2,330,450 1,835,000  2,330,450
Terra Capital Inc. 12.875% 10/15/08...........               --       --  2,990,000  3,692,650 2,990,000  3,692,650
UAP Holding Corp.(a) 07/15/12                                                                                      
 (10.750% 01/15/08)(b)........................               --       --  1,630,000  1,238,800 1,630,000  1,238,800
United Agriculture Products, Inc.                                                                                  
 8.250% 12/15/11(b)(c) (8.750% 12/15/04)......               --       --  1,535,000  1,634,775 1,535,000  1,634,775
                                                                 -------            ----------           ----------
                                                                      --             8,896,675            8,896,675
                                                                 -------            ----------           ----------
Chemicals - Diversified                           1.2%                                                             
BCP Caylux Holdings 9.625% 06/15/14(b)........               --       --  1,180,000  1,327,500 1,180,000  1,327,500
Equistar Chemicals Funding LP 10.625% 05/01/11               --       --  2,615,000  3,026,862 2,615,000  3,026,862
HMP Equity Holdings Corp.(d) 05/15/08.........               --       --  4,620,000  3,037,650 4,620,000  3,037,650
Huntsman ICI Holdings LLC(d) 12/31/09.........               --       --  9,530,000  5,312,975 9,530,000  5,312,975
Lyondell Chemical Co. 9.625% 05/01/07.........               --       --  2,825,000  3,100,438 2,825,000  3,100,438
Nova Chemicals Corp. 6.500% 01/15/12..........               --       --    780,000    809,398   780,000    809,398
Westlake Chemical Corp. 8.750% 07/15/11.......               --       --    767,000    864,793   767,000    864,793
                                                                 -------            ----------           ----------
                                                                      --            17,479,616           17,479,616
                                                                 -------            ----------           ----------
Chemicals - Basic                                 0.0%                                                             
The Dow Chemical Company 7.375% 11/01/29......           68,000   79,611         --         --    68,000     79,611
The Dow Chemical Company 6.125% 2/1/2011......           92,000   99,511         --         --    92,000     99,511
                                                                 -------            ----------           ----------
                                                                 179,122                    --              179,122
                                                                 -------            ----------           ----------
Chemicals - Specialty                             0.1%                                                             
Crompton Corp. 7.670% 08/01/10(b)(e)..........                              940,000  1,015,200   940,000  1,015,200
E.I. duPont de Nemours and Company                                                                                 
 3.375% 11/15/07..............................          115,000  114,390         --         --   115,000    114,390
Eastman Chemical Company 3.25% 06/15/08.......           69,000   67,100         --         --    69,000     67,100
Eastman Chemical Company 6.30% 11/15/18.......          145,000  152,717         --         --   145,000    152,717
Praxair, Inc. 6.90% 11/01/06..................          283,000  302,413         --         --   283,000    302,413
Praxair, Inc. 6.5% 3/1/2008...................           32,000   34,500         --         --    32,000     34,500
Praxair, Inc. 4.75% 07/15/07..................          101,000  103,359         --         --   101,000    103,359
                                                                 -------            ----------           ----------
                                                                 774,479             1,015,200            1,789,679
                                                                 -------            ----------           ----------
   Chemicals Total............................                   953,601            27,391,491           28,345,092
                                                                 -------            ----------           ----------
Forest Products & Paper                           0.7%                                                             
Forestry                                          0.1%                                                             
Millar Western Forest 7.750% 11/15/13.........               --       --  1,260,000  1,348,200 1,260,000  1,348,200
Tembec Industries, Inc. 8.500% 02/01/11.......               --       --    900,000    900,000   900,000    900,000
                                                                 -------            ----------           ----------
                                                                      --             2,248,200            2,248,200
                                                                 -------            ----------           ----------
Paper & Related Products                          0.6%                                                             
Boise Cascade LLC                                                                                                  
  5.005% 10/15/12(b)(e).......................               --       --    915,000    933,300   915,000    933,300
  7.125% 10/15/14(b)..........................               --       --  1,030,000  1,081,500 1,030,000  1,081,500
Buckeye Technologies, Inc. 8.500% 10/01/13....               --       --    390,000    429,000   390,000    429,000
Caraustar Industries, Inc. 9.875% 04/01/11....               --       --  1,605,000  1,725,375 1,605,000  1,725,375
Georgia-Pacific Corp. 8.000% 01/15/24.........               --       --  1,025,000  1,189,000 1,025,000  1,189,000
Neenah Paper, Inc. 7.375% 11/15/14(b).........               --       --    680,000    686,800   680,000    686,800
Newark Group, Inc. 9.750% 03/15/14(b).........               --       --  1,335,000  1,398,413 1,335,000  1,398,413
Norske Skog Canada Ltd.                                                                                            
  7.375% 03/01/14.............................               --       --    565,000    593,250   565,000    593,250
  8.625% 06/15/11.............................               --       --    850,000    918,000   850,000    918,000

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                                                     Nations Strategic  Columbia Strategic   Columbia Strategic 
                                                        Income Fund        Income Fund          Income Fund     
                                                       Acquired Fund      Acquiring Fund     Pro-Forma Combined 
                                                     ----------------- -------------------- --------------------
                                            % of Net                                                            
                                             Assets    Par   Value ($)    Par    Value ($)     Par    Value ($) 
                                            -------- ------- --------- --------- ---------- --------- ----------
                                                                                                                
International Paper Company                                                                                     
 4.250% 01/15/09(e)........................          132,000   131,404        --         --   132,000    131,404
MeadWestvaco Corporation 6.850% 04/01/12...          100,000   112,150        --         --   100,000    112,150
Westvaco Corporation 8.200% 1/15/30........          174,000   210,857        --         --   174,000    210,857
                                                             ---------           ----------           ----------
                                                               454,410            8,954,638            9,409,048
                                                             ---------           ----------           ----------
   Forest Products & Paper Total...........                    454,410           11,202,838           11,657,248
                                                             ---------           ----------           ----------
Iron/Steel                                    0.5%                                                              
Metal - Iron                                  0.2%                                                              
Wise Metals Group LLC 10.250% 05/15/12(b)..               --        -- 2,295,000  2,312,213 2,295,000  2,312,213
                                                             ---------           ----------           ----------
                                                                    --            2,312,213            2,312,213
                                                             ---------           ----------           ----------
Steel - Producers                             0.1%                                                              
Bayou Steel Corp. 9.000% 03/31/11..........               --        --   750,000    705,000   750,000    705,000
Steel Dynamics, Inc. 9.500% 03/15/09.......               --        --   940,000  1,041,050   940,000  1,041,050
                                                             ---------           ----------           ----------
                                                                    --            1,746,050            1,746,050
                                                             ---------           ----------           ----------
Steel - Specialty                             0.2%                                                              
Oregon Steel Mills, Inc. 10.000% 07/15/09..               --        --   995,000  1,114,400   995,000  1,114,400
UCAR Finance, Inc. 10.250% 02/15/12........               --        -- 2,200,000  2,530,000 2,200,000  2,530,000
                                                             ---------           ----------           ----------
                                                          --        --            3,644,400            3,644,400
                                                             ---------           ----------           ----------
   Iron/Steel Total........................                         --            7,702,663            7,702,663
                                                             ---------           ----------           ----------
Mining                                        0.4%                                                              
Metal - Aluminum                              0.2%                                                              
Alcan Inc. 6.450% 3/15/2011................           87,000    95,561        --         --    87,000     95,561
Alcoa Inc. 7.375% 8/1/2010.................          181,000   208,328        --         --   181,000    208,328
Kaiser Aluminum & Chemical Corp.                                                                                
 10.875% 10/15/06(f).......................               --        -- 3,200,000  2,752,000 3,200,000  2,752,000
                                                             ---------           ----------           ----------
                                                               303,889            2,752,000            3,055,889
                                                             ---------           ----------           ----------
Metal - Diversified                           0.2%                                                              
Earle M. Jorgensen & Co. 9.750% 06/01/12...               --        -- 2,045,000  2,300,625 2,045,000  2,300,625
Codelco Inc. 5.50% 10/15/13(b).............          132,000   135,464                        132,000    135,464
                                                             ---------           ----------           ----------
                                                               439,353            2,300,625            2,436,089
                                                             ---------           ----------           ----------
   Mining Total............................                    439,353            5,052,625            5,491,978
                                                             ---------           ----------           ----------
   BASIC MATERIALS TOTAL...................                  1,847,364           51,349,617           53,196,981
                                                             =========           ==========           ==========
COMMUNICATIONS                                8.5%                                                              
Advertising                                   0.1%                                                              
Advertising Services                          0.1%                                                              
WDAC Subsidiary Corp.                                                                                           
 8.375% 12/01/14(b)(g).....................               --        -- 1,455,000  1,469,550 1,455,000  1,469,550
                                                             ---------           ----------           ----------
                                                          --        --            1,469,550            1,469,550
                                                             ---------           ----------           ----------
   Advertising Total.......................                         --            1,469,550            1,469,550
                                                             ---------           ----------           ----------
Media                                         4.2%                                                              
Broadcast Servicing/Program                   0.3%                                                              
Fisher Communications, Inc.                                                                                     
 8.625% 09/15/14(b)........................               --        --   925,000    999,000   925,000    999,000
TV Azteca SA de CV 10.500% 02/15/07........               --        -- 2,345,000  2,403,625 2,345,000  2,403,625
XM Satellite Radio, Inc. 7.660% 05/01/09(e)               --        -- 1,380,000  1,407,600 1,380,000  1,407,600
                                                             ---------           ----------           ----------
                                                                    --            4,810,225            4,810,225
                                                             ---------           ----------           ----------
Cable TV                                      1.7%                                                              
Atlantic Broadband Financial                                                                                    
 9.375% 01/15/14(b)........................               --        -- 1,965,000  1,906,050 1,965,000  1,906,050
Cablevision Systems Corp.                                                                                       
 6.669% 04/01/09(b)(e).....................               --        -- 1,580,000  1,651,100 1,580,000  1,651,100

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                                                        Nations Strategic  Columbia Strategic   Columbia Strategic 
                                                           Income Fund        Income Fund          Income Fund     
                                                          Acquired Fund      Acquiring Fund     Pro-Forma Combined 
                                                        ----------------- -------------------- --------------------
                                               % of Net                                                            
                                                Assets    Par   Value ($)    Par    Value ($)     Par    Value ($) 
                                               -------- ------- --------- --------- ---------- --------- ----------
                                                                                                                   
Charter Communications Holding LLC                                                                                 
  9.920% 04/01/11.............................               --        -- 9,135,000  7,513,537 9,135,000  7,513,537
  10.250% 09/15/10............................               --        -- 1,130,000  1,186,500 1,130,000  1,186,500
Comcast Cable Communications                                                                                       
 7.125% 6/15/13...............................           94,000   106,361        --         --    94,000    106,361
CSC Holdings, Inc.                                                                                                 
  6.750% 04/15/12(b)..........................               --        -- 1,310,000  1,342,750 1,310,000  1,342,750
  7.625% 04/01/11.............................               --        --   180,000    193,050   180,000    193,050
DirecTV Holdings LLC 8.375% 03/15/13..........               --        --   945,000  1,065,488   945,000  1,065,488
EchoStar DBS Corp. 6.375% 10/01/11............               --        -- 1,960,000  2,018,800 1,960,000  2,018,800
Insight Communications, Inc.(a) 02/15/11                                                                           
 (12.250% 02/15/06)...........................               --        --   955,000    921,575   955,000    921,575
Insight Midwest 9.750% 10/01/09...............               --        -- 1,020,000  1,074,825 1,020,000  1,074,825
Northland Cable Television, Inc.                                                                                   
 10.250% 11/15/07.............................               --        -- 2,835,000  2,835,000 2,835,000  2,835,000
Pegasus Satellite Communications, Inc.                                                                             
 11.250% 01/15/10(b)(f).......................               --        -- 2,290,000  1,459,875 2,290,000  1,459,875
Rogers Cable Inc 6.25% 06/15/2013.............           30,000    29,925        --         --    30,000     29,925
Telenet Group Holding NV(a) 06/15/14                                                                               
 (11.500% 12/15/08)(b)........................               --        -- 2,210,000  1,707,225 2,210,000  1,707,225
                                                                ---------           ----------           ----------
                                                                  136,286           24,875,775           25,012,061
                                                                ---------           ----------           ----------
Multimedia                                       0.7%                                                              
Advanstar Communications, Inc.(a) 10/15/11                                                                         
 (15.000% 10/15/05)...........................               --        -- 1,555,000  1,313,975 1,555,000  1,313,975
  12.000% 02/15/11............................               --        -- 1,840,000  2,005,600 1,840,000  2,005,600
Clear Channel Communications 6% 11/1/06.......          110,000   114,484        --         --   110,000    114,484
Haights Cross Communications, Inc.(a) 08/15/11                                                                     
 (12.500% 02/01/09)...........................               --        -- 1,735,000  1,119,075 1,735,000  1,119,075
Haights Cross Operating 11.750% 08/15/11......               --        -- 1,690,000  1,926,600 1,690,000  1,926,600
Liberty Media Corp 3.50% 09/25/06.............          385,000   383,002        --         --   385,000    383,002
News America Holdings Inc                                                                                          
  9.250% 2/1/13...............................           49,000    62,675        --         --    49,000     62,675
  8.150% 10/17/36.............................          204,000   252,885        --         --   204,000    252,885
  6.550% 3/15/33..............................           64,000    67,051        --         --    64,000     67,051
Quebecor Media, Inc. 11.125% 07/15/11.........               --        -- 1,830,000  2,099,925 1,830,000  2,099,925
The Walt Disney Company, MTN                                                                                       
 5.5% 12/29/2006..............................          129,000   134,619        --         --   129,000    134,619
Tele-Communications Inc 9.875% 6/15/2022......          135,000   186,678        --         --   135,000    186,678
Time Warner Inc. 7.625% 4/15/31...............          366,000   428,886        --         --   366,000    428,886
Time Warner Inc. 8.110% 08/15/06..............           11,000    11,837        --         --    11,000     11,837
Time Warner Inc. 9.125% 01/15/13..............           45,000    56,887        --         --    45,000     56,887
Time Warner Entertainment Company LP                                                                               
 7.250% 9/01/08...............................          181,000   200,576        --         --   181,000    200,576
Viacom Inc., Class B 5.625% 5/1/2007..........          110,000   115,135        --         --   110,000    115,135
                                                                ---------           ----------           ----------
                                                                2,014,714            8,465,175           10,479,889
                                                                ---------           ----------           ----------
Publishing - Newspapers                          0.1%                                                              
Hollinger, Inc.                                                                                                    
  11.875% 03/01/11(b)(h)......................               --        --   734,000    794,394   734,000    794,394
  12.875% 03/01/11(b).........................               --        -- 1,157,000  1,261,130 1,157,000  1,261,130
                                                                ---------           ----------           ----------
                                                                       --            2,055,524            2,055,524
                                                                ---------           ----------           ----------
Publishing - Periodicals                         0.8%                                                              
CBD Media Holdings LLC & Fin, Inc.                                                                                 
 9.250% 07/15/12(b)...........................               --        -- 1,160,000  1,189,000 1,160,000  1,189,000
Dex Media East LLC 12.125% 11/15/12...........               --        -- 1,677,000  2,054,325 1,677,000  2,054,325
Dex Media West LLC 9.875% 08/15/13............               --        -- 1,621,000  1,872,255 1,621,000  1,872,255
Dex Media, Inc.(a) 11/15/13                                                                                        
 (9.000% 11/15/08)............................               --        -- 1,375,000  1,055,312 1,375,000  1,055,312
  8.000% 11/15/13.............................               --        -- 1,800,000  1,926,000 1,800,000  1,926,000

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                                                        Nations Strategic  Columbia Strategic   Columbia Strategic 
                                                           Income Fund        Income Fund          Income Fund     
                                                          Acquired Fund      Acquiring Fund     Pro-Forma Combined 
                                                        ----------------- -------------------- --------------------
                                               % of Net                                                            
                                                Assets    Par   Value ($)    Par    Value ($)     Par    Value ($) 
                                               -------- ------- --------- --------- ---------- --------- ----------
                                                                                                                   
Primedia, Inc. 8.875% 05/15/11................               --        -- 2,330,000  2,399,900 2,330,000  2,399,900
Yell Finance BV 10.750% 08/01/11..............               --        -- 1,560,000  1,817,400 1,560,000  1,817,400
                                                                ---------           ----------           ----------
                                                                       --           12,314,192           12,314,192
                                                                ---------           ----------           ----------
Radio                                            0.2%                                                              
Spanish Broadcasting System 9.625% 11/01/09...               --        -- 2,325,000  2,441,250 2,325,000  2,441,250
                                                                ---------           ----------           ----------
                                                                       --            2,441,250            2,441,250
                                                                ---------           ----------           ----------
Television                                       0.4%                                                              
Granite Broadcasting Corp. 9.750% 12/01/10....               --        -- 2,875,000  2,702,500 2,875,000  2,702,500
Paxson Communications 10.750% 07/15/08........               --        -- 2,830,000  2,914,900 2,830,000  2,914,900
Sinclair Broadcast Group, Inc. 8.750% 12/15/11               --        --   960,000  1,032,000   960,000  1,032,000
                                                                ---------           ----------           ----------
                                                                       --            6,649,400            6,649,400
                                                                ---------           ----------           ----------
   Media Total................................                  2,151,001           61,611,541           63,762,542
                                                                ---------           ----------           ----------
Telecommunications                               4.2%                                                              
Cellular Telecommunications                      1.7%                                                              
American Cellular Corp., 10.000% 08/01/11.....               --        -- 1,430,000  1,204,775 1,430,000  1,204,775
Dobson Cellular Systems, Inc.                                                                                      
 8.375% 11/01/11(b)...........................               --        --   450,000    461,250   450,000    461,250
Dobson Communications Corp. 8.875% 10/01/13...               --        -- 2,980,000  2,011,500 2,980,000  2,011,500
Horizon PCS, Inc. 11.375% 07/15/12(b).........               --        -- 1,150,000  1,259,250 1,150,000  1,259,250
iPCS Escrow Co. 11.500% 05/01/12(b)...........               --        --   705,000    786,075   705,000    786,075
Nextel Communications, Inc. 7.375% 08/01/15...               --        -- 3,700,000  4,070,000 3,700,000  4,070,000
Nextel Partners, Inc. 8.125% 07/01/11.........               --        -- 2,855,000  3,140,500 2,855,000  3,140,500
Rogers Cantel, Inc. 9.750% 06/01/16...........               --        -- 3,580,000  4,215,450 3,580,000  4,215,450
Rogers Wireless, Inc. 8.000% 12/15/12(b)......               --        -- 1,125,000  1,172,812 1,125,000  1,172,812
Rural Cellular Corp. 8.250% 03/15/12..........               --        -- 1,215,000  1,266,637 1,215,000  1,266,637
US Unwired, Inc. 10.000% 06/15/12.............               --        -- 2,465,000  2,736,150 2,465,000  2,736,150
Ubiquitel Operating Co.                                                                                            
 9.875% 03/01/11..............................               --        -- 1,255,000  1,377,363 1,255,000  1,377,363
  9.875% 03/01/11(b)..........................               --        --   915,000  1,004,213   915,000  1,004,213
Western Wireless Corp. 9.250% 07/15/13........               --        -- 2,205,000  2,381,400 2,205,000  2,381,400
                                                                ---------           ----------           ----------
                                                                       --           27,087,375           27,087,375
                                                                ---------           ----------           ----------
Satellite Telecommunications                     0.3%                                                              
Inmarsat Finance II PLC(a) 11/15/12                                                                                
 (10.375% 11/15/08)(b)........................               --        --   690,000    477,825   690,000    477,825
New Skies Satellites NV 9.125% 11/01/12(b)....               --        -- 1,035,000  1,055,700 1,035,000  1,055,700
PanAmSat Holding Corp.(a) 11/01/14                                                                                 
 (10.375% 11/01/09)(b)........................               --        -- 2,240,000  1,344,000 2,240,000  1,344,000
  9.000% 08/15/14(b)..........................               --        --   910,000    978,250   910,000    978,250
                                                                ---------           ----------           ----------
                                                                       --            3,855,775            3,855,775
                                                                ---------           ----------           ----------
Telecommunication Equipment                      0.1%                                                              
Lucent Technologies, Inc. 6.450% 03/15/29.....               --        -- 1,700,000  1,457,750 1,700,000  1,457,750
                                                                ---------           ----------           ----------
                                                                       --            1,457,750            1,457,750
                                                                ---------           ----------           ----------
Telecommunication Services                       0.7%                                                              
Axtel SA 11.000% 12/15/13.....................               --        -- 2,260,000  2,401,250 2,260,000  2,401,250
Carrier1 International SA                                                                                          
 13.250% 02/15/09(f)..........................               --        -- 6,000,000    540,000 6,000,000    540,000
Fairpoint Communications                                                                                           
 11.875% 03/01/10.............................               --        -- 1,670,000  1,899,625 1,670,000  1,899,625
Securus Technologies, Inc.                                                                                         
 11.000% 09/01/11(b)..........................               --        -- 1,855,000  1,855,000 1,855,000  1,855,000
Time Warner Telecom, LLC                                                                                           
  9.750% 07/15/08.............................               --        -- 2,120,000  2,114,700 2,120,000  2,114,700
  10.125% 02/01/11............................               --        --   750,000    720,000   750,000    720,000
Telus Corporation 7.5% 6/1/2007...............          486,000   526,987        --         --   486,000    526,987
                                                                ---------           ----------           ----------
                                                                  526,987            9,530,575           10,057,562
                                                                ---------           ----------           ----------

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                                                    Nations Strategic  Columbia Strategic    Columbia Strategic  
                                                       Income Fund         Income Fund           Income Fund     
                                                      Acquired Fund      Acquiring Fund      Pro-Forma Combined  
                                                    ----------------- --------------------- ---------------------
                                           % of Net                                                              
                                            Assets    Par   Value ($)    Par     Value ($)     Par     Value ($) 
                                           -------- ------- --------- --------- ----------- --------- -----------
                                                                                                                 
Telephone - Integrated                       1.2%                                                                
BellSouth Corporation 5% 10/15/06.........          223,000   229,645                         223,000     229,645
Cincinnati Bell, Inc. 8.375% 01/15/14.....               --        -- 2,335,000   2,346,675 2,335,000   2,346,675
Qwest Capital Funding                                                                                            
  7.250% 02/15/11.........................               --        -- 5,045,000   4,792,750 5,045,000   4,792,750
  7.750% 02/15/31.........................               --        -- 2,065,000   1,765,575 2,065,000   1,765,575
Qwest Services Corp. 13.500% 12/15/10(b)..               --        -- 5,505,000   6,550,950 5,505,000   6,550,950
SBC Communications Inc. 5.750% 5/2/06.....          430,000   444,743        --          --   430,000     444,743
Sprint Capital Corporation.                                                                                      
 6.125% 11/15/2008........................           51,000    54,400        --          --    51,000      54,400
Sprint Capital Corporation. 8.375% 3/15/12          268,000   323,764        --          --   268,000     323,764
Sprint Capital Corporation. 8.75% 3/15/32.          237,000   305,335        --          --   237,000     305,335
US LEC Corp. 10.670% 10/01/09(b)(e).......               --        --   935,000     932,980   935,000     932,980
Verizon Global Funding Corp                                                                                      
 7.75% 12/1/30............................           55,000    66,084        --          --    55,000      66,084
Verizon Pennsylvania Inc., Series A                                                                              
 5.65% 11/15/2011.........................          241,000   251,430        --          --   241,000     251,430
                                                            ---------           -----------           -----------
                                                            1,675,401            16,388,930            18,064,331
                                                            ---------           -----------           -----------
Wireless Equipment                           0.2%                                                                
American Towers, Inc. 7.250% 12/01/11.....               --        -- 1,150,000   1,216,125 1,150,000   1,216,125
SBA Telecommunications, Inc.(a)                                                                                  
 12/15/11 (9.750% 12/15/07)...............               --        -- 1,100,000     926,750 1,100,000     926,750
Spectrasite Inc. 8.250% 05/15/10..........               --        -- 1,120,000   1,212,400 1,120,000   1,212,400
                                                            ---------           -----------           -----------
                                                                   --             3,355,275             3,355,275
                                                            ---------           -----------           -----------
   Telecommunications Total...............                  2,202,388            61,675,680            63,878,068
                                                            ---------           -----------           -----------
   COMMUNICATIONS TOTAL...................                  4,353,389           124,756,771           129,110,160
                                                            =========           ===========           ===========
CONSUMER CYCLICAL                            7.1%                                                                
Airlines                                     0.5%                                                                
Airlines                                     0.5%                                                                
Continental Airlines, Inc. 7.568% 12/01/06               --        -- 2,450,000   1,886,500 2,450,000   1,886,500
Delta Air Lines, Inc. 7.900% 12/15/09.....               --        -- 1,115,000     624,400 1,115,000     624,400
Northwest Airlines, Inc. 9.875% 03/15/07..               --        -- 3,230,000   2,810,100 3,230,000   2,810,100
United Air Lines 2.020% 03/02/49(e)(i)....               --        -- 1,755,069   1,404,055 1,755,069   1,404,055
                                                            ---------           -----------           -----------
                                                                   --             6,725,055             6,725,055
                                                            ---------           -----------           -----------
   Airlines Total.........................                         --             6,725,055             6,725,055
                                                            ---------           -----------           -----------
Apparel                                      0.4%                                                                
Apparel Manufacturers                        0.4%                                                                
Broder Brothers Co.                                                                                              
  11.250% 10/15/10........................               --        -- 1,360,000   1,414,400 1,360,000   1,414,400
  11.250%10/15/10(b)......................               --        --   670,000     696,800   670,000     696,800
Levi Strauss & Co. 12.250% 12/15/12.......               --        -- 2,325,000   2,452,875 2,325,000   2,452,875
Phillips-Van Heusen                                                                                              
  7.250% 02/15/11.........................               --        --   815,000     859,825   815,000     859,825
  8.125% 05/01/13.........................               --        --   850,000     930,750   850,000     930,750
                                                            ---------           -----------           -----------
                                                                   --             6,354,650             6,354,650
                                                            ---------           -----------           -----------
   Apparel Total..........................                         --             6,354,650             6,354,650
                                                            ---------           -----------           -----------
Auto Manufacturers                           0.2%                                                                
Auto - Manufacturers                         0.2%                                                                
Navistar International 7.500% 06/15/11....               --        -- 1,450,000   1,566,000 1,450,000   1,566,000
Daimler Chrysler 4.05% 6/4/08.............          443,000   440,626        --          --   443,000     440,626
Ford Motor Company 7.45% 7/16/31..........          485,000   471,832        --          --   485,000     471,832
General Motors Acceptance Corp                                                                                   
 6.15% 04/05/07...........................          256,000   263,737        --          --   256,000     263,737

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                                                    Nations Strategic  Columbia Strategic   Columbia Strategic 
                                                       Income Fund        Income Fund          Income Fund     
                                                      Acquired Fund      Acquiring Fund     Pro-Forma Combined 
                                                    ----------------- -------------------- --------------------
                                           % of Net                                                            
                                            Assets    Par   Value ($)    Par    Value ($)     Par    Value ($) 
                                           -------- ------- --------- --------- ---------- --------- ----------
                                                                                                               
General Motors Acceptance Corp                                                                                 
 6.875% 9/15/11...........................          166,000   169,320        --         --   166,000    169,320
General Motors Acceptance Corp                                                                                 
 8.000% 11/01/31..........................          304,000   304,634        --         --   304,000    304,634
                                                            ---------           ----------           ----------
                                                            1,650,149            1,566,000            3,216,149
                                                            ---------           ----------           ----------
   Auto Manufacturers Total...............                  1,650,149            1,566,000            3,216,149
                                                            ---------           ----------           ----------
Auto Parts & Equipment                       0.6%                                                              
Auto/Truck Parts & Equipment - Original      0.3%                                                              
Accuride Corp. 9.250% 02/01/08............               --        --   875,000    890,312   875,000    890,312
Affinia Group, Inc. 9.000% 11/30/14(b)....               --        --   230,000    236,900   230,000    236,900
Delco Remy International, Inc.                                                                                 
 11.000% 05/01/09.........................               --        -- 1,695,000  1,788,225 1,695,000  1,788,225
Dura Operating Corp. 8.625% 04/15/12......               --        -- 2,125,000  2,167,500 2,125,000  2,167,500
                                                            ---------           ----------           ----------
                                                                   --            5,082,937            5,082,937
                                                            ---------           ----------           ----------
Auto/Truck Parts & Equipment - Repacement    0.1%                                                              
Rexnord Corp. 10.125% 12/15/12............               --        -- 1,040,000  1,175,200 1,040,000  1,175,200
                                                            ---------           ----------           ----------
                                                                   --            1,175,200            1,175,200
                                                            ---------           ----------           ----------
Rubber - Tires                               0.2%                                                              
Goodyear Tire & Rubber Co. 7.857% 08/15/11               --        -- 2,565,000  2,545,763 2,565,000  2,545,763
                                                            ---------           ----------           ----------
                                                                   --            2,545,763            2,545,763
                                                            ---------           ----------           ----------
   Auto Parts & Equipment Total...........                         --            8,803,900            8,803,900
                                                            ---------           ----------           ----------
Entertainment                                0.9%                                                              
Gambling (Non-Hotel)                         0.1%                                                              
Global Cash Access LLC/Global Cash Finance                                                                     
 Corp. 8.750% 03/15/12....................               --        -- 1,945,000  2,100,600 1,945,000  2,100,600
                                                            ---------           ----------           ----------
                                                                   --            2,100,600            2,100,600
                                                            ---------           ----------           ----------
Music                                        0.2%                                                              
Steinway Musical Instruments, Inc.                                                                             
 8.750% 04/15/11..........................               --        -- 1,260,000  1,367,100 1,260,000  1,367,100
Warner Music Group 7.375% 04/15/14(b).....               --        -- 1,920,000  1,963,200 1,920,000  1,963,200
                                                            ---------           ----------           ----------
                                                                   --            3,330,300            3,330,300
                                                            ---------           ----------           ----------
Resorts/Theme Parks                          0.2%                                                              
Six Flags, Inc.                                                                                                
  8.875% 02/01/10.........................               --        -- 2,005,000  2,015,025 2,005,000  2,015,025
  9.625% 06/01/14.........................               --        --   895,000    883,813   895,000    883,813
                                                            ---------           ----------           ----------
                                                                   --            2,898,838            2,898,838
                                                            ---------           ----------           ----------
Theaters                                     0.4%                                                              
LCE Acquisition Corp. 9.000% 08/01/14(b)..               --        -- 2,435,000  2,617,625 2,435,000  2,617,625
Marquee Holdings, Inc.(a) 08/15/14                                                                             
 (12.000% 08/15/09)(b)....................               --        -- 4,935,000  3,183,075 4,935,000  3,183,075
                                                            ---------           ----------           ----------
                                                                   --            5,800,700            5,800,700
                                                            ---------           ----------           ----------
   Entertainment Total....................                         --           14,130,438           14,130,438
                                                            ---------           ----------           ----------
Home Builders                                0.6%                                                              
Building - Residential Commercial            0.6%                                                              
D.R. Horton, Inc. 9.750% 09/15/10.........               --        -- 2,855,000  3,418,862 2,855,000  3,418,862
K. Hovnanian Enterprises, Inc.                                                                                 
  8.875% 04/01/12.........................               --        -- 1,270,000  1,397,000 1,270,000  1,397,000
  10.500% 10/01/07........................               --        -- 1,470,000  1,694,175 1,470,000  1,694,175
Standard Pacific Corp. 9.250% 04/15/12....               --        -- 1,770,000  2,066,475 1,770,000  2,066,475
                                                            ---------           ----------           ----------
                                                                   --            8,576,512            8,576,512
                                                            ---------           ----------           ----------
   Home Builders Total....................                         --            8,576,512            8,576,512
                                                            ---------           ----------           ----------

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                                                        Nations Strategic  Columbia Strategic   Columbia Strategic 
                                                         Income Fund          Income Fund          Income Fund     
                                                        Acquired Fund        Acquiring Fund     Pro-Forma Combined 
                                                        ----------------- -------------------- --------------------
                                               % of Net                                                            
                                                Assets  Par   Value ($)      Par    Value ($)     Par    Value ($) 
                                               -------- ---   ---------   --------- ---------- --------- ----------
                                                                                                                   
Home Furnishings                                 0.2%                                                              
Home Furnishings                                 0.2%                                                              
Norcraft Companies LP 9.000% 11/01/11.........          --       --         835,000    905,975   835,000    905,975
WII Components, Inc. 10.000% 02/15/12.........          --       --       2,535,000  2,484,300 2,535,000  2,484,300
                                                                 --                 ----------           ----------
                                                                 --                  3,390,275            3,390,275
                                                                 --                 ----------           ----------
   Home Furnishings Total.....................                   --                  3,390,275            3,390,275
                                                                 --                 ----------           ----------
Leisure Time                                     0.6%                                                              
Cruise Lines                                     0.1%                                                              
NCL Corp. 10.625% 07/15/14(b).................          --       --         710,000    731,300   710,000    731,300
                                                                 --                 ----------           ----------
                                                                 --                    731,300              731,300
                                                                 --                 ----------           ----------
Leisure & Recreational Products                  0.2%                                                              
Bombardier Recreational 8.375% 12/15/13.......          --       --       1,935,000  2,089,800 1,935,000  2,089,800
K2, Inc. 7.375% 07/01/14(b)...................          --       --         990,000  1,086,525   990,000  1,086,525
                                                                 --                 ----------           ----------
                                                                 --                  3,176,325            3,176,325
                                                                 --                 ----------           ----------
Recreational Centers                             0.3%                                                              
AMF Bowling Worldwide, Inc. 10.000% 03/01/10..          --       --       1,340,000  1,433,800 1,340,000  1,433,800
Equinox Holdings, Inc. 9.000% 12/15/09........          --       --       2,130,000  2,247,150 2,130,000  2,247,150
Town Sports International, Inc.(a) 02/01/14                                                                        
 (11.000% 02/01/09)...........................          --       --       2,395,000  1,335,213 2,395,000  1,335,213
                                                                 --                 ----------           ----------
                                                                 --                  5,016,163            5,016,163
                                                                 --                 ----------           ----------
   Leisure Time Total.........................                   --                  8,923,788            8,923,788
                                                                 --                 ----------           ----------
Lodging                                          2.0%                                                              
Casino Hotels                                    1.9%                                                              
Ameristar Casinos, Inc. 10.750% 02/15/09......          --       --         750,000    842,812   750,000    842,812
Circus & Eldorado/Silver Legacy Capital Corp.                                                                      
 10.125% 03/01/12.............................          --       --       1,495,000  1,637,025 1,495,000  1,637,025
Hard Rock Hotel, Inc. 8.875% 06/01/13.........          --       --       1,555,000  1,710,500 1,555,000  1,710,500
Hollywood Casino Shreveport                                                                                        
 13.000% 08/01/06(j)..........................          --       --       5,220,000  4,593,600 5,220,000  4,593,600
Inn of the Mountain Gods Resort                                                                                    
 12.000% 11/15/10.............................          --       --       1,680,000  1,957,200 1,680,000  1,957,200
MGM Mirage, Inc. 8.375% 02/01/11..............          --       --       2,135,000  2,412,550 2,135,000  2,412,550
Mohegan Tribal Gaming Authority                                                                                    
 7.125% 08/15/14(b)...........................          --       --         355,000    378,962   355,000    378,962
Park Place Entertainment Corp. 9.375% 02/15/07          --       --         660,000    730,950   660,000    730,950
Pinnacle Entertainment, Inc.                                                                                       
  8.250% 03/15/12.............................          --       --       3,835,000  3,988,400 3,835,000  3,988,400
  8.750% 10/01/13.............................          --       --       1,855,000  1,994,125 1,855,000  1,994,125
Premier Entertainment Biloxi Financial                                                                             
 10.750% 02/01/12.............................          --       --       1,120,000  1,209,600 1,120,000  1,209,600
River Rock Entertainment 9.750% 11/01/11......          --       --       2,090,000  2,314,675 2,090,000  2,314,675
Seneca Gaming Corp. 7.250% 05/01/12...........          --       --       1,860,000  1,966,950 1,860,000  1,966,950
Station Casinos, Inc. 6.875% 03/01/16.........          --       --         520,000    546,000   520,000    546,000
Wynn Las Vegas LLC                                                                                                 
  6.625% 12/01/14(b)(g).......................          --       --       1,345,000  1,324,825 1,345,000  1,324,825
  12.000% 11/01/10............................          --       --         796,000  1,002,960   796,000  1,002,960
                                                                 --                 ----------           ----------
                                                                 --                 28,611,134           28,611,134
                                                                 --                 ----------           ----------
Hotels & Motels                                  0.1%                                                              
Starwood Hotels & Resorts Worldwide, Inc.                                                                          
 7.875% 05/01/12..............................          --       --       1,130,000  1,292,438 1,130,000  1,292,438
                                                                 --                 ----------           ----------
                                                                 --                  1,292,438            1,292,438
                                                                 --                 ----------           ----------
   Lodging Total..............................                   --                 29,903,572           29,903,572
                                                                 --                 ----------           ----------

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                                                   Nations Strategic  Columbia Strategic    Columbia Strategic  
                                                      Income Fund         Income Fund           Income Fund     
                                                     Acquired Fund      Acquiring Fund      Pro-Forma Combined  
                                                   ----------------- --------------------- ---------------------
                                          % of Net                                                              
                                           Assets    Par   Value ($)    Par     Value ($)     Par     Value ($) 
                                          -------- ------- --------- --------- ----------- --------- -----------
                                                                                                                
Retail                                      0.9%                                                                
Retail - Automobile                         0.1%                                                                
Asbury Automotive Group 8.000% 03/15/14..               --        -- 1,630,000   1,613,700 1,630,000   1,613,700
                                                           ---------           -----------           -----------
                                                                  --             1,613,700             1,613,700
                                                           ---------           -----------           -----------
Retail - Food and Drug Stores               0.3%                                                                
The Kroger Company 6.75% 4/15/2012.......           40,000    44,587        --          --    40,000      44,587
The Kroger Company 7.45% 3/1/2008........          335,000   369,864        --          --   335,000     369,864
Jean Coutu Group, Inc. 8.500% 08/01/14(b)               --        -- 1,205,000   1,223,075 1,205,000   1,223,075
Rite Aid Corp. 9.250% 06/01/13...........               --        -- 2,435,000   2,514,137 2,435,000   2,514,137
                                                           ---------           -----------           -----------
                                                             414,452             3,737,212             4,151,664
                                                           ---------           -----------           -----------
Retail - Home Furnishings                   0.2%                                                                
Levitz Home Furnishings, Inc.                                                                                   
 12.000% 11/01/11(b).....................               --        -- 1,130,000   1,152,600 1,130,000   1,152,600
Tempur-Pedic, Inc. 10.250% 08/15/10......               --        -- 1,446,000   1,655,670 1,446,000   1,655,670
                                                           ---------           -----------           -----------
                                                                  --             2,808,270             2,808,270
                                                           ---------           -----------           -----------
Retail - Jewelry                            0.1%                                                                
Finlay Fine Jewelry Corp. 8.375% 06/01/12               --        -- 1,460,000   1,591,400 1,460,000   1,591,400
                                                           ---------           -----------           -----------
                                                                  --             1,591,400             1,591,400
                                                           ---------           -----------           -----------
Retail - Major Department Stores            0.0%                                                                
Saks, Inc. 7.000% 12/01/13...............               --        --   533,000     542,328   533,000     542,328
                                                           ---------           -----------           -----------
                                                                  --               542,328               542,328
                                                           ---------           -----------           -----------
Retail - Discount Stores                    0.0%                                                                
Target Corporation                                                                                              
  5.400% 10/1/08.........................          145,000   152,793        --          --   145,000     152,793
  5.375% 06/15/09........................           40,000    42,152        --          --    40,000      42,152
Wal-Mart Stores, Inc. 5.45% 8/1/06.......          166,000   172,115        --          --   166,000     172,115
                                                           ---------           -----------           -----------
                                                             367,059                    --               367,059
                                                           ---------           -----------           -----------
Retail - Propane Distributor                0.1%                                                                
Ferrellgas Partners LP 8.750% 06/15/12...               --        -- 1,520,000   1,656,800 1,520,000   1,656,800
                                                           ---------           -----------           -----------
                                                                  --             1,656,800             1,656,800
                                                           ---------           -----------           -----------
Retail - Restaurants                        0.1%                                                                
Denny's Corp. 10.000% 10/01/12(b)........               --        -- 1,380,000   1,452,450 1,380,000   1,452,450
                                                           ---------           -----------           -----------
                                                                  --             1,452,450             1,452,450
                                                           ---------           -----------           -----------
   Retail Total..........................                    781,511            13,402,160            14,183,671
                                                           ---------           -----------           -----------
Textiles                                    0.2%                                                                
Textile - Products                          0.2%                                                                
Collins & Aikman Floor Covering, Inc.                                                                           
 9.750% 02/15/10.........................               --        -- 1,400,000   1,505,000 1,400,000   1,505,000
Invista 9.250% 05/01/12(b)...............               --        -- 1,150,000   1,276,500 1,150,000   1,276,500
                                                           ---------           -----------           -----------
                                                                  --             2,781,500             2,781,500
                                                           ---------           -----------           -----------
   Textiles Total........................                         --             2,781,500             2,781,500
                                                           ---------           -----------           -----------
   CONSUMER CYCLICAL TOTAL...............                  2,431,660           104,557,850           106,989,510
                                                           =========           ===========           ===========
CONSUMER NON-CYCLICAL                       4.5%                                                                
Agriculture                                 0.3%                                                                
Agricultural Operations                     0.2%                                                                
Seminis Vegetable Seeds, Inc.                                                                                   
 10.250% 10/01/13........................               --        -- 2,332,000   2,623,500 2,332,000   2,623,500
                                                           ---------           -----------           -----------
                                                                  --             2,623,500             2,623,500
                                                           ---------           -----------           -----------

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                                                        Nations Strategic  Columbia Strategic   Columbia Strategic 
                                                           Income Fund        Income Fund          Income Fund     
                                                          Acquired Fund      Acquiring Fund     Pro-Forma Combined 
                                                        ----------------- -------------------- --------------------
                                               % of Net                                                            
                                                Assets    Par   Value ($)    Par    Value ($)     Par    Value ($) 
                                               -------- ------- --------- --------- ---------- --------- ----------
                                                                                                                   
Tobacco                                          0.1%                                                              
North Atlantic Trading 9.250% 03/01/12........               --       --  1,245,000    996,000 1,245,000    996,000
                                                                 -------            ----------           ----------
                                                                      --               996,000              996,000
                                                                 -------            ----------           ----------
   Agriculture Total..........................                        --             3,619,500            3,619,500
                                                                 -------            ----------           ----------
Beverages                                        0.2%                                                              
Beverages - Wine/Spirits                         0.1%                                                              
Anheuser-Busch Co., Inc 5.95% 1/15/33.........          176,000  184,402         --         --   176,000    184,402
Constellation Brands, Inc. 8.125% 01/15/12....               --       --  1,175,000  1,277,812 1,175,000  1,277,812
                                                                 -------            ----------           ----------
                                                                 184,402             1,277,812            1,462,214
                                                                 -------            ----------           ----------
Beverages - Non-Alcoholic                        0.1%                                                              
Cadbury Shweppes 5.125% 10/01/2013(b).........          349,000  350,574         --         --   349,000    350,574
                                                                 -------            ----------           ----------
                                                                 350,574                    --              350,574
                                                                 -------            ----------           ----------
   Beverages Total............................                   534,976             1,277,812            1,812,788
                                                                 -------            ----------           ----------
Biotechnology                                    0.1%                                                              
Medical - Biomedical/Gene                        0.1%                                                              
Bio-Rad Laboratories, Inc. 7.500% 08/15/13....               --       --  2,020,000  2,206,850 2,020,000  2,206,850
                                                                 -------            ----------           ----------
                                                                      --             2,206,850            2,206,850
                                                                 -------            ----------           ----------
   Biotechnology Total........................                        --             2,206,850            2,206,850
                                                                 -------            ----------           ----------
Commercial Services                              1.2%                                                              
Commercial Services - Finance                    0.2%                                                              
Dollar Financial Group 9.750% 11/15/11........               --       --  3,140,000  3,391,200 3,140,000  3,391,200
                                                                 -------            ----------           ----------
                                                                      --             3,391,200            3,391,200
                                                                 -------            ----------           ----------
Commercial Services                              0.2%                                                              
Iron Mountain, Inc. 7.750% 01/15/15...........               --       --    470,000    478,225   470,000    478,225
Language Line Holdings, Inc.                                                                                       
 11.125% 06/15/12(b)..........................               --       --  2,365,000  2,542,375 2,365,000  2,542,375
Waste Management, Inc. 7.375% 8/1/10..........          139,000  158,714         --         --   139,000    158,714
                                                                 -------            ----------           ----------
                                                                 158,714             3,020,600            3,179,314
                                                                 -------            ----------           ----------
Funeral Services & Related Items                 0.2%                                                              
Service Corp. International 7.700% 04/15/09...               --       --  2,385,000  2,605,612 2,385,000  2,605,612
                                                                 -------            ----------           ----------
                                                                      --             2,605,612            2,605,612
                                                                 -------            ----------           ----------
Printing - Commercial                            0.2%                                                              
American Color Graphics, Inc. 10.000% 06/15/10               --       --    895,000    769,700   895,000    769,700
Sheridan Group 10.250% 08/15/11(b)............               --       --  1,290,000  1,409,325 1,290,000  1,409,325
Vertis, Inc. 13.500% 12/07/09(b)..............               --       --  1,465,000  1,552,900 1,465,000  1,552,900
                                                                 -------            ----------           ----------
                                                                      --             3,731,925            3,731,925
                                                                 -------            ----------           ----------
Private Corrections                              0.1%                                                              
Geo Group, Inc. 8.250% 07/15/13...............               --       --    940,000  1,001,100   940,000  1,001,100
                                                                 -------            ----------           ----------
                                                                      --             1,001,100            1,001,100
                                                                 -------            ----------           ----------
Rental Auto/Equipment                            0.3%                                                              
NationsRent, Inc. 9.500% 10/15/10.............               --       --  2,575,000  2,896,875 2,575,000  2,896,875
Williams Scotsman, Inc. 9.875% 06/01/07.......               --       --  1,130,000  1,121,525 1,130,000  1,121,525
                                                                 -------            ----------           ----------
                                                                      --             4,018,400            4,018,400
                                                                 -------            ----------           ----------
   Commercial Services Total..................                   158,714            17,768,837           17,927,551
                                                                 -------            ----------           ----------
Cosmetics/Personal Care                          0.1%                                                              
Cosmetics, Toiletries & Personal Care            0.1%                                                              
Elizabeth Arden, Inc. 7.750% 01/15/14.........               --       --  1,365,000  1,446,900 1,365,000  1,446,900
Proctor & Gamble & Co 4.75% 6/15/07...........           63,000   64,850         --         --    63,000     64,850
                                                                 -------            ----------           ----------
                                                                  64,850             1,446,900            1,511,750
                                                                 -------            ----------           ----------
   Cosmetics/Personal Care Total..............                    64,850             1,446,900            1,511,750
                                                                 -------            ----------           ----------

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                                                        Nations Strategic  Columbia Strategic   Columbia Strategic 
                                                           Income Fund        Income Fund          Income Fund     
                                                          Acquired Fund      Acquiring Fund     Pro-Forma Combined 
                                                        ----------------- -------------------- --------------------
                                               % of Net                                                            
                                                Assets    Par   Value ($)    Par    Value ($)     Par    Value ($) 
                                               -------- ------- --------- --------- ---------- --------- ----------
                                                                                                                   
Food                                             0.8%                                                              
Food - Confectionery                             0.2%                                                              
Merisant Co. 9.500% 07/15/13(b)...............               --        -- 1,425,000  1,282,500 1,425,000  1,282,500
Tabletop Holdings, Inc.(a) 05/15/14                                                                                
 (12.250% 11/15/08)(b)........................               --        -- 4,055,000  1,845,025 4,055,000  1,845,025
                                                                ---------           ----------           ----------
                                                                       --            3,127,525            3,127,525
                                                                ---------           ----------           ----------
Food - Miscellaneous/Diversified                 0.5%                                                              
Del Monte Corp. 9.250% 05/15/11...............               --        -- 1,600,000  1,752,000 1,600,000  1,752,000
Dole Food Co., Inc. 8.625% 05/01/09...........               --        -- 1,880,000  2,072,700 1,880,000  2,072,700
Pinnacle Foods Holdings 8.250% 12/01/13(b)....               --        -- 2,945,000  2,665,225 2,945,000  2,665,225
Reddy Ice Holdings, Inc.(a) 11/01/12(b)                                                                            
 (10.500% 11/01/12)...........................               --        -- 1,375,000    955,625 1,375,000    955,625
                                                                ---------           ----------           ----------
                                                                       --            7,445,550            7,445,550
                                                                ---------           ----------           ----------
Food - Retail                                    0.1%                                                              
Stater Brothers Holdings 8.125% 06/15/12......               --        -- 2,085,000  2,220,525 2,085,000  2,220,525
                                                                ---------           ----------           ----------
                                                                       --            2,220,525            2,220,525
                                                                ---------           ----------           ----------
   Food Total.................................                         --           12,793,600           12,793,600
                                                                ---------           ----------           ----------
Healthcare - Services                            1.3%                                                              
Medical Devices and Supplies                     0.1%                                                              
Bristol-Meyers Squibb Company                                                                                      
 4.75% 10/1/2006..............................          113,000   115,723        --         --   113,000    115,723
                                                                ---------           ----------           ----------
                                                                  115,723                   --              115,723
                                                                ---------           ----------           ----------
Medical - HMO                                    0.1%                                                              
Coventry Health Care, Inc. 8.125% 02/15/12....               --        -- 1,690,000  1,859,000 1,690,000  1,859,000
Wellpoint Health Networks, Inc. 6.375% 6/15/06          330,000   344,228        --         --   330,000    344,228
Wellpoint Health Networks, Inc. 6.375% 1/15/12           42,000    45,597        --         --    42,000     45,597
                                                                ---------           ----------           ----------
                                                                  389,826            1,859,000            2,248,826
                                                                ---------           ----------           ----------
Medical - Hospitals                              0.5%                                                              
Tenet Healthcare Corp. 9.875% 07/01/14(b).....               --        -- 4,790,000  5,137,275 4,790,000  5,137,275
United Surgical Partners International, Inc.                                                                       
 10.000% 12/15/11.............................               --        -- 2,235,000  2,553,488 2,235,000  2,553,488
                                                                ---------           ----------           ----------
                                                                       --            7,690,763            7,690,763
                                                                ---------           ----------           ----------
MRI/Medical Diagnostic Imaging                   0.5%                                                              
InSight Health Services Corp. 9.875% 11/01/11.               --        -- 2,400,000  2,436,000 2,400,000  2,436,000
MedQuest, Inc. 11.875% 08/15/12...............               --        -- 2,460,000  2,878,200 2,460,000  2,878,200
MQ Associates, Inc.(a) 08/15/12                                                                                    
 (12.250% 08/15/08)...........................               --        -- 3,945,000  2,761,500 3,945,000  2,761,500
                                                                ---------           ----------           ----------
                                                                       --            8,075,700            8,075,700
                                                                ---------           ----------           ----------
Physical Practice Management                     0.1%                                                              
US Oncology, Inc. 9.000% 08/15/12(b)..........                         -- 1,955,000  2,179,825 1,955,000  2,179,825
                                                                ---------           ----------           ----------
                                                                       --            2,179,825            2,179,825
                                                                ---------           ----------           ----------
   Healthcare Services Total..................                    505,548           19,805,288           20,310,836
                                                                ---------           ----------           ----------
Household Products/Wares                         0.5%                                                              
Consumer Products - Miscellaneous                0.5%                                                              
AAC Group Hldg Corp.(a) 10/01/12                                                                                   
 (10.250% 10/01/08)(b)........................               --        --   480,000    324,000   480,000    324,000
Amscan Holdings, Inc. 8.750% 05/01/14.........               --        -- 2,255,000  2,266,275 2,255,000  2,266,275
Jostens IH Corp. 7.625% 10/01/12(b)...........               --        -- 1,155,000  1,212,750 1,155,000  1,212,750
Playtex Products, Inc. 9.375% 06/01/11........               --        -- 3,160,000  3,353,550 3,160,000  3,353,550
Fortune Brands, Inc. 2.875% 12/01/06..........          114,000   113,049        --         --   114,000    113,049
                                                                ---------           ----------           ----------
                                                                  113,049            7,156,575            7,269,624
                                                                ---------           ----------           ----------
   Household Products/Wares Total.............                    113,049            7,156,575            7,269,624
                                                                ---------           ----------           ----------
   CONSUMER NON-CYCLICAL TOTAL................                  1,377,138           66,075,362           67,452,500
                                                                =========           ==========           ==========

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                                                      Nations Strategic  Columbia Strategic   Columbia Strategic 
                                                         Income Fund        Income Fund          Income Fund     
                                                        Acquired Fund      Acquiring Fund     Pro-Forma Combined 
                                                      ----------------- -------------------- --------------------
                                             % of Net                                                            
                                              Assets    Par   Value ($)    Par    Value ($)     Par    Value ($) 
                                             -------- ------- --------- --------- ---------- --------- ----------
                                                                                                                 
ENERGY                                         3.2%                                                              
Oil & Gas                                      1.9%                                                              
Oil Companies - Exploration & Production       1.6%                                                              
Chesapeake Energy Corp. 7.500% 06/15/14.....               --        --   885,000    979,031   885,000    979,031
Compton Petroleum Corp. 9.900% 05/15/09.....               --        -- 2,200,000  2,420,000 2,200,000  2,420,000
Encore Acquisition Co. 8.375% 06/15/12......               --        -- 1,885,000  2,101,775 1,885,000  2,101,775
Energy Partners Ltd. 8.750% 08/01/10........               --        -- 1,150,000  1,265,000 1,150,000  1,265,000
Gazprom 9.625% 03/01/13.....................               --        -- 5,760,000  6,648,768 5,760,000  6,648,768
Magnum Hunter Resources, Inc.                                                                                    
 9.600% 03/15/12............................               --        -- 1,472,000  1,678,080 1,472,000  1,678,080
Pemex Finance Ltd.                                                                                               
  9.150% 11/15/18...........................               --        -- 2,485,000  3,084,158 2,485,000  3,084,158
  10.610% 08/15/17..........................               --        -- 1,650,000  2,207,271 1,650,000  2,207,271
Pemex Project Funding Master Trust                                                                               
  7.375% 12/15/14...........................          123,000   134,193        --         --   123,000    134,193
  8.625% 2/1/22(e)..........................          359,000   409,260        --         --   359,000    409,260
TransTexas Gas Corp. 15.000% 03/15/05(j)(k).               --        --   465,296          5   465,296          5
Whiting Petroleum Corp. 7.250% 05/01/12.....               --        -- 2,290,000  2,404,500 2,290,000  2,404,500
XTO Energy, Inc. 7.500% 4/15/12.............          340,000   394,385        --         --   340,000    394,385
                                                              ---------           ----------           ----------
                                                                937,838           22,788,588           23,726,426
                                                              ---------           ----------           ----------
Oil & Gas Drilling                             0.2%                                                              
Ocean Rig Norway AS 10.250% 06/01/08........               --        -- 1,585,000  1,632,550 1,585,000  1,632,550
Pride International, Inc. 7.375% 07/15/14(b)               --        --   865,000    960,150   865,000    960,150
                                                              ---------           ----------           ----------
                                                                     --            2,592,700            2,592,700
                                                              ---------           ----------           ----------
Oil Refining & Marketing                       0.1%                                                              
Conoco Funding Company                                                                                           
  5.45% 10/15/2006..........................          209,000   216,756        --         --   209,000    216,756
  6.35% 10/15/2011..........................          259,000   287,187        --         --   259,000    287,187
Premcor Refining Group 7.500% 06/15/15......               --        -- 1,430,000  1,565,850 1,430,000  1,565,850
                                                              ---------           ----------           ----------
                                                                503,943            1,565,850            2,069,793
                                                              ---------           ----------           ----------
Oil Integrated                                 0.0%                                                              
USX Corporation 6.65% 2/1/2006..............          246,000   255,760        --         --   246,000    255,760
                                                              ---------           ----------           ----------
                                                                255,760                   --              255,760
                                                              ---------           ----------           ----------
   Oil & Gas Total..........................                  1,697,541           26,947,138           28,644,679
                                                              ---------           ----------           ----------
Oil & Gas Services                             0.2%                                                              
Oil - Field Services                           0.2%                                                              
Hornbeck Offshore Services, Inc.                                                                                 
 6.125% 12/01/14(b).........................               --        --   460,000    460,000   460,000    460,000
Newpark Resources, Inc. 8.625% 12/15/07.....               --        -- 1,560,000  1,575,600 1,560,000  1,575,600
                                                              ---------           ----------           ----------
                                                                     --            2,035,600            2,035,600
                                                              ---------           ----------           ----------
   Oil & Gas Services Total.................                         --            2,035,600            2,035,600
                                                              ---------           ----------           ----------
Pipelines                                      1.1%                                                              
Pipelines                                      1.1%                                                              
Coastal Corp. 7.750% 06/15/10...............               --        -- 3,550,000  3,652,062 3,550,000  3,652,062
Consolidated Natural Gas Company Series B                                                                        
 5.375% 11/1/2006...........................          201,000   208,026        --         --   201,000    208,026
Duke Capital LLC 4.37% 03/01/09.............          276,000   276,355        --         --   276,000    276,355
Dynegy Holdings, Inc.                                                                                            
  6.875% 04/01/11...........................               --        -- 1,895,000  1,819,200 1,895,000  1,819,200
  9.875% 07/15/10(b)........................               --        --   960,000  1,084,800   960,000  1,084,800
Kinder Morgan Inc. 6.65% 3/1/2005...........          169,000   170,617        --         --   169,000    170,617
Northwest Pipeline Corp. 8.125% 03/01/10....               --        --   760,000    847,400   760,000    847,400
Sonat, Inc.                                                                                                      
  6.875% 06/01/05...........................               --        -- 1,000,000  1,012,500 1,000,000  1,012,500
  7.625% 07/15/11...........................               --        -- 4,230,000  4,293,450 4,230,000  4,293,450

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                                                            Nations Strategic  Columbia Strategic   Columbia Strategic 
                                                               Income Fund        Income Fund          Income Fund     
                                                              Acquired Fund      Acquiring Fund     Pro-Forma Combined 
                                                            ----------------- -------------------- --------------------
                                                   % of Net                                                            
                                                    Assets    Par   Value ($)    Par    Value ($)     Par    Value ($) 
                                                   -------- ------- --------- --------- ---------- --------- ----------
                                                                                                                       
Southern Natural Gas Co. 8.875% 03/15/10..........               --        -- 1,335,000  1,498,538 1,335,000  1,498,538
Teppco Partnres, LP 7.625% 02/15/12...............          244,000   280,222        --         --   244,000    280,222
Williams Companies, Inc. 8.125% 03/15/12..........               --        -- 1,780,000  2,073,700 1,780,000  2,073,700
                                                                    ---------           ----------           ----------
                                                                      935,220           16,281,650           17,216,870
                                                                    ---------           ----------           ----------
   Pipelines Total................................                    935,220           16,281,650           17,216,870
                                                                    ---------           ----------           ----------
   ENERGY TOTAL...................................                  2,632,761           45,264,388           47,897,149
                                                                    =========           ==========           ==========
FINANCIAL                                            1.5%                                                              
Diversified Financial Services                       1.2%                                                              
Commercial Banks                                     0.3%                                                              
Corp Andina De Fomento 6.375% 6/18/09.............          350,000   519,796        --         --   350,000    519,796
AmSouth Bnak N.A. 4.850% 4/1/13...................          223,000   220,629        --         --   223,000    220,629
The Bank of New York MTN Series E                                                                                      
 3.900% 9/1/07....................................          125,000   125,785        --         --   125,000    125,785
Bank One Corporation 6.000% 8/1/08................          623,000   665,500        --         --   623,000    665,500
Capital One Bank 5.000% 06/15/09..................          151,000   154,741        --         --   151,000    154,741
Cnase Manhattan Corp 7.250% 6/01/07...............          345,000   374,357        --         --   345,000    374,357
Citigroup Inc. 6.000% 2/21/12.....................          151,000   164,435        --         --   151,000    164,435
First Union Nantional Bank 5.800% 12/01/08........          382,000   404,978        --         --   382,000    404,978
Mellon Funding Corporation 4.875% 6/15/07.........           70,000    72,104        --         --    70,000     72,104
National City Bank 4.625% 5/1/2013................          418,000   409,949        --         --   418,000    409,949
PNC Funding Corporation 5.750% 8/1/06.............          156,000   162,197        --         --   156,000    162,197
Popular North America Inc., MTN Series E                                                                               
 6.125% 10/15/06..................................          114,000   119,126        --         --   114,000    119,126
Popular North America Inc. 4.25% 04/01/08.........          125,000   125,787        --         --   125,000    125,787
SouthTrust Bank N.A. 4.750% 3/1/13................           86,000    84,485        --         --    86,000     84,485
US Bank N.A., Minnesota 2.850% 11/15/06...........          181,000   179,501        --         --   181,000    179,501
US Bank N.A., Minnesota 6.375% 8/1/11.............          358,000   395,588        --         --   358,000    395,588
Union Planters Corporation 4.375% 12/1/10.........          418,000   414,410        --         --   418,000    414,410
U.S. Bancorp, MTN, Series N 5.10% 07/15/07........          187,000   193,434        --         --   187,000    193,434
                                                                    ---------           ----------           ----------
                                                                    4,786,801                   --            4,786,801
                                                                    ---------           ----------           ----------
Commercial Services                                  0.2%                                                              
American Express Company 5.50% 09/12/06...........          325,000   337,248        --         --   325,000    337,248
American Express Company 3.75% 11/20/07...........          102,000   102,064        --         --   102,000    102,064
American Express Company 4.75% 06/17/2009.........          162,000   166,136        --         --   162,000    166,136
American General Finance Corp 2.75% 06/15/08......          118,000   113,066        --         --   118,000    113,066
CIT Group Inc 7.375% 4/2/2007.....................          155,000   167,835        --         --   155,000    167,835
Countrywide Home Loans, Inc. MTN Ser J                                                                                 
 5.5% 8/01/06.....................................          541,000   558,784        --         --   541,000    558,784
Household Finance Corp 5.875% 02/01/09............          193,000   205,601        --         --   193,000    205,601
Household Finance Corp 7.2% 07/15/06..............          211,000   223,288        --         --   211,000    223,288
Household Finance Corp 6.375% 11/27/12............           95,000   104,289        --         --    95,000    104,289
International Leasing Finance Corp 4.5% 5/1/2008..           89,000    89,959        --         --    89,000     89,959
International Leasing Finance Corp                                                                                     
 3.50% 04/01/09...................................          438,000   424,161        --         --   438,000    424,161
National Rural Utilities Cooperative                                                                                   
 8.000% 3/1/32....................................          122,000   155,074        --         --   122,000    155,074
National Rural Utilities Cooperative 5.75% 8/28/09          140,000   148,597        --         --   140,000    148,597
National Rural Utilities Cooperative                                                                                   
 3.25% 10/01/07...................................          136,000   133,979        --         --   136,000    133,979
                                                                    ---------           ----------           ----------
                                                                    2,930,081                   --            2,930,081
                                                                    ---------           ----------           ----------
Finance - Commercial                                 0.1%                                                              
Caterpillar Financial Services Corp...............                                                                     
  2.35% 09/15/2006................................          186,000   182,738        --         --   186,000    182,738
  5.95% 5/1/2006..................................          239,000   248,057        --         --   239,000    248,057
FINOVA Group, Inc. 7.500% 11/15/09(l).............               --        -- 2,409,000  1,150,298 2,409,000  1,150,298
                                                                    ---------           ----------           ----------
                                                                      430,795            1,150,298            1,581,093
                                                                    ---------           ----------           ----------

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                                                      Nations Strategic  Columbia Strategic   Columbia Strategic 
                                                         Income Fund         Income Fund         Income Fund     
                                                        Acquired Fund      Acquiring Fund     Pro-Forma Combined 
                                                      ------------------ ------------------- --------------------
                                             % of Net                                                            
                                              Assets    Par   Value ($)     Par    Value ($)    Par    Value ($) 
                                             -------- ------- ---------- --------- --------- --------- ----------
                                                                                                                 
Finance - Consumer Loans                       0.0%                                                              
John Deere Capital Corp MTN Series D                                                                             
 3.125% 12/15/05............................          244,000    243,784        --        --   244,000    243,784
                                                              ----------           ---------           ----------
                                                                 243,784                  --              243,784
                                                              ----------           ---------           ----------
Finance - Investment Banker/Broker             0.5%                                                              
E*Trade Financial Corp. 8.000% 06/15/11(b)..               --         -- 1,370,000 1,448,775 1,370,000  1,448,775
LaBranche & Co., Inc. 11.000% 05/15/12......               --         -- 3,545,000 3,775,425 3,545,000  3,775,425
Bear Sterns Companies Inc. 5.70% 01/15/07...          115,000    120,138        --        --   115,000    120,138
Bear Sterns Companies Inc. 4.50% 10/28/10...          388,000    387,754        --        --   388,000    387,754
Credit Suisse First Boston USA Inc.                                                                              
 5.875% 8/1/06..............................           42,000     43,743        --        --    42,000     43,743
Credit Suisse First Boston USA Inc.                                                                              
 6.125% 11/15/11............................          201,000    218,267        --        --   201,000    218,267
Goldman Sachs Group, Inc. 4.125% 01/15/08...           86,000     86,989        --        --    86,000     86,989
Lehman Brothers Holdings Inc. 7.875% 8/15/10           77,000     89,909        --        --    77,000     89,909
Lehman Brothers Holdings Inc. 7.000% 2/1/08.          248,000    269,937        --        --   248,000    269,937
Lehman Brothers Holdings Inc. 4.0% 1/22/08..          323,000    324,948        --        --   323,000    324,948
Merrill Lynch & Company, Inc. 6.00% 02/17/09          245,000    262,034        --        --   245,000    262,034
Merrill Lynch & Company, Inc. MTN Series B                                                                       
 3.70% 04/21/08.............................          154,000    153,149        --        --   154,000    153,149
Salomon Smith Barney Holdings 6.50% 02/15/08          138,000    149,340        --        --   138,000    149,340
                                                              ----------           ---------           ----------
                                                               2,106,209           5,224,200            7,330,409
                                                              ----------           ---------           ----------
Insurance                                      0.1%                                                              
Hartford Financial Services Group                                                                                
 2.375% 06/01/06............................           78,000     76,555        --        --    78,000     76,555
Hartford Financial Services Group                                                                                
 4.625% 07/15/13............................           68,000     65,168        --        --    68,000     65,168
Mass Mutual Global Funding II                                                                                    
 2.55% 07/15/2008(b)........................          127,000    121,204        --        --   127,000    121,204
Metlife, Inc. 5.375% 12/15/12...............           99,000    101,490        --        --    99,000    101,490
Metlife, Inc. 6.5% 12/15/32.................          101,000    107,453        --        --   101,000    107,453
Principal Life Global 6.25% 2/15/12(b)......          244,000    264,226        --        --   244,000    264,226
Prudential Funding LLC MTN                                                                                       
 6.6% 5/15/2008(b)..........................          388,000    419,262        --        --   388,000    419,262
                                                              ----------           ---------           ----------
                                                               1,155,359                  --            1,155,359
                                                              ----------           ---------           ----------
   Diversified Financial Services Total.....                  11,653,029           6,374,498           18,027,527
                                                              ----------           ---------           ----------
REITS                                          0.2%                                                              
REITS - Hotels                                 0.1%                                                              
La Quinta Properties 7.000% 08/15/12(b).....               --         --   500,000   537,500   500,000    537,500
                                                              ----------           ---------           ----------
                                                                      --             537,500              537,500
                                                              ----------           ---------           ----------
REITS - Mortgages                              0.1%                                                              
Thornburg Mortgage, Inc. 8.000% 05/15/13....               --         -- 1,545,000 1,657,013 1,545,000  1,657,013
Camden Property Trust 5.375% 12/15/13.......          326,000    324,735        --        --   326,000    324,735
Health Care Property Investors, Inc.                                                                             
 6.45% 06/25/12.............................          120,000    128,652        --        --   120,000    128,652
                                                              ----------           ---------           ----------
                                                                 453,388           1,657,013            2,110,401
                                                              ----------           ---------           ----------
   REITS Total..............................                     453,388           2,194,513            2,647,901
                                                              ----------           ---------           ----------
Real Estate                                    0.0%                                                              
Real Estate Operating and Development          0.0%                                                              
EOP Operating LP 7.000% 7/15/11.............          180,000    201,452        --        --   180,000    201,452
EOP Operating LP 4.75% 03/15/14.............          268,000    256,252        --        --   268,000    256,252
                                                              ----------           ---------           ----------
                                                                 457,704                  --              457,704
                                                              ----------           ---------           ----------
   Real Estate Total........................                     457,704                  --              457,704
                                                              ----------           ---------           ----------

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                                                      Nations Strategic   Columbia Strategic   Columbia Strategic 
                                                         Income Fund         Income Fund          Income Fund     
                                                        Acquired Fund       Acquiring Fund     Pro-Forma Combined 
                                                      ------------------ -------------------- --------------------
                                             % of Net                                                             
                                              Assets    Par   Value ($)     Par    Value ($)     Par    Value ($) 
                                             -------- ------- ---------- --------- ---------- --------- ----------
                                                                                                                  
Savings & Loans                                0.1%                                                               
Savings & Loans/ Thrifts - Western US          0.1%                                                               
Washington Mutual, Inc.                                                                                           
  2.400% 11/03/05...........................          116,000    115,234        --         --   116,000    115,234
  4.625% 4/1/14.............................          402,000    378,532        --         --   402,000    378,532
  5.625% 1/15/07............................          210,000    218,660        --         --   210,000    218,660
Western Financial Bank 9.625% 05/15/12......               --         -- 1,090,000  1,242,600 1,090,000  1,242,600
                                                              ----------           ----------           ----------
                                                                 712,426            1,242,600            1,955,026
                                                              ----------           ----------           ----------
   Savings & Loans Total....................                     712,426            1,242,600            1,955,026
                                                              ----------           ----------           ----------
   FINANCIAL TOTAL..........................                  13,276,546            9,811,611           23,088,157
                                                              ==========           ==========           ==========
INDUSTRIALS                                    5.8%                                                               
Aerospace/Defense                              0.6%                                                               
Aerospace/Defense - Equipment                  0.5%                                                               
Argo Tech Corp. 9.250% 06/01/11.............               --         -- 1,215,000  1,327,387 1,215,000  1,327,387
BE Aerospace, Inc. 8.875% 05/01/11..........               --         -- 2,095,000  2,189,275 2,095,000  2,189,275
Sequa Corp. 8.875% 04/01/08.................               --         -- 1,335,000  1,461,825 1,335,000  1,461,825
Standard Aero Holdings, Inc.                                                                                      
 8.250% 09/01/14(b).........................               --         -- 1,370,000  1,472,750 1,370,000  1,472,750
TransDigm, Inc. 8.375% 07/15/11.............               --         -- 1,175,000  1,266,063 1,175,000  1,266,063
                                                              ----------           ----------           ----------
                                                                      --            7,717,300            7,717,300
                                                              ----------           ----------           ----------
Aerospace and Defense                          0.1%                                                               
Northrop Grumman 7.125% 02/15/11............          204,000    231,439        --         --   204,000    231,439
Raytheon Company 5.375% 04/1/13.............          125,000    128,954        --         --   125,000    128,954
                                                              ----------           ----------           ----------
                                                                 360,393                   --              360,393
                                                              ----------           ----------           ----------
Electronics - Military                         0.0%                                                               
Condor Systems, Inc. 11.875% 05/01/09(j)(k).               --         -- 4,000,000     40,000 4,000,000     40,000
                                                              ----------           ----------           ----------
                                                                      --               40,000               40,000
                                                              ----------           ----------           ----------
   Aerospace/Defense Total..................                     360,393            7,757,300            8,117,693
                                                              ----------           ----------           ----------
Building Materials                             0.7%                                                               
Building Products - Doors & Windows            0.3%                                                               
Atrium Companies, Inc. 10.500% 05/01/09.....               --         -- 3,885,000  4,079,250 3,885,000  4,079,250
                                                              ----------           ----------           ----------
                                                                      --            4,079,250            4,079,250
                                                              ----------           ----------           ----------
Building & Construction Products -                                                                                
 Miscellaneous                                 0.2%                                                               
Associated Materials, Inc.(a) 03/01/14                                                                            
 (11.250% 03/01/09).........................               --         -- 1,095,000    815,775 1,095,000    815,775
Congoleum Corp. 8.625% 08/01/08(m)..........               --         -- 1,305,000  1,017,900 1,305,000  1,017,900
Nortek Holdings, Inc. 8.500% 09/01/14(b)....               --         --   695,000    747,125   695,000    747,125
                                                              ----------           ----------           ----------
                                                                      --            2,580,800            2,580,800
                                                              ----------           ----------           ----------
Building Products - Cement/Aggregation         0.2%                                                               
RMCC Acquisition Co. 9.500% 11/01/12(b).....               --         -- 1,810,000  1,814,525 1,810,000  1,814,525
US Concrete, Inc. 8.375% 04/01/14...........               --         -- 1,670,000  1,782,725 1,670,000  1,782,725
                                                              ----------           ----------           ----------
                                                                      --            3,597,250            3,597,250
                                                              ----------           ----------           ----------
   Building Materials Total.................                          --           10,257,300           10,257,300
                                                              ----------           ----------           ----------
Electrical Components & Equipment              0.1%                                                               
Wire & Cable Products                          0.1%                                                               
Coleman Cable, Inc. 9.875% 10/01/12(b)......               --         -- 2,065,000  2,173,412 2,065,000  2,173,412
                                                              ----------           ----------           ----------
                                                                      --            2,173,412            2,173,412
                                                              ----------           ----------           ----------
   Electrical Components & Equipment Total..                          --            2,173,412            2,173,412
                                                              ----------           ----------           ----------

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                                                           Nations Strategic  Columbia Strategic   Columbia Strategic 
                                                              Income Fund        Income Fund          Income Fund     
                                                             Acquired Fund      Acquiring Fund     Pro-Forma Combined 
                                                           ----------------- -------------------- --------------------
                                                  % of Net                                                            
                                                   Assets    Par   Value ($)    Par    Value ($)     Par    Value ($) 
                                                  -------- ------- --------- --------- ---------- --------- ----------
                                                                                                                      
Electronics                                         0.0%                                                              
Electronic Components - Miscellaneous               0.0%                                                              
Flextronics International Ltd. 6.250% 11/15/14(b)               --       --    670,000    659,950   670,000    659,950
                                                                    -------            ----------           ----------
                                                                         --               659,950              659,950
                                                                    -------            ----------           ----------
   Electronics Total.............................                        --               659,950              659,950
                                                                    -------            ----------           ----------
Engineering & Construction                          0.2%                                                              
Building & Construction - Miscellaneous             0.2%                                                              
J. Ray McDermott SA 11.000% 12/15/13(b)..........               --       --  2,160,000  2,359,800 2,160,000  2,359,800
                                                                    -------            ----------           ----------
                                                                         --             2,359,800            2,359,800
                                                                    -------            ----------           ----------
   Engineering & Construction Total..............                        --             2,359,800            2,359,800
                                                                    -------            ----------           ----------
Environmental Control                               0.5%                                                              
Non-Hazardous Waste Disposal                        0.4%                                                              
Allied Waste North America, Inc.                                                                                      
  7.875% 04/15/13................................               --       --  1,500,000  1,515,000 1,500,000  1,515,000
  8.500% 12/01/08................................               --       --  2,330,000  2,449,412 2,330,000  2,449,412
Waste Services, Inc. 9.500% 04/15/14(b)..........               --       --  2,735,000  2,707,650 2,735,000  2,707,650
                                                                    -------            ----------           ----------
                                                                         --             6,672,062            6,672,062
                                                                    -------            ----------           ----------
Recycling                                           0.1%                                                              
IMCO Recycling Escrow, Inc. 9.000% 11/15/14(b)...               --       --    575,000    595,125   575,000    595,125
                                                                    -------            ----------           ----------
                                                                         --               595,125              595,125
                                                                    -------            ----------           ----------
   Environmental Control Total...................                        --             7,267,187            7,267,187
                                                                    -------            ----------           ----------
Hand/Machine Tools                                  0.0%                                                              
Machine Tools & Related Products                    0.0%                                                              
Newcor, Inc. 6.000% 01/01/13(k)..................               --       --    847,510    542,406   847,510    542,406
                                                                    -------            ----------           ----------
                                                                         --               542,406              542,406
                                                                    -------            ----------           ----------
   Hand/Machine Tools Total......................                        --               542,406              542,406
                                                                    -------            ----------           ----------
Industrial Conglomerates                            0.0%                                                              
Industrial Conglomerates                            0.0%                                                              
General Electric Co. 5.0% 2/1/2013...............          129,000  130,957         --         --   129,000    130,957
                                                                    -------            ----------           ----------
                                                                    130,957                    --              130,957
                                                                    -------            ----------           ----------
   Industrial Conglomerates Total................                   130,957                    --              130,957
                                                                    -------            ----------           ----------
Machinery - Construction & Mining                   0.1%                                                              
Terex Corp. 10.375% 04/01/11.....................               --       --  1,700,000  1,916,750 1,700,000  1,916,750
                                                                    -------            ----------           ----------
                                                                         --             1,916,750            1,916,750
                                                                    -------            ----------           ----------
   Machinery - Construction & Mining Total.......                        --             1,916,750            1,916,750
                                                                    -------            ----------           ----------
Metal Fabricate/Hardware                            0.8%                                                              
Metal Processors & Fabricate                        0.6%                                                              
Altra Industrial Motion, Inc. 9.000% 12/01/11(b).               --       --    895,000    908,425   895,000    908,425
Hawk Corp. 8.750% 11/01/14(b)....................               --       --    345,000    356,213   345,000    356,213
Mueller Group, Inc. 10.000% 05/01/12.............               --       --  1,700,000  1,844,500 1,700,000  1,844,500
Mueller Holdings, Inc.(a) 04/15/14                                                                                    
 (14.750% 04/15/09)..............................               --       --  2,083,000  1,406,025 2,083,000  1,406,025
TriMas Corp. 9.875% 06/15/12.....................               --       --  4,165,000  4,352,425 4,165,000  4,352,425
                                                                    -------            ----------           ----------
                                                                         --             8,867,588            8,867,588
                                                                    -------            ----------           ----------
Metal Products - Fasteners                          0.2%                                                              
Fastentech, Inc. 11.500% 05/01/11(b).............               --       --  2,680,000  3,055,200 2,680,000  3,055,200
                                                                    -------            ----------           ----------
                                                                         --             3,055,200            3,055,200
                                                                    -------            ----------           ----------
   Metal Fabricate/Hardware Total................                        --            11,922,788           11,922,788
                                                                    -------            ----------           ----------

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                                                             Nations Strategic  Columbia Strategic   Columbia Strategic 
                                                              Income Fund          Income Fund          Income Fund     
                                                             Acquired Fund        Acquiring Fund     Pro-Forma Combined 
                                                             ----------------- -------------------- --------------------
                                                    % of Net                                                            
                                                     Assets  Par   Value ($)      Par    Value ($)     Par    Value ($) 
                                                    -------- ---   ---------   --------- ---------- --------- ----------
                                                                                                                        
Miscellaneous Manufacturers                           0.6%                                                              
Advanced Materials/Products                           0.1%                                                              
Hexcel Corp. 9.750% 01/15/09.......................          --       --       1,385,000  1,450,787 1,385,000  1,450,787
                                                                      --                 ----------           ----------
                                                                      --                  1,450,787            1,450,787
                                                                      --                 ----------           ----------
Diversified Manufacturer Operations                   0.4%                                                              
J.B. Poindexter & Co. 8.750% 03/15/14(b)...........          --       --       1,835,000  1,945,100 1,835,000  1,945,100
KI Holdings, Inc.(a) 11/15/14 (9.875% 11/15/09)(b).          --       --       2,025,000  1,285,875 2,025,000  1,285,875
Koppers Industries, Inc. 9.875% 10/15/13...........          --       --       1,960,000  2,224,600 1,960,000  2,224,600
Trinity Industries, Inc. 6.500% 03/15/14...........          --       --         740,000    733,525   740,000    733,525
                                                                      --                 ----------           ----------
                                                                      --                  6,189,100            6,189,100
                                                                      --                 ----------           ----------
Filteration/Separation Product                        0.1%                                                              
Polypore, Inc.(a) 10/01/12 (10.500% 10/01/12)(b)...          --       --       2,365,000  1,519,513 2,365,000  1,519,513
                                                                      --                 ----------           ----------
                                                                      --                  1,519,513            1,519,513
                                                                      --                 ----------           ----------
   Miscelleaneous Manufacturer Total...............                   --                  9,159,400            9,159,400
                                                                      --                 ----------           ----------
Packaging & Containers                                0.9%                                                              
Containers - Metal/Glass                              0.3%                                                              
Crown European Holdings SA 10.875% 03/01/13........          --       --       1,800,000  2,119,500 1,800,000  2,119,500
Owens-Brockway Glass Container 8.250% 05/15/13.....          --       --         340,000    371,450   340,000    371,450
Owens-Illinois, Inc.                                                                                                    
  7.350% 05/15/08..................................          --       --       1,950,000  2,032,875 1,950,000  2,032,875
  7.500% 05/15/10..................................          --       --         440,000    463,650   440,000    463,650
                                                                      --                 ----------           ----------
                                                                      --                  4,987,475            4,987,475
                                                                      --                 ----------           ----------
Containers - Paper/Plastic                            0.6%                                                              
Consolidated Container Co. LLC(a) 06/15/09 (10.750%                                                                     
 06/15/07).........................................          --       --       1,500,000  1,260,000 1,500,000  1,260,000
MDP Acquisitions PLC 9.625% 10/01/12...............          --       --       2,800,000  3,164,000 2,800,000  3,164,000
Portola Packaging, Inc. 8.250% 02/01/12............          --       --       1,460,000  1,138,800 1,460,000  1,138,800
Smurfit-Stone Container Corp. 8.250% 10/01/12......          --       --       1,600,000  1,752,000 1,600,000  1,752,000
Tekni-Plex, Inc. 12.750% 06/15/10..................          --       --       1,755,000  1,553,175 1,755,000  1,553,175
                                                                      --                 ----------           ----------
                                                                      --                  8,867,975            8,867,975
                                                                      --                 ----------           ----------
   Packaging & Containers Total....................                   --                 13,855,450           13,855,450
                                                                      --                 ----------           ----------
Transportation                                        1.3%                                                              
Transport - Truck                                     0.2%                                                              
Allied Holdings, Inc. 8.625% 10/01/07..............          --       --       1,410,000  1,198,500 1,410,000  1,198,500
QDI Capital Corp. 9.000% 11/15/10(b)...............          --       --       2,060,000  2,054,850 2,060,000  2,054,850
                                                                      --                 ----------           ----------
                                                                      --                  3,253,350            3,253,350
                                                                      --                 ----------           ----------
Transport - Services                                  0.3%                                                              
CHC Helicopter Corp. 7.375% 05/01/14...............          --       --       1,450,000  1,533,375 1,450,000  1,533,375
Petroleum Helicopters, Inc. 9.375% 05/01/09........          --       --       2,710,000  2,926,800 2,710,000  2,926,800
                                                                      --                 ----------           ----------
                                                                      --                  4,460,175            4,460,175
                                                                      --                 ----------           ----------
Transport - Marine                                    0.6%                                                              
Ship Finance International Ltd. 8.500% 12/15/13....          --       --       3,795,000  3,899,363 3,795,000  3,899,363
Stena AB                                                                                                                
  7.000% 12/01/16(b)...............................          --       --         670,000    658,275   670,000    658,275
  7.500% 11/01/13..................................          --       --       2,215,000  2,292,525 2,215,000  2,292,525
  9.625% 12/01/12..................................          --       --       1,425,000  1,603,125 1,425,000  1,603,125
Teekay Shipping Corp. 8.875% 07/15/11..............          --       --         485,000    562,600   485,000    562,600
                                                                      --                 ----------           ----------
                                                                      --                  9,015,888            9,015,888
                                                                      --                 ----------           ----------

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                                                          Nations Strategic  Columbia Strategic   Columbia Strategic 
                                                             Income Fund        Income Fund          Income Fund     
                                                            Acquired Fund      Acquiring Fund     Pro-Forma Combined 
                                                          ----------------- -------------------- --------------------
                                                 % of Net                                                            
                                                  Assets    Par   Value ($)    Par    Value ($)     Par    Value ($) 
                                                 -------- ------- --------- --------- ---------- --------- ----------
                                                                                                                     
Transport - Rail                                   0.2%                                                              
Burlington North Santa Fe Corp 6.75% 7/15/11....          212,000  238,001         --         --   212,000    238,001
Canadian National Railway Company                                                                                    
 6.90% 7/15/28..................................          192,000  214,385         --         --   192,000    214,385
TFM SA de CV 12.500% 06/15/12...................                   452,386  2,210,000  2,508,350 2,210,000  2,508,350
                                                                   -------            ----------           ----------
                                                                   452,386             2,508,350            2,960,736
                                                                   -------            ----------           ----------
   Transportation Total.........................                   452,386            19,237,763           19,690,149
                                                                   -------            ----------           ----------
   INDUSTRIALS TOTAL............................                   943,736            87,109,506           88,053,242
                                                                   =======            ==========           ==========
TECHNOLOGY                                         0.2%                                                              
Semiconductors                                     0.2%                                                              
Electronic Components - Semiconductor              0.2%                                                              
Amkor Technology, Inc. 9.250% 02/15/08..........               --       --  2,505,000  2,461,162 2,505,000  2,461,162
                                                                   -------            ----------           ----------
                                                                        --             2,461,162            2,461,162
                                                                   -------            ----------           ----------
   Semiconductors Total.........................                        --             2,461,162            2,461,162
                                                                   -------            ----------           ----------
Computers                                          0.0%                                                              
Hewlett-Packard Company 5.75% 12/15/06..........          383,000  399,598         --         --   383,000    399,598
International Business Machines Corp                                                                                 
 4.875% 10/1/06.................................          188,000  193,381         --         --   188,000    193,381
                                                                   -------            ----------           ----------
   Computers Total..............................                   592,979                    --              592,979
                                                                   -------            ----------           ----------
   TECHNOLOGY TOTAL.............................                   592,979             2,461,162            3,054,141
                                                                   =======            ==========           ==========
UTILITIES                                          2.2%                                                              
Electric                                           2.2%                                                              
Electric - Generation                              0.4%                                                              
AES Corp.                                                                                                            
  9.000% 05/15/15(b)............................               --       --    585,000    672,750   585,000    672,750
  9.500% 06/01/09...............................               --       --  1,646,000  1,888,785 1,646,000  1,888,785
Edison Mission Energy 9.875% 04/15/11...........               --       --  2,290,000  2,713,650 2,290,000  2,713,650
Mission Energy Holding 13.500% 07/15/08.........               --       --    710,000    892,825   710,000    892,825
                                                                   -------            ----------           ----------
                                                                        --             6,168,010            6,168,010
                                                                   -------            ----------           ----------
Electric - Integrated                              0.7%                                                              
CMS Energy Corp. 8.900% 07/15/08................               --       --  2,360,000  2,619,600 2,360,000  2,619,600
Nevada Power Co.                                                                                                     
  9.000% 08/15/13...............................               --       --  1,060,000  1,240,200 1,060,000  1,240,200
  10.875% 10/15/09..............................               --       --  2,025,000  2,369,250 2,025,000  2,369,250
PSE&G Energy Holdings, Inc. 8.625% 02/15/08.....               --       --  2,495,000  2,760,094 2,495,000  2,760,094
TNP Enterprises, Inc. 10.250% 04/01/10..........               --       --  1,630,000  1,744,100 1,630,000  1,744,100
                                                                   -------            ----------           ----------
                                                                        --            10,733,244           10,733,244
                                                                   -------            ----------           ----------
Electric Power - Integrated                        0.2%                                                              
Appalachian Power Company 3.60% 05/15/08........           95,000   93,551         --         --    95,000     93,551
CenterPoint Energy Resources Corp., Series B                                                                         
 7.875% 04/01/2013..............................          189,000  222,143         --         --   189,000    222,143
Consolidated Edison Co of New York Series 2000-C                                                                     
 6.625% 12/15/05................................          195,000  202,096         --         --   195,000    202,096
Consolidated Edison Co of New York                                                                                   
 4.700% 06/15/09................................          210,000  214,882         --         --   210,000    214,882
Dominion Ressources, Inc., 5.000% 3/15/13.......           55,000   54,639         --         --    55,000     54,639
FirstEnergy Corp Series C 6.45% 11/15/11........          147,000  157,979         --         --   147,000    157,979
FirstEnergy Corp Series B 7.375% 11/15/31.......           92,000  101,768         --         --    92,000    101,768
MidAmerican Energy Hldgs Series D                                                                                    
 5.000% 2/15/14.................................          305,000  298,664         --         --   305,000    298,664
NiSource Finance Corporation 5.40% 07/15/14.....          223,000  225,655         --         --   223,000    225,655
Ohio Edison Company 4.000% 5/1/08...............           38,000   37,781         --         --    38,000     37,781

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                                                   Nations Strategic   Columbia Strategic    Columbia Strategic  
                                                      Income Fund          Income Fund           Income Fund     
                                                     Acquired Fund       Acquiring Fund      Pro-Forma Combined  
                                                   ------------------ --------------------- ---------------------
                                          % of Net                                                               
                                           Assets    Par   Value ($)     Par     Value ($)     Par     Value ($) 
                                          -------- ------- ---------- --------- ----------- --------- -----------
                                                                                                                 
Pacific Gas and Electric Company                                                                                 
 4.200% 03/01/11.........................           63,000     61,695        --          --    63,000      61,695
Pacific Gas and Electric Company                                                                                 
 6.050% 03/01/34.........................           89,000     89,698        --          --    89,000      89,698
Pepco Holdings, Inc. 3.750% 2/15/06......          106,000    106,408        --          --   106,000     106,408
Pepco Holdings, Inc. 5.500% 8/15/07......            9,000      9,349        --          --     9,000       9,349
Progress Energy, Inc. 6.050% 4/15/07.....          374,000    392,267        --          --   374,000     392,267
Public Service Electric & Gas Co., MTN,                                                                          
 Series C 4.000% 11/1/08.................          101,000    100,628        --          --   101,000     100,628
Southern California Edison Company                                                                               
 6.00% 01/15/34..........................           68,000     70,266        --          --    68,000      70,266
Southern Company Capital Funding                                                                                 
 5.3% 02/01/2007.........................          190,000    198,923        --          --   190,000     198,923
Southern Power Company Series B                                                                                  
 6.25% 7/15/12...........................           58,000     62,591        --          --    58,000      62,591
Virginia Electric and Power Co., Series A                                                                        
 5.375% 2/01/07..........................           90,000     93,406        --          --    90,000      93,406
                                                           ----------           -----------           -----------
                                                            2,794,390                    --             2,794,390
                                                           ----------           -----------           -----------
Independent Power Producers                 0.9%                                                                 
Caithness Coso Funding Corp.                                                                                     
 9.050% 12/15/09.........................               --         -- 2,585,820   2,870,260 2,585,820   2,870,260
Calpine Corp.                                                                                                    
 8.500% 07/15/10(b)......................               --         -- 2,345,000   1,840,825 2,345,000   1,840,825
Calpine Generating Co.                                                                                           
  11.169% 04/01/11(b)(e).................               --         -- 2,950,000   2,795,125 2,950,000   2,795,125
  11.500% 04/01/11(b)....................               --         -- 1,725,000   1,587,000 1,725,000   1,587,000
MSW Energy Holdings Finance                                                                                      
  7.375% 09/01/10........................               --         --   800,000     844,000   800,000     844,000
  8.500% 09/01/10........................               --         -- 2,130,000   2,343,000 2,130,000   2,343,000
Orion Power Holdings, Inc.                                                                                       
 12.000% 05/01/10........................               --         -- 1,520,000   1,930,400 1,520,000   1,930,400
                                                           ----------           -----------           -----------
                                                                   --            14,210,610            14,210,610
                                                           ----------           -----------           -----------
   Electric Total........................                   2,794,390            31,111,864            33,906,254
                                                           ----------           -----------           -----------
   UTILITIES TOTAL.......................                   2,794,390            31,111,864            33,906,254
                                                           ==========           ===========           ===========
   Total Corporate Fixed-Income                                                                                  
    Bonds & Notes........................                  30,249,962           522,498,131           552,748,093
                                                           ==========           ===========           ===========
Municipal Bond (Taxable)                    0.2%                                                                 
CONSUMER CYCLICAL                           0.2%                                                                 
Lodging                                     0.2%                                                                 
Casino Hotels                               0.2%                                                                 
Cabazon Band Mission Indians                                                                                     
 13.000% 10/01/11(h).....................               --         -- 2,820,000   2,797,525 2,820,000   2,797,525
                                                           ----------           -----------           -----------
                                                                   --             2,797,525             2,797,525
                                                           ----------           -----------           -----------
   Lodging Total.........................                          --             2,797,525             2,797,525
                                                           ----------           -----------           -----------
   CONSUMER CYCLICAL.....................                          --             2,797,525             2,797,525
                                                           ==========           ===========           ===========
   Total Municipal Bond (Taxable)........                          --             2,797,525             2,797,525
                                                           ==========           ===========           ===========

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                                      Nations Strategic       Columbia Strategic        Columbia Strategic    
                                         Income Fund              Income Fund               Income Fund       
                                        Acquired Fund           Acquiring Fund          Pro-Forma Combined    
                                    ---------------------- ------------------------- -------------------------
                           % of Net                                                                           
                            Assets      Par      Value ($)      Par       Value ($)       Par       Value ($) 
                           -------- ------------ --------- -------------- ---------- -------------- ----------
                                                                                                              
Foreign Government                                                                                            
 Obligations                 32.7%                                                                            
FOREIGN                                                                                                       
 GOVERNMENT                                                                                                   
 BONDS                       32.7%                                                                            
Sovereign                    32.7%                                                                            
Aries Vermogensverwaltng                                                                                      
 7.750% 10/25/09(b).......                    --        -- EUR  2,500,000  3,707,330 EUR  2,500,000  3,707,330
Commonwealth of Australia                                                                                     
 6.250% 4/15/15...........          AUD  740,000   620,249             --         -- AUD    740,000    620,249
  8.750% 08/15/08.........          AUD  315,000   274,481  AUD13,580,000 11,777,509 AUD 13,895,000 12,051,990
European Investment Bank                                                                                      
 7.625% 12/07/07..........          GBP  100,000   206,233 GBP  5,110,000 10,535,729 GBP  5,210,000 10,741,962
Federal Republic of Brazil                                                                                    
  7.720% 06/29/09(e)......                    --        -- USD  6,350,000  7,128,700 USD  6,350,000  7,128,700
  8.250% 01/20/34.........                    --        -- USD  4,595,000  4,238,887 USD  4,595,000  4,238,887
  11.500% 04/02/09........                    --        -- EUR  4,250,000  6,677,294 EUR  4,250,000  6,677,294
  12.750% 01/15/20........          USD1,250,000 1,615,625             --         -- USD  1,250,000  1,615,625
  14.500% 10/15/09........                    --        -- USD 12,750,000 16,670,625 USD 12,750,000 16,670,625
  FLTR 4/15/12(e).........          USD6,419,168 5,994,219             --         -- USD  6,419,168  5,994,219
Government of Canada                                                                                          
  5.250% 06/01/13.........          CAD1,000,000   893,646 CAD  6,200,000  5,544,803 CAD  7,200,000  6,438,449
  10.000% 06/01/08........                    --        -- CAD 24,110,000 24,635,158 CAD 24,110,000 24,635,158
Government of                                                                                                 
 New Zealand                                                                                                  
  6.000% 11/15/11.........          NZD1,395,000 1,002,228 NZD 21,400,000 15,358,594 NZD 22,795,000 16,360,822
  6.500% 04/15/13.........                    --        -- NZD 27,600,000 20,453,385 NZD 27,600,000 20,453,385
  6.500% 2/15/06..........          NZD  525,000   377,386             --         -- NZD    525,000    377,386
Government of Norway                                                                                          
  5.500% 05/15/09.........                    --        -- NOK 41,770,000  7,487,444 NOK 41,770,000  7,487,444
  6 500% 05/16/11.........          NOK  640,000   119,031             --         -- NOK    640,000    119,031
Government of Spain                                                                                           
 5.500% 07/30/17..........                    --        -- EUR  7,635,000 11,666,432 EUR  7,635,000 11,666,432
Government of Sweden                                                                                          
  5.000% 01/28/09.........                    --        -- SEK153,580,000 24,338,189 SEK153,580,000 24,338,189
  6.750% 05/05/14.........          SEK2,830,000   508,195 SEK 86,735,000 15,587,070 SEK 89,565,000 16,095,265
Hellenic Republic                                                                                             
 5.350% 5/18/11...........          EUR  310,000   456,066             --         -- EUR    310,000    456,066
Malaysia 7.500% 7/15/11...          USD  400,000   462,120             --         -- USD    400,000    462,120
Peru Government                                                                                               
 International Bond                                                                                           
 7.500% 10/14/14..........                    --        -- EUR  2,475,000  3,416,655 EUR  2,475,000  3,416,655
Poland Government Bond                                                                                        
  8.500% 05/12/07.........                    --        -- PLN 29,915,000  9,867,862 PLN 29,915,000  9,867,862
  6.000% 05/24/09.........          PLN3,040,000   938,308             --         -- PLN  3,040,000    938,308
Republic of Argentina(d)                                                                                      
 6/19/31..................          USD1,749,000   552,684             --         -- USD  1,749,000    552,684
Republic of Bulgaria                                                                                          
  2.750% 7/28/11(c).......                    --        -- USD  7,280,000  7,269,080 USD  7,280,000  7,269,080
  8.250% 01/15/15.........          USD  300,000   372,000 USD  4,215,000  5,220,278 USD  4,515,000  5,592,278
Republic of Chile                                                                                             
 5.500% 01/15/13..........          USD   46,000    47,463             --         -- USD     46,000     47,463
Republic of Colombia                                                                                          
  9.750% 04/09/11.........          USD  751,441   864,157 USD  2,697,672  3,102,323 USD  3,449,113  3,966,480
  10.000% 01/23/12........                    --        -- USD  5,523,000  6,254,798 USD  5,523,000  6,254,798
  11.500% 05/31/11........                    --        -- EUR  3,010,000  4,959,051 EUR  3,010,000  4,959,051
  11.750% 02/25/20........          USD  300,000   375,450 USD  4,620,000  5,781,930 USD  4,920,000  6,157,380
  10.750% 01/15/13........          USD  300,000   351,600             --         -- USD    300,000    351,600
Republic of France                                                                                            
  4.000% 04/25/14.........                    --        -- EUR  8,220,000 11,144,559 EUR  8,220,000 11,144,559
  4.750% 10/25/12.........          EUR1,000,000 1,437,251             --         -- EUR  1,000,000  1,437,251
  5.500% 10/25/10.........          EUR  350,000   520,450             --         -- EUR    350,000    520,450

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                                       Nations Strategic         Columbia Strategic         Columbia Strategic    
                                          Income Fund               Income Fund                 Income Fund       
                                         Acquired Fund             Acquiring Fund           Pro-Forma Combined    
                                    ----------------------- ---------------------------- -------------------------
                           % of Net                                                                               
                            Assets      Par      Value ($)        Par         Value ($)       Par       Value ($) 
                           -------- ------------ ---------- ---------------- ----------- ------------- -----------
                                                                                                                  
Republic of Germany                                                                                               
  4.250% 07/04/14.........          EUR  750,000  1,037,716 EUR   11,740,000  16,238,812 EUR12,490,000  17,276,528
  6.000% 07/04/07.........          EUR  440,000    634,970 EUR   10,280,000  14,830,731 EUR10,720,000  15,465,701
  5.250% 07/04/10.........          EUR  350,000    513,579               --          -- EUR   350,000     513,579
Republic of Greece                                                                                                
 5.350% 05/18/11..........                    --         -- EUR    5,000,000   7,353,689 EUR 5,000,000   7,353,689
Republic of Italy                                                                                                 
  5.000% 02/01/12.........                    --         -- EUR   23,170,000  33,678,825 EUR23,170,000  33,678,825
  7.625% 12/07/07.........          EUR1,735,000  2,522,675               --          -- EUR 1,735,000   2,522,675
Republic of Panama                                                                                                
  8.875% 09/30/27.........                    --         -- USD    6,230,000   6,572,650 USD 6,230,000   6,572,650
  9.375% 07/23/12.........          USD  200,000    228,000               --          -- USD   200,000     228,000
Republic of Peru                                                                                                  
  9.875% 02/06/15.........                    --         -- USD    6,100,000   7,091,250 USD 6,100,000   7,091,250
  5.000% 03/7/17(e).......          USD  704,000    658,240               --          -- USD   704,000     658,240
Republic of Philippines                                                                                           
  10.625% 03/16/25........          USD  200,000    207,750 USD    3,100,000   3,216,250 USD 3,300,000   3,424,000
  8.875% 04/15/08.........          USD1,200,000  1,296,000               --          -- USD 1,200,000   1,296,000
Republic of Poland                                                                                                
 5.250% 01/15/14..........          USD  342,000    350,379               --          -- USD   342,000     350,379
Republic of South Africa                                                                                          
  5.250% 05/16/13.........                    --         -- EUR   11,030,000  15,378,960 EUR11,030,000  15,378,960
  13.000% 08/31/10........                    --         -- ZAR   24,700,000   5,162,893 ZAR24,700,000   5,162,893
  7.375% 04/25/12.........          USD  500,000    569,375               --          -- USD   500,000     569,375
  6.500% 06/02/14.........          USD  176,000    191,180               --          -- USD   176,000     191,180
Republic of Turkey                                                                                                
  12.375% 06/15/09........          USD  500,000    620,000               --          -- USD   500,000     620,000
  11.500% 01/23/12........          USD  750,000    939,375               --          -- USD   750,000     939,375
Republic of Venezuela                                                                                             
  9.250% 09/15/27.........          USD  250,000    260,000 USD    6,945,000   7,222,800 USD 7,195,000   7,482,800
  2.750% 12/18/07(e)......          USD  666,642    664,142               --          -- USD   666,642     664,142
Russian Federation                                                                                                
  5.000% 03/31/30.........          USD4,800,000  4,772,160 USD    6,060,000   6,024,852 USD10,860,000  10,797,012
  11.000% 07/24/18........                    --         -- USD    5,752,000   7,760,598 USD 5,752,000   7,760,598
  12.750% 06/24/28........                    --         -- USD    7,430,000  11,757,975 USD 7,430,000  11,757,975
United Kingdom Treasury                                                                                           
  5.000% 03/07/12.........                    --         -- GBP    2,540,000   4,979,174 GBP 2,540,000   4,979,174
  7.500% 12/07/06.........                    --         -- GBP    6,535,000  13,223,957 GBP 6,535,000  13,223,957
  9.000% 07/12/11.........                    --         -- GBP    4,750,000  11,356,471 GBP 4,750,000  11,356,471
  5.000% 09/07/14.........          GBP  610,000  1,202,862               --          -- GBP   610,000   1,202,862
United Mexican States                                                                                             
  7.500% 03/08/10.........                    --         --    EUR 5,040,000   7,745,048 EUR 5,040,000   7,745,048
  7.500% 04/08/33.........          USD  391,000    407,422    USD 9,255,000   9,643,710 USD 9,646,000  10,051,132
  11.375% 09/15/16........                    --         --    USD 7,590,000  11,062,425 USD 7,590,000  11,062,425
  9.875% 02/1/10..........          USD  550,000    672,650               --          -- USD   550,000     672,650
  8.375% 01/14/11.........          USD  400,000    466,000               --          -- USD   400,000     466,000
  6.375% 01/16/13.........          USD  181,000    189,145               --          -- USD   181,000     189,145
  11.500% 05/15/26(q).....          USD2,050,000  3,054,500               --          -- USD 2,050,000   3,054,500
Western Australia Treasury                                                                                        
 7.500% 10/15/09..........                    --         -- AUD   14,665,000  12,370,794 AUD14,665,000  12,370,794
                                                 ----------                  -----------               -----------
                                                 39,446,961                  455,495,549               494,942,510
                                                 ----------                  -----------               -----------
   Sovereign Total........                       39,446,961                  455,495,549               494,942,510
                                                 ----------                  -----------               -----------
   FOREIGN                                                                                                        
    GOVERNMENT                                                                                                    
    BONDS TOTAL...........                       39,446,961                  455,495,549               494,942,510
                                                 ==========                  ===========               ===========
   Total Foreign                                                                                                  
    Government                                                                                                    
    Obligations...........                       39,446,961                  455,495,549               494,942,510
                                                 ==========                  ===========               ===========

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                                                       Nations Strategic    Columbia Strategic    Columbia Strategic  
                                                          Income Fund           Income Fund           Income Fund     
                                                         Acquired Fund        Acquiring Fund      Pro-Forma Combined  
                                                     --------------------- --------------------- ---------------------
                                            % of Net                                                                  
                                             Assets     Par     Value ($)     Par     Value ($)     Par     Value ($) 
                                            -------- ---------- ---------- ---------- ---------- ---------- ----------
                                                                                                                      
Government Agencies & Obligations             23.9%                                                                   
AGENCY                                         1.1%                                                                   
Federal Farm Credit Bank                                                                                              
  5.000% 08/25/10..........................                  --         --  8,600,000  8,698,805  8,600,000  8,698,805
  2.500% 03/15/06..........................             280,000    278,280         --         --    280,000    278,280
Federal Home Loan Bank                                                                                                
  3.625% 11/14/08..........................             300,000    298,972         --         --    300,000    298,972
  2.000% 02/13/06..........................             300,000    296,625         --         --    300,000    296,625
Federal Home Loan Mortgage Corp.                                                                                      
  5.125% 10/15/08..........................             680,000    714,699         --         --    680,000    714,699
  5.750% 03/15/09..........................             550,000    590,905         --         --    550,000    590,905
  6.750% 03/15/31..........................             406,000    477,966         --         --    406,000    477,966
  4.875% 3/15/07...........................             300,000    310,435         --         --    300,000    310,435
  4.250% 06/15/05..........................             750,000    756,941         --         --    750,000    756,941
  4.875% 11/15/13..........................             246,000    249,921         --         --    246,000    249,921
  1.875% 02/15/06..........................           1,000,000    987,258         --         --  1,000,000    987,258
Federal National Mortgage Association                                                                                 
  4.375% 9/15/12...........................             490,000    485,388         --         --    490,000    485,388
  4.375% 03/15/13..........................             350,000    344,969         --         --    350,000    344,969
  4.375% 07/17/13..........................           2,378,000  2,296,979         --         --  2,378,000  2,296,979
  2.625% 11/15/06..........................             394,000    389,620         --         --    394,000    389,620
                                                                ----------            ----------            ----------
                                                                 8,478,959             8,698,805            17,177,764
                                                                ----------            ----------            ----------
   AGENCY TOTAL............................                      8,478,959             8,698,805            17,177,764
                                                                ==========            ==========            ==========
MORTGAGE-BACKED SECURITIES                     7.4%                                                                   
Commercial Mortgage-Backed                                                                                            
Freddie Mac, Series 2664                                                                                              
 5.500% 05/15/27...........................             613,011     73,686         --         --    613,011     73,686
Freddie Mac, Series 2692                                                                                              
 5.500% 01/15/23...........................             582,520     54,757         --         --    582,520     54,757
Fannie Mae. Series 2002-16                                                                                            
 6.000% 04/25/17...........................             521,000    545,910         --         --    521,000    545,910
Fannie Mae. Series 2002-47                                                                                            
 5.500% 08/25/17...........................             557,832    571,856         --         --    557,832    571,856
Merrill Lynch Mtg. Inv., Inc Series 1998-C3                                                                           
 IO 1.074% 12/15/30(e).....................           2,431,568     78,508         --         --  2,431,568     78,508
Federal Home Loan Mortgage Corp.                                                                                      
  7.500% 03/01/16..........................                  --         --      9,958     10,198      9,958     10,198
  8.000% 04/01/06-05/01/16.................                  --         --     69,083     71,157     69,083     71,157
  8.500% 02/01/07-07/01/10.................                  --         --     60,487     63,439     60,487     63,439
  8.750% 06/01/08-07/01/08.................                  --         --     12,161     12,742     12,161     12,742
  9.000% 06/01/08-01/01/22.................                  --         --     80,013     87,207     80,013     87,207
  9.250% 08/01/08-05/01/16.................                  --         --     90,430     99,671     90,430     99,671
  9.500% 11/01/08-08/01/16.................                  --         --     41,253     44,388     41,253     44,388
  9.750% 12/01/08-09/01/16.................                  --         --     10,489     11,313     10,489     11,313
  10.000% 07/01/09-11/01/19................                  --         --    129,749    140,277    129,749    140,277
  10.500% 01/01/20-10/01/24................                  --         --     94,091    105,498     94,091    105,498
  10.750% 05/01/10-09/01/13................                  --         --    136,987    150,364    136,987    150,364
  11.250% 10/01/10-11/01/15................                  --         --    143,394    159,779    143,394    159,779
Federal National Mortgage Association                                                                                 
  7.500% 02/01/06-11/01/11.................                  --         --     23,209     23,494     23,209     23,494
  8.000% 07/01/08-07/01/09.................                  --         --     48,933     51,133     48,933     51,133
  8.250% 11/01/07..........................                  --         --     25,210     25,592     25,210     25,592
  8.500% 05/01/08-09/01/21.................                  --         --    146,215    153,628    146,215    153,628
  9.000% 11/01/08-08/01/21.................                  --         --    414,610    448,810    414,610    448,810
  9.250% 05/01/16..........................                  --         --     95,113    106,649     95,113    106,649
  10.000% 11/01/13-03/01/16................                  --         --    262,172    291,236    262,172    291,236
  10.500% 03/01/14-03/01/16................                  --         --    269,997    300,160    269,997    300,160
  5.000% 12/01/19(g).......................          14,187,000 14,373,204         --         -- 14,187,000 14,373,204
  6.500% 12/01/31-05/01/33.................             368,500    386,939         --         --    368,500    386,939
  6.500% 12/13/34(g).......................          20,691,000 21,706,142 60,590,000 63,562,667 81,281,000 85,268,809

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                                                    Nations Strategic     Columbia Strategic     Columbia Strategic  
                                                       Income Fund           Income Fund            Income Fund      
                                                      Acquired Fund         Acquiring Fund       Pro-Forma Combined  
                                                   -------------------- ---------------------- ----------------------
                                          % of Net                                                                   
                                           Assets     Par    Value ($)     Par      Value ($)     Par      Value ($) 
                                          -------- --------- ---------- ---------- ----------- ---------- -----------
                                                                                                                     
Government National Mortgage Association                                                                             
  8.500% 02/15/06........................                 --         --      1,393       1,447      1,393       1,447
  9.000% 08/15/08-12/15/17...............                 --         --  1,295,681   1,442,820  1,295,681   1,442,820
  9.500% 06/15/09-11/15/17...............                 --         --    615,793     676,383    615,793     676,383
  10.000% 11/15/09-09/15/21..............                 --         --    174,793     193,570    174,793     193,570
  10.500% 12/15/10-04/15/21..............                 --         --     54,966      61,409     54,966      61,409
  11.000% 12/15/09-10/15/15..............                 --         --    294,440     329,998    294,440     329,998
  11.750% 08/15/13.......................                 --         --      8,765       9,860      8,765       9,860
  12.000% 05/15/14.......................                 --         --        491         559        491         559
  5.500% 07/19/33(g).....................          5,808,000  5,902,380         --          --  5,808,000   5,902,380
                                                             ----------            -----------            -----------
                                                             43,693,381             68,635,448            112,328,829
                                                             ----------            -----------            -----------
   MORTGAGE-BACKED                                                                                                   
    SECURITIES TOTAL.....................                    43,693,381             68,635,448            112,328,829
                                                             ==========            ===========            ===========
U.S. TREASURY OBLIGATIONS                   15.4%                                                                    
U.S. Treasury Bonds                                                                                                  
  6.250% 08/15/23........................          1,810,000  2,076,834         --          --  1,810,000   2,076,834
  6.875% 08/15/25........................             50,000     61,666         --          --     50,000      61,666
  7.500% 11/15/24........................                 --         -- 12,000,000  15,722,808 12,000,000  15,722,808
  8.875% 02/15/19........................                 --         --  9,000,000  12,772,620  9,000,000  12,772,620
  10.375% 11/15/12.......................                 --         -- 52,000,000  62,243,584 52,000,000  62,243,584
  10.625% 08/15/15.......................                 --         -- 29,415,000  44,798,133 29,415,000  44,798,133
  12.500% 08/15/14.......................                 --         -- 52,151,000  71,782,983 52,151,000  71,782,983
                                                             ----------            -----------            -----------
                                                              2,138,500            207,320,128            209,458,628
                                                             ----------            -----------            -----------
U.S. Treasury Notes                                                                                                  
  2.375% 08/15/06........................            250,000    247,705         --          --    250,000     247,705
  2.500% 05/31/06........................            300,000    298,406         --          --    300,000     298,406
  2.625% 05/15/09........................            500,000    481,074         --          --    500,000     481,074
  2.750% 06/30/06........................          2,000,000  1,995,546         --          --  2,000,000   1,995,546
  3.125% 04/15/09........................          1,800,000  1,765,759         --          --  1,800,000   1,765,759
  3.500% 08/15/09........................            900,000    893,426         --          --    900,000     893,426
  3.625% 07/15/09........................            190,000    189,733         --          --    190,000     189,733
  3.875% 05/15/09........................            900,000    909,563         --          --    900,000     909,563
  4.000% 06/15/09........................            450,000    456,715         --          --    450,000     456,715
  4.000% 02/15/14........................             96,000     93,600         --          --     96,000      93,600
  4.250% 08/13/13........................          1,290,000  1,287,127         --          --  1,290,000   1,287,127
  4.250% 08/15/14(q).....................          1,070,000  1,060,304         --          --  1,070,000   1,060,304
  4.750% 05/15/14........................            715,000    737,008         --          --    715,000     737,008
  4.875% 02/15/12........................                 --         --  3,500,000   3,668,711  3,500,000   3,668,711
                                                             ----------            -----------            -----------
                                                             10,415,965              3,668,711             14,084,676
                                                             ----------            -----------            -----------
U.S. Treasury STRIP                                                                                                  
  (d) 11/15/08(p)........................          7,000,000  6,092,800         --          --  7,000,000   6,092,800
  (d) 11/15/13...........................          2,250,000  1,510,434         --          --  2,250,000   1,510,434
  (d) 05/15/23...........................          4,550,000  1,717,261         --          --  4,550,000   1,717,261
                                                             ----------            -----------            -----------
                                                              9,320,495         --          --              9,320,495
                                                             ----------            -----------            -----------
                                                              9,320,495                     --              9,320,495
                                                             ----------            -----------            -----------
   U.S. TREASURY OBLIGATIONS                                                                                         
    TOTAL................................                    21,874,960            210,988,839            232,863,799
                                                             ==========            ===========            ===========
   Total Government Agencies &                                                                                       
    Obligations..........................                    74,047,301            288,323,092            362,370,393
                                                             ==========            ===========            ===========
Asset-Backed Securities                      1.4%                                                                    
AmeriCredit Automobile Receivables Trust,                                                                            
 Series 2004-BM, Class A3                                                                                            
 2.070% 08/06/08.........................            940,000    923,683         --          --    940,000     923,683

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                                                Nations Strategic   Columbia Strategic   Columbia Strategic 
                                                   Income Fund          Income Fund         Income Fund     
                                                  Acquired Fund       Acquiring Fund     Pro-Forma Combined 
                                               -------------------- ------------------- --------------------
                                      % of Net                                                              
                                       Assets     Par    Value ($)     Par    Value ($)    Par    Value ($) 
                                      -------- --------- ---------- --------- --------- --------- ----------
                                                                                                            
AmeriCredit Automobile Receivables                                                                          
 Trust, Series 2001-B, Class A4                                                                             
 5.370% 06/12/08.....................            424,236    429,196        --        --   424,236    429,196
American Express Credit Account                                                                             
 Master, Series 2003-4, Class A                                                                             
 1.690% 01/15/09.....................            225,779    220,704        --        --   225,779    220,704
BMW Vehicle Owner Trust, Series                                                                             
 2004-A, Class A4                                                                                           
 3.320% 02/25/09.....................          1,126,000  1,121,154        --        -- 1,126,000  1,121,154
Bank One Auto Securitization Trust,                                                                         
 Series 2003-1, Class A3                                                                                    
 1.820% 09/20/07.....................            623,000    616,393        --        --   623,000    616,393
Capital Auto Receivables Asset Trust,                                                                       
 Series 2002-3, Class A2A                                                                                   
 4.180% 10/15/07.....................             34,451     34,637        --        --    34,451     34,637
Capital Auto Receivables Asset Trust,                                                                       
 Series 2002-2, Class CTFS                                                                                  
 3.050% 09/15/05.....................             87,529     87,561        --        --    87,529     87,561
Citibank Credit Card Issuance Trust,                                                                        
 Series 2003-A5, Class A5                                                                                   
 2.500% 04/07/08.....................          1,130,000  1,120,285        --        -- 1,130,000  1,120,285
CIT Equipment Collateral, Series                                                                            
 2002-VT1, Class A4                                                                                         
 4.670% 12/21/09.....................            420,000    423,777        --        --   420,000    423,777
Discover Card Master Trust I, Series                                                                        
 2001-6, Class A5.750% 12/15/08......            212,000    220,107        --        --   212,000    220,107
Equity One ABS, Inc.                                                                                        
 4.205% 04/25/34.....................                 --         -- 5,050,000 4,922,437 5,050,000  4,922,437
First Plus Home Loan Trust,                                                                                 
 Series1998-2, Class M1                                                                                     
 7.220% 05/10/24.....................             16,748     16,740        --        --    16,748     16,740
Ford Credit Auto Owner Trust,                                                                               
 Series2002-B, Class B                                                                                      
 5.180% 10/16/06.....................            200,000    203,153        --        --   200,000    203,153
Ford Credit Auto Owner Trust,                                                                               
 Series2003-A, Class A4A                                                                                    
 2.700% 06/15/07.....................            485,000    483,226        --        --   485,000    483,226
Ford Credit Auto Owner Trust,                                                                               
 Series2004-A, Class A4                                                                                     
 3.540% 11/15/08.....................          2,503,000  2,497,922        --        -- 2,503,000  2,497,922
GMAC Mortgage Corp.                                                                                         
 4.865% 09/25/34.....................                 --         -- 4,130,000 4,078,052 4,130,000  4,078,052
Honda Auto Receivables Owner Trust,                                                                         
 Series 2004-1, Class A4                                                                                    
 3.060% 10/21/09.....................          1,403,000  1,388,072        --        -- 1,403,000  1,388,072
Household Automotive Trust, Series                                                                          
 2003-2, Class A3                                                                                           
 2.310% 04/17/08.....................          1,391,000  1,381,496        --        -- 1,391,000  1,381,496
Nissan Auto Receivables Owner Trust,                                                                        
 Series 2003-C, Class A4                                                                                    
 2.700% 12/17/07.....................            563,000    558,770        --        --   563,000    558,770
Volkswagen Auto Loan Enhanced                                                                               
 Trust, Series 2003-2, Class A3                                                                             
 2.270% 10/22/07.....................            800,000    794,132        --        --   800,000    794,132
                                                         ----------           ---------           ----------
                                                         12,521,008           9,000,489           21,521,497
                                                         ----------           ---------           ----------
   Total Asset-Backed                                                                                       
    Securities.......................                    12,521,008           9,000,489           21,521,497
                                                         ==========           =========           ==========

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                                              Nations Strategic        Columbia Strategic         Columbia Strategic     
                                                 Income Fund               Income Fund                Income Fund        
                                                Acquired Fund            Acquiring Fund           Pro-Forma Combined     
                                           -----------------------  ------------------------  -------------------------- 
                                  % of Net                                                                               
                                   Assets     Par       Value ($)      Par       Value ($)        Par        Value ($)   
                                  -------- ---------- ------------  --------- --------------  ----------- -------------- 
                                                                                                                         
Convertible Bonds                    0.2%                                                                                
UTILITIES                            0.2%                                                                                
Electric                             0.2%                                                                                
Independent Power Producers          0.2%                                                                                
Mirant Corp.                                                                                                             
 2.500% 06/15/21(f)..............                  --           --  1,565,000      1,111,854   1,565,000       1,111,854 
Nortel Networks Corp.                                                                                                    
 4.250% 09/01/08.................                  --           --  2,265,000      2,171,886   2,265,000       2,171,886 
                                                      ------------            --------------              -------------- 
                                                                --                 3,283,740                   3,283,740 
                                                      ------------            --------------              -------------- 
   Total Convertible Bonds.......                               --                 3,283,740                   3,283,740 
                                                      ============            ==============              ============== 
Short-Term Instruments               5.1%                                                                                
FNMA Discount Discount Note                                                                                              
  (d) 12/16/04...................          14,187,000   14,174,759         --             --  14,187,000      14,174,759 
  (d) 12/13/04...................          20,691,000   20,676,723         --             --  20,691,000      20,676,723 
  (d) 12/20/04...................           5,808,000    5,801,652         --             --   5,808,000       5,801,652 
                                                      ------------            --------------              -------------- 
   FNMA DISCOUNT NOTES                                                                                                   
    TOTAL........................                       40,653,134                        --                  40,653,134 
                                                      ============            ==============              ============== 
U.S. Treasury Bill(d) 02/10/05...              50,000       49,792         --             --      50,000          49,792 
                                                      ------------            --------------              -------------- 
   U.S. TREASURY BILL                                                                                                    
    TOTAL........................                           49,792                        --                      49,792 
                                                      ============            ==============              ============== 
Repurchase agreement with State                                                                                          
 Street Bank & Trust Co., dated                                                                                          
 11/30/04, due 12/01/04 at                                                                                               
 1.870%, collateralized by a U.S.                                                                                        
 Treasury Note maturing                                                                                                  
 07/15/09, market value of                                                                                               
 $37,775,244 (repurchase                                                                                                 
 proceeds $37,031,924)                                                                                                   
 1.870% 12/01/04.................                  --           --                37,030,000                  37,030,000 
                                                      ------------            --------------              -------------- 
   REPURCHASE                                                                                                            
    AGREEMENT TOTAL..............                  --           --                37,030,000                  37,030,000 
                                                      ============            ==============              ============== 
   Total Short-Term                                                                                                      
    Obligations..................                       40,702,926                37,030,000                  77,732,926 
                                                      ============            ==============              ============== 
Affiliated Investment Companies      5.6%                                                                                
High Yield Portfolio(n)..........           7,282,806   72,015,294         --             --   7,282,806      72,015,294 
Nations Cash Reserves, Capital                                                                                           
 Class(o)........................          12,337,642   12,337,642         --             --  12,337,642      12,337,642 
                                                      ------------            --------------              -------------- 
Total Affiliated Investment                                                                                              
 Companies.......................                       84,352,936                        --                  84,352,936 
                                                      ============            ==============              ============== 
Total Investments                  105.6%              281,321,093             1,318,428,526               1,599,749,619 
                                                      ============            ==============              ============== 
                                                                                               Pro-Forma                 
                                                                                              Adjustments                
Other Assets & Liabilities, Net     -5.6%              (42,480,105)              (41,719,039)    (89,141)    (84,288,285)
                                                      ------------            --------------              -------------- 
Net Assets                         100.0%             $238,840,988            $1,276,709,487     (89,141) $1,515,461,334 
                                                      ============            ==============              ============== 
Total Investments At Cost(r)                          $276,845,124            $1,241,498,702              $1,518,343,826 
                                                      ============            ==============              ============== 

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Sector                                  % of Net Assets
------                                  ---------------
                                                       
 Corporate Fixed-income Bonds & Notes..       36.5     
 Municipal Bond........................        0.2     
 Foreign Government Bonds..............       32.7     
 Government Agencies & Obligations.....       23.9     
 Asset-Backed Securities...............        1.4     
 Convertible Bonds.....................        0.2     
 Short-Term Obligations................        5.1     
 Affiliated Investment Companies.......        5.6     
 Other Assets & Liabilities. Net.......       (5.6)    
                                             -----     
                                             100.0     
                                             -----     

Category - Corp Fixed Bonds & Notes     % of Net Assets
-----------------------------------     ---------------
 Basic Materials.......................        3.5     
 Communications........................        8.5     
 Consumer Cyclical.....................        7.1     
 Consumer Non-Cyclical.................        4.5     
 Energy................................        3.2     
 Financial.............................        1.5     
 Industrials...........................        5.8     
 Tecknology............................        0.2     
 Utilities.............................        2.2     
                                             -----     
                                              36.5     
                                             -----     

Category - Gov't Agencies & Obligations % of Net Assets
--------------------------------------- ---------------
 Agency................................        1.1     
 Mortgage-Backed Securities............        7.4     
 US Treasury Obligations...............       15.4     
                                             -----     
                                              23.9     
                                             -----     

--------                                                                        
Notes to Investment Portfolio:                                                  

(a)Step bond. This security is currently not paying coupon. Shown               
parenthetically is the next interest rate to be paid and the date the Fund
will begin accruing at this rate.                                         
(b)Security exempt from registration pursuant to Rule 144A under the Securities 
Act of 1933. These securities may be resold in transactions exempt from   
registration, normally to qualified institutional buyers. At November 30, 
 2004, these securities amounted to $1,290,730 and $121,125,585 representing
.5% and 9.5% of net assets for Nations Strategic Inome Fund and Columbia  
Strategic Income Fund, respectively.                                      
(c)Step bond. Shown parenthetically is the next interest rate to be paid and    
the date the Fund will begin accruing at this rate.                       
(d)Zero coupon Bond.                                                            
(e)Floating rate security. The interest rate shown reflects the rate as of      
November 30, 2004.                                                        
(f)The issuer has filed for bankruptcy protection under Chapter 11, and is in   
default of certain debt covenants. Income is not being accrued. As of     
November 30, 2004, the value of these securities amounted to $5,863,729,  
which represents 0.5% of net assets for Columbia Strategic Income Fund.   
(g)Securities purchased on a delayed delivery basis.                            
(h)Illiquid security                                                            
(i)The issuer has filed for bankruptcy protection under Chapter 11 and is in    
 default of certain debt convenants. Income is being accrued. As of November
30, 2004, the value of this security represents 0.1% of net assets for    
Columbia Strategic Income Fund.                                           
(j)The issuer is in default of certain debt convenants. Income is not being     
 accrued. As of November 30, 2004, the value of these securities amounted to
$4,633,605, which represents 0.4% of net assets for Columbia Strategic    
Income Fund.                                                              
(k)Represents fair value as determined in good faith under procedures approved  
by the Board of Trustees.                                                 
(l)Issued as part of bankruptcy reorganization.                                 
(m)The issuer has filed for bankruptcy protection under Chapter 11, and is in   
default of certain debt convenants, however, under the issuer's plan of   
reorganization, the issuer has guaranteed all interest due and therefore  

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income is still being accrued. As of November 30, 2004, the value of this 
security represents 0.1% of net assets for Columbia Strategic Income Fund.
(n)Mutual fund registered under the Investment Company Act of 1940, as amended, 
and advised by Banc of America Capital Management, LLC.                   
(o)Money market mutual fund registered under the Investment Company Act of      
 1940, as amended, and advised by Banc of America Capital Management, LLC. A
portion of this amount represents cash collateral received from securities
lending (see Note 5). The portion that represents cash collateral is      
$1,130,642.                                                               
(p)All or a portion of security segregated as collateral for futures contracts. 
(q)All or a portion of security was on loan at November 30, 2004. The aggregate 
cost and market value of securities on loan at November 30, 2004 was      
$1,128,622 and $1,060,304.                                                
(r)Cost for federal income tax purposes is $276,845,124 and $1,255,758,829 for  
Nations Strategic Inome Fund and Columbia Strategic Income Fund,          
respectively.                                                             

                                                        [Enlarge/Download Table]

 Forward Currency Contracts--                                                            
Columbia Strategic Income Fund                        Aggregate   Settlement  Unrealized 
      Contracts to Sell        Face Value    Value    Face Value     Date    Depreciation
------------------------------ ---------- ----------- ----------- ---------- ------------
                                                                                         
             EUR               13,480,000 $17,911,604 $17,564,575 12/23/2004    (347,029)
             EUR                3,751,000   4,984,934   4,905,258  1/26/2005     (79,676)
             EUR                6,620,750   8,798,722   8,660,868  1/26/2005    (137,854)
             EUR                4,462,500   5,930,638   5,840,431  1/31/2005     (90,207)
             GBP                7,020,000  13,402,654  12,916,800 12/13/2004    (485,854)
             GBP                3,530,000   6,719,968   6,572,860  1/26/2005    (147,108)
                                                                              ---------- 
                                                                              (1,287,728)
                                                                              ========== 

                                                        [Enlarge/Download Table]

       Futures Contracts--         Number of Value of Contracts Market Value                  Appreciation 
  Nations Strategic Income Fund    Contracts    when opened     of Contracts Expiration Date (Depretiation)
  -----------------------------    --------- ------------------ ------------ --------------- --------------
                                                                                                           
U.S. 5 year Treasury Note Futures                                                                          
  (long position) expiring                                                                                 
  December 2004...................    43         4,741,234       4,717,906    December 2004     (23,328)   
U.S. 20 year Treasury Bond                                                                                 
  Futures (long position) expiring                                                                         
  December 2004...................    11         1,208,539       1,222,031    December 2004      13,492    
U.S. 10 year Treasury Note Futures                                                                         
  (short position) expiring                                                                                
  December 2004...................    (7)         (784,203)       (780,172)   December 2004       4,031    
                                                                                                -------    
                                                                                                 (5,805)   
                                                                                                =======    

                                                                [Download Table]

Acronym Name                                                            
------- ----                                                            
                                                                        
 AUD    Australian Dollar                                               
 CAD    Canadian Dollar                                                 
 EUR    Euro Currency                                                   
 GBP    British Pound                                                   
 MTN    Medium Term Note                                                
 NOK    Norwegian Krona                                                 
 NZD    New Zealand Dollar                                              
 PIK    Payment-In-Kind                                                 
 PLN    Polish Zloty                                                    
 REIT   Real Estate Investment Trust                                    
 SEK    Swedish Krona                                                   
 STRIP  Separate Trading of Registered Interest and Principal Securities
 TBA    To Be Announced                                                 
 USD    United States Dollar                                            
 ZAR    South African Rand                                              

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PRO-FORMA COMBINING STATEMENTS OF ASSETS & LIABILITIES  
As of November 30, 2004 (Unaudited) 

                                                        [Enlarge/Download Table]

                                                                                                           Columbia Strategic
                                                        Nations Strategic Columbia Strategic                  Income Fund    
                                                           Income Fund       Income Fund      Pro-Forma        Pro-Forma     
                                                          Acquired Fund     Acquiring Fund   Adjustments        Combined     
                                                        ----------------- ------------------ -----------   ------------------
                                                                                                                             
Assets:                                                                                                                      
Unaffiliated investments, at cost......................   $193,036,991      $1,241,498,702    $     --       $1,434,535,693  
Affiliated investments, at cost........................     83,808,133                  --          --           83,808,133  
                                                          ------------      --------------    --------       --------------  
 Total investments, at cost............................    276,845,124       1,241,498,702          --        1,518,343,826  
Unaffiliated investments, at value.....................   $196,968,157      $1,318,428,526    $     --       $1,515,396,683  
Affiliated investments, at value.......................     84,352,936                  --          --           84,352,936  
 Total investments, at value...........................    281,321,093       1,318,428,526          --        1,599,749,619  
                                                          ------------      --------------    --------       --------------  
Cash...................................................             --             456,166      (7,938)             448,228  
Foreign Currency (Cost: $13,004;$46;$13,050)...........         13,297                  45          --               13,342  
Receivable for:                                                                                                              
 Investments sold......................................        173,000           1,540,801          --            1,713,801  
 Investments sold on a delayed delivery basis..........             --           1,046,710          --            1,046,710  
 Fund shares sold......................................        110,709           1,385,183          --            1,495,892  
 Interest..............................................      1,434,429          26,094,965          --           27,529,394  
 Dividends.............................................        375,534                  --          --              375,534  
 Foreign tax reclaims..................................             --             160,686          --              160,686  
 Dollar Roll...........................................             --             351,678          --              351,678  
 Securities Lending....................................            408                  --          --                  408  
Deferred Trustees' compensation plan...................             --              48,463          --               48,463  
Other Assets...........................................             --                  --          --                   --  
                                                          ------------      --------------    --------       --------------  
   Total Assets........................................   $283,428,470      $1,349,513,223    $ (7,938)      $1,632,933,755  
                                                          ------------      --------------    --------       --------------  
Liabilities:                                                                                                                 
Due to custodian.......................................          7,938                  --      (7,938)                  --  
Collateral on securities lending.......................      1,130,642                  --          --            1,130,642  
Net unrealized dep on foreign forward currency                                                                               
 contracts.............................................             --           1,287,728                        1,287,728  
Payable for:                                                                                                                 
 Investments purchased.................................     42,115,105          68,320,011          --          110,435,116  
 Fund shares repurchased...............................        248,907           1,535,704          --            1,784,611  
 Dividend Payable......................................        728,553                  --          --              728,553  
 Variation Margin......................................         23,109                  --          --               23,109  
 Investment advisory fee...............................         78,941             669,532          --              748,473  
 Administration fee....................................         43,417                  --          --               43,417  
 Transfer agent fee....................................         22,501             248,252          --              270,753  
 Pricing and bookkeeping fees..........................             --              44,032          --               44,032  
 Blue Sky Registration fee.............................          3,605                  --          --                3,605  
 Trustees' fees........................................         69,340                  --          --               69,340  
 Audit fee.............................................         26,847                  --          --               26,847  
 Legal fee.............................................         23,826                  --          --               23,826  
 Custody fee...........................................          7,522              29,931          --               37,453  
 Printing fee..........................................         21,729                  --          --               21,729  
 Distribution and service fees.........................         33,762             572,773          --              606,535  
 Miscellaneous fee.....................................          1,738                  --          --                1,738  
Deferred Trustees' fees................................             --              48,463          --               48,463  
Other liabilities......................................             --              47,310      89,141(d)           136,451  
                                                          ------------      --------------    --------       --------------  
   Total Liabilities...................................     44,587,482          72,803,736      81,203          117,472,421  
                                                          ------------      --------------    --------       --------------  
Net Assets.............................................   $238,840,988      $1,276,709,487    $(89,141)(d)   $1,515,461,334  
                                                          ============      ==============    ========       ==============  
Composition of Net Assets:                                                                                                   
Paid-in capital........................................   $246,793,934      $1,537,591,199          --       $1,784,385,133  
Accumulated net investment income (loss)...............        728,000            (813,390)    (89,141)(d)         (174,531) 
Accumulated net realized loss on investments, futures                                                                        
 contracts, options contracts and foreign currency                                                                           
 transactions..........................................    (13,161,354)       (336,357,512)         --         (349,518,866) 
Unrealized appreciation (depreciation) on:                                                                                   
 Investments...........................................      4,475,969          76,929,824          --           81,405,793  
 Foreign Currency translation..........................         10,244            (640,634)         --             (630,390) 
 Futures Contracts.....................................         (5,805)                 --          --               (5,805) 
                                                          ------------      --------------    --------       --------------  
Net Assets.............................................   $238,840,988      $1,276,709,487    $(89,141)(d)   $1,515,461,334  
                                                          ============      ==============    ========       ==============  

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                                                                                                               Columbia Strategic
                                                         Nations Strategic Columbia Strategic                     Income Fund    
                                                            Income Fund       Income Fund        Pro-Forma         Pro-Forma     
                                                           Acquired Fund     Acquiring Fund     Adjustments         Combined     
                                                         ----------------- ------------------ -------------    ------------------
                                                                                                                                 
Class A:(a)                                                                                                                      
Net assets..............................................   $         --       $605,709,092    $  29,673,571(d)    $635,382,663   
Shares outstanding......................................             --         94,708,301        4,639,741(e)      99,348,042   
                                                           ============       ============                        ============   
Net asset value per share(b)............................   $         --       $       6.40                        $       6.40   
                                                           ============       ============                        ============   
Maximum sales charge....................................             --               4.75%                               4.75%  
                                                           ============       ============                        ============   
Maximum offering price per share(c).....................   $         --       $       6.72                        $       6.72   
                                                           ============       ============                        ============   
Class B:(a)                                                                                                                      
Net assets..............................................   $         --       $389,011,586    $  30,318,740(d)    $419,330,326   
Shares outstanding......................................             --         60,867,234        4,743,863(e)      65,611,097   
                                                           ============       ============                        ============   
Net asset value and offering price per share(b).........   $         --       $       6.39                        $       6.39   
                                                           ============       ============                        ============   
Class C:(a)                                                                                                                      
Net assets..............................................   $         --       $ 43,505,634    $   2,909,818(d)    $ 46,415,452   
Shares outstanding......................................             --          6,802,019          454,944(e)       7,256,963   
                                                           ============       ============                        ============   
Net asset value and offering price per share(b).........   $         --       $       6.40                        $       6.40   
                                                           ============       ============                        ============   
Class J:                                                                                                                         
Net assets..............................................   $         --       $228,672,912    $      (5,585)      $228,667,327   
Shares outstanding......................................             --         35,829,636                          35,829,636   
                                                           ============       ============                        ============   
Net asset value per share(b)............................   $         --       $       6.38                        $       6.38   
                                                           ============       ============                        ============   
Maximum sales charge....................................             --               3.00%                               4.50%  
                                                           ============       ============                        ============   
Maximum offering price per share(c).....................   $         --       $       6.58                        $       6.68   
                                                           ============       ============                        ============   
Class Z:(a)                                                                                                                      
Net assets..............................................   $         --       $  9,810,263    $ 175,855,368(d)    $185,665,631   
Shares outstanding......................................             --          1,545,602       27,705,925(e)      29,251,527   
                                                           ============       ============                        ============   
Net asset value, offering and redemption price per share   $         --       $       6.35                        $       6.35   
                                                           ============       ============                        ============   
Investor A Shares:(a)                                                                                                            
Net assets..............................................   $ 29,695,563       $         --    $ (29,695,563)      $         --   
Shares outstanding......................................      2,903,378                 --       (2,903,378)                --   
                                                           ============       ============                        ============   
Net asset value and redemption price per share..........   $      10.23       $         --                        $         --   
                                                           ============       ============                        ============   
Maximum sales charge....................................           4.75%                --                                  --   
                                                           ============       ============                        ============   
Maximum offering price per share........................   $      10.74       $         --                        $         --   
                                                           ============       ============                        ============   
Investor B Shares:(a)                                                                                                            
Net assets..............................................   $ 30,335,594       $         --    $ (30,335,594)      $         --   
Shares outstanding......................................      2,964,068                 --       (2,964,068)      $         --   
                                                           ============       ============                        ============   
Net asset value and offering price per share(b).........   $      10.23       $         --                        $         --   
                                                           ============       ============                        ============   
Investor C Shares:(a)                                                                                                            
Net assets..............................................   $  2,911,586       $         --    $  (2,911,586)      $         --   
Shares outstanding......................................        284,656                 --         (284,656)      $         --   
                                                           ============       ============                        ============   
Net asset value and offering price per share(b).........   $      10.23       $         --                        $         --   
                                                           ============       ============                        ============   
Primary A Shares:(a)                                                                                                             
Net assets..............................................   $175,898,245       $         --    $(175,898,245)      $         --   
Shares outstanding......................................     17,180,325                 --      (17,180,325)                --   
                                                           ============       ============                        ============   
Net asset value, offering and redemption price per share   $      10.24       $         --                        $         --   
                                                           ============       ============                        ============   

--------                                                                        
(a)Investor A, Investor B, Investor C and Primary A Shares of Nations Strategic 
Income Fund are exchanged for Class A, B, C and Z shares, respectively, of
  Columbia Strategic Income based on the net asset value per share of Columbia
  Stategic Income Fund's Class A, B, C and Z shares at the time of the merger.
(b)Redemption price per share is equal to net asset value less any applicable   
contingent deferred sales charge.                                         
(c)On sales of $50,000 or more the offering price is reduced.                   
(d)Adjustment includes one time proxy, accounting, legal and other costs of the 
reorganization as approved by the Board of Trustees of $57,959 and $31,182
to be borne by Nations Stategic Income Fund and Columbia Stategic Income  
Fund, respectively.                                                       
(e)Reflects estimated shares issued to Acquired Fund at the time of the merger. 

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PRO-FORMA COMBINING STATEMENTS OF OPERATIONS  
For the Twelve Months Ended November 30, 2004 (Unaudited) 

                                                        [Enlarge/Download Table]

                                                                                                 Columbia Strategic   
                                               Nations Strategic Columbia Strategic                 Income Fund       
                                                  Income Fund       Income Fund      Pro-Forma       Pro-Forma        
                                                 Acquired Fund     Acquiring Fund   Adjustments       Combined        
                                               ----------------- ------------------ -----------  ------------------   
                                                                                                                      
Investment Income:                                                                                                    
Dividends from affiliates.....................    $ 5,957,786       $         --    $        --     $  5,957,786      
Interest......................................      5,990,218         88,439,088             --       94,429,306      
Dollar roll fee income........................             --          1,697,971             --        1,697,971      
Securities lending............................          7,191                 --             --            7,191      
Foreign taxes withheld........................         (1,264)           (96,530)            --          (97,794)     
                                                  -----------       ------------    -----------     ------------      
 Total Investment Income......................     11,953,931         90,040,529             --      101,994,460      
                                                  -----------       ------------    -----------     ------------      
Expenses:                                                                                                             
Investment advisory fee.......................      1,182,508          8,251,608       (955,533)       8,478,583(c)   
Administration fee............................        520,304                 --       (520,304)             -- (c)(f)
Distribution fee:                                                                                                     
 Class A......................................             --                 --             --               --      
 Class B......................................        247,590          3,169,209             --        3,416,799(a)   
 Class C......................................         25,155            321,990             --          347,145(a)   
 Class J......................................             --            825,588             --          825,588(a)   
Service fee:                                                                                                  --      
 Class A......................................         78,173          1,409,661         (3,419)       1,484,415(a)   
 Class B......................................         82,530          1,013,816         (3,917)       1,092,429(a)   
 Class C......................................          8,385            102,681            104          111,170(a)   
 Class J......................................             --            565,411            371          565,782(a)   
Transfer agent fee............................         71,406          2,077,659     (1,066,163)       1,082,902(d)   
Pricing and bookkeeping fees..................             --            393,691       (142,941)         250,750(a)(f)
Trustees' fees................................         27,980             32,872         (9,327)          51,525(b)   
Custody fee...................................         31,995            187,783             --          219,778      
Audit fee.....................................         30,961             55,259        (36,220)          50,000(b)   
Legal fee.....................................          1,268             34,795             --           36,063      
Registration fees.............................         34,667             49,868        (23,535)          61,000(b)   
Non-recurring costs (See Note 5)..............             --             60,284             --           60,284      
Other expenses................................         69,836            329,572         (6,085)         393,323(b)   
                                                  -----------       ------------    -----------     ------------      
 Total Expenses...............................      2,412,758         18,881,747     (2,766,968)      18,527,537      
Fees and expenses waived or reimbursed by                                                                             
 Investment Advisor...........................       (236,502)                          236,502              -- (c)   
Fee waived by Distributor--Class C Shares.....                           (64,109)        (5,351)         (69,460)(e)  
Non-recurring costs assumed by Investment                                                                             
 Advisor (See Note 5).........................             --            (60,284)            --          (60,284)     
Custody earnings credit.......................         (2,000)           (10,237)            --          (12,237)     
                                                  -----------       ------------    -----------     ------------      
 Net Expenses.................................      2,174,256         18,747,117     (2,535,817)      18,385,556      
                                                  -----------       ------------    -----------     ------------      
Net Investment Income.........................      9,779,675         71,293,412      2,535,817       83,608,904      
                                                  -----------       ------------    -----------     ------------      
Net Realized and Unrealized Gain (Loss) on                                                                            
 Investments:                                                                                                         
Net realized gain (loss) on:                                                                                          
 Investments..................................      3,017,018         50,522,633                      53,539,651      
 Swap Contracts...............................        330,775                                --          330,775      
 Foreign Currency Transactions................       (395,575)        (7,193,531)            --       (7,589,106)     
 Futures Contracts............................         45,187                                --           45,187      
 Options Contracts............................        (10,167)                               --          (10,167)     
                                                  -----------       ------------    -----------     ------------      
   Net realized gain..........................      2,987,238         43,329,102             --       46,316,340      
Net change in unrealized                                                                                              
 appreciation/depreciation on:                                                                                        
 Investments..................................      2,011,090         18,240,793             --       20,251,883      
 Foreign Currency Transactions................        307,349            (18,141)            --          289,208      
 Futures Contracts............................        (38,601)                --             --          (38,601)     
                                                  -----------       ------------    -----------     ------------      
   Net change in unrealized                                                                                           
    appreciation/depreciation:................      2,279,838         18,222,652             --       20,502,490      
                                                  -----------       ------------    -----------     ------------      
Net Gain......................................      5,267,076         61,551,754             --       66,818,830      
                                                  -----------       ------------    -----------     ------------      
Net Increase in Net Assets from Operations....    $15,046,751       $132,845,166      2,535,817     $150,427,734      
                                                  ===========       ============    ===========     ============      

--------                                                                        
(a)Based on the contract in effect for the Columbia Strategic Income Fund, the  
surviving fund.                                                           
(b)Reflects elimination of duplicate expenses achieved as a result of merging   
funds.                                                                    
(c)Reflects current contractual rates for Columbia Strategic Income Fund, the   
surviving Fund in the merger, pursuant to the Assurance of Discontinuance 
with the NYAG, effective November 1, 2004.                                
(d)Reflects the impact of changes to the transfer agent fee that is expected to 
be implemented on the date the merger is consummated.                     
(e)Based on voluntary fee waiver for the Columbia Strategic Income Fund, the    
surviving fund.                                                           
(f)Adjustment to realign Nations Strategic Income Fund's fees to Columbia       
Strategic Income Fund's current fee structure.                            

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COLUMBIA STRATEGIC INCOME FUND  
AND 
NATIONS STRATEGIC INCOME FUND 

PRO FORMA COMBINING FINANCIAL STATEMENTS  

Notes to Financial Statements 
November 30, 2004 
(unaudited) 

Note 1. Organization                                                            

 Columbia Strategic Income Fund (the "Acquiring Fund"), a series of Columbia
Funds Trust I (the "Trust"), is a Massachusetts business trust registered under 
the Investment Company Act of 1940, as amended, as an open-end management       
investment company. Nations Strategic Income Fund (the ''Acquired Fund''), a    
series of Nations Funds Trust, is a Delaware business trust registered under    
the Investment Company Act of 1940, as amended, as an open-end management       
investment company.                                                             

Investment Goal                                                             

The Acquiring Fund seeks current income consistent with prudent risk. The 
Fund also sees maximum total return. The Acquired Fund seeks total return with  
an emphasis on current income by investing in a diversified portfolio of fixed  
income securities.                                                              

Fund Shares                                                                 

The Acquiring Fund and the Acquired Fund may issue an unlimited number of 
shares. The Acquiring Fund offers five classes of shares: Class A, Class B,     
Class C, Class J and Class Z shares. The Acquired Fund offers four classes of   
shares. Investor A shares, Investor B shares, Investor C shares and Primary A   
shares are exchanged for new Class A, Class B, Class C and Class Z shares of    
the Acquiring Fund, respectively. Each share class has its own expense          
structure.                                                                      

Note 2. Basis of Combination                                                    

The accompanying pro-forma financial statements are presented to show the 
effect of the proposed merger of Nations Strategic Income Fund ("Acquired       
Fund") a series of Nations Funds Trust, by the Acquiring Fund as if such merger 
had occurred on December 1, 2003.                                               

Under the terms of the merger, the combination of the Acquired Fund and   
Acquiring Fund will be accounted for by the method of accounting for tax-free   
mergers of investment companies. The merger will be accomplished by a           
combination of the net assets of the Acquired Fund into the Acquiring Fund in   
exchange for new shares of the Acquiring Fund at net asset value.               

The Investment Portfolios and Statements of Assets and Liabilities of the 
Acquired Fund and Acquiring Fund have been combined to reflect balances as of   
November 30, 2004. The Statements of Operations of the Acquired Fund and        
Acquiring Fund have been combined to reflect twelve months ended November 30,   
2004. Columbia Management Advisors, Inc. believes that all of the securities    
held by the Acquired Fund would be eligible for purchase by the Acquiring Fund. 

 Following the merger the Acquiring Fund will be the accounting survivor. In
accordance with accounting principles generally accepted in the United States   
of America, the historical cost of investment securities will be carried        
forward to the Acquiring Fund and the results of operations for pre-combination 
periods will not be re-stated.                                                  

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The accompanying pro-forma combined financial statements should be read in
conjunction with the financial statements of the Acquiring Fund and the         
Acquired Fund included within their respective annual shareholder reports dated 
May 31, 2004 and March 31, 2005, respectively, as well as their semi-annual     
shareholder reports dated November 30, 2004 and September 30, 2004,             
respectively.                                                                   

The following notes refer to the accompanying pro-forma combined financial
statements as if the merger referenced above of the Acquired Fund by the        
Acquiring Fund had occurred on December 1, 2003.                                

Note 3. Significant Accounting Policies                                         

Both the Acquiring Fund and the Acquired Fund have substantially the same 
accounting policies, which are detailed in the annual shareholder reports       
referenced above in Note 2. The Acquired Fund actively engaged in the following 
transactions. The accounting policies for these transactions are disclosed      
below.                                                                          

Futures Contracts                                                           

Upon entering into a futures contract, the Acquired Fund is required to   
deposit with the broker an amount of cash or liquid securities equal to a       
specified percentage of the contract amount. This is known as the "initial      
margin." Subsequent payments ("variation margin") are made or received by the   
Acquired Fund each day, depending on the daily fluctuation of the value of the  
contract.                                                                       

 During the period the futures contract is open, changes in the value of the
contract are recognized as an unrealized gain or loss by "marking-to-market" on 
a daily basis to reflect the changes in market value of the contract. When the  
contract is closed, the Target Fund records a realized gain or loss equal to    
the difference between the value of the contract on the closing date and the    
value of the contract when originally entered into.                             

Risks of investments in futures contracts include the possible adverse    
movement of the securities or indices underlying the contracts, the possibility 
that there may not be a liquid secondary market for the contracts, that a       
change in the value of the contract may not correlate with a change in the      
value of the underlying securities, or that the counterparty to a contract may  
default on its obligation to perform.                                           

Options                                                                     

  The Acquired Fund may purchase and write call and put options on securities,
futures and swap contracts ("swaptions"). The Acquired Fund may use such        
options on futures contracts in connection with its hedging strategies in lieu  
of purchasing and writing options directly on the underlying securities or      
stock indices or purchasing and selling the underlying futures, and to seek to  
enhance return.                                                                 

The Acquired Fund may write covered call options and put options on       
securities in which they are permitted to invest from time to time in seeking   
to attain the Target Fund's objective. Call options written by the Target Fund  
give the holder the right to buy the underlying securities from the Target Fund 
at a stated exercise price; put options give the holder the right to sell the   
underlying security to the Acquired Fund at a stated price. In the case of put  
options, the Acquired Fund is required to maintain in a separate account liquid 
assets with a value equal to or greater than the exercise price of the          
underlying securities. The Acquired Fund may also write combinations of covered 
puts and calls on the same underlying security. When the Acquired Fund          
purchases an option, it pays a premium and an amount equal to that premium is   
recorded as an asset. When the Acquired Fund writes an option, it receives a    
premium and an amount equal to that premium is recorded as a liability. The     
asset or liability is adjusted daily to reflect the current market value of the 
option.                                                                         

The Acquired Fund typically receive a premium from writing a put or call  
option, which would increase the Target Fund's return in the event the option   
expires unexercised or is closed out at a profit. The amount of the             

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premium would reflect, among other things, the relationship of the market price 
of the underlying security to the exercise price of the option, the term of the 
option and the volatility of the market price of the underlying security. By    
writing a call option, the Acquired Fund limits its opportunity to profit from  
any increase in the market value of the underlying security above the exercise  
price of the option. By writing a put option, the Acquired Fund assumes the     
risk that it may be required to purchase the underlying security for an         
exercise price higher than its then current market value, resulting in a        
potential capital loss if the purchase price exceeds the market value plus the  
amount of the premium received.                                                 

The Acquired Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it          
purchases an option having the same terms as the option written. The Acquired   
Fund will realize a profit or loss from such transaction if the cost of such    
transaction is less or more than the premium received from the writing of the   
option. In the case of a put option, any loss so incurred may be partially or   
entirely offset by the premium received. Because increases in the market price  
of a call option will generally reflect increases in the market price of the    
underlying security, any loss resulting from the repurchase of a call option is 
likely to be offset in whole or in part by unrealized appreciation of the       
underlying security owned by the Acquired Fund.                                 

Swaps                                                                       

The Acquired Fund may engage in swap transactions such as interest rate,  
total return, index or currency swaps, consistent with their investment         
objective and policies to obtain a desired return at a lower cost than if the   
Acquired Fund had invested directly in the asset that yielded the desired       
return. Swaps involve the exchange by the Acquired Fund with another party of   
their respective commitments to pay or receive interest or total return         
throughout the lives of the agreements. The interest to be paid or received on  
interest rate swaps is included in net realized gain/(loss) on investments.     
Unrealized gains are reported as an asset and unrealized losses are reported as 
a liability on the Statement of net assets. A realized gain or loss is recorded 
upon termination of swap agreements and is equal to the difference between the  
Acquired Fund's basis in the swap and the proceeds from (or cost of) the        
closing transaction. Swap agreements are stated at fair value. Notional         
principal amounts are used to express the extent of involvement in these        
transactions, but the amounts potentially subject to credit risk are much       
smaller.                                                                        

If there is a default by the counterparty to a swap contract, the Acquired
Fund will be limited to contractual remedies pursuant to the agreements related 
to the transaction. There is no assurance that the swap contract counterparties 
will be able to meet their obligations pursuant to the swap contracts or that,  
in the event of default, the Acquired Fund will succeed in pursuing contractual 
remedies. The Acquired Fund thus assumes the risk that it may be delayed in or  
prevented from obtaining payments owed to it pursuant to the swap contracts.    
The creditworthiness of the swap contract counterparties is closely monitored   
in order to minimize this risk.                                                 

Federal Income Tax Status                                                   

Each fund intends to qualify each year as a "regulated investment company"
under Subchapter M of the Internal Revenue Code, as amended, and will           
distribute substantially all of its taxable income, if any, for its tax year,   
and as such will not be subject to federal income taxes. In addition, each fund 
intends to distribute in each calendar year substantially all of its net        
investment income, capital gains and certain other amounts, if any, such that   
the fund should not be subject to federal excise tax. Therefore, no federal     
income or excise tax provision is recorded.                                     

Note 4. Capital Shares                                                          

The pro-forma combining net asset value per share assumes the issuance of 
Acquiring Fund shares to Acquired Fund shareholders in connection with the      
proposed merger. The number of shares assumed to be issued is equal to the net  
asset value of the Acquired Fund divided by the net asset value per share of    
the Acquiring                                                                   

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Fund as of November 30, 2004. The pro-forma number of shares outstanding, by    
class, for the combined entity consists of the following at November 30, 2004.  

                                                                [Download Table]

                   Shares of    Additional Shares   Total Shares  
                Acquiring Fund   Assumed Issued     Outstanding   
Class of Shares Pre-Combination    with Merger    Post Combination
--------------- --------------- ----------------- ----------------
                                                                  
    Class A....   94,708,301        4,639,741        99,348,042   
    Class B....   60,867,234        4,743,863        65,611,097   
    Class C....    6,802,019          454,944         7,256,963   
    Class J....   35,829,636               --        35,829,636   
    Class Z....    1,545,602       27,705,925        29,251,527   

Note 5. Disclosure of Significant Risks and Contingencies                       

On February 9, 2005, Columbia and the Distributor (collectively, the      
"Columbia Group") entered into an Assurance of Discontinuance with the New York 
Attorney General ("NYAG") (the "NYAG Settlement") and consented to the entry of 
a cease-and-desist order by the Securities and Exchange Commission ("SEC") (the 
"SEC Order"). The SEC Order and the NYAG Settlement are referred to             
collectively as the "Settlements". The Settlements contain substantially the    
same terms and conditions as outlined in the agreements in principle which      
Columbia Group entered into with the SEC and NYAG in March 2004.                

 Under the terms of the SEC Order, the Columbia Group has agreed among other
things, to: pay $70 million in disgorgement and $70 million in civil money      
penalties; cease and desist from violations of the antifraud provisions and     
certain other provisions of the federal securities laws; maintain certain       
compliance and ethics oversight structures; retain an independent consultant to 
review the Columbia Group's applicable supervisory, compliance, control and     
other policies and procedures; and retain an independent distribution           
consultant (see below).                                                         

The Columbia Funds have also undertaken to implement certain governance   
measures designed to maintain the independence of their boards of trustees. The 
NYAG Settlement also, among other things, requires Columbia and its affiliates, 
Banc of America Capital Management, LLC and BACAP Distributors, LLC to reduce   
certain Columbia Funds, Nations Funds and other mutual funds management fees    
collectively by $32 million per year for five years, for a projected total of   
$160 million in management fee reductions.                                      

Pursuant to the procedures set forth in the SEC order, the $140 million in
settlement amounts described above will be distributed in accordance with a     
distribution plan to be developed by an independent distribution consultant,    
who is acceptable to the SEC staff and the Columbia Funds' independent          
trustees. The distribution plan must be based on a methodology developed in     
consultation with the Columbia Group and the Fund's independent trustees and    
not unacceptable to the staff of the SEC. At this time, the distribution plan   
is still under development. As such, any gain to the fund or its shareholders   
can not currently be determined.                                                

 As a result of these matters or any adverse publicity or other developments
resulting from them, there may be increased redemptions or reduced sales of     
fund shares, which could increase transaction costs or operating expenses, or   
have other adverse consequences for the funds.                                  

A copy of the SEC Order is available on the SEC website at                
http://www.sec.gov. A copy of the NYAG Settlement is available as part of the   
Bank of America Corporation Form 8-K filing on February 10, 2005.               

On January 11, 2005, a putative class action lawsuit was filed in federal 
district court in Massachusetts against, among others, the Trustees of the Fund 
and Columbia. The lawsuit alleges that defendants violated common law duties to 
fund shareholders as well as sections of the Investment Company Act of 1940, by 
failing to ensure that the Fund and other affiliated funds participated in      
securities class action settlements for which the funds were eligible.          
Specifically, plaintiffs allege that defendants failed to submit proof of       
claims in connection with settlements of securities class action lawsuits filed 
against companies in which the funds held positions.                            

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  In 2004, certain Columbia funds, advisers and affiliated entities were named
as defendants in certain purported shareholder class and derivative actions     
making claims, including claims under the Investment Company and the Investment 
Advisers Acts of 1940 and state law. The suits allege, inter alia, that the     
fees and expenses paid by the funds are excessive and that the advisers and     
their affiliates inappropriately used fund assets to distribute the funds and   
for other improper purpose.                                                     

  On March 2, 2005, the actions were consolidated in the Massachusetts federal
court as In re Columbia Entities Litigation. The plaintiffs are expected to     
file a consolidated amended complaint in June 2005. The Fund and the other      
defendants to these actions, including Columbia and various of its affiliates,  
certain other mutual funds advised by Columbia and its affiliates, and various  
directors of such funds, have denied these allegations and are contesting the   
plaintiffs' claims. These proceedings are ongoing, however, based on currently  
available information, Columbia believes that these lawsuits are without merit, 
that the likelihood they will have a material adverse impact on any fund is     
remote, and that the lawsuits are not likely to materially affect its ability   
to provide investment management services to its clients, including the Fund.   

In connection with events described in detail above, various parties have 
filed suit against certain funds, their Boards, FleetBoston Financial           
Corporation and its affiliated entities and/or Bank of America Corporation and  
its affiliated entities. More than 300 cases including those filed against      
entities unaffiliated with the funds, their Boards, FleetBoston Financial       
Corporation and its affiliated entities and/or Bank of America Corporation and  
its affiliated entities have been transferred to the Federal District Court in  
Maryland and consolidated in a multi-district proceeding (the "MDL"). On March  
21, 2005 purported class action plaintiffs filed suit in Massachusetts state    
court alleging that the conduct, including market timing, entitles Class B      
shareholders in certain Columbia funds to an exemption from contingent deferred 
sales charges upon early redemption (the "CDSC Lawsuit"). The CDSC Lawsuit has  
been removed to federal court in Massachusetts and the federal Judicial Panel   
has conditionally ordered its transfer to the MDL. The MDL is ongoing.          
Accordingly, an estimate of the financial impact of this litigation on any      
Fund, if any, can not currently be made.                                        

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Appendix A--Statement of Additional Information of the Acquiring Fund           

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                                                        [Enlarge/Download Table]
                                                                                                    
COLUMBIA FUNDS TRUST I                       Columbia Intermediate Tax-Exempt Bond Fund             
Columbia High Yield Opportunity Fund         Columbia Massachusetts Intermediate Municipal Bond Fund
Columbia Strategic Income Fund               Columbia Connecticut Intermediate Municipal Bond Fund  
Columbia Tax-Managed Growth Fund             Columbia New Jersey Intermediate Municipal Bond Fund   
Columbia Tax-Managed Growth Fund II          Columbia New York Intermediate Municipal Bond Fund     
Columbia Tax-Managed Value Fund              Columbia Rhode Island Intermediate Municipal Bond Fund 
                                             Columbia Florida Intermediate Municipal Bond Fund      
COLUMBIA FUNDS TRUST II                      Columbia Pennsylvania Intermediate Municipal Bond Fund 
Columbia Newport Greater China Fund                                                                 
Columbia Money Market Fund                   COLUMBIA FUNDS TRUST VI                                
                                             Columbia Growth & Income Fund                          
COLUMBIA FUNDS TRUST III                     Columbia Small Cap Value Fund                          
Columbia Mid Cap Value Fund                                                                         
Columbia Liberty Fund                        COLUMBIA FUNDS TRUST VII                               
Columbia Global Equity Fund                  Columbia Newport Tiger Fund                            
Columbia Intermediate Government Income Fund                                                        
Columbia Quality Plus Bond Fund              COLUMBIA FUNDS TRUST VIII                              
Columbia Corporate Bond Fund                 Columbia Income Fund                                   
Columbia Federal Securities Fund             Columbia Intermediate Bond Fund                        
COLUMBIA FUNDS TRUST IV                      COLUMBIA FUNDS TRUST IX                                
Columbia Tax-Exempt Fund                     Columbia High Yield Municipal Fund                     
Columbia Tax-Exempt Insured Fund             Columbia Managed Municipals Fund                       
Columbia Utilities Fund                                                                             
Columbia Municipal Money Market Fund         COLUMBIA FUNDS TRUST XI                                
                                             Columbia Young Investors Fund                          
COLUMBIA FUNDS TRUST V                       Columbia Growth Stock Fund                             
Columbia California Tax-Exempt Fund          Columbia Asset Allocation Fund                         
Columbia Connecticut Tax-Exempt Fund         Columbia Dividend Income Fund                          
Columbia Massachusetts Tax-Exempt Fund       Columbia Large Cap Core Fund                           
Columbia New York Tax-Exempt Fund            Columbia Large Cap Growth Fund                         
Columbia Large Company Index Fund            Columbia Disciplined Value Fund                        
Columbia U.S. Treasury Index Fund            Columbia Small Cap Fund                                
Columbia Small Company Index Fund            Columbia Small Company Equity Fund                     

SUPPLEMENT TO THE STATEMENTS OF ADDITIONAL INFORMATION  

1. The following language is added to the section "Fund Charges and Expenses"   
in Part I of the Statements of Additional Information.                    

With respect to Columbia Large Company Index Fund, Columbia Small Company 
Index Fund and Columbia Large Cap Growth Fund, Administration Agreements with   
Columbia Management Advisors, Inc. have been amended to reduce the rates at     
which fees are payable thereunder to the annual rate of 0.10% of the average    
daily net assets of Columbia Large Company Index Fund and Columbia Small        
Company Index Fund and 0.05% of the average daily net assets of Columbia Large  
Cap Growth Fund.                                                                

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With respect to each Fund listed below, Investment Advisory Agreement with
Columbia Management Advisors, Inc. has been amended so that, effective February 
9, 2005, the fees payable thereunder will be paid at the following reduced      
rates:                                                                          

Columbia Tax-Managed Growth Fund                                          

                                                                [Download Table]

Average Daily Net Assets                                      Rate 
------------------------                                     ----- 
                                                                   
Net assets under $500 million............................... 0.520%
Net assets of $500 million but less than $1 billion......... 0.470%
Net assets of $1 billion but less than $1.5 billion......... 0.420%
Net assets of $1.5 billion but less than $3 billion......... 0.370%
Net assets of $3 billion but less than $6 billion........... 0.350%
Net assets in excess of $6 billion.......................... 0.330%

Columbia Tax-Managed Growth Fund II and Columbia Tax-Managed Value Fund   

                                                                [Download Table]

Average Daily Net Assets                                      Rate 
------------------------                                     ----- 
                                                                   
Net assets under $500 million............................... 0.720%
Net assets of $500 million but less than $1 billion......... 0.670%
Net assets of $1 billion but less than $1.5 billion......... 0.620%
Net assets of $1.5 billion but less than $3 billion......... 0.570%
Net assets of $3 billion but less than $6 billion........... 0.550%
Net assets in excess of $6 billion.......................... 0.530%

Columbia Large Cap Growth Fund                                            

                                                                [Download Table]

Average Daily Net Assets                                      Rate 
------------------------                                     ----- 
                                                                   
Net assets under $200 million...............................  0.70%
Net assets of $200 million but less than $500 million....... 0.575%
Net assets in excess of $500 million........................  0.45%

Columbia Large Cap Core Fund, Columbia Disciplined Value Fund and Columbia
Dividend Income Fund                                                            

                                                                [Download Table]

Average Daily Net Assets                                      Rate 
------------------------                                     ----- 
                                                                   
Net assets under $500 million............................... 0.700%
Net assets of $500 million but less than $1 billion......... 0.650%
Net assets of $1 billion but less than $1.5 billion......... 0.600%
Net assets of $1.5 billion but less than $3 billion......... 0.550%
Net assets of $3 billion but less than $6 billion........... 0.530%
Net assets in excess of $6 billion.......................... 0.510%

Columbia Growth & Income Fund                                             

                                                                [Download Table]

Average Daily Net Assets                                      Rate 
------------------------                                     ----- 
                                                                   
Net assets under $500 million............................... 0.770%
Net assets of $500 million but less than $1 billion......... 0.720%
Net assets of $1 billion but less than $1.5 billion......... 0.600%
Net assets of $1.5 billion but less than $3 billion......... 0.600%
Net assets of $3 billion but less than $6 billion........... 0.600%
Net assets in excess of $6 billion.......................... 0.580%

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Columbia Asset Allocation Fund                                            

                                                                [Download Table]

Average Daily Net Assets                                      Rate 
------------------------                                     ----- 
                                                                   
Net assets under $500 million............................... 0.650%
Net assets of $500 million but less than $1 billion......... 0.600%
Net assets of $1 billion but less than $1.5 billion......... 0.550%
Net assets of $1.5 billion but less than $3 billion......... 0.500%
Net assets of $3 billion but less than $6 billion........... 0.480%
Net assets in excess of $6 billion.......................... 0.460%

Columbia Newport Tiger Fund                                               

                                                                [Download Table]

Average Daily Net Assets                                      Rate 
------------------------                                     ----- 
                                                                   
Net assets under $500 million............................... 0.700%
Net assets of $500 million but less than $1 billion......... 0.700%
Net assets of $1 billion but less than $1.5 billion......... 0.620%
Net assets of $1.5 billion but less than $3 billion......... 0.570%
Net assets of $3 billion but less than $6 billion........... 0.520%
Net assets in excess of $6 billion.......................... 0.470%

Columbia Newport Greater China Fund                                       

                                                                [Download Table]

Average Daily Net Assets                                      Rate 
------------------------                                     ----- 
                                                                   
Net assets under $500 million............................... 0.950%
Net assets of $500 million but less than $1 billion......... 0.950%
Net assets of $1 billion but less than $1.5 billion......... 0.870%
Net assets of $1.5 billion but less than $3 billion......... 0.820%
Net assets of $3 billion but less than $6 billion........... 0.770%
Net assets in excess of $6 billion.......................... 0.720%

Columbia Federal Securities Fund                                          

                                                                [Download Table]

Average Daily Net Assets                                      Rate 
------------------------                                     ----- 
                                                                   
Net assets under $500 million............................... 0.530%
Net assets of $500 million but less than $1 billion......... 0.480%
Net assets of $1 billion but less than $1.5 billion......... 0.450%
Net assets of $1.5 billion but less than $3 billion......... 0.420%
Net assets in excess of $3 billion.......................... 0.400%

Columbia Intermediate Government Income Fund                              

                                                                [Download Table]

Average Daily Net Assets                                      Rate 
------------------------                                     ----- 
                                                                   
Net assets under $500 million............................... 0.460%
Net assets of $500 million but less than $1 billion......... 0.410%
Net assets of $1 billion but less than $1.5 billion......... 0.380%
Net assets of $1.5 billion but less than $3 billion......... 0.350%
Net assets of $3 billion but less than $6 billion........... 0.340%
Net assets in excess of $6 billion.......................... 0.330%

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Columbia Intermediate Bond Fund                                           

                                                                [Download Table]

Average Daily Net Assets                                      Rate 
------------------------                                     ----- 
                                                                   
Net assets under $500 million............................... 0.350%
Net assets of $500 million but less than $1 billion......... 0.350%
Net assets of $1 billion but less than $1.5 billion......... 0.300%
Net assets of $1.5 billion but less than $3 billion......... 0.290%
Net assets of $3 billion but less than $6 billion........... 0.280%
Net assets in excess of $6 billion.......................... 0.270%

Columbia Tax-Exempt Insured Fund and Columbia Tax-Exempt Fund             

                                                                [Download Table]

Average Daily Net Assets                                      Rate 
------------------------                                     ----- 
                                                                   
Net assets under $500 million............................... 0.550%
Net assets of $500 million but less than $1 billion......... 0.500%
Net assets of $1 billion but less than $1.5 billion......... 0.470%
Net assets of $1.5 billion but less than $3 billion......... 0.440%
Net assets of $3 billion but less than $6 billion........... 0.430%
Net assets in excess of $6 billion.......................... 0.420%

Columbia Corporate Bond Fund, Columbia Quality Plus Bond Fund, Columbia   
Florida Intermediate Municipal Bond Fund, Columbia Connecticut Intermediate     
Municipal Bond Fund, Columbia Massachusetts Intermediate Municipal Bond Fund,   
Columbia Intermediate Tax-Exempt Bond Fund, Columbia Pennsylvania Intermediate  
Municipal Bond Fund, Columbia New Jersey Intermediate Municipal Bond Fund,      
Columbia New York Intermediate Municipal Bond Fund and Columbia Rhode Island    
Intermediate Municipal Bond Fund                                                

                                                                [Download Table]

Average Daily Net Assets                                      Rate 
------------------------                                     ----- 
                                                                   
Net assets under $500 million............................... 0.480%
Net assets of $500 million but less than $1 billion......... 0.430%
Net assets of $1 billion but less than $1.5 billion......... 0.400%
Net assets of $1.5 billion but less than $3 billion......... 0.370%
Net assets of $3 billion but less than $6 billion........... 0.360%
Net assets in excess of $6 billion.......................... 0.350%

Columbia Income Fund                                                      

                                                                [Download Table]

Average Daily Net Assets                                      Rate 
------------------------                                     ----- 
                                                                   
Average Daily Net Assets....................................  Rate 
Net assets under $500 million............................... 0.420%
Net assets of $500 million but less than $1 billion......... 0.375%
Net assets of $1 billion but less than $1.5 billion......... 0.370%
Net assets of $1.5 billion but less than $3 billion......... 0.340%
Net assets of $3 billion but less than $6 billion........... 0.330%
Net assets in excess of $6 billion.......................... 0.320%

Columbia High Yield Opportunity Fund and Columbia Strategic Income Fund   

                                                                [Download Table]

Average Daily Net Assets                                      Rate 
------------------------                                     ----- 
                                                                   
Net assets under $500 million............................... 0.600%
Net assets of $500 million but less than $1 billion......... 0.550%
Net assets of $1 billion but less than $1.5 billion......... 0.520%
Net assets in excess of $1.5 billion........................ 0.490%

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Previously, Columbia Management had, with respect to the period from      
November 1, 2004 to February 9, 2005, waived a portion of its fees, so that it  
retained fees at the rates shown above.                                         

2. The following paragraph is added to the section "How to Buy Shares" in Part  
II of the Statements of Additional Information:                           

Investors should understand that, since the offering price of the Fund's  
shares is calculated to two decimal places using standard rounding methodology, 
the dollar amount of the sales charge paid as a percentage of the offering      
price and of the net amount invested for any particular purchase of fund shares 
may be higher or lower depending on whether downward or upward rounding was     
required during the calculation process.                                        

3. The Fund's Trustees have approved, subject to shareholder approval at a      
shareholder meeting expected to be held in 2005, the replacement of each  
Fund's current fundamental investment restrictions with the following     
standardized fundamental investment restrictions (except that municipal   
  funds will retain their current 80% policies required under Rule 35d-1 under
the Investment Company Act of 1940):                                      

Proposed Fundamental Restrictions                                               

Each Fund may not, as a matter of fundamental policy:                           

      1. Underwrite any issue of securities issued by other persons within the
   meaning of the 1933 Act except when it might be deemed to be an
   underwriter either: (a) in connection with the disposition of a
 portfolio security; or (b) in connection with the purchase of
      securities directly from the issuer thereof in accordance with its
investment objective. This restriction shall not limit the  
Portfolio's ability to invest in securities issued by other 
registered investment companies.                            

    2. Purchase or sell real estate, except a Fund may purchase securities
   of issuers which deal or invest in real estate and may purchase
    securities which are secured by real estate or interests in real
     estate and it may hold and dispose of real estate or interests in
       real estate acquired through the exercise of its rights as a holder
        of securities which are secured by real estate or interests therein.

   3. Purchase or sell commodities, except that a Fund may to the extent
     consistent with its investment objective, invest in securities of
       companies that purchase or sell commodities or which invest in such
       programs, and purchase and sell options, forward contracts, futures
   contracts, and options on futures contracts and enter into swap
       contracts and other financial transactions relating to commodities.
   This limitation does not apply to foreign currency transactions
including without limitation forward currency contracts.    

     4. [Except for Funds that are "concentrated" in an industry or group of
         related industries.] Purchase any securities which would cause 25% or
       more of the value of its total assets at the time of purchase to be
      invested in the securities of one or more issuers conducting their
      principal business activities in the same industry, provided that:
    (a) there is no limitation with respect to obligations issued or
    guaranteed by the U.S. Government, any state or territory of the
 United States, or any of their agencies, instrumentalities or
      political subdivisions; and (b) notwithstanding this limitation or
       any other fundamental investment limitation, assets may be invested
       in the securities of one or more management investment companies to
   the extent permitted by the 1940 Act, the rules and regulations
thereunder and any applicable exemptive relief.             

      5. Make loans, except to the extent permitted by the 1940 Act, the rules
   and regulations thereunder and any applicable exemptive relief.

6. Borrow money or issue senior securities except to the extent   
       permitted by the 1940 Act, the rules and regulations thereunder and
any applicable exemptive relief.                            

     7. [Except for Funds classified as "non-diversified" under Section 5 of
   the 1940 Act.] Purchase securities (except securities issued or
         guaranteed by the U.S. Government, its agencies or instrumentalities)
       of any one issuer if, as a result, more than 5% of its total assets
will be invested                                            

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         in the securities of such issuer or it would own more than 10% of the
       voting securities of such issuer, except that: (a) up to 25% of its
        total assets may be invested without regard to these limitations and
        (b) a Fund's assets may be invested in the securities of one or more
       management investment companies to the extent permitted by the 1940
Act, the rules and regulations thereunder, or any applicable
     exemptive relief. [For municipal Funds only: For purposes of this
       restriction, tax exempt securities that are supported solely by the
       revenues of a particular private entity will be deemed to have been
issued by that entity.]                                     

G-35/994U-0405                                                   April 15, 2005 

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                                                        [Enlarge/Download Table]
                                                                                                    
COLUMBIA FUNDS TRUST I                        Columbia Connecticut Intermediate Municipal Bond Fund 
Columbia High Yield Opportunity Fund          Columbia New Jersey Intermediate Municipal Bond Fund  
Columbia Strategic Income Fund                Columbia New York Intermediate Municipal Bond Fund    
Columbia Tax-Managed Growth Fund              Columbia Rhode Island Intermediate Municipal Bond Fund
Columbia Tax-Managed Growth Fund II           Columbia Florida Intermediate Municipal Bond Fund     
Columbia Tax-Managed Value Fund               Columbia Pennsylvania Intermediate Municipal Bond Fund
Columbia Tax-Managed Aggressive Growth Fund                                                         
                                              COLUMBIA FUNDS TRUST VI                               
COLUMBIA FUNDS TRUST II                       Columbia Growth & Income Fund                         
Columbia Newport Greater China Fund           Columbia Small Cap Value Fund                         
Columbia Money Market Fund                    Columbia Newport Asia Pacific Fund                    

COLUMBIA FUNDS TRUST III                      COLUMBIA FUNDS TRUST VII                              
Columbia Mid Cap Value Fund                   Columbia Newport Tiger Fund                           
Columbia Liberty Fund                         Columbia Europe Fund                                  
Columbia Global Equity Fund                                                                         
Columbia Contrarian Income Fund               COLUMBIA FUNDS TRUST VIII                             
Columbia Intermediate Government Income Fund  Columbia Income Fund                                  
Columbia Quality Plus Bond Fund               Columbia Intermediate Bond Fund                       
Columbia Corporate Bond Fund                                                                        
Columbia Federal Securities Fund              COLUMBIA FUNDS TRUST IX                               
                                              Columbia High Yield Municipal Fund                    
COLUMBIA FUNDS TRUST IV                       Columbia Managed Municipals Fund                      
Columbia Tax-Exempt Fund                                                                            
Columbia Tax-Exempt Insured Fund              COLUMBIA FUNDS TRUST XI                               
Columbia Utilities Fund                       Columbia Young Investor Fund                          
Columbia Municipal Money Market Fund          Columbia Growth Stock Fund                            
                                              Columbia Global Thematic Equity Fund                  
COLUMBIA FUNDS TRUST V                        Columbia European Thematic Equity Fund                
Columbia California Tax-Exempt Fund           Columbia Asset Allocation Fund                        
Columbia Connecticut Tax-Exempt Fund          Columbia Dividend Income Fund                         
Columbia Massachusetts Tax-Exempt Fund        Columbia Large Cap Core Fund                          
Columbia New York Tax-Exempt Fund             Columbia International Equity Fund                    
Columbia Large Company Index Fund             Columbia Large Cap Growth Fund                        
Columbia U.S. Treasury Index Fund             Columbia Disciplined Value Fund                       
Columbia Intermediate Tax-Exempt Bond Fund    Columbia Small Cap Fund                               
Columbia Massachusetts Intermediate Municipal Columbia Small Company Equity Fund                    
  Bond Fund                                                                                         

The Funds listed above are referred to collectively as the "Funds" and the
Trusts listed above are referred to collectively as the "Trusts."               

SUPPLEMENT TO THE STATEMENTS OF ADDITIONAL INFORMATION  

 Under the heading "HOW TO BUY SHARES", the seventh paragraph is deleted and
replaced with the following:                                                    

In addition to the commissions specified in a Fund's prospectus and this  
SAI, CFD, or its advisory affiliates, from their own resources, may make cash   
payments to FSFs that agree to promote the sale of shares of funds that CFD     
distributes. A number of factors may be considered in determining the amount of 
those payments, including the FSF's sales, client assets invested in the funds  
and redemption rates, the quality of the FSF's relationship with                

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CFD and/or its affiliates, and the nature of the services provided by FSFs to   
its clients. The payments may be made in recognition of such factors as         
marketing support, access to sales meetings and the FSF's representatives, and  
inclusion of the Fund on focus, select or other similar lists.                  

 Subject to applicable rules, CFD may also pay non-cash compensation to FSFs
and their representatives, including: (i) occasional gifts (ii) occasional      
meals, or other entertainment; and/or (iii) support for FSF educational or      
training events.                                                                

In addition, CFD, and/or the Fund's investment advisor, transfer agent or 
their affiliates, may pay service, administrative or other similar fees to      
broker/dealers, banks, third-party administrators or other financial            
institutions (each commonly referred to as an "intermediary"). Those fees are   
generally for subaccounting, sub-transfer agency and other shareholder services 
associated with shareholders whose shares are held of record in omnibus or      
other group accounts. The rate of those fees may vary and is generally          
calculated on the average daily net assets of a Fund attributable to a          
particular intermediary.                                                        

 In some circumstances, the payments discussed above may create an incentive
for an intermediary or its employees or associated persons to recommend or sell 
shares of a Fund.                                                               

As of the date of this Supplement, CFD and its affiliates anticipate that 
the FSFs and intermediaries that will receive the additional compensation       
described above include:                                                        

1st Global Capital Corp                                                         
401 Company                                                                     
ABN AMRO Trust Services                                                         
ADP Retirement Services                                                         
Advest                                                                          
AEGON/Transamerica                                                              
AG Edwards                                                                      
American Century Services                                                       
American Express                                                                
AMG                                                                             
AON Consulting                                                                  
AST Trust Company                                                               
Banc of America Investment Services                                             
BancOne                                                                         
Bear Stearns                                                                    
Benefit Plan Administrators                                                     
Bidwell & Company                                                               
BNY Clearing                                                                    
C N A Trust                                                                     
Charles Schwab                                                                  
CIBC Oppenheimer                                                                
Citigroup Global Markets                                                        
CitiStreet Associates LLC                                                       
City National Bank                                                              
City of Milwaukee                                                               
Columbia Trust Company                                                          
Commonwealth Financial                                                          
Compensation & Capital                                                          
CPI Qualified Plan Consultants                                                  
Daily Access Concepts                                                           
Davenport & Company                                                             

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Delaware Investments                                                            
Digital Retirement Solutions                                                    
Discover Brokerage                                                              
Dreyfus/Mellon                                                                  
Edgewood Services                                                               
Edward Jones                                                                    
E-Trade,                                                                        
ExpertPlan                                                                      
FAS Liberty Life Spectrum                                                       
Ferris Baker Watts                                                              
Fidelity                                                                        
Financial Data Services                                                         
Franklin Templeton                                                              
Freeman Welwood                                                                 
Gem Group                                                                       
Great West Life                                                                 
Hewitt Associates LLC                                                           
Huntington Bank                                                                 
ING                                                                             
Intermountain Health Care                                                       
Investmart, Inc.                                                                
Investment Manager Services (IMS)                                               
Janney Montgomery Scott                                                         
JJB Hilliard Lyons                                                              
JP Morgan/American Century                                                      
Kenney Investments                                                              
Kirkpatrick Pettis Smith Polian Inc                                             
Legg Mason Wood Walker                                                          
Liberty Life                                                                    
Lincoln Financial                                                               
Lincoln Life                                                                    
Linsco Private Ledger                                                           
M & T Securities                                                                
Marquette Trust Company                                                         
Mass Mutual Life                                                                
Matrix Settlement & Clearance Services (MSCS)                                   
McDonald Investments                                                            
Merrill Lynch                                                                   
MetLife                                                                         
MFS                                                                             
Mfund Trax                                                                      
MidAtlantic Capital                                                             
Milliman USA                                                                    
Morgan Keegan                                                                   
Morgan Stanley Dean Witter                                                      
PFPC                                                                            
Nationwide Investment Services                                                  
Neuberger Berman Mgmt                                                           
NFP Securities                                                                  
NSD -NetStock Sharebuilder                                                      
NYLife Distributors                                                             
Optimum Investment Advisors                                                     

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Orbitex                                                                         
Pershing LLC                                                                    
Phoenix Home Life                                                               
Piper Jaffray                                                                   
PNC                                                                             
PPI Employee Benefits                                                           
Private Bank & Trust                                                            
Prudential                                                                      
Putnam Investments                                                              
Raymond James                                                                   
RBC Dain Rausher                                                                
Robert W Baird                                                                  
Royal Alliance                                                                  
RSM McGladrey Inc.                                                              
Safeco                                                                          
Scott & Stringfellow                                                            
Scudder Investments                                                             
Security Benefit                                                                
Segall Bryant Hamill                                                            
South Trust Securities                                                          
Southwest Securities                                                            
Standard Insurance                                                              
Stanton Group                                                                   
State of NY Deferred Compensation Plan                                          
Stephens, Inc.                                                                  
Stifel Nicolaus & Co                                                            
Strong Capital                                                                  
Sungard T Rowe Price                                                            
Trustar Retirement Services                                                     
Trustlynx/Datalynx                                                              
UBS Financial Services                                                          
USAA Investment Management                                                      
Vanguard                                                                        
Wachovia                                                                        
TD Waterhouse                                                                   
Webster Investment Services                                                     
Wells Fargo                                                                     
Wilmington Trust                                                                

Please contact your FSF or intermediary for details about payments it may 
receive.                                                                        

G-35/554T-1004                                                 November 1, 2004 

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                                                                [Download Table]
                                                                                 
COLUMBIA FUNDS TRUST I                       COLUMBIA FUNDS TRUST IV             
Columbia High Yield Opportunity Fund         Columbia Municipal Money Market Fund
Columbia Strategic Income Fund               Columbia Tax-Exempt Fund            
                                             Columbia Tax-exempt Insured Fund    
COLUMBIA FUNDS TRUST II                      Columbia Utilities Fund             
Columbia Money Market Fund                                                       
                                             COLUMBIA FUNDS TRUST V              
COLUMBIA FUNDS TRUST III                     Columbia Large Company Index Fund   
Columbia Global Equity Fund                  Columbia U.S. Treasury Index Fund   
Columbia Contrarian Income Fund              Columbia Small Company Index Fund   
Columbia Intermediate Government Income Fund COLUMBIA FUNDS TRUST VIII           
Columbia Quality Plus Bond Fund              Columbia Income Fund                
Columbia Corporate Bond Fund                 Columbia Intermediate Bond Fund     

The Funds listed above are referred to collectively as the "Funds" and the
Trusts listed above are referred to collectively as the "Trusts."               

SUPPLEMENT TO THE STATEMENTS OF ADDITIONAL INFORMATION  

 The disclosure following the caption "Trustees and Officers" located in the
section "Management of the Funds" in Part 2 of the Statement of Information is  
restated in its entirety:                                                       

Trustees and Officers (this section applies to all of the Funds)                

The Trustees and officers serve terms of indefinite duration. The names,  
addresses and ages of the Trustees and officers of the Fund Complex, the year   
each was first elected or appointed to office, their principal business         
occupations during at least the last five years, the number of portfolios       
overseen by each Trustee and other directorships they hold are shown below.     

                                                        [Enlarge/Download Table]

                                                                              Number of                     
                                                                            Portfolios in                   
                                   Year First                                   Fund                        
                                   Elected or                                  Complex                      
    Name, Address       Position  Appointed to   Principal Occupation(s)     Overseen by        Other       
       and Age         with Funds  Office/1/     During Past Five Years        Trustee    Directorships Held
    -------------      ---------- ------------   ----------------------     ------------- ------------------
Disinterested Trustees                                                                                      
                                                                                                            

  Douglas A. Hacker     Trustee       1996     Executive Vice President--        118       Orbitz, Inc.     
  (Age 48)                                     Strategy of United Airlines                 (on-line travel  
  P.O. Box 66100                               (airline) since December,                   company)         
  Chicago, IL 60666                            2002 (formerly President of                                  
                                               UAL Loyalty Services                                         
                                               (airline) from September,                                    
                                               2001 to December, 2002;                                      
                                               Executive Vice President and                                 
                                               Chief Financial Officer of                                   
                                               United Airlines from March,                                  
                                               1999 to September, 2001;                                     
                                               Senior Vice President-                                       
                                               Finance from March, 1993 to                                  
                                               July, 1999).                                                 

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                                                                                     Number of                     
                                                                                   Portfolios in                   
                                     Year First                                        Fund                        
                                     Elected or                                       Complex                      
     Name, Address        Position  Appointed to      Principal Occupation(s)       Overseen by        Other       
        and Age          with Funds  Office/1/        During Past Five Years          Trustee    Directorships Held
     -------------       ---------- ------------      ----------------------       ------------- ------------------
Disinterested Trustees                                                                                             
                                                                                                                   

Janet Langford Kelly      Trustee       1996     Private Investor since March,         118              None       
(Age 46)                                         2004 (formerly Chief                                              
9534 W. Gull Lake Drive                          Administrative Officer and                                        
Richland,                                        Senior Vice President, Kmart                                      
MI 49083-8530                                    Holding Corporation                                               
                                                 (consumer goods), from                                            
                                                 September, 2003 to March,                                         
                                                 2004; Executive Vice                                              
                                                 President-Corporate                                               
                                                 Development and                                                   
                                                 Administration, General                                           
                                                 Counsel and Secretary, Kellogg                                    
                                                 Company (food manufacturer),                                      
                                                 from September, 1999 to                                           
                                                 August, 2003; Senior Vice                                         
                                                 President, Secretary and                                          
                                                 General Counsel, Sara Lee                                         
                                                 Corporation (branded,                                             
                                                 packaged, consumer-products                                       
                                                 manufacturer) from January,                                       
                                                 1995 to September, 1999).                                         

Richard W. Lowry          Trustee       1995     Private Investor since August,       120/3/            None       
(Age 68)                                         1987 (formerly Chairman and                                       
10701 Charleston Drive                           Chief Executive Officer, U.S.                                     
Vero Beach, FL 32963                             Plywood Corporation (building                                     
                                                 products manufacturer)).                                          

Charles R. Nelson         Trustee       1981     Professor of Economics,               118              None       
(Age 62)                                         University of Washington,                                         
Department of Economics                          since January, 1976; Ford and                                     
University of Washington                         Louisa Van Voorhis Professor                                      
Seattle, WA 98195                                of Political Economy,                                             
                                                 University of Washington,                                         
                                                 since September, 1993                                             
                                                 (formerly Director, Institute for                                 
                                                 Economic Research, University                                     
                                                 of Washington from                                                
                                                 September, 2001 to June, 2003)                                    
                                                 Adjunct Professor of Statistics,                                  
                                                 University of Washington,                                         
                                                 since September, 1980;                                            
                                                 Associate Editor, Journal of                                      
                                                 Money Credit and Banking,                                         
                                                 since September, 1993;                                            
                                                 consultant on econometric and                                     
                                                 statistical matters.                                              

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                                                                                   Number of                     
                                                                                 Portfolios in                   
                                    Year First                                       Fund                        
                                    Elected or                                      Complex                      
    Name, Address        Position  Appointed to     Principal Occupation(s)       Overseen by        Other       
       and Age          with Funds  Office/1/       During Past Five Years          Trustee    Directorships Held
    -------------       ---------- ------------     ----------------------       ------------- ------------------
Disinterested Trustees                                                                                           
                                                                                                                 

John J. Neuhauser        Trustee       1985     Academic Vice President and        121/3,4/    Saucony, Inc.     
(Age 61)                                        Dean of Faculties since                        (athletic         
84 College Road                                 August, 1999, Boston College                   footwear)         
Chestnut Hill, MA                               (formerly Dean, Boston                                           
02467-3838                                      College School of Management                                     
                                                from September, 1977 to                                          
                                                September, 1999).                                                

Patrick J. Simpson       Trustee       2000     Partner, Perkins Coie L.L.P.         118              None       
(Age 60)                                        (law firm).                                                      
1120 N.W. Couch Street                                                                                           
Tenth Floor                                                                                                      
Portland, OR 97209-4128                                                                                          

Thomas E. Stitzel        Trustee       1998     Business Consultant since 1999          118           None       
(Age 68)                                        (formerly Professor of Finance                                   
2208 Tawny Woods                                from 1975 to 1999, College of                                    
  Place                                         Business, Boise State                                            
Boise, ID 83706                                 University); Chartered                                           
                                                Financial Analyst.                                               

Thomas C. Theobald       Trustee       1996     Partner and Senior Advisor,             118    Anixter           
(Age 67)/5/              and                    Chicago Growth Partners                        International     
303 W. Madison           Chairman               (private equity investing) since               (network support  
Suite 2500               of the                 September, 2004 (formerly                      equipment         
Chicago, IL 60606        Board                  Managing Director, William                     distributor);     
                                                Blair Capital Partners (private                Ventas, Inc. (real
                                                equity investing) from                         estate investment 
                                                September, 1994 to September,                  trust); Jones Lang
                                                2004).                                         LaSalle (real     
                                                                                               estate            
                                                                                               management        
                                                                                               services) and     
                                                                                               MONY Group        
                                                                                               (life insurance)  

Anne-Lee Verville        Trustee       1998     Retired since 1997 (formerly           1194    Chairman of the   
(Age 59)                                        General Manager, Global                        Board of          
359 Stickney Hill Road                          Education Industry, IBM                        Directors, Enesco 
Hopkinton, NH 03229                             Corporation (computer and                      Group, Inc.       
                                                technology) from 1994 to                       (designer,        
                                                1997).                                         importer and      
                                                                                               distributor of    
                                                                                               giftware and      
                                                                                               collectibles)     

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                                                                                  Number of                       
                                                                                Portfolios in                     
                                   Year First                                       Fund                          
                                   Elected or                                      Complex                        
    Name, Address       Position  Appointed to     Principal Occupation(s)       Overseen by         Other        
       and Age         with Funds  Office/1/       During Past Five Years          Trustee     Directorships Held 
    -------------      ---------- ------------     ----------------------       -------------  ------------------ 
Disinterested Trustees                                                                                            
                                                                                                                  

Richard L. Woolworth    Trustee       1991     Retired since December 2003            118     Northwest           
(Age 63)                                       (formerly Chairman and Chief                   Natural Gas Co.     
100 S.W. Market Street                         Executive Officer, The                         (natural gas        
#1500                                          Regence Group (regional                        service provider)   
Portland, OR 97207                             health insurer); Chairman and                                      
                                               Chief Executive Officer,                                           
                                               BlueCross BlueShield of                                            
                                               Oregon; Certified Public                                           
                                               Accountant, Arthur Young &                                         
                                               Company)                                                           

Interested Trustee                                                                                                

William E. Mayer/2/     Trustee       1994     Managing Partner, Park              120/3/     Lee Enterprises     
(Age 64)                                       Avenue Equity Partners                         (print media), WR   
399 Park Avenue                                (private equity) since February,               Hambrecht + Co.     
Suite 3204                                     1999 (formerly Founding                        (financial service  
New York, NY 10022                             Partner, Development Capital                   provider); First    
                                               LLC from November 1996 to                      Health (healthcare);
                                               February, 1999).                               Reader's            
                                                                                              Digest (publishing);
                                                                                              OPENFIELD           
                                                                                              Solutions (retail   
                                                                                              industry technology 
                                                                                              provider)           

--------                                                                        
/1/  In October 2003, the trustees of the Liberty Funds and Stein Roe Funds     
   (both as defined in Part 1 of this SAI) were elected to the boards of the
 Columbia Funds; simultaneous with that election, Patrick J. Simpson and
Richard L. Woolworth, who had been directors/trustees of the Columbia 
  Funds were appointed to serve as trustees of the Liberty Funds and Stein
    Roe Funds. The date shown is the earliest date on which a trustee/director
was elected or appointed to the board of a Fund in the Fund Complex.  
/2/  Mr. Mayer is an "interested person" (as defined in the Investment Company  
  Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht +
Co.                                                                   
/3/  Messrs. Lowry, Neuhauser and Mayer also serve as directors/trustees of the 
All-Star Funds (as defined in Part 1 of this SAI).                    
/4/  Mr. Neuhauser and Ms. Verville also serve as disinterested directors of    
 Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by
the Advisor.                                                          
/5/  Mr. Theobald was appointed as Chairman of the Board effective December 10, 
2003.                                                                 

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                                   Year First                                                            
                                   Elected or                                                            
    Name, Address      Position   Appointed to                  Principal Occupation(s)                  
       and Age        with Funds     Office                     During Past Five Years                   
    -------------     ----------- ------------                  ----------------------                   
Officers                                                                                                 
                                                                                                         

Christopher L. Wilson President       2004     President of the Columbia Funds, Liberty Funds and Stein  
(Age 47)                                       Roe Funds since October, 2004 (formerly President and     
One Financial Center                           Chief Executive Officer, CDC IXIS Asset Management        
Boston, MA 02111                               Services, Inc. from September, 1998 to August, 2004).     

J. Kevin Connaughton  Treasurer       2000     Treasurer of the Columbia Funds since October, 2003 and   
(Age 39)                                       of the Liberty Funds, Stein Roe Funds and All-Star Funds  
One Financial Center                           since December, 2000; Vice President of the Advisor since 
Boston, MA 02111                               April, 2003 (formerly President of the Columbia Funds,    
                                               Liberty Funds and Stein Roe Funds from February, 2004 to  
                                               October, 2004; Chief Accounting Officer and Controller of 
                                               the Liberty Funds and of the All-Star Funds from February,
                                               1998 to October, 2000); Treasurer of the Galaxy Funds     
                                               since September, 2002; Treasurer, Columbia Management     
                                               Multi-Strategy Hedge Fund, LLC since December, 2002       
                                               (formerly Vice President of Colonial Management           
                                               Associates, Inc. from February, 1998 to October, 2000).   

Mary Joan Hoene       Senior Vice     2004     Senior Vice President and Chief Compliance Officer of the 
(Age 54)              President                Columbia Funds, Liberty Funds and Stein Roe Funds since   
40 West 57th Street   and Chief                August, 2004; Chief Compliance Officer of the All-Star    
New York, NY 10019... Compliance               Funds since August, 2004 (formerly Partner, Carter,       
                      Officer                  Ledyard & Milburn LLP from January, 2001 to August,       
                                               2004; Counsel, Carter, Ledyard & Milburn LLP from         
                                               November, 1999 to December, 2000; Vice President and      
                                               Counsel, Equitable Life Assurance Society of the United   
                                               States from April, 1998 to November, 1999,).              

Michael G. Clarke     Chief           2004     Chief Accounting Officer of the Columbia Funds, Liberty   
(Age 34)              Accounting               Funds, Stein Roe Funds and All-Star Funds since October,  
One Financial Center  Officer                  2004 (formerly Controller of the Columbia Funds, Liberty  
Boston, MA 02111                               Funds, Stein Roe Funds and All-Star Funds from May, 2004  
                                               to October, 2004; Assistant Treasurer from June, 2002 to  
                                               May, 2004; Vice President, Product Strategy &             
                                               Development of the Liberty Funds and Stein Roe Funds      
                                               from February, 2001 to June, 2002; Assistant Treasurer of 
                                               the Liberty Funds, Stein Roe Funds and the All-Star Funds 
                                               from August, 1999 to February, 2001; Audit Manager,       
                                               Deloitte & Toche LLP from May, 1997 to August, 1999).     

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                                 Year First                                                               
                                 Elected or                                                               
   Name, Address      Position  Appointed to                    Principal Occupation(s)                   
      and Age        with Funds    Office                       During Past Five Years                    
   -------------     ---------- ------------                    ----------------------                    
Officers                                                                                                  
                                                                                                          

Jeffrey R. Coleman   Controller     2004     Controller of the Columbia Funds, Liberty Funds, Stein Roe   
(Age 34)                                     Funds and All-Star Funds since October, 2004 (formerly Vice  
One Financial Center                         President of CDC IXIS Asset Management Services, Inc. and    
Boston, MA 02111                             Deputy Treasurer of the CDC Nvest Funds and Loomis Sayles    
                                             Funds from February, 2003 to September, 2004; Assistant Vice 
                                             President of CDC IXIS Asset Management Services, Inc. and    
                                             Assistant Treasurer of the CDC Nvest Funds from August,      
                                             2000 to February, 2003; Tax Manager of PFPC, Inc. from       
                                             November, 1996 to August, 2000).                             

David A. Rozenson    Secretary      2003     Secretary of the Columbia Funds, Liberty Funds, Stein Roe    
(Age 50)                                     Funds and All-Star Funds since December, 2003; Senior        
One Financial Center                         Counsel, Bank of America Corporation (formerly FleetBoston   
Boston, MA 02111                             Financial Corporation) since January, 1996; Associate General
                                             Counsel, Columbia Management Group since November,           
                                             2002.                                                        

G-35/296T-1004                                                 October 15, 2004 

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COLUMBIA STRATEGIC INCOME FUND (the "Fund") 
Supplement to Statement of Additional Information dated October 1, 2004 

  The following sentence is added as the fifth paragraph in the section "Other
Investment Policies" in the Fund's Statement of Additional Information:         

So long as shares of the Fund are being offered for sale in Japan, the    
Strategic Income Fund will not invest in equity securities.               

716-35/284T-1004                                               October 11, 2004 

1   

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COLUMBIA HIGH YIELD OPPORTUNITY FUND  
COLUMBIA STRATEGIC INCOME FUND  
SERIES OF COLUMBIA FUNDS TRUST I  

STATEMENT OF ADDITIONAL INFORMATION 

October 1, 2004, as revised July 12, 2005 

This Statement of Additional Information (SAI) contains information which 
may be useful to investors but which is not included in the Prospectuses of     
Columbia High Yield Opportunity Fund and Columbia Strategic Income Fund (each a 
Fund and, collectively, the Funds). This SAI is not a prospectus and is         
authorized for distribution only when accompanied or preceded by the relevant   
Prospectus of the Funds dated October 1, 2004. This SAI should be read together 
with the relevant Prospectus and each Fund's most recent Annual Report dated    
May 31, 2004. Investors may obtain a free copy of the relevant Prospectus and   
Annual Report from Columbia Funds Distributor, Inc. (CFD), One Financial        
Center, Boston, MA 02111-2621 or by calling 1-800-426-3750. The Financial       
Statements and Report of Independent Registered Public Accounting Firm          
appearing in each Fund's May 31, 2004 Annual Report, are incorporated in this   
SAI by reference.                                                               

Part 1 of this SAI contains specific information about the Funds. Part 2  
includes information about the funds distributed by CFD generally and           
additional information about certain securities and investment techniques       
described in the Funds' Prospectuses.                                           

TABLE OF CONTENTS                                                               

                                                                [Download Table]

                                                           Page
                                                           ----
                                                               
Part 1                                                         
Definitions...............................................   b 
Organization and History..................................   b 
Investment Goals and Policies.............................   b 
Fundamental Investment Policies...........................   c 
Other Investment Policies.................................   d 
Portfolio Turnover........................................   e 
Fund Charges and Expenses.................................   e 
Custodian of the Funds....................................   o 
Independent Registered Public Accounting Firm of the Funds   o 

Part 2                                                         
Miscellaneous Investment Practices........................   1 
Taxes.....................................................  25 
Additional Tax Matters Concerning Trust Shares............  30 
Management of the Funds...................................  32 
Determination of Net Asset Value..........................  43 
How to Buy Shares.........................................  45 
Special Purchase Programs/Investor Services...............  50 
Programs for Reducing or Eliminating Sales Charges........  53 
How to Sell Shares........................................  56 
Distributions.............................................  61 
How to Exchange Shares....................................  62 
Suspension of Redemptions.................................  62 
Shareholder Liability.....................................  62 
Shareholder Meetings......................................  63 
Appendix I................................................  64 
Appendix II...............................................  70 

SUP-39/88344-0705                                                               

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PART 1  

COLUMBIA HIGH YIELD OPPORTUNITY FUND  
COLUMBIA STRATEGIC INCOME FUND  

STATEMENT OF ADDITIONAL INFORMATION 

October 1, 2004, as revised July 12, 2005 

DEFINITIONS                                                                     

                                                        [Enlarge/Download Table]
                                                                                           
"Trust"                           Columbia Funds Trust I                                   
"Fund" or "High Yield Fund"       Columbia High Yield Opportunity Fund                     
"Fund" or "Strategic Income Fund" Columbia Strategic Income Fund                           
"Advisor"                         Columbia Management Advisors, Inc., the Funds' investment
                                  advisor                                                  
"CFD"                             Columbia Funds Distributor, Inc., the Funds' distributor 
"CFS"                             Columbia Funds Services, Inc., the Funds' shareholder    
                                  services and transfer agent                              

ORGANIZATION AND HISTORY                                                        

 The Trust is a Massachusetts business trust organized in 1985. Each Fund is
an open-end diversified management investment company representing the entire   
interest in a separate series of the Trust. The High Yield Fund commenced       
investment operations on October 21, 1971. The Strategic Income Fund commenced  
investment operations on April 21, 1977.                                        

The Trust is not required to hold annual shareholder meetings, but special
meetings may be called for certain purposes. Shareholders receive one vote for  
each Fund share. Shares of each Fund and any other series of the Trust that may 
be in existence from time to time generally vote together except when required  
by law to vote separately by fund or by class. Shareholders owning in the       
aggregate ten percent of Trust shares may call meetings to consider removal of  
Trustees. Under certain circumstances, the Trust will provide information to    
assist shareholders in calling such a meeting. See Part 2 of this SAI for more  
information.                                                                    

  The Trust changed its name from Colonial Trust I to Liberty Funds Trust I on
April 1, 1999. Effective October 13, 2003, the Trust changed its name from      
Liberty Funds Trust I to its current name. Effective July 14, 2000, the High    
Yield Fund changed its name from Colonial High Yield Securities Fund to Liberty 
High Yield Securities Fund. Effective October 13, 2003, the High Yield Fund     
changed its name from Liberty High Yield Securities Fund to its current name.   
Effective July 14, 2000, the Strategic Income Fund changed its name from        
Colonial Strategic Income Fund to Liberty Strategic Income Fund. Effective      
October 13, 2003, the Strategic Income Fund changed its name from Liberty       
Strategic Income Fund to its current name.                                      

 It is expected that, subject to shareholder approval of the election of all
current Trustees, each Fund will be reorganized as a series of Columbia Funds   
Trust IX, a Massachusetts business trust into which all of the retail Columbia  
funds are expected to be reorganized.                                           

INVESTMENT GOALS AND POLICIES                                                   

  The Prospectuses describe the Funds' investment goals, investment strategies
and risks. Part 1 of this SAI includes additional information concerning, among 
other things, the investment policies of the Funds. Part 2 contains additional  
information about the following securities and investment techniques that may   
be utilized by each Fund (unless otherwise noted):                              

Short-Term Trading                                                        
Lower-Rated Debt Securities                                               

b 

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Foreign Securities                                                        
Zero Coupon Securities                                                    
Step Coupon Bonds                                                         
Pay-In-Kind Securities                                                    
Money Market Instruments (High Yield Fund only)                           
Forward Commitments ("When-Issued" and "Delayed Delivery" Securities)     
Mortgage Dollar Rolls (Strategic Income Fund only)                        
Mortgage-Backed Securities                                                
Non-Agency Mortgage-Backed Securities (High Yield Fund only)              
Repurchase Agreements                                                     
Options on Securities (Strategic Income Fund only)                        
Futures Contracts and Related Options (interest rate futures and related  
options) (High Yield Fund only)                                                 
Foreign Currency Transactions                                             
Rule 144A Securities (High Yield Fund only)                               
Swap Agreements (Swaps, Caps, Collars and Floors)                         

Except as indicated below under "Fundamental Investment Policies", the    
Funds' investment policies are not fundamental, and the Trustees may change the 
policies without shareholder approval.                                          

FUNDAMENTAL INVESTMENT POLICIES                                                 

  The Investment Company Act of 1940 (Act) provides that a "vote of a majority
of the outstanding voting securities" means the affirmative vote of the lesser  
of (1) more than 50% of the outstanding shares of a Fund, or (2) 67% or more of 
the shares present at a meeting if more than 50% of the outstanding shares are  
represented at the meeting in person or by proxy. The following fundamental     
investment policies cannot be changed without such a vote.                      

As fundamental policies, each Fund may:                                   

1. Borrow from banks, other affiliated funds and other entities to the  
     extent permitted by applicable law, provided that the Fund's borrowings
      shall not exceed 33 1/3% of the value of its total assets (including the
     amount borrowed) less liabilities (other than borrowings) or such other
percentage permitted by law;                                      

 2. Only own real estate acquired as a result of owning securities and not
more than 5% of total assets;                                     

 3. Purchase and sell futures contracts and related options so long as the
    total initial margin and premiums on contracts do not exceed 5% of its
total assets;                                                     

  4. Not issue senior securities except as provided in paragraph 1 above and
to the extent permitted by the Act;                               

  5. Underwrite securities issued by others only when disposing of portfolio
securities;                                                       

 6. Make loans (a) through lending of securities, (b) through the purchase
     of debt instruments or similar evidences of indebtedness typically sold
   privately to financial institutions, (c) through an interfund lending
    program with other affiliated funds provided that no such loan be made
      if, as a result, the aggregate of such loans would exceed 33 1/3% of the
  value of its total assets (taken at market value at the time of such
loans) and (d) through repurchase agreements; and                 

7. Not concentrate more than 25% of its total assets in any one industry
   or, with respect to 75% of total assets, purchase any security (other
than obligations of the U.S. government and cash items including  
     receivables) if as a result more than 5% of its total assets would then
 be invested in securities of a single issuer or purchase the voting
      securities of an issuer if, as a result of such purchase, the Fund would
own more than 10% of the outstanding voting shares of such issuer.

The Funds' Trustees have approved, subject to shareholder approval at a   
shareholder meeting expected to be held in 2005, the replacement of each Fund's 
current fundamental investment restrictions with the following                  

c 

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standardized fundamental investment restrictions (except that municipal funds   
will retain their current 80% policies required under Rule 35d-1 under the Act):

Proposed Fundamental Restrictions                                               

Each Fund may not, as a matter of fundamental policy:                     

1. Underwrite any issue of securities issued by other persons within the
meaning of the Securities Act of 1933, as amended (the "1933 Act")
except when it might be deemed to be an underwriter either: (a) in
connection with the disposition of a portfolio security; or (b) in
 connection with the purchase of securities directly from the issuer
   thereof in accordance with its investment objective. This restriction
  shall not limit the Fund's ability to invest in securities issued by
other registered investment companies.                            

 2. Purchase or sell real estate, except a Fund may purchase securities of
     issuers which deal or invest in real estate and may purchase securities
     which are secured by real estate or interests in real estate and it may
  hold and dispose of real estate or interests in real estate acquired
    through the exercise of its rights as a holder of securities which are
secured by real estate or interests therein.                      

3. Purchase or sell commodities, except that a Fund may to the extent   
consistent with its investment objective, invest in securities of 
 companies that purchase or sell commodities or which invest in such
 programs, and purchase and sell options, forward contracts, futures
contracts, and options on futures contracts and enter into swap   
      contracts and other financial transactions relating to commodities. This
  limitation does not apply to foreign currency transactions including
without limitation forward currency contracts.                    

4. Purchase any securities which would cause 25% or more of the value of
its total assets at the time of purchase to be invested in the    
   securities of one or more issuers conducting their principal business
activities in the same industry, provided that: (a) there is no   
     limitation with respect to obligations issued or guaranteed by the U.S.
      Government, any state or territory of the United States, or any of their
agencies, instrumentalities or political subdivisions; and (b)    
 notwithstanding this limitation or any other fundamental investment
 limitation, assets may be invested in the securities of one or more
     management investment companies to the extent permitted by the Act, the
   rules and regulations thereunder and any applicable exemptive relief.

5. Make loans, except to the extent permitted by the Act, the rules and 
regulations thereunder and any applicable exemptive relief.       

 6. Borrow money or issue senior securities except to the extent permitted
 by the Act, the rules and regulations thereunder and any applicable
exemptive relief.                                                 

  7. Purchase securities (except securities issued or guaranteed by the U.S.
     Government, its agencies or instrumentalities) of any one issuer if, as
a result, more than 5% of its total assets will be invested in the
   securities of such issuer or it would own more than 10% of the voting
securities of such issuer, except that: (a) up to 25% of its total
  assets may be invested without regard to these limitations and (b) a
Fund's assets may be invested in the securities of one or more    
     management investment companies to the extent permitted by the Act, the
   rules and regulations thereunder, or any applicable exemptive relief.

OTHER INVESTMENT POLICIES                                                       

As non-fundamental investment policies, which may be changed without a    
shareholder vote, each Fund may not:                                            

1. Purchase securities on margin, but the Fund may receive short-term   
credit to clear securities transactions and may make initial or   
  maintenance margin deposits in connection with futures transactions;

 2. Have a short securities position, unless the Fund owns, or owns rights
(exercisable without payment) to acquire, an equal amount of such 
securities; and                                                   

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3. Invest more than 15% of its net assets in illiquid assets.           

 Total assets and net assets are determined at current value for purposes of
compliance with investment restrictions and policies. All percentage            
limitations will apply at the time of investment and are not violated unless an 
excess or deficiency occurs as a result of such investment. For the purpose of  
the Act's diversification requirement, an issuer is the entity whose revenues   
support the security.                                                           

In addition, the Strategic Income Fund will, so long as shares of the Fund
are being offered for sale by the Fund in Japan, comply with the following      
standards of selection of the Japan Securities Dealers Association:             

  1. More than 50% of the total number of outstanding shares of stock of any
   one company may not be acquired on behalf of all funds managed by the
Advisor; and                                                      

2. Borrowing may not be made if it will result in an aggregate amount of
   borrowing outstanding in excess of 10% of the net assets of the Fund,
    except in the case of a merger, etc., when this 10% may be temporarily
exceeded.                                                         

If any violation of the foregoing standards occurs, the Strategic Income  
Fund will, promptly after discovery of the violation, take such action as may   
be necessary to cause the violation to cease, which shall be the only           
obligation of the Fund and the only remedy in respect of the violation.         

Except with respect to the Strategic Income Fund's policy on borrowing and
investing in illiquid securities, if the Fund's investment limitations,         
policies and rating standards are adhered to at the time of purchase or         
utilization of assets; a subsequent change in circumstances will not be         
considered to result in a violation of policy. So long as shares of the         
Strategic Income Fund are being offered for sale in Japan, the Strategic Income 
Fund will not invest in equity securities.                                      

PORTFOLIO TURNOVER                                                              

Portfolio turnover is included in the Prospectuses under "Financial       
Highlights." Each Fund may sell a portfolio investment soon after its           
acquisition if the Advisor believes that such a disposition is consistent with  
the Fund's investment goals. Portfolio investments may be sold for a variety of 
reasons, such as more favorable investment opportunity or other circumstances   
bearing on the desirability of continuing to hold such investments. A portfolio 
turnover rate of 100% or more is considered high, although the rate of          
portfolio turnover will not be a limiting factor in making portfolio decisions. 
High portfolio turnover may cause the Funds to realize capital gains which, if  
realized and distributed by a Fund, may be taxable to shareholders as ordinary  
income. High portfolio turnover may result in correspondingly greater brokerage 
commissions and other transaction costs, which will be borne directly by the    
Funds.                                                                          

FUND CHARGES AND EXPENSES                                                       

  Effective February 9, 2005, under the High Yield Fund's and Strategic Income
Fund's management contract, each Fund pays the Advisor a monthly fee based on   
the average daily net assets of the Fund at the annual rate of:                 

                                                                [Download Table]

Average Daily Net Assets                             Rate 
------------------------                             ---- 
                                                          
Net assets under $500 million...................... 0.600%
Net assets of $500 million but less than $1 billion 0.550%
Net assets of $1 billion but less than $1.5 billion 0.520%
Net assets in excess of $1.5 billion............... 0.490%

Previously, the Advisor had, with respect to the period from November 1,  
2004 to February 9, 2005, waived a portion of its fees, so that it retained     
fees at the rates shown above.                                                  

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  Prior to November 1, 2004, under the High Yield Fund's management agreement,
the High Yield Fund pays the Advisor a monthly fee based on the average daily   
net assets of the High Yield Fund at the annual rate of 0.60% of the first $1   
billion, 0.55% of the next $1 billion and 0.50% in excess of $2 billion.        

  Prior to November 1, 2003, under the High Yield Fund's management agreement,
the High Yield Fund paid the Advisor a monthly fee based on the average daily   
net assets of the High Yield Fund at the annual rate of 0.60% of the first $1.5 
billion and 0.55% in excess of $1.5 billion.                                    

Prior to November 1, 2004, under the Strategic Income Fund's management   
agreement, the Strategic Income Fund pays the Advisor a monthly fee based on    
the average daily net assets of the Strategic Income Fund at the annual rate of 
0.65% on the first $1 billion, 0.60% of the next $1 billion and 0.55% in excess 
of $2 billion.                                                                  

  The Advisor is responsible for providing accounting and bookkeeping services
to the Funds pursuant to a pricing and bookkeeping agreement. Under a separate  
agreement (Outsourcing Agreement), the Advisor has delegated those functions to 
State Street Bank and Trust Company (State Street). The Advisor pays fees to    
State Street under the Outsourcing Agreement.                                   

Under its pricing and bookkeeping agreement with the Funds, the Advisor   
receives from each Fund a monthly fee consisting of a flat fee plus an          
asset-based fee, as follows:                                                    

.   an annual flat fee of $10,000, paid monthly; and                        

 .   in any month that a Fund has average net assets of more than $50 million,
  a monthly fee equal to the average daily net assets of a Fund for that
    month multiplied by a fee rate that is calculated by taking into account
the fees payable to State Street under the Outsourcing Agreement.   

  Each Fund reimburses the Advisor for all out-of-pocket expenses and charges,
including fees payable to third parties (other than State Street) for providing 
pricing data.                                                                   

Effective November 1, 2003, each Fund pays a shareholders' servicing and  
transfer agency fee to CFS as follows:                                          

  An annual open account fee of $34 per open account plus the Fund's allocated
share of reimbursement for the out-of-pocket expenses of CFS.                   

Prior to November 1, 2003, each Fund paid a shareholders' servicing and   
transfer agency fee to CFS as follows:                                          

.   An account fee for each open account of $4.00 per annum, payable on a   
 monthly basis, in an amount equal to  1/12 the per annum charge; plus

.   An account fee for each closed account of $1.50 per annum, payable on a 
 monthly basis, in an amount equal to  1/12 the per annum charge; plus

.   A transaction fee of $1.40 per transaction occurring in Fund accounts   
during any month; plus                                              

 .   A monthly fee at the rate of 0.06% per annum of the average daily closing
value of the total net assets of each Fund for such month; plus     

.   Each Fund's allocated share of CFS' out-of-pocket expenses, including   
     fees payable to DST Systems, Inc. (DST) under a remote services agreement
with DST.                                                           

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Recent Fees paid to the Advisor, CFD and CFS (dollars in thousands)             

                                                        [Enlarge/Download Table]

                                                                 High Yield Fund                    
                                                      --------------------------------------------- 
                                                      Year ended Five months                        
                                                       May 31,      ended    Year ended December 31,
                                                         2004      May 31,     2002        2001     
                                                      ----------   2003(a)   ------      ------     
                                                                                                    
Management fee.......................................   $4,453     $1,874    $4,397      $5,130     
Bookkeeping fee......................................      235        124       295         310     
Shareholder service and transfer agent fee...........    1,980      1,108     2,846       2,532     
12b-1 fees:                                                                                         
   Service fee (Class A).............................      911        389       894       1,001     
   Service fee (Class B).............................      744        301       772         973     
   Service fee (Class C).............................      135         50       124         134     
   Distribution fee (Class B)........................    2,231        902     2,315       2,986     
   Distribution fee (Class C)........................      406        151       373         402     
Fees waived by CFD (Class C).........................      (81)       (30)      (75)        (80)    
Fees waived by CFS...................................       --        (15)       --          --     
Fees and expenses waived or reimbursed by the Advisor      (38)        --        --          --     

                                                        [Enlarge/Download Table]

                                                    Strategic Income Fund                
                                           --------------------------------------------- 
                                                      Five months                        
                                           Year ended    ended    Year ended December 31,
                                            May 31,     May 31,   ---------------------- 
                                              2004      2003(a)     2002         2001    
                                           ---------- ----------- ------       -------   
                                                                                         
Management fee............................   $8,539     $3,534    $8,711      $10,406    
Bookkeeping fee...........................      418        211       553          548    
Shareholder service and transfer agent fee    2,806      1,634     3,888        4,183    
12b-1 fees:                                                                              
   Service fee (Class A)..................    1,412        557     1,339        1,285    
   Service fee (Class B)..................    1,095        457     1,134        1,469    
   Service fee (Class C)..................      105         41        94          104    
   Service fee (Class J)..................      588        261       672          982    
   Distribution fee (Class B).............    3,436      1,444     3,606        4,751    
   Distribution fee (Class C).............      331        130       297          335    
   Distribution fee (Class J).............      861        383       993        1,476    
   Fees waived by CFD (Class C)...........      (66)       (26)      (59)         (65)   

--------                                                                        
(a)The Funds changed their fiscal year end from December 31 to May 31 in 2003.  

Brokerage Commissions (dollars in thousands)                                    

                                                                [Download Table]

                                             High Yield Fund                       
                                     ----------------------------------------------
                                                Five months                        
                                     Year ended    ended    Year ended December 31,
                                      May 31,     May 31,   -----------------------
                                        2004      2003(a)   2002        2001       
                                     ---------- ----------- ----        ----       
                                                                                   
Total commissions...................    $11         $0       $0         $10        
Directed transactions(b)............      0          0        0           0        
Commissions on directed transactions      0          0        0           0        

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                                                                [Download Table]

                                          Strategic Income Fund                    
                                     ----------------------------------------------
                                                Five months                        
                                     Year ended    ended    Year ended December 31,
                                      May 31,     May 31,   -----------------------
                                        2004      2003(a)   2002        2001       
                                     ---------- ----------- ----        ----       
                                                                                   
Total commissions...................     $1         $0       $0         $11        
Directed transactions(b)............      0          0        0           0        
Commissions on directed transactions      0          0        0           0        

--------                                                                        
(a)The Funds changed their fiscal year end from December 31 to May 31 in 2003.  
(b)See "Management of the Fund" in Part 2 of this SAI.                          

 The Trust is required to identify any securities of its "regular brokers or
dealers" that the Funds have acquired during their most recent fiscal year. At  
May 31, 2004, the Funds held securities of their regular brokers or dealers as  
set forth below:                                                                

                                                                [Download Table]

Fund                  Broker/Dealer         Value (in thousands)
----                  -------------         --------------------
                                                                
High Yield Fund       Labranche and Company        $3,402       
Strategic Income Fund None                         N/A          

Trustees and Trustees' Fees                                                     

Fund Complex consists of the following funds:                             

    The series of Columbia Funds Trust I, the series of Columbia Funds Trust
II, the series of Columbia Funds Trust III, the series of Columbia Funds  
  Trust IV, the series of Columbia Funds Trust V, the series of Columbia Funds
Trust VI, the series of Columbia Funds Trust VII, the series of Liberty   
  Variable Investment Trust and 9 closed-end or interval management investment
company portfolios (the "Liberty Funds").                                 

 The series of Columbia Funds Trust VIII, the series of Columbia Funds
Trust IX, the series of Columbia Funds Trust XI, the series of SteinRoe   
Variable Investment Trust and 3 closed-end management investment company  
portfolios (the "Stein Roe Funds").                                       

 Two closed-end management investment company portfolios named Liberty
All-Star Equity Fund and Liberty All-Star Growth Fund, Inc. (the "All-Star
Funds").                                                                  

Columbia Management Multi-Strategy Hedge Fund, LLC.                 

    Columbia Balanced Fund, Inc., Columbia Common Stock Fund, Inc., Columbia
 Daily Income Company, Columbia Fixed Income Securities Fund, Inc., Columbia
Growth Fund, Inc., Columbia High Yield Fund, Inc., Columbia International 
Stock Fund, Inc., Columbia National Municipal Bond Fund, Inc., Columbia   
Oregon Municipal Bond Fund, Inc., Columbia Real Estate Equity Fund, Inc., 
Columbia Short Term Bond Fund, Inc., Columbia Small Cap Growth Fund, Inc.,
 Columbia Mid Cap Growth Fund, Inc., Columbia Strategic Investor Fund, Inc.,
Columbia Technology Fund, Inc. and the series of CMG Fund Trust (the      
"Columbia Funds").                                                        

The series of The Galaxy Funds (the "Galaxy Funds").                

The series of Columbia Acorn Trust and the series of Wanger Advisors
Trust (the "Acorn Funds" and "WAT Funds," respectively).                  

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The Advisor or its affiliates pay the compensation of all the officers of 
the funds in the Fund Complex advised by the Advisor, including Trustees who    
are affiliated with the Advisor. For the fiscal year ended May 31, 2004 and the 
calendar year ended December 31, 2003, the Trustees received the following      
compensation for serving as Trustees:                                           

                                                        [Enlarge/Download Table]

                                                                          Aggregate                              
                                                     Aggregate          Compensation     Total Compensation from 
                                               Compensation from the from the Strategic      the Fund Complex    
                       Pension or Retirement    High Yield Fund for  Income Fund for the Paid to the Trustees for
                      Benefits Accrued as part the Fiscal Year Ended  Fiscal Year Ended  the Calendar Year Ended 
Trustee(a)              of Fund Expenses(b)        May 31, 2004         May 31, 2004       December 31, 2003(a)  
----------            ------------------------ --------------------- ------------------- ------------------------
                                                                                                                 
Douglas A. Hacker....           N/A                   $2,491               $3,600                $115,500        
Janet Langford Kelly.           N/A                    2,022                3,191                 101,500        
Richard W. Lowry.....           N/A                    2,009                3,167                 128,150        
Salvatore Macera(c)..           N/A                      310                  517                  56,500        
William E. Mayer.....           N/A                    2,200                3,469                 133,150        
Charles R. Nelson....           N/A                    2,206                3,491                 155,073        
John J. Neuhauser....           N/A                    2,354                3,728                 143,568        
Patrick J. Simpson(d)           N/A                    1,012                1,518                  64,234        
Thomas E. Stitzel....           N/A                    2,097                3,296                 103,500        
Thomas C. Theobald(e)           N/A                    2,491                3,947                 110,250        
Anne-Lee Verville(f).           N/A                    2,603                4,131                 128,250        
Richard L. Woolworth.           N/A                    1,067                1,602                  64,234        

--------                                                                        
(a)As of December 31, 2003, the Fund Complex consisted of 132 open-end and 15   
closed-end management investment company portfolios. Effective October 8, 
2003, Patrick J. Simpson and Richard L. Woolworth, then directors/trustees
of the Columbia Funds, were appointed to the board of trustees of the     
Liberty Funds and Stein Roe Funds. Also effective October 8, 2003, the    
trustees of the Liberty Funds and the Stein Roe Funds were elected as     
directors/trustees of the Columbia Funds. A single combined board of      
trustees/directors now oversees all of the Liberty Funds, Stein Roe Funds 
and Columbia Funds. The All-Star Funds, Columbia Management Multi-Strategy
Hedge Fund, LLC, the Galaxy Funds, the Acorn Funds and the WAT Funds each 
have separate boards of trustees/directors.                               
(b)The Fund does not currently provide pension or retirement plan benefits to   
the Trustees.                                                             
(c)Mr. Macera retired as a Trustee from the Board of Trustees effective June    
18, 2003.                                                                 
(d)During the fiscal year ended May 31, 2004, Mr. Simpson deferred $1,012 and   
  $1,518 of his compensation from the High Yield Fund and the Strategic Income
Fund, respectively, pursuant to the deferred compensation plan.           
(e)During the fiscal year ended May 31, 2004 and the calendar year ended        
  December 31, 2003, Mr. Theobald deferred $904 and $2,046 of his compensation
from the High Yield Fund and the Strategic Income Fund, respectively, and 
$50,750 of his total compensation from the Fund Complex pursuant to the   
deferred compensation plan. At December 31, 2003, the value of Mr.        
Theobald's account under that plan was $55,587.                           
(f)During the fiscal year ended May 31, 2004 and the calendar year ended        
December 31, 2003, Ms. Verville deferred $1,026 and $1,703 of her         
compensation from the High Yield Fund and the Strategic Income Fund,      
respectively, and $53,250 of her total compensation from the Fund Complex 
 pursuant to the deferred compensation plan. At December 31, 2003, the value
of Ms. Verville's account under that plan was $516,001.                   

Role of the Board of Trustees                                                   

The Trustees of the Funds are responsible for the overall management and  
supervision of the Funds' affairs and for protecting the interests of the       
shareholders. The Trustees meet periodically throughout the year to oversee the 
Fund's activities, review contractual arrangements with service providers for   
the Funds and review the Fund's performance. The Trustees have created several  
committees to perform specific functions for the Funds.                         

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Mr. Theobald was elected Chairman of the Board of Trustees of the Liberty       
Funds, Stein Roe Funds and Columbia Funds effective December, 2003.             

Audit Committee                                                                 

Ms. Verville and Messrs. Hacker, Stitzel and Woolworth are members of the 
Audit Committee of the Board of Trustees of the Funds. Prior to October 8,      
2003, Ms. Verville and Messrs. Hacker, Nelson and Neuhauser were members of the 
Audit Committee of the Board of Trustees of the Funds. The Audit Committee's    
functions include making recommendations to the Trustees regarding the          
selection and performance of the independent accountants, and reviewing matters 
relative to accounting and auditing practices and procedures, accounting        
records, and the internal accounting controls, of the Funds and certain service 
providers. For the fiscal year ended May 31, 2004, the Audit Committee convened 
ten times.                                                                      

Governance Committee                                                            

Messrs. Lowry, Mayer, Simpson and Theobald are members of the Governance  
Committee of the Board of Trustees of the Funds. Prior to October 8, 2003, Ms.  
Verville and Messrs. Hacker, Lowry, Mayer and Theobald were members of the      
Governance Committee of the Board of Trustees of the Funds. The Governance      
Committee's functions include recommending to the Trustees nominees for         
independent Trustee positions and for appointments to various committees,       
performing periodic evaluations of the effectiveness of the Board, reviewing    
and recommending to the Board policies and practices to be followed in carrying 
out the Trustees' duties and responsibilities and reviewing and making          
recommendations to the Board regarding the compensation of the Trustees who are 
not affiliated with the Funds' investment advisors. The Governance Committee    
will consider candidates for Trustee recommended by shareholders. Written       
recommendations with supporting information should be directed to the           
Committee, in care of the Funds. For the fiscal year ended May 31, 2004, the    
Governance Committee convened five times.                                       

Advisory Fees & Expenses Committee                                              

Ms. Kelly and Messrs. Mayer, Nelson and Neuhauser are members of the      
Advisory Fees & Expenses Committee of the Board of Trustees of the Funds. Prior 
to October 8, 2003, Ms. Kelly and Messrs. Mayer, Neuhauser, Stitzel and         
Theobald were members of the Advisory Fees & Expenses Committee of the Board of 
Trustees of the Funds. The Advisory Fees & Expenses Committee's functions       
include reviewing and making recommendations to the Board as to contracts       
requiring approval of a majority of the disinterested Trustees and as to any    
other contracts that may be referred to the Committee by the Board. For the     
fiscal year ended May 31, 2004, the Advisory Fees & Expenses Committee convened 
seven times.                                                                    

Compliance Committee                                                            

Ms. Kelly, Messrs. Nelson and Simpson and Ms. Verville are members of the 
Compliance Committee of the Board of Trustees of the Funds. Prior to August 10, 
2004, Ms. Kelly, Mr. Nelson and Ms. Verville were members of the Compliance     
Committee of the Board of Trustees of the Funds. The Compliance Committee's     
functions include providing oversight of the monitoring processes and controls  
regarding the Trust. The Committee uses legal, regulatory and internal rules,   
policies, procedures and standards other than those relating to accounting      
matters and oversight of compliance by the Trust's investment adviser,          
principal underwriter and transfer agent. For the fiscal year ended May 31,     
2004, the Compliance Committee convened one time.                               

Investment Oversight Committees                                                 

Beginning in 2004, each Trustee of the Funds also began serving on an     
Investment Oversight Committee ("IOC"). Each IOC is responsible for monitoring, 
on an ongoing basis, a select group of funds in the Fund Complex and gives      
particular consideration to such matters as the Funds' adherence to their       
investment                                                                      

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mandates, historical performance, changes in investment processes and           
personnel, and proposed changes to investment objectives. Investment personnel  
who manage the Funds attend IOC meetings from time to time to assist each IOC   
in its review of the Funds. Each IOC meets four times a year. The following are 
members of the respective IOCs and the general categories of funds in the Fund  
Complex which they review:                                                      

                                                        [Enlarge/Download Table]
                                                                                                          
IOC #1: Messrs. Lowry, Mayer and Neuhauser are responsible for reviewing funds in the following asset     
        categories: Large Growth Diversified, Large Growth Concentrated, Small Growth, Outside            
        Managed (i.e., sub-advised), Municipal and Bank Loan.                                             

IOC #2: Mr. Hacker and Ms. Verville are responsible for reviewing funds in the following asset categories:
        Large Blend, Small Blend, Foreign Stock, Fixed Income--Multi Sector, Fixed Income--Core and       
        Young Investor.                                                                                   

IOC#3:  Messrs. Theobald and Stitzel and Ms. Kelly are responsible for reviewing funds in the following   
        asset categories: Large Value, Mid Cap Value, Small Value, Asset Allocation, High Yield and       
        Money Market.                                                                                     

IOC#4:  Messrs. Nelson, Simpson and Woolworth are responsible for reviewing funds in the following        
        asset categories: Large/Multi-Cap Blend, Mid Cap Growth, Small Growth, Asset Allocation,          
        Specialty Equity and Taxable Fixed Income.                                                        

Share Ownership                                                                 

  The following table shows the dollar range of equity securities beneficially
owned by each Trustee as of December 31, 2003 (i) in each Fund and (ii) in the  
funds in the Fund Complex.                                                      

                                                        [Enlarge/Download Table]

                                                                      Aggregate Dollar Range
                                                                       of Equity Securities 
                       Dollar Range of Equity Dollar Range of Equity    Owned in All Funds  
                        Securities Owned in   Securities Owned in the Overseen by Trustee in
Name of Trustee         the High Yield Fund    Strategic Income Fund       Fund Complex     
---------------        ---------------------- ----------------------- ----------------------
                                                                                            
Disinterested Trustees                                                                      
Douglas A. Hacker.....          $0                      $0                Over $100,000     
Janet Langford Kelly..          $0                      $0                Over $100,000     
Richard W. Lowry......          $0                      $0                Over $100,000     
Charles R. Nelson.....    $10,001-$50,000               $0                Over $100,000     
John J. Neuhauser.....      $1-$10,000                  $0                Over $100,000     
Patrick J. Simpson....                                                   $50,001-$100,000   
Thomas E. Stitzel.....          $0                      $0               $50,001-$100,000   
Thomas C. Theobald....          $0                      $0                Over $100,000     
Anne-Lee Verville(a)..          $0                      $0                      $0          
Richard L. Woolworth..                                                    Over $100,000     

Interested Trustee                                                                          
William E. Mayer......          $0                      $0               $50,001-$100,000   

--------                                                                        
(a)Ms. Verville has elected to defer her compensation as a Trustee under the    
  deferred compensation plan for independent Trustees of the Fund Complex. The
 value of her deferred compensation is determined as if the amounts had been
 invested, as of the date of deferral, in shares of one or more funds in the
Fund Complex as specified by her. At December 31, 2003, the value of her  
deferred compensation account exceeded $100,000.                          

Ownership of the Funds                                                          

  As of record on August 31, 2004, the officers and Trustees of the Trust as a
group beneficially owned less than 1% of the then outstanding of each of Class  
A, Class B, Class C and Class Z shares of the High Yield Fund and Class A,      
Class B, Class C, Class J and Class Z shares of the Strategic Income Fund.      

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 As of record on August 31, 2004, the following shareholders of record owned
5% or more of one or more of each class of the Funds' then outstanding shares:  

High Yield Fund                                                           

                                                                [Download Table]

Class Account                              Percent(%)
----- -------                              ----------
                                                     
  B   MERRILL LYNCH, PIERCE FENNER & SMITH    5.66   
      4800 DEER LAKE DRIVE E., 2/ND/ FLOOR           
      JACKSONVILLE, FL 32246-6484                    

  B   CITIGROUP GLOBAL MARKETS, INC.          6.18   
      333 W. 34/TH/ STREET                           
      NEW YORK, NY 10001-2402                        

  C   BANC ONE SECURITIES CORP                7.22   
      1111 POLARIS PARKWAY #J-2                      
      COLUMBUS, OH 43240-2050                        

  Z   CHARLES SCHWAB & CO., INC. CUSTODIAN   17.21   
      101 MONTGOMERY ST.                             
      SAN FRANCISCO, CA 94104-4122                   

Strategic Income Fund                                                     

                                                                [Download Table]
                                             

C   MERRILL LYNCH PIERCE FENNER & SMITH  8.81
    4800 DEER LAKE DR. E., 2/ND/ FLOOR       
    JACKSONVILLE, FL 32246-6484              

C   CITIGROUP GLOBAL MARKETS, INC.       5.02
    333 W. 34/TH/ STREET                     
    NEW YORK, NY 10001-2402                  

J   TOKAI TOKYO SECURITIES              93.24
    SHINYAESU BUILDING 7-1                   
    KYOBASHI 1-CHOME                         
    CHUO-KU                                  
    TOKYO, JAPAN 104-0031                    

J   MITSUBISHI SECURITIES CO. LTD        6.76
    INVESTMENT TRUST DIVISION                
    MITSUBISHI BUILDING                      
    2-5-2 MARUNOUCHI                         
    CHIYODA-KU TOKYO 100-0005                
    JAPAN                                    

Z   FLEET NATIONAL BANK                 71.98
    FBO COLUMBIA OMNIBUS C/C                 
    PO BOX 92800                             
    ROCHESTER, NY 14692-8900                 

Z   FLEET NATIONAL BANK                  9.49
    FBO COLUMBIA OMNIBUS C/C                 
    PO BOX 92800                             
    ROCHESTER, NY 14692-8900                 

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Sales Charges (dollars in thousands)                                            

                                                        [Enlarge/Download Table]

                                                               High Yield Fund                    
                                                    --------------------------------------------- 
                                                               Class A Shares                     
                                                    --------------------------------------------- 
                                                               Five months                        
                                                    Year ended    ended    Year ended December 31,
                                                     May 31,     May 31,   ---------------------- 
                                                       2004      2003(a)    2002        2001      
                                                    ---------- -----------   ------      ------   
                                                                                                  
Aggregate initial sales charges on Fund share sales    $266       $162     $  645      $  596     
Initial sales charges retained by CFD..............      34         15         77          60     
Aggregate contingent deferred sales charges (CDSC)                                                
  on Fund redemptions retained by CFD..............     109         (b)        10           5     

                                                               Class B Shares                     
                                                    --------------------------------------------- 
                                                               Five months                        
                                                    Year ended    ended    Year ended December 31,
                                                     May 31,     May 31,   ---------------------- 
                                                       2004      2003(a)    2002        2001      
                                                    ---------- -----------   ------      ------   
Aggregate CDSC on Fund redemptions retained by                                                    
  CFD..............................................    $960       $327     $  915      $1,006     

                                                               Class C Shares                     
                                                    --------------------------------------------- 
                                                               Five months                        
                                                    Year ended    ended    Year ended December 31,
                                                     May 31,     May 31,   ---------------------- 
                                                       2004      2003(a)    2002        2001      
                                                    ---------- -----------   ------      ------   
Aggregate CDSC on Fund redemptions retained by                                                    
  CFD..............................................    $ 18       $  5     $   25      $   20     

                                                            Strategic Income Fund                 
                                                    --------------------------------------------- 
                                                               Class A Shares                     
                                                    --------------------------------------------- 
                                                               Five months                        
                                                    Year ended    ended    Year ended December 31,
                                                     May 31,     May 31,   ---------------------- 
                                                       2004      2003(a)    2002        2001      
                                                    ---------- -----------   ------      ------   
Aggregate initial sales charges on Fund share sales    $506       $173     $  286      $  476     
Initial sales charges retained by CFD..............      54         20         32          57     
Aggregate CDSC on Fund redemptions retained by                                                    
  CFD..............................................      (b)         2          1          (b)    
                                                               Class B Shares                     
                                                    --------------------------------------------- 
                                                               Five months                        
                                                    Year ended    ended    Year ended December 31,
                                                     May 31,     May 31,   ---------------------- 
                                                       2004      2003(a)    2002        2001      
                                                    ---------- -----------   ------      ------   
Aggregate CDSC on Fund redemptions retained by                                                    
  CFD..............................................    $999       $537     $1,470      $1,474     

                                                               Class C Shares                     
                                                    --------------------------------------------- 
                                                               Five months                        
                                                    Year ended    ended    Year ended December 31,
                                                     May 31,     May 31,   ---------------------- 
                                                       2004      2003(a)    2002        2001      
                                                    ---------- -----------   ------      ------   
Aggregate CDSC on Fund redemptions retained by                                                    
  CFD..............................................    $ 10       $  3     $    8      $    8     

--------                                                                        
(a)The Funds changed their fiscal year end from December 31 to May 31 in 2003.  
(b)Rounds to less than one.                                                     

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12b-1 Plan, CDSCs and Conversion of Shares                                      

  Each Fund offers four classes of shares--Class A, Class B, Class C and Class
Z. The Strategic Income Fund also offers an additional class of shares--Class J 
shares. The Funds may in the future offer other classes of shares. The Trustees 
have approved a 12b-1 Plan (Plan) pursuant to Rule 12b-1 under the 1940 Act for 
each class except for Class Z. Under the Plan, the High Yield Fund pays CFD     
monthly a service fee at an annual rate of 0.25% of net assets attributed to    
Class A, B and C shares and the Strategic Income Fund pays CFD monthly a        
service fee at an annual rate of 0.15% of the Fund's net assets attributed to   
shares issued on or before January 1, 1993, and a service fee of 0.25% of the   
Fund's net assets attributed to shares issued and outstanding thereafter. Each  
Fund also pays CFD monthly a distribution fee at an annual rate of 0.75% of     
average daily net assets attributed to Class B and Class C shares and the       
Strategic Income Fund pays CFD monthly a distribution fee at an annual rate of  
0.35% of average daily net assets attributed to Class J shares. CFD has         
voluntarily agreed to waive a portion of the Class C share distribution fee so  
that it does not exceed 0.60% annually. CFD may terminate this waiver at any    
time without shareholder approval. CFD may use the entire amount of such fees   
to defray the costs of commissions and service fees paid to financial service   
firms (FSFs) and for certain other purposes. Since the distribution and service 
fees are payable regardless of the amount of CFD's expenses, CFD may realize a  
profit from the fees. The Plan authorizes any other payments by the Funds to    
CFD and its affiliates (including the Advisor) to the extent that such payments 
might be construed to be indirect financing of the distribution of the Funds'   
shares.                                                                         

The Trustees believe the Plan could be a significant factor in the growth 
and retention of each Fund's assets resulting in a more advantageous expense    
ratio and increased investment flexibility which could benefit each class of    
the Funds' shareholders. The Plan will continue in effect from year to year so  
long as continuance is specifically approved at least annually by a vote of the 
Trustees, including the Trustees who are not interested persons of the Trust    
and have no direct or indirect financial interest in the operation of the Plan  
or in any agreements related to the Plan (Independent Trustees), cast in person 
at a meeting called for the purpose of voting on the Plan. The Plan may not be  
amended to increase the fee materially without approval by vote of a majority   
of the outstanding voting securities of the relevant class of shares and all    
material amendments of the Plan must be approved by the Trustees in the manner  
provided in the foregoing sentence. The Plan may be terminated at any time by   
vote of a majority of the Independent Trustees or by vote of a majority of the  
outstanding voting securities of the relevant class of shares. The continuance  
of the Plan will only be effective if the selection and nomination of the       
Trustees who are not interested persons of the Trust is effected by such        
disinterested Trustees.                                                         

Class A shares are offered at net asset value plus varying sales charges  
which may include a CDSC. Class B shares are offered at net asset value and are 
subject to a CDSC if redeemed for periods up to six years after purchase. Class 
C shares are offered at net asset value and are subject to a 1.00% CDSC on      
redemptions within one year after purchase. Class J shares are offered at net   
asset value plus varying sales charges, but not a CDSC. Class Z shares are      
offered at net asset value and are not subject to a CDSC. The CDSCs and initial 
sales charges are described in the Prospectuses.                                

  No CDSC will be imposed on shares derived from reinvestment of distributions
or amounts representing capital appreciation. In determining the applicability  
and rate of any CDSC, it will be assumed that a redemption is made first of     
shares representing capital appreciation, next of shares representing           
reinvestment of distributions and finally of other shares held by the           
shareholder for the longest period of time.                                     

A certain number of years, depending on the program you purchased your    
shares under, after the end of the month in which a Class B share is purchased, 
such share and a pro rata portion of any shares issued on the reinvestment of   
distributions will be automatically converted into Class A shares having an     
equal value, which are not subject to the distribution fee.                     

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Sales-related expenses (dollars in thousands) of CFD relating to the Class
A, B and C shares of the Funds and Class J shares of the Strategic Income Fund  
were:                                                                           

                                                        [Enlarge/Download Table]

                                                                        High Yield Fund    
                                                                    -----------------------
                                                                    Year ended May 31, 2004
                                                                    -----------------------
                                                                    Class A Class B Class C
                                                                    ------- ------- -------
                                                                                           
Fees to FSFs....................................................... $1,138  $1,741   $220  
Cost of sales material relating to the Fund (including printing and                        
  mailing expenses)................................................    120      31      9  
Allocated travel, entertainment and other promotional expenses                             
  (including advertising)..........................................    344      87     24  

                                                        [Enlarge/Download Table]

                                                                     Strategic Income Fund     
                                                                -------------------------------
                                                                    Year ended May 31, 2004    
                                                                -------------------------------
                                                                Class A Class B Class C Class J
                                                                ------- ------- ------- -------
                                                                                               
Fees to FSFs................................................... $1,605  $2,757   $199    $109  
Cost of sales material relating to the Fund (including printing                                
  and mailing expenses)........................................     60      49     10       7  
Allocated travel, entertainment and other promotional                                          
  expenses (including advertising).............................    170     141     28      21  

CUSTODIAN OF THE FUNDS                                                          

  State Street Bank & Trust Company, located at 2 Avenue De Lafayette, Boston,
Massachusetts 02111-2900, is the Funds' custodian. The custodian is responsible 
for safeguarding the Funds' cash and securities, receiving and delivering       
securities and collecting the Funds' interest and dividends.                    

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF THE FUNDS                      

PricewaterhouseCoopers LLP, located at 125 High Street, Boston,           
Massachusetts 02110-2624, is the Funds' independent registered public           
accounting firm, providing audit and tax return review services and assistance  
and consultation in connection with the review of various Securities and        
Exchange Commission filings. The financial statements incorporated by reference 
in this SAI have been so incorporated, and the financial highlights in the      
Prospectuses have been so included, in reliance upon the report of              
PricewaterhouseCoopers LLP given on the authority of said firm as experts in    
accounting and auditing.                                                        

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STATEMENT OF ADDITIONAL INFORMATION 

PART 2  

The following information applies generally to most funds advised by the  
Advisor. "Funds" include the series of Columbia Funds Trust I (formerly named   
Liberty Funds Trust I), Columbia Funds Trust II (formerly named Liberty Funds   
Trust II), Columbia Funds Trust III (formerly named Liberty Funds Trust III),   
Columbia Funds Trust IV (formerly named Liberty Funds Trust IV), Columbia Funds 
Trust V (formerly named Liberty Funds Trust V), Columbia Funds Trust VI         
(formerly named Liberty Funds Trust VI), Columbia FundsTrust VII (formerly      
named Liberty Funds Trust VII), Columbia Funds Trust VIII (formerly named       
Liberty-Stein Roe Funds Income Trust), Columbia Funds Trust IX (formerly named  
Liberty-Stein Roe Funds Municipal Trust) and Columbia Funds Trust XI (formerly  
named Liberty-Stein Roe Funds Investment Trust) (each a Trust and together, the 
Trusts, also known as Fund Complex). In certain cases, the discussion applies   
to some, but not all, of the Funds, and you should refer to your Fund's         
Prospectus and to Part 1 of this Statement of Additional Information (SAI) to   
determine whether the matter is applicable to your Fund. You will also be       
referred to Part 1 for certain data applicable to your Fund.                    

MISCELLANEOUS INVESTMENT PRACTICES                                              

Part 1 of this SAI lists on page b which of the following investment      
practices are available to your Fund. If an investment practice is not listed   
in Part 1 of this SAI, it is not applicable to your Fund.                       

Short-Term Trading                                                              

In seeking the Fund's investment goal, the Advisor will buy or sell       
portfolio securities whenever it believes it is appropriate. The Advisor's      
decision will not generally be influenced by how long the Fund may have owned   
the security. From time to time, the Fund will buy securities intending to seek 
short-term trading profits. A change in the securities held by the Fund is      
known as "portfolio turnover" and generally involves some expense to the Fund.  
These expenses may include brokerage commissions or dealer mark-ups and other   
transaction costs on both the sale of securities and the reinvestment of the    
proceeds in other securities. If sales of portfolio securities cause the Fund   
to realize net short-term capital gains, such gains will be taxable as ordinary 
income. As a result of the Fund's investment policies, under certain market     
conditions the Fund's portfolio turnover rate may be higher than that of other  
mutual funds. The Fund's portfolio turnover rate for a fiscal year is the ratio 
of the lesser of purchases or sales of portfolio securities to the monthly      
average of the value of portfolio securities, excluding securities whose        
maturities at acquisition were one year or less. The Fund's portfolio turnover  
rate is not a limiting factor when the Advisor considers a change in the Fund's 
portfolio.                                                                      

Short Sales                                                                     

  A Fund's short sales are subject to special risks. A short sale involves the
sale by the Fund of a security that it does not own with the hope of purchasing 
the same security at a later date at a lower price. In order to deliver the     
security to the buyer, the Fund borrows the security from a third party. The    
Fund is then obligated to return the security to the third party, so the Fund   
must purchase the security at the market price at a later point in time. If the 
price of the security has increased during this time, then the Fund will incur  
a loss equal to the increase in price of the security from the time that the    
short sale was entered into plus any premiums and interest paid to the third    
party. Therefore, short sales involve the risk that losses may be exaggerated,  
potentially losing more money than the actual cost of the security. Also, there 
is the risk that the third party to the short sale may fail to honor its        
contract terms, causing a loss to the Fund.                                     

Lower-Rated Debt Securities                                                     

  Lower-rated debt securities are those rated lower than Baa by Moody's or BBB
by S&P, or comparable unrated debt securities. Relative to debt securities of   
higher quality,                                                                 

1. an economic downturn or increased interest rates may have a more     
  significant effect on the yield, price and potential for default for
lower-rated debt securities;                                      

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   2. the secondary market for lower-rated debt securities may at times become
  less liquid or respond to adverse publicity or investor perceptions,
increasing the difficulty in valuing or disposing of the bonds;   

  3. the Advisor's credit analysis of lower-rated debt securities may have a
  greater impact on the Fund's achievement of its investment goal; and

4. lower-rated debt securities may be less sensitive to interest rate   
changes, but are more sensitive to adverse economic developments. 

In addition, certain lower-rated debt securities may not pay interest in  
cash on a current basis.                                                        

Small Companies                                                                 

  Smaller, less well established companies may offer greater opportunities for
capital appreciation than larger, better established companies, but may also    
involve certain special risks related to limited product lines, markets, or     
financial resources and dependence on a small management group. Their           
securities may trade less frequently, in smaller volumes, and fluctuate more    
sharply in value than securities of larger companies.                           

Common Stock, Preferred Stock and Warrants                                      

Common stocks are generally more volatile than other securities. Preferred
stocks share some of the characteristics of both debt and equity investments    
and are generally preferred over common stocks with respect to dividends and in 
liquidation. A warrant is an instrument issued by a corporation which gives the 
holder the right to subscribe to a specified amount of the company's capital    
stock at a set price for a specified period of time.                            

Foreign Securities                                                              

The Fund may invest in securities traded in markets outside the United    
States. Foreign investments can be affected favorably or unfavorably by changes 
in currency rates and in exchange control regulations. There may be less        
publicly available information about a foreign company than about a U.S.        
company, and foreign companies may not be subject to accounting, auditing and   
financial reporting standards comparable to those applicable to U.S. companies. 
Securities of some foreign companies are less liquid or more volatile than      
securities of U.S. companies, and foreign brokerage commissions and custodian   
fees may be higher than in the United States. Investments in foreign securities 
can involve other risks different from those affecting U.S. investments,        
including local political or economic developments, expropriation or            
nationalization of assets and imposition of withholding taxes on dividend or    
interest payments. Foreign securities, like other assets of the Fund, will be   
held by the Fund's custodian or by a sub-custodian or depository. See also      
"Foreign Currency Transactions" below.                                          

 The Fund may invest in certain Passive Foreign Investment Companies (PFICs)
which may be subject to U.S. federal income tax on a portion of any "excess     
distribution" or gain (PFIC tax) related to the investment. This "excess        
distribution" will be allocated over the Fund's holding period for such         
investment. The PFIC tax is the highest ordinary income rate in effect for any  
period multiplied by the portion of the "excess distribution" allocated to such 
period, and it could be increased by an interest charge on the deemed tax       
deferral.                                                                       

The Fund may possibly elect to include in its income its pro rata share of
the ordinary earnings and net capital gain of PFICs. This election requires     
certain annual information from the PFICs which in many cases may be difficult  
to obtain. An alternative election would permit the Fund to recognize as income 
any appreciation (and to a limited extent, depreciation) on its holdings of     
PFICs as of the end of its fiscal year. See "Taxes" below.                      

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Other Investment Companies                                                      

The Fund may invest in other investment companies. Such investments will  
involve the payment of duplicative fees through the indirect payment of a       
portion of the expenses, including advisory fees, of such other investment      
companies.                                                                      

Exchange-traded funds ("ETFs"). The Fund may invest in ETFs, which are    
shares of publicly-traded unit investment trusts, open-end funds, or depositary 
receipts that seek to track the performance and dividend yield of specific      
indexes or companies in related industries. These indexes may be either         
broad-based, sector or international.                                           

ETF shareholders are generally subject to the same risks as holders of the
underlying securities they are designed to track. ETFs are also subject to      
certain additional risks, including (1) the risk that their prices may not      
correlate perfectly with changes in the prices of the underlying securities     
they are designed to track; and (2) the risk of possible trading halts due to   
market conditions or other reasons, based on the policies of the exchange upon  
which an ETF trades. In addition, an exchange traded sector fund may be         
adversely affected by the performance of that specific sector or group of       
industries on which it is based.                                                

The Fund would bear, along with other shareholders of an ETF, its pro rata
portion of the ETF's expenses, including management fees. Accordingly, in       
addition to bearing their proportionate share of the Fund's expenses (i.e.,     
management fees and operating expenses), shareholders of the Fund may also      
indirectly bear similar expenses of an ETF.                                     

Zero Coupon Securities (Zeros)                                                  

The Fund may invest in zero coupon securities, which are securities issued
at a significant discount from face value and do not pay interest at intervals  
during the life of the security. Zero coupon securities include securities      
issued in certificates representing undivided interests in the interest or      
principal of mortgage-backed securities (interest only/principal only), which   
tend to be more volatile than other types of securities. The Fund will accrue   
and distribute income from stripped securities and certificates on a current    
basis and may have to sell securities to generate cash for distributions.       

Step Coupon Bonds (Steps)                                                       

The Fund may invest in debt securities which pay interest at a series of  
different rates (including 0%) in accordance with a stated schedule for a       
series of periods. In addition to the risks associated with the credit rating   
of the issuers, these securities may be subject to more volatility risk than    
fixed rate debt securities.                                                     

Tender Option Bonds                                                             

A tender option bond is a municipal security (generally held pursuant to a
custodial arrangement) having a relatively long maturity and bearing interest   
at a fixed rate substantially higher than prevailing short-term tax-exempt      
rates, that has been coupled with the agreement of a third party, such as a     
bank, broker-dealer or other financial institution, pursuant to which such      
institution grants the security holders the option, at periodic intervals, to   
tender their securities to the institution and receive the face value thereof.  
As consideration for providing the option, the financial institution receives   
periodic fees equal to the difference between the municipal security's fixed    
coupon rate and the rate, as determined by a remarketing or similar agent at or 
near the commencement of such period, that would cause the securities, coupled  
with the tender option, to trade at par on the date of such determination.      
Thus, after payment of this fee, the security holder effectively holds a demand 
obligation that bears interest at the prevailing short-term tax-exempt rate.    
The Advisor will consider on an ongoing basis the creditworthiness of the       
issuer of the underlying municipal securities, of any custodian, and of the     
third-party provider of the tender option. In certain instances and for certain 
tender option bonds, the option may be terminable in the event of a default in  
payment of principal or interest on the underlying municipal securities and for 
other reasons.                                                                  

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Pay-In-Kind (PIK) Securities                                                    

The Fund may invest in securities which pay interest either in cash or    
additional securities. These securities are generally high yield securities     
and, in addition to the other risks associated with investing in high yield     
securities, are subject to the risks that the interest payments which consist   
of additional securities are also subject to the risks of high yield securities.

Money Market Instruments                                                        

 Government obligations are issued by the U.S. or foreign governments, their
subdivisions, agencies and instrumentalities. Supranational obligations are     
issued by supranational entities and are generally designed to promote economic 
improvements. Certificates of deposit are issued against deposits in a          
commercial bank with a defined return and maturity. Banker's acceptances are    
used to finance the import, export or storage of goods and are "accepted" when  
guaranteed at maturity by a bank. Commercial paper is a promissory note issued  
by a business to finance short-term needs (including promissory notes with      
floating or variable interest rates, or including a frequent interval put       
feature). Short-term corporate obligations are bonds and notes (with one year   
or less to maturity at the time of purchase) issued by businesses to finance    
long-term needs. Participation Interests include the underlying securities and  
any related guaranty, letter of credit, or collateralization arrangement in     
which the Fund would be allowed to invest directly.                             

  Certificates of Deposit are short-term negotiable instruments issued against
deposits in a commercial bank with a defined return and maturity. Time Deposits 
are non-negotiable deposits maintained in banking institutions for specified    
periods of time at stated interest rates.                                       

 Government Obligations are issued by the U.S. or foreign governments, their
subdivisions, agencies and instrumentalities. Examples of the types of          
obligations issued or guaranteed by the U.S. Government, its agencies or        
instrumentalities (hereinafter, "U.S. Government obligations") that may be held 
by the Funds include, without limitation, direct obligations of the U.S.        
Treasury, and securities issued or guaranteed by the Federal Home Loan Banks,   
Federal Farm Credit Banks, Federal Land Banks, Federal Housing Administration,  
Farmers Home Administration, Export-Import Bank of the United States, Small     
Business Administration, Government National Mortgage Association, Federal      
National Mortgage Association, General Services Administration, Central Bank    
for Cooperatives, Federal Home Loan Mortgage Corporation, Federal Intermediate  
Credit Banks, Resolution Trust Corporation and Maritime Administration.         

  U.S. Treasury securities differ only in their interest rates, maturities and
time of issuance: Treasury Bills have initial maturities of one year or less;   
Treasury Notes have initial maturities of one to ten years; and Treasury Bonds  
generally have initial maturities of more than ten years. Obligations of        
certain agencies and instrumentalities of the U.S. Government, such as those of 
the Government National Mortgage Association, are supported by the full faith   
and credit of the U.S. Treasury; others, such as those of the Federal Home Loan 
Banks, are supported by the right of the issuer to borrow from the Treasury;    
others, such as those of the Federal National Mortgage Association, are         
supported by the discretionary authority of the U.S. Government to purchase the 
agency's obligations; still others, such as those of the Federal Home Loan      
Mortgage Corporation, are supported only by the credit of the instrumentality.  
No assurance can be given that the U.S. Government would provide financial      
support to U.S. Government-sponsored instrumentalities if it is not obligated   
to do so by law. Some of these instruments may be variable or floating rate     
instruments.                                                                    

Securities issued or guaranteed by the U.S. Government, its agencies and  
instrumentalities have historically involved relatively little risk of loss of  
principal. However, due to fluctuations in interest rates, the market value of  
such securities may vary during the period a shareholder owns shares of the     
Fund.                                                                           

Bank obligations include bankers' acceptances, negotiable certificates of 
deposit, and non-negotiable time deposits issued for a definite period of time  
and earning a specified return by a U.S. bank which is a member of              

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the Federal Reserve System or is insured by the Federal Deposit Insurance       
Corporation ("FDIC"), or by a savings and loan association or savings bank      
which is insured by the FDIC. Bank obligations also include U.S.                
dollar-denominated obligations of foreign branches of U.S. banks or of U.S.     
branches of foreign banks, all of the same type as domestic bank obligations.   
Time deposits with a maturity longer than seven days or that do not provide for 
payment within seven days after notice will be subject to any limitations on    
illiquid securities described in Part 1 of this SAI. For purposes of each       
Fund's investment policies with respect to bank obligations, the assets of a    
bank or savings institution will be deemed to include the assets of its U.S.    
and foreign branches.                                                           

  Domestic and foreign banks are subject to extensive but different government
regulation which may limit the amount and types of their loans and the interest 
rates that may be charged. In addition, the profitability of the banking        
industry is largely dependent upon the availability and cost of funds to        
finance lending operations and the quality of underlying bank assets.           

Investments in obligations of foreign branches of U.S. banks and of U.S.  
branches of foreign banks may subject a Fund to additional risks, including     
future political and economic developments, the possible imposition of          
withholding taxes on interest income, possible seizure or nationalization of    
foreign deposits, the possible establishment of exchange controls, or the       
adoption of other foreign governmental restrictions which might adversely       
affect the payment of principal and interest on such obligations. In addition,  
foreign branches of U.S. banks and U.S. branches of foreign banks may be        
subject to less stringent reserve requirements and to different accounting,     
auditing, reporting, and recordkeeping standards than those applicable to       
domestic branches of U.S. banks.                                                

  Separately Traded Interest and Principal Securities ("STRIPS") are component
parts of U.S. Treasury Securities traded through the Federal Reserve Book-Entry 
System. While there is no limitation on the percentage of a Fund's assets that  
may be invested in STRIPS, the Advisor will monitor the level of such holdings  
to avoid the risk of impairing shareholders' redemption rights. The             
interest-only component of STRIPS is extremely sensitive to the rate of         
principal payments on the underlying obligation. The market value of the        
principal-only component is usually volatile in response to changes in interest 
rates.                                                                          

In U.S. Treasury Rolls, a Fund sells outstanding U.S. Treasury securities 
and buys back on a delayed settlement basis the same U.S. Treasury securities.  
During the period prior to the delayed settlement date, the assets from the     
sale of the U.S. Treasury securities are invested in certain cash equivalent    
instruments. U.S. Treasury rolls entail the risk that the Fund could suffer an  
opportunity loss if the counterparty to the roll failed to perform its          
obligations on the settlement date, and if market conditions changed adversely. 
The Funds intend to enter into U.S. Treasury rolls only with U.S. Government    
securities dealers recognized by the Federal Reserve Bank or with member banks  
of the Federal Reserve System. The Funds will hold and maintain in a segregated 
account until the settlement date cash or other liquid assets in an amount      
equal to the forward purchase price. For financial reporting and tax purposes,  
the Funds propose to treat U.S. Treasury rolls as two separate transactions,    
one involving the purchase of a security and a separate transaction involving a 
sale.                                                                           

Commercial Paper is an unsecured short-term promissory note issued by     
businesses to finance short-term needs (including those with floating or        
variable interest rates, or including a frequent interval put feature).         
Commercial paper may include variable and floating rate instruments which are   
unsecured instruments that permit the indebtedness thereunder to vary. Variable 
rate instruments provide for periodic adjustments in the interest rate.         
Floating rate instruments provide for automatic adjustment of the interest rate 
whenever some other specified interest rate changes. Some variable and floating 
rate obligations are direct lending arrangements between the purchaser and the  
issuer and there may be no active secondary market. However, in the case of     
variable and floating rate obligations with a demand feature, a Fund may demand 
payment of principal and accrued interest at a time specified in the instrument 
or may resell the instrument to a third party. In the event that an issuer of a 
variable or floating rate obligation were to default on its payment obligation, 
a Fund might be unable to dispose of the note because of the absence of a       
secondary market and could, for this or other reasons, suffer a loss to the     
extent of the default.                                                          

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Commercial paper may include securities issued by corporations without    
registration under the 1933 Act in reliance on the so-called "private           
placement" exemption in Section 4(2) ("Section 4(2) Paper"). Section 4(2) Paper 
is restricted as to disposition under the federal securities laws in that any   
resale must similarly be made in an exempt transaction. Section 4(2) Paper is   
normally resold to other institutional investors through or with the assistance 
of investment dealers who make a market in Section 4(2) Paper, thus providing   
liquidity. For purposes of each Fund's limitation on purchases of illiquid      
instruments described below, Section 4(2) Paper will not be considered illiquid 
if the Advisor has determined, in accordance with guidelines approved by the    
Board of Trustees, that an adequate trading market exists for such securities.  

Stripped Obligations                                                            

  To the extent consistent with their investment objective, Funds may purchase
U.S. Treasury receipts and other "stripped" securities that evidence ownership  
in either the future interest payments or the future principal payments on U.S. 
Government and other obligations. These participations, which may be issued by  
the U.S. Government or by private issuers, such as banks and other              
institutions, are issued at their "face value," and may include stripped        
mortgage-backed securities ("SMBS"), which are derivative multi-class mortgage  
securities. Stripped securities, particularly SMBS, may exhibit greater price   
volatility than ordinary debt securities because of the manner in which their   
principal and interest are returned to investors.                               

 SMBS are usually structured with two or more classes that receive different
proportions of the interest and principal distributions from a pool of          
mortgage-backed obligations. A common type of SMBS will have one class          
receiving all of the interest, while the other class will receive all of the    
principal. However, in some instances, one class will receive some of the       
interest and most of the principal while the other class will receive most of   
the interest and the remainder of the principal. If the underlying obligations  
experience greater than anticipated prepayments of principal, the Fund may fail 
to fully recoup its initial investment in these securities. The market value of 
the class consisting entirely of principal payments generally is extremely      
volatile in response to changes in interest rates. The yields on a class of     
SMBS that receives all or most of the interest are generally higher than        
prevailing market yields on other mortgage-backed obligations because their     
cash flow patterns are more volatile and there is a greater risk that the       
initial investment will not be fully recouped. SMBS which are not issued by the 
U.S. Government (or a U.S. Government agency or instrumentality) are considered 
illiquid by the Funds. Obligations issued by the U.S. Government may be         
considered liquid under guidelines established by Funds' Board of Trustees if   
they can be disposed of promptly in the ordinary course of business at a value  
reasonably close to that used in the calculation of net asset value per share.  

Municipal Securities                                                            

Municipal Securities acquired by the Funds include debt obligations issued
by governmental entities to obtain Funds for various public purposes, including 
the construction of a wide range of public facilities, the refunding of         
outstanding obligations, the payment of general operating expenses, and the     
extension of loans to public institutions and facilities. Private activity      
bonds that are issued by or on behalf of public authorities to finance various  
privately operated facilities are "Municipal Securities" if the interest paid   
thereon is exempt from regular federal income tax and not treated as a specific 
tax preference item under the federal alternative minimum tax.                  

 The two principal classifications of Municipal Securities which may be held
by the Funds are "general obligation" securities and "revenue" securities.      
General obligation securities are secured by the issuer's pledge of its full    
faith, credit and taxing power for the payment of principal and interest.       
Revenue securities are payable only from the revenues derived from a particular 
facility or class of facilities or, in some cases, from the proceeds of a       
special excise tax or other specific revenue source such as the user of the     
facility being financed.                                                        

The Fund's portfolio may also include "moral obligation" securities, which
are normally issued by special purpose public authorities. If the issuer of     
moral obligation securities is unable to meet its debt service                  

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obligations from current revenues, it may draw on a reserve fund, the           
restoration of which is a moral commitment but not a legal obligation of the    
state or municipality which created the issuer. There is no limitation on the   
amount of moral obligation securities that may be held by the Funds.            

There are, of course, variations in the quality of Municipal Securities,  
both within a particular category and between categories, and the yields on     
Municipal Securities depend upon a variety of factors, including general market 
conditions, the financial condition of the issuer, general conditions of the    
municipal bond market, the size of a particular offering, the maturity of the   
obligation, and the rating of the issue. The ratings of a nationally recognized 
statistical rating organization ("NRSRO"), such as Moody's and S&P, represent   
such NRSRO's opinion as to the quality of Municipal Securities. It should be    
emphasized that these ratings are general and are not absolute standards of     
quality. Municipal Securities with the same maturity, interest rate and rating  
may have different yields. Municipal Securities of the same maturity and        
interest rate with different ratings may have the same yield.                   

Municipal Securities may include rated and unrated variable and floating  
rate tax-exempt instruments, such as variable rate demand notes. Variable rate  
demand notes are long-term Municipal Securities that have variable or floating  
interest rates and provide a Fund with the right to tender the security for     
repurchase at its stated principal amount plus accrued interest. Such           
securities typically bear interest at a rate that is intended to cause the      
securities to trade at par. The interest rate may float or be adjusted at       
regular intervals (ranging from daily to annually), and is normally based on an 
applicable interest index or another published interest rate or interest rate   
index. Most variable rate demand notes allow a Fund to demand the repurchase of 
the security on not more than seven days prior notice. Other notes only permit  
a Fund to tender the security at the time of each interest rate adjustment or   
at other fixed intervals. Variable interest rates generally reduce changes in   
the market value of Municipal Securities from their original purchase prices.   
Accordingly, as interest rates decrease, the potential for capital appreciation 
is less for variable rate Municipal Securities than for fixed income            
obligations. The terms of these variable rate demand instruments require        
payment of principal and accrued interest from the issuer of the Municipal      
Securities, the issuer of the participation interest or a guarantor of either   
issuer.                                                                         

 Municipal Securities purchased by the Funds in some cases may be insured as
to the timely payment of principal and interest. There is no guarantee,         
however, that the insurer will meet its obligations in the event of a default   
in payment by the issuer. In other cases, Municipal Securities may be backed by 
letters of credit or guarantees issued by domestic or foreign banks or other    
financial institutions which are not subject to federal deposit insurance.      
Adverse developments affecting the banking industry generally or a particular   
bank or financial institution that has provided its credit or guarantee with    
respect to a Municipal Security held by a Fund, including a change in the       
credit quality of any such bank or financial institution, could result in a     
loss to the Fund and adversely affect the value of its shares. Letters of       
credit and guarantees issued by foreign banks and financial institutions        
involve certain risks in addition to those of similar instruments issued by     
domestic banks and financial institutions.                                      

  The payment of principal and interest on most Municipal Securities purchased
by the Funds will depend upon the ability of the issuers to meet their          
obligations. Each state, the District of Columbia, each of their political      
subdivisions, agencies, instrumentalities and authorities and each multi-state  
agency of which a state is a member is a separate "issuer" as that term is used 
in this SAI and the Prospectuses. The non-governmental user of facilities       
financed by private activity bonds is also considered to be an "issuer." An     
issuer's obligations under its Municipal Securities are subject to the          
provisions of bankruptcy, insolvency and other laws affecting the rights and    
remedies of creditors, such as the Federal Bankruptcy Code and laws, if any,    
which may be enacted by federal or state legislatures extending the time for    
payment of principal or interest, or both, or imposing other constraints upon   
enforcement of such obligations or upon the ability of municipalities to levy   
taxes. Litigation or other conditions may materially adversely affect the power 
or ability of an issuer to meet its obligations for the payment of interest on  
and principal of its Municipal Securities.                                      

From time to time, proposals have been introduced before Congress for the 
purpose of restricting or eliminating the federal income tax exemption for      
interest on Municipal Securities. For example, under the Tax                    

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Reform Act of 1986, interest on certain private activity bonds must be included 
in an investor's federal alternative minimum taxable income, and corporate      
investors must include all tax-exempt interest in their federal alternative     
minimum taxable income. The Funds cannot, of course, predict what legislation   
may be proposed in the future regarding the income tax status of interest on    
Municipal Securities, or which proposals, if any, might be enacted. Such        
proposals, while pending or if enacted, might materially and adversely affect   
the availability of Municipal Securities for investment by the Funds and the    
liquidity and value of their respective portfolios. In such an event, each Fund 
would re-evaluate its investment objective and policies and consider possible   
changes in its structure or possible dissolution.                               

Opinions relating to the validity of Municipal Securities and to the      
exemption of interest thereon from federal income tax are rendered by bond      
counsel to the respective issuers at the time of issuance. Neither the Funds    
nor the Advisor will review the proceedings relating to the issuance of         
Municipal Securities or the bases for such opinions.                            

Private Activity Bonds                                                          

The Funds may invest in "private activity bonds," the interest on which,  
although exempt from regular federal income tax, may constitute an item of tax  
preference for purposes of the federal alternative minimum tax. Private         
activity bonds are or have been issued to obtain funds to provide, among other  
things, privately operated housing facilities, pollution control facilities,    
convention or trade show facilities, mass transit, airport, port or parking     
facilities and certain local facilities for water supply, gas, electricity or   
sewage or solid waste disposal. Private activity bonds are also issued to       
privately held or publicly owned corporations in the financing of commercial or 
industrial facilities. State and local governments are authorized in most       
states to issue private activity bonds for such purposes in order to encourage  
corporations to locate within their communities. The principal and interest on  
these obligations may be payable from the general revenues of the users of such 
facilities.                                                                     

Private activity bonds held by the Funds are in most cases revenue        
securities and are not payable from the unrestricted revenues of the issuer.    
Consequently, the credit quality of such private activity bonds is usually      
directly related to the credit standing of the corporate user of the facility   
involved.                                                                       

Municipal Lease Obligations                                                     

Although a municipal lease obligation does not constitute a general       
obligation of the municipality for which the municipality's taxing power is     
pledged, a municipal lease obligation is ordinarily backed by the               
municipality's covenant to budget for, appropriate and make the payments due    
under the municipal lease obligation. However, certain lease obligations        
contain "non-appropriation" clauses which provide that the municipality has no  
obligation to make lease or installment purchase payments in future years       
unless money is appropriated for such purpose on a yearly basis. Although       
"non-appropriation" lease obligations are secured by the leased property,       
disposition of the property in the event of foreclosure might prove difficult.  
In addition, the tax treatment of such obligations in the event of              
non-appropriation is unclear.                                                   

Determinations concerning the liquidity and appropriate valuation of a    
municipal lease obligation, as with any other municipal security, are made      
based on all relevant factors. These factors include, among others: (1) the     
frequency of trades and quotes for the obligation; (2) the number of dealers    
willing to purchase or sell the security and the number of other potential      
buyers; (3) the willingness of dealers to undertake to make a market in the     
security; and (4) the nature of the marketplace trades, including the time      
needed to dispose of the security, the method of soliciting offers, and the     
mechanics of the transfer.                                                      

Securities Loans                                                                

  The Fund may make secured loans of its portfolio securities amounting to not
more than the percentage of its total assets specified in Part 1 of this SAI,   
thereby realizing additional income. The risks in lending portfolio             

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securities, as with other extensions of credit, consist of possible delay in    
recovery of the securities or possible loss of rights in the collateral should  
the borrower fail financially. As a matter of policy, securities loans are made 
to banks and broker-dealers pursuant to agreements requiring that loans be      
continuously secured by collateral in cash or short-term debt obligations at    
least equal at all times to the value of the securities on loan. The borrower   
pays to the Fund an amount equal to any dividends or interest received on       
securities lent. The Fund retains all or a portion of the interest received on  
investment of the cash collateral or receives a fee from the borrower. Although 
voting rights, or rights to consent, with respect to the loaned securities pass 
to the borrower, the Fund retains the right to call the loans at any time on    
reasonable notice, and it will do so in order that the securities may be voted  
by the Fund if the holders of such securities are asked to vote upon or consent 
to matters materially affecting the investment. The Fund may also call such     
loans in order to sell the securities involved.                                 

Interfund Borrowing and Lending                                                 

  The Fund may lend money to and borrow money from other affiliated registered
open-end investment companies. The Fund may borrow through the program when the 
Advisor believes borrowing is appropriate and the costs are equal to or lower   
than the costs of bank loans. When borrowing money, the Fund is subject to the  
risk that the securities the Fund acquires with the borrowed money or would     
otherwise have sold will decline in value. When lending money, the Fund is      
subject to the risk that the borrower will be unwilling or unable to make       
timely payments of interest or principal.                                       

Forward Commitments ("When-Issued" and "Delayed Delivery" Securities)           

The Fund may enter into contracts to purchase securities for a fixed price
at a future date beyond customary settlement time ("forward commitments" and    
"when-issued securities") if the Fund holds until the settlement date, in a     
segregated account, cash or liquid securities in an amount sufficient to meet   
the purchase price, or if the Fund enters into offsetting contracts for the     
forward sale of other securities it owns. Forward commitments may be considered 
securities in themselves, and involve a risk of loss if the value of the        
security to be purchased declines prior to the settlement date. Where such      
purchases are made through dealers, the Fund relies on the dealer to consummate 
the sale. The dealer's failure to do so may result in the loss to the Fund of   
an advantageous yield or price. Although the Fund will generally enter into     
forward commitments with the intention of acquiring securities for its          
portfolio or for delivery pursuant to options contracts it has entered into,    
the Fund may dispose of a commitment prior to settlement if the Advisor deems   
it appropriate to do so. The Fund may realize short-term profits or losses      
(generally taxed at ordinary income tax rates in the hands of the shareholders) 
upon the sale of forward commitments.                                           

Mortgage Dollar Rolls                                                           

In a mortgage dollar roll, the Fund sells a mortgage-backed security and  
simultaneously enters into a commitment to purchase a similar security at a     
later date. The Fund either will be paid a fee by the counterparty upon         
entering into the transaction or will be entitled to purchase the similar       
security at a discount. As with any forward commitment, mortgage dollar rolls   
involve the risk that the counterparty will fail to deliver the new security on 
the settlement date, which may deprive the Fund of obtaining a beneficial       
investment. In addition, the security to be delivered in the future may turn    
out to be inferior to the security sold upon entering into the transaction. In  
addition, the transaction costs may exceed the return earned by the Fund from   
the transaction.                                                                

REITs                                                                           

The Funds may invest in real estate investment trusts ("REITs"). Equity   
REITs invest directly in real property while mortgage REITs invest in mortgages 
on real property. REITs may be subject to certain risks associated with the     
direct ownership of real estate, including declines in the value of real        
estate, risks related to general and local economic conditions, overbuilding    
and increased competition, increases in property taxes and operating expenses,  
and variations in rental income. Generally, increases in interest rates will    
decrease the value                                                              

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of high yielding securities and increase the costs of obtaining financing,      
which could decrease the value of a REIT's investments. In addition, equity     
REITs may be affected by changes in the value of the underlying property owned  
by the REITs, while mortgage REITs may be affected by the quality of credit     
extended. Equity and mortgage REITs are dependent upon management skill, are    
not diversified and are subject to the risks of financing projects. REITs are   
also subject to heavy cash flow dependency, defaults by borrowers, self         
liquidation and the possibility of failing to qualify for tax-free pass-through 
of income under the Internal Revenue Code of 1986, as amended (the "Code"), and 
to maintain exemption from the 1940 Act. REITs pay dividends to their           
shareholders based upon available funds from operations. It is quite common for 
these dividends to exceed a REIT's taxable earnings and profits resulting in    
the excess portion of such dividends being designated as a return of capital.   
The Funds intend to include the gross dividends from any investments in REITs   
in their periodic distributions to its shareholders and, accordingly, a portion 
of the Fund's distributions may also be designated as a return of capital.      

Mortgage-Backed Securities                                                      

 Mortgage-backed securities, including "collateralized mortgage obligations"
(CMOs) and "real estate mortgage investment conduits" (REMICs), evidence        
ownership in a pool of mortgage loans made by certain financial institutions    
that may be insured or guaranteed by the U.S. government or its agencies. CMOs  
are obligations issued by special-purpose trusts, secured by mortgages. REMICs  
are entities that own mortgages and elect REMIC status under the Internal       
Revenue Code. Both CMOs and REMICs issue one or more classes of securities of   
which one (the Residual) is in the nature of equity. The Funds will not invest  
in the Residual class. Principal on mortgage-backed securities, CMOs and REMICs 
may be prepaid if the underlying mortgages are prepaid. Prepayment rates for    
mortgage-backed securities tend to increase as interest rates decline           
(effectively shortening the security's life) and decrease as interest rates     
rise (effectively lengthening the security's life). Because of the prepayment   
feature, these securities may not increase in value as much as other debt       
securities when interest rates fall. A Fund may be able to invest prepaid       
principal only at lower yields. The prepayment of such securities purchased at  
a premium may result in losses equal to the premium.                            

Non-Agency Mortgage-Backed Securities                                           

 The Fund may invest in non-investment grade mortgage-backed securities that
are not guaranteed by the U.S. government or an agency. Such securities are     
subject to the risks described under "Lower Rated Debt Securities" and          
"Mortgage-Backed Securities." In addition, although the underlying mortgages    
provide collateral for the security, the Fund may experience losses, costs and  
delays in enforcing its rights if the issuer defaults or enters bankruptcy.     

Asset-Backed Securities                                                         

 Asset-backed securities are interests in pools of debt securities backed by
various types of loans such as credit card, auto and home equity loans. These   
securities involve prepayment risk, which is the possibility that the           
underlying debt may be refinanced or prepaid prior to maturity during periods   
of declining interest rates. During periods of rising interest rates,           
asset-backed securities have a high risk of declining in price because the      
declining prepayment rates effectively lengthen the expected maturity of the    
securities. A decline in interest rates may lead to a faster rate of repayment  
on asset-backed securities and, therefore, cause a Fund to earn a lower         
interest rate on reinvestment. In addition, the potential impact of prepayment  
on the price of an asset-backed security may be difficult to predict and result 
in greater volatility.                                                          

Custody Receipts and Trust Certificates. Custody receipts, such as Morgan 
Stanley TRACERs (Traded Custody Receipts), and trust certificates, such as      
Lehman Brothers TRAINs (Targeted Return Index Securities Trust), are derivative 
products which, in the aggregate, evidence direct ownership in a pool of        
securities. Typically, a sponsor will deposit a pool of securities with a       
custodian in exchange for custody receipts evidencing those securities or with  
a trust in exchange for trust certificates evidencing interests in the trust,   
the                                                                             

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principal asset of which is those securities. The sponsor will then generally   
sell those custody receipts or trust certificates in negotiated transactions at 
varying prices that are determined at the time of sale. Each custody receipt or 
trust certificate evidences the individual securities in the pool and the       
holder of a custody receipt or trust certificate generally will have all the    
rights and privileges of owners of those securities. Each holder of a custody   
receipt or trust certificate generally will be treated as directly purchasing   
its pro rata share of the securities in the pool for an amount equal to the     
amount that such holder paid for its custody receipt or trust certificate. If a 
custody receipt or trust certificate is sold, a holder will be treated as       
having directly "disposed of its pro rata share of the securities evidenced by  
the custody receipt or trust certificate. Additionally, the holder of a custody 
receipt or trust certificate may withdraw the securities represented by the     
custody receipt or trust certificate subject to certain conditions. Custody     
receipts and trust certificates are generally subject to the same risks as      
those securities evidenced by the receipts or certificates which, in the case   
of the Fund, are corporate debt securities. Additionally, custody receipts and  
trust certificates may also be less liquid than the underlying securities if    
the sponsor fails to maintain a trading market.                                 

Repurchase Agreements                                                           

The Fund may enter into repurchase agreements. A repurchase agreement is a
contract under which the Fund acquires a security for a relatively short period 
subject to the obligation of the seller to repurchase and the Fund to resell    
such security at a fixed time and price (representing the Fund's cost plus      
interest). It is the Fund's present intention to enter into repurchase          
agreements only with commercial banks and registered broker-dealers and only    
with respect to obligations of the U.S. government or its agencies or           
instrumentalities. Repurchase agreements may also be viewed as loans made by    
the Fund which are collateralized by the securities subject to repurchase. The  
Advisor will monitor such transactions to determine that the value of the       
underlying securities is at least equal at all times to the total amount of the 
repurchase obligation, including the interest factor. If the seller defaults,   
the Fund could realize a loss on the sale of the underlying security to the     
extent that the proceeds of sale including accrued interest are less than the   
resale price provided in the agreement including interest. In addition, if the  
seller should be involved in bankruptcy or insolvency proceedings, the Fund may 
incur delay and costs in selling the underlying security or may suffer a loss   
of principal and interest if the Fund is treated as an unsecured creditor and   
required to return the underlying collateral to the seller's estate.            

Reverse Repurchase Agreements                                                   

In a reverse repurchase agreement, the Fund sells a security and agrees to
repurchase the same security at a mutually agreed upon date and price. A        
reverse repurchase agreement may also be viewed as the borrowing of money by    
the Fund and, therefore, as a form of leverage. The Fund will invest the        
proceeds of borrowings under reverse repurchase agreements. In addition, the    
Fund will enter into a reverse repurchase agreement only when the interest      
income expected to be earned from the investment of the proceeds is greater     
than the interest expense of the transaction. The Fund will not invest the      
proceeds of a reverse repurchase agreement for a period which exceeds the       
duration of the reverse repurchase agreement. The Fund may not enter into       
reverse repurchase agreements exceeding in the aggregate one-third of the       
market value of its total assets, less liabilities other than the obligations   
created by reverse repurchase agreements. Each Fund will establish and maintain 
with its custodian a separate account with a segregated portfolio of securities 
in an amount at least equal to its purchase obligations under its reverse       
repurchase agreements. If interest rates rise during the term of a reverse      
repurchase agreement, entering into the reverse repurchase agreement may have a 
negative impact on a money market fund's ability to maintain a net asset value  
of $1.00 per share.                                                             

Line of Credit                                                                  

The Fund may establish and maintain a line of credit with a major bank in 
order to permit borrowing on a temporary basis to meet share redemption         
requests in circumstances in which temporary borrowings may be preferable to    
liquidation of portfolio securities.                                            

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Options on Securities                                                           

  Writing covered options. The Fund may write covered call options and covered
put options on securities held in its portfolio when, in the opinion of the     
Advisor, such transactions are consistent with the Fund's investment goal and   
policies. Call options written by the Fund give the purchaser the right to buy  
the underlying securities from the Fund at a stated exercise price; put options 
give the purchaser the right to sell the underlying securities to the Fund at a 
stated price.                                                                   

The Fund may write only covered options, which means that, so long as the 
Fund is obligated as the writer of a call option, it will own the underlying    
securities subject to the option (or comparable securities satisfying the cover 
requirements of securities exchanges). In the case of put options, the Fund     
will hold cash and/or high-grade short-term debt obligations equal to the price 
to be paid if the option is exercised. In addition, the Fund will be considered 
to have covered a put or call option if and to the extent that it holds an      
option that offsets some or all of the risk of the option it has written. The   
Fund may write combinations of covered puts and calls on the same underlying    
security.                                                                       

The Fund will receive a premium from writing a put or call option, which  
increases the Fund's return on the underlying security if the option expires    
unexercised or is closed out at a profit. The amount of the premium reflects,   
among other things, the relationship between the exercise price and the current 
market value of the underlying security, the volatility of the underlying       
security, the amount of time remaining until expiration, current interest       
rates, and the effect of supply and demand in the options market and in the     
market for the underlying security. By writing a call option, the Fund limits   
its opportunity to profit from any increase in the market value of the          
underlying security above the exercise price of the option but continues to     
bear the risk of a decline in the value of the underlying security. By writing  
a put option, the Fund assumes the risk that it may be required to purchase the 
underlying security for an exercise price higher than its then-current market   
value, resulting in a potential capital loss unless the security subsequently   
appreciates in value.                                                           

  The Fund may terminate an option that it has written prior to its expiration
by entering into a closing purchase transaction in which it purchases an        
offsetting option. The Fund realizes a profit or loss from a closing            
transaction if the cost of the transaction (option premium plus transaction     
costs) is less or more than the premium received from writing the option.       
Because increases in the market price of a call option generally reflect        
increases in the market price of the security underlying the option, any loss   
resulting from a closing purchase transaction may be offset in whole or in part 
by unrealized appreciation of the underlying security.                          

If the Fund writes a call option but does not own the underlying security,
and when it writes a put option, the Fund may be required to deposit cash or    
securities with its broker as "margin" or collateral for its obligation to buy  
or sell the underlying security. As the value of the underlying security        
varies, the Fund may have to deposit additional margin with the broker. Margin  
requirements are complex and are fixed by individual brokers, subject to        
minimum requirements currently imposed by the Federal Reserve Board and by      
stock exchanges and other self-regulatory organizations.                        

Purchasing put options. The Fund may purchase put options to protect its  
portfolio holdings in an underlying security against a decline in market value. 
Such hedge protection is provided during the life of the put option since the   
Fund, as holder of the put option, is able to sell the underlying security at   
the put exercise price regardless of any decline in the underlying security's   
market price. For a put option to be profitable, the market price of the        
underlying security must decline sufficiently below the exercise price to cover 
the premium and transaction costs. By using put options in this manner, the     
Fund will reduce any profit it might otherwise have realized from appreciation  
of the underlying security by the premium paid for the put option and by        
transaction costs.                                                              

  Purchasing call options. The Fund may purchase call options to hedge against
an increase in the price of securities that the Fund wants ultimately to buy.   
Such hedge protection is provided during the life of the call                   

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option since the Fund, as holder of the call option, is able to buy the         
underlying security at the exercise price regardless of any increase in the     
underlying security's market price. In order for a call option to be            
profitable, the market price of the underlying security must rise sufficiently  
above the exercise price to cover the premium and transaction costs. These      
costs will reduce any profit the Fund might have realized had it bought the     
underlying security at the time it purchased the call option.                   

Over-the-Counter (OTC) options. The Staff of the Division of Investment   
Management of the Securities and Exchange Commission (SEC) has taken the        
position that OTC options purchased by the Fund and assets held to cover OTC    
options written by the Fund are illiquid securities. Although the Staff has     
indicated that it is continuing to evaluate this issue, pending further         
developments, the Fund intends to enter into OTC options transactions only with 
primary dealers in U.S. government securities and, in the case of OTC options   
written by the Fund, only pursuant to agreements that will assure that the Fund 
will at all times have the right to repurchase the option written by it from    
the dealer at a specified formula price. The Fund will treat the amount by      
which such formula price exceeds the amount, if any, by which the option may be 
"in-the-money" as an illiquid investment. It is the present policy of the Fund  
not to enter into any OTC option transaction if, as a result, more than 15%     
(10% in some cases, refer to your Fund's Prospectus) of the Fund's net assets   
would be invested in (i) illiquid investments (determined under the foregoing   
formula) relating to OTC options written by the Fund, (ii) OTC options          
purchased by the Fund, (iii) securities which are not readily marketable, and   
(iv) repurchase agreements maturing in more than seven days.                    

Risk factors in options transactions. The successful use of the Fund's    
options strategies depends on the ability of the Advisor to forecast interest   
rate and market movements correctly.                                            

When it purchases an option, the Fund runs the risk that it will lose its 
entire investment in the option in a relatively short period of time, unless    
the Fund exercises the option or enters into a closing sale transaction with    
respect to the option during the life of the option. If the price of the        
underlying security does not rise (in the case of a call) or fall (in the case  
of a put) to an extent sufficient to cover the option premium and transaction   
costs, the Fund will lose part or all of its investment in the option. This     
contrasts with an investment by the Fund in the underlying securities, since    
the Fund may continue to hold its investment in those securities                
notwithstanding the lack of a change in price of those securities.              

  The effective use of options also depends on the Fund's ability to terminate
option positions at times when the Advisor deems it desirable to do so.         
Although the Fund will take an option position only if the Advisor believes     
there is a liquid secondary market for the option, there is no assurance that   
the Fund will be able to effect closing transactions at any particular time or  
at an acceptable price.                                                         

If a secondary trading market in options were to become unavailable, the  
Fund could no longer engage in closing transactions. Lack of investor interest  
might adversely affect the liquidity of the market for particular options or    
series of options. A marketplace may discontinue trading of a particular option 
or options generally. In addition, a market could become temporarily            
unavailable if unusual events--such as volume in excess of trading or clearing  
capability--were to interrupt normal market operations.                         

A marketplace may at times find it necessary to impose restrictions on    
particular types of option transactions, which may limit the Fund's ability to  
realize its profits or limit its losses.                                        

Disruptions in the markets for the securities underlying options purchased
or sold by the Fund could result in losses on the options. If trading is        
interrupted in an underlying security, the trading of options on that security  
is normally halted as well. As a result, the Fund as purchaser or writer of an  
option will be unable to close out its positions until options trading resumes, 
and it may be faced with losses if trading in the security reopens at a         
substantially different price. In addition, the Options Clearing Corporation    
(OCC) or other options markets may impose exercise restrictions. If a           
prohibition on exercise is imposed at the time when trading in the option has   
also been halted, the Fund as purchaser or writer of an option will be locked   
into its position until one of the two                                          

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restrictions has been lifted. If a prohibition on exercise remains in effect    
until an option owned by the Fund has expired, the Fund could lose the entire   
value of its option.                                                            

Special risks are presented by internationally traded options. Because of 
time differences between the United States and various foreign countries, and   
because different holidays are observed in different countries, foreign options 
markets may be open for trading during hours or on days when U.S. markets are   
closed. As a result, option premiums may not reflect the current prices of the  
underlying interest in the United States.                                       

Futures Contracts and Related Options                                           

Upon entering into futures contracts, in compliance with the SEC's        
requirements, cash or liquid securities, equal in value to the amount of the    
Fund's obligation under the contract (less any applicable margin deposits and   
any assets that constitute "cover" for such obligation), will be segregated     
with the Fund's custodian.                                                      

A futures contract sale creates an obligation by the seller to deliver the
type of instrument called for in the contract in a specified delivery month for 
a stated price. A futures contract purchase creates an obligation by the        
purchaser to take delivery of the type of instrument called for in the contract 
in a specified delivery month at a stated price. The specific instruments       
delivered or taken at the settlement date are not determined until on or near   
that date. The determination is made in accordance with the rules of the        
exchanges on which the futures contract was made. The Fund may enter into       
futures contracts which are traded on national or foreign futures exchanges and 
are standardized as to maturity date and underlying financial instrument.       
Futures exchanges and trading in the United States are regulated under the      
Commodity Exchange Act by the Commodity Futures Trading Commission (CFTC).      

Although futures contracts by their terms call for actual delivery or     
acceptance of commodities or securities, the contracts usually are closed out   
before the settlement date without the making or taking of delivery. Closing    
out a futures contract sale is effected by purchasing a futures contract for    
the same aggregate amount of the specific type of financial instrument or       
commodity with the same delivery date. If the price of the initial sale of the  
futures contract exceeds the price of the offsetting purchase, the seller is    
paid the difference and realizes a gain. Conversely, if the price of the        
offsetting purchase exceeds the price of the initial sale, the seller realizes  
a loss. Similarly, the closing out of a futures contract purchase is effected   
by the purchaser's entering into a futures contract sale. If the offsetting     
sale price exceeds the purchase price, the purchaser realizes a gain, and if    
the purchase price exceeds the offsetting sale price, the purchaser realizes a  
loss.                                                                           

Unlike when the Fund purchases or sells a security, no price is paid or   
received by the Fund upon the purchase or sale of a futures contract, although  
the Fund is required to deposit with its custodian in a segregated account in   
the name of the futures broker an amount of cash and/or U.S. government         
securities. This amount is known as "initial margin." The nature of initial     
margin in futures transactions is different from that of margin in security     
transactions in that futures contract margin does not involve the borrowing of  
funds by the Fund to finance the transactions. Rather, initial margin is in the 
nature of a performance bond or good faith deposit on the contract that is      
returned to the Fund upon termination of the futures contract, assuming all     
contractual obligations have been satisfied. Futures contracts also involve     
brokerage costs.                                                                

Subsequent payments, called "variation margin," to and from the broker (or
the custodian) are made on a daily basis as the price of the underlying         
security or commodity fluctuates, making the long and short positions in the    
futures contract more or less valuable, a process known as "marking to market." 

  The Fund may elect to close some or all of its futures positions at any time
prior to their expiration. The purpose of making such a move would be to reduce 
or eliminate the hedge position then currently held by the Fund. The Fund may   
close its positions by taking opposite positions which will operate to          
terminate the Fund's position in the futures contracts. Final determinations of 
variation margin are then made, additional cash is required to be paid by or    
released to the Fund, and the Fund realizes a loss or a gain. Such closing      
transactions involve additional commission costs.                               

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Interest Rate Futures Contracts. Bond prices are established in both the  
cash market and the futures market. In the cash market, bonds are purchased and 
sold with payment for the full purchase price of the bond being made in cash,   
generally within five business days after the trade. In the futures market,     
only a contract is made to purchase or sell a bond in the future for a set      
price on a certain date. Historically, the prices for bonds established in the  
futures markets have tended to move generally in the aggregate in concert with  
the cash market prices and have maintained fairly predictable relationships.    
Accordingly, the Funds may use interest rate futures contracts as a defense, or 
hedge, against anticipated interest rate changes. The Funds presently could     
accomplish a similar result to that which they hope to achieve through the use  
of futures contracts by selling bonds with long maturities and investing in     
bonds with short maturities when interest rates are expected to increase, or    
conversely, selling short-term bonds and investing in long-term bonds when      
interest rates are expected to decline. However, because of the liquidity that  
is often available in the futures market, the protection is more likely to be   
achieved, perhaps at a lower cost and without changing the rate of interest     
being earned by the Funds, through using futures contracts.                     

 Interest rate futures contracts are traded in an auction environment on the
floors of several exchanges--principally, the Chicago Board of Trade, the       
Chicago Mercantile Exchange and the New York Futures Exchange. The Funds would  
deal only in standardized contracts on recognized exchanges. Each exchange      
guarantees performance under contract provisions through a clearing             
corporation, a nonprofit organization managed by the exchange membership.       

A public market now exists in futures contracts covering various financial
instruments including long-term United States Treasury Bonds and Notes;         
Government National Mortgage Association (GNMA) modified pass-through mortgage  
backed securities; three-month United States Treasury Bills; and ninety-day     
commercial paper. The Funds may trade in any interest rate futures contracts    
for which there exists a public market, including, without limitation, the      
foregoing instruments.                                                          

Municipal Bond Index Futures Contracts. Municipal bond index futures      
contracts may act as a hedge against changes in market conditions. A municipal  
bond index assigns values daily to the municipal bonds included in the index    
based on the independent assessment of dealer-to-dealer municipal bond brokers. 
A municipal bond index futures contract represents a firm commitment by which   
two parties agree to take or make delivery of an amount equal to a specified    
dollar amount multiplied by the difference between the municipal bond index     
value on the last trading date of the contract and the price at which the       
futures contract is originally struck. No physical delivery of the underlying   
securities in the index is made.                                                

  The Chicago Board of Trade has designed a futures contract based on the Bond
Buyer Municipal Bond Index. This Index is composed of 40 term revenue and       
general obligation bonds, and its composition is updated regularly as new bonds 
meeting the criteria of the Index are issued and existing bonds mature. The     
Index is intended to provide an accurate indicator of trends and changes in the 
municipal bond market. Each bond in the Index is independently priced by six    
dealer-to-dealer municipal bond brokers daily. The 40 prices then are averaged  
and multiplied by a coefficient. The coefficient is used to maintain the        
continuity of the Index when its composition changes. The Chicago Board of      
Trade, on which futures contracts based on this Index are traded, as well as    
other U.S. commodities exchanges, are regulated by the CFTC. Transactions on    
such exchange are cleared through a clearing corporation, which guarantees the  
performance of the parties to each contract.                                    

Options on futures contracts. The Fund will enter into written options on 
futures contracts only when, in compliance with the SEC's requirements, cash or 
liquid securities equal in value to the commodity value (less any applicable    
margin deposits) have been deposited in a segregated account. The Fund may      
purchase and write call and put options on futures contracts it may buy or sell 
and enter into closing transactions with respect to such options to terminate   
existing positions. The Fund may use such options on futures contracts in lieu  
of writing options directly on the underlying securities or purchasing and      
selling the underlying futures contracts. Such options generally operate in the 
same manner as options purchased or written directly on the underlying          
investments.                                                                    

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As with options on securities, the holder or writer of an option may      
terminate his position by selling or purchasing an offsetting option. There is  
no guarantee that such closing transactions can be effected.                    

The Fund will be required to deposit initial margin and maintenance margin
with respect to put and call options on futures contracts written by it         
pursuant to brokers' requirements similar to those described above.             

Risks of transactions in futures contracts and related options. Successful
use of futures contracts by the Fund is subject to the Advisor's ability to     
predict correctly, movements in the direction of interest rates and other       
factors affecting securities markets.                                           

 Compared to the purchase or sale of futures contracts, the purchase of call
or put options on futures contracts involves less potential risk to the Fund    
because the maximum amount at risk is the premium paid for the options (plus    
transaction costs). However, there may be circumstances when the purchase of a  
call or put option on a futures contract would result in a loss to the Fund     
when the purchase or sale of a futures contract would not, such as when there   
is no movement in the prices of the hedged investments. The writing of an       
option on a futures contract involves risks similar to those risks relating to  
the sale of futures contracts.                                                  

  There is no assurance that higher than anticipated trading activity or other
unforeseen events might not, at times, render certain market clearing           
facilities inadequate, and thereby result in the institution, by exchanges, of  
special procedures which may interfere with the timely execution of customer    
orders.                                                                         

 To reduce or eliminate a hedge position held by the Fund, the Fund may seek
to close out a position. The ability to establish and close out positions will  
be subject to the development and maintenance of a liquid secondary market. It  
is not certain that this market will develop or continue to exist for a         
particular futures contract. Reasons for the absence of a liquid secondary      
market on an exchange include the following: (i) there may be insufficient      
trading interest in certain contracts or options; (ii) restrictions may be      
imposed by an exchange on opening transactions or closing transactions or both; 
(iii) trading halts, suspensions or other restrictions may be imposed with      
respect to particular classes or series of contracts or options, or underlying  
securities; (iv) unusual or unforeseen circumstances may interrupt normal       
operations on an exchange; (v) the facilities of an exchange or a clearing      
corporation may not at all times be adequate to handle current trading volume;  
or (vi) one or more exchanges could, for economic or other reasons, decide or   
be compelled at some future date to discontinue the trading of contracts or     
options (or a particular class or series of contracts or options), in which     
event the secondary market on that exchange (or in the class or series of       
contracts or options) would cease to exist, although outstanding contracts or   
options on the exchange that had been issued by a clearing corporation as a     
result of trades on that exchange would continue to be exercisable in           
accordance with their terms.                                                    

 Use by tax-exempt funds of interest rate and U.S. Treasury security futures
contracts and options. The Funds investing in tax-exempt securities may         
purchase and sell futures contracts and related options on interest rate and    
U.S. Treasury securities when, in the opinion of the Advisor, price movements   
in these security futures and related options will correlate closely with price 
movements in the tax-exempt securities which are the subject of the hedge.      
Interest rate and U.S. Treasury securities futures contracts require the seller 
to deliver, or the purchaser to take delivery of, the type of security called   
for in the contract at a specified date and price. Options on interest rate and 
U.S. Treasury security futures contracts give the purchaser the right in return 
for the premium paid to assume a position in a futures contract at the          
specified option exercise price at any time during the period of the option.    

In addition to the risks generally involved in using futures contracts,   
there is also a risk that price movements in interest rate and U.S. Treasury    
security futures contracts and related options will not correlate closely with  
price movements in markets for tax-exempt securities.                           

Index futures contracts. An index futures contract is a contract to buy or
sell units of an index at a specified future date at a price agreed upon when   
the contract is made. Entering into a contract to buy units of an               

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index is commonly referred to as buying or purchasing a contract or holding a   
long position in the index. Entering into a contract to sell units of an index  
is commonly referred to as selling a contract or holding a short position. A    
unit is the current value of the index. The Fund may enter into stock index     
futures contracts, debt index futures contracts, or other index futures         
contracts appropriate to its objective(s). The Fund may also purchase and sell  
options on index futures contracts.                                             

There are several risks in connection with the use by the Fund of index   
futures as a hedging device. One risk arises because of the imperfect           
correlation between movements in the prices of the index futures and movements  
in the prices of securities which are the subject of the hedge. The Advisor     
will attempt to reduce this risk by selling, to the extent possible, futures on 
indices the movements of which will, in its judgment, have a significant        
correlation with movements in the prices of the Fund's portfolio securities     
sought to be hedged.                                                            

Successful use of index futures by the Fund for hedging purposes is also  
subject to the Advisor's ability to predict correctly movements in the          
direction of the market. It is possible that, where the Fund has sold futures   
to hedge its portfolio against a decline in the market, the index on which the  
futures are written may advance and the value of securities held in the Fund's  
portfolio may decline. If this occurs, the Fund would lose money on the futures 
and also experience a decline in the value of its portfolio securities.         
However, while this could occur to a certain degree, the Advisor believes that  
over time the value of the Fund's portfolio will tend to move in the same       
direction as the market indices which are intended to correlate to the price    
movements of the portfolio securities sought to be hedged. It is also possible  
that, if the Fund has hedged against the possibility of a decline in the market 
adversely affecting securities held in its portfolio and securities prices      
increase instead, the Fund will lose part or all of the benefit of the          
increased values of those securities that it has hedged because it will have    
offsetting losses in its futures positions. In addition, in such situations, if 
the Fund has insufficient cash, it may have to sell securities to meet daily    
variation margin requirements.                                                  

In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the index futures and the        
securities of the portfolio being hedged, the prices of index futures may not   
correlate perfectly with movements in the underlying index due to certain       
market distortions. First, all participants in the futures markets are subject  
to margin deposit and maintenance requirements. Rather than meeting additional  
margin deposit requirements, investors may close futures contracts through      
offsetting transactions which would distort the normal relationship between the 
index and futures markets. Second, margin requirements in the futures market    
are less onerous than margin requirements in the securities market, and as a    
result, the futures market may attract more speculators than the securities     
market. Increased participation by speculators in the futures market may also   
cause temporary price distortions. Due to the possibility of price distortions  
in the futures market and also because of the imperfect correlation between     
movements in the index and movements in the prices of index futures, even a     
correct forecast of general market trends by the Advisor may still not result   
in a successful hedging transaction.                                            

  Options on index futures. Options on index futures are similar to options on
securities except that options on index futures give the purchaser the right,   
in return for the premium paid, to assume a position in an index futures        
contract (a long position if the option is a call and a short position if the   
option is a put), at a specified exercise price at any time during the period   
of the option. Upon exercise of the option, the delivery of the futures         
position by the writer of the option to the holder of the option will be        
accompanied by delivery of the accumulated balance in the writer's futures      
margin account which represents the amount by which the market price of the     
index futures contract, at exercise, exceeds (in the case of a call) or is less 
than (in the case of a put) the exercise price of the option on the index       
future. If an option is exercised on the last trading day prior to the          
expiration date of the option, the settlement will be made entirely in cash     
equal to the difference between the exercise price of the option and the        
closing level of the index on which the future is based on the expiration date. 
Purchasers of options who fail to exercise their options prior to the exercise  
date suffer a loss of the premium paid.                                         

 Options on Indices. As an alternative to purchasing call and put options on
index futures, the Fund may purchase call and put options on the underlying     
indices themselves. Such options could be used in a manner                      

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identical to the use of options on index futures. Options involving securities  
indices provide the holder with the right to make or receive a cash settlement  
upon exercise of the option based on movements in the relevant index. Such      
options must be listed on a national securities exchange and issued by the      
Options Clearing Corporation. Such options may relate to particular securities  
or to various stock indices, except that a Fund may not write covered options   
on an index.                                                                    

 Options on Foreign Stock Indices. The Funds may, for the purpose of hedging
its portfolio, subject to applicable securities regulations, purchase and write 
put and call options on foreign stock indices listed on foreign and domestic    
stock exchanges. A stock index fluctuates with changes in the market values of  
the stocks included in the index.                                               

Swap Agreements (Swaps, Caps, Collars and Floors)                               

The Funds may enter into interest rate swaps, currency swaps, and other   
types of swap agreements such as caps, collars, and floors. In a typical        
interest rate swap, one party agrees to make regular payments equal to a        
floating interest rate times a "notional principal amount," in return for       
payments equal to a fixed rate times the same amount, for a specified period of 
time. If a swap agreement provides for payments in different currencies, the    
parties might agree to exchange notional principal amount as well. Swaps may    
also depend on other prices or rates, such as the value of an index or mortgage 
prepayment rates.                                                               

 In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the    
other party. For example, the buyer of an interest rate cap obtains the right   
to receive payments to the extent that a specified interest rate exceeds an     
agreed upon level, while the seller of an interest rate floor is obligated to   
make payments to the extent that a specified interest rate falls below an       
agreed upon level. An interest rate collar combines elements of buying a cap    
and selling a floor.                                                            

Swap agreements will tend to shift a Fund's investment exposure from one  
type of investment to another. For example, if a Fund agreed to exchange        
payments in dollars for payments in foreign currency, the swap agreement would  
tend to decrease the Fund's exposure to U.S. interest rates and increase its    
exposure to foreign currency and interest rates. Caps and floors have an effect 
similar to buying or writing options. Depending on how they are used, swap      
agreements may increase or decrease the overall volatility of a Fund's          
investments and its share price and yield.                                      

  Swap agreements are sophisticated hedging instruments that typically involve
a small investment of cash relative to the magnitude of risks assumed. As a     
result, swaps can be highly volatile and may have a considerable impact on the  
Funds' performance. Swap agreements are subject to risks related to the         
counterparty's ability to perform, and may decline in value if the              
counterparty's creditworthiness deteriorates. The Funds may also suffer losses  
if they are unable to terminate outstanding swap agreements or reduce their     
exposure through offsetting transactions.                                       

Equity Swaps                                                                    

The Fund may engage in equity swaps. Equity swaps allow the parties to the
swap agreement to exchange components of return on one equity investment (e.g., 
a basket of equity securities or an index) for a component of return on another 
non-equity or equity investment, including an exchange of differential rates of 
return. Equity swaps may be used to invest in a market without owning or taking 
physical custody of securities in circumstances where direct investment may be  
restricted for legal reasons or is otherwise impractical. Equity swaps also may 
be used for other purposes, such as hedging or seeking to increase total return.

Risk factors in equity swap transactions. Equity swaps are derivative     
instruments and their values can be very volatile. To the extent that the       
portfolio managers do not accurately analyze and predict the potential relative 
fluctuation on the components swapped with the other party, the Fund may suffer 
a loss. The value of                                                            

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some components of an equity swap (such as the dividend on a common stock) may  
also be sensitive to changes in interest rates. Furthermore, during the period  
a swap is outstanding, the Fund may suffer a loss if the counterparty defaults. 
See "Taxes" for information on tax risks associated with equity swaps.          

Foreign Currency Transactions                                                   

The Fund may engage in currency exchange transactions to protect against  
uncertainty in the level of future currency exchange rates.                     

The Fund may engage in both "transaction hedging" and "position hedging." 
When it engages in transaction hedging, the Fund enters into foreign currency   
transactions with respect to specific receivables or payables of the Fund       
generally arising in connection with the purchase or sale of its portfolio      
securities. The Fund will engage in transaction hedging when it desires to      
"lock in" the U.S. dollar price of a security it has agreed to purchase or      
sell, or the U.S. dollar equivalent of a dividend or interest payment in a      
foreign currency. By transaction hedging the Fund attempts to protect itself    
against a possible loss resulting from an adverse change in the relationship    
between the U.S. dollar and the applicable foreign currency during the period   
between the date on which the security is purchased or sold, or on which the    
dividend or interest payment is declared, and the date on which such payments   
are made or received.                                                           

The Fund may purchase or sell a foreign currency on a spot (or cash) basis
at the prevailing spot rate in connection with the settlement of transactions   
in portfolio securities denominated in that foreign currency. The Fund may also 
enter into contracts to purchase or sell foreign currencies at a future date    
("forward contracts") and purchase and sell foreign currency futures contracts. 

 For transaction hedging purposes the Fund may also purchase exchange-listed
and over-the-counter call and put options on foreign currency futures contracts 
and on foreign currencies. Over-the-counter options are considered to be        
illiquid by the SEC staff. A put option on a futures contract gives the Fund    
the right to assume a short position in the futures contract until expiration   
of the option. A put option on currency gives the Fund the right to sell a      
currency at an exercise price until the expiration of the option. A call option 
on a futures contract gives the Fund the right to assume a long position in the 
futures contract until the expiration of the option. A call option on currency  
gives the Fund the right to purchase a currency at the exercise price until the 
expiration of the option.                                                       

When it engages in position hedging, the Fund enters into foreign currency
exchange transactions to protect against a decline in the values of the foreign 
currencies in which its portfolio securities are denominated (or an increase in 
the value of currency for securities which the Fund expects to purchase, when   
the Fund holds cash or short-term investments). In connection with position     
hedging, the Fund may purchase put or call options on foreign currency and      
foreign currency futures contracts and buy or sell forward contracts and        
foreign currency futures contracts. The Fund may also purchase or sell foreign  
currency on a spot basis.                                                       

The precise matching of the amounts of foreign currency exchange          
transactions and the value of the portfolio securities involved will not        
generally be possible since the future value of such securities in foreign      
currencies will change as a consequence of market movements in the value of     
those securities between the dates the currency exchange transactions are       
entered into and the dates they mature.                                         

It is impossible to forecast with precision the market value of portfolio 
securities at the expiration or maturity of a forward or futures contract.      
Accordingly, it may be necessary for the Fund to purchase additional foreign    
currency on the spot market (and bear the expense of such purchase) if the      
market value of the security or securities being hedged is less than the amount 
of foreign currency the Fund is obligated to deliver and if a decision is made  
to sell the security or securities and make delivery of the foreign currency.   
Conversely, it may be necessary to sell on the spot market some of the foreign  
currency received upon the sale of the portfolio security or securities if the  
market value of such security or securities exceeds the amount of foreign       
currency the Fund is obligated to deliver.                                      

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Transaction and position hedging do not eliminate fluctuations in the     
underlying prices of the securities which the Fund owns or intends to purchase  
or sell. They simply establish a rate of exchange which one can achieve at some 
future point in time. Additionally, although these techniques tend to minimize  
the risk of loss due to a decline in the value of the hedged currency, they     
tend to limit any potential gain which might result from the increase in value  
of such currency.                                                               

Currency forward and futures contracts. Upon entering into such contracts,
in compliance with the SEC's requirements, cash or liquid securities, equal in  
value to the amount of the Fund's obligation under the contract (less any       
applicable margin deposits and any assets that constitute "cover" for such      
obligation), will be segregated.                                                

A forward currency contract involves an obligation to purchase or sell a  
specific currency at a future date, which may be any fixed number of days from  
the date of the contract as agreed by the parties, at a price set at the time   
of the contract. In the case of a cancelable contract, the holder has the       
unilateral right to cancel the contract at maturity by paying a specified fee.  
The contracts are traded in the interbank market conducted directly between     
currency traders (usually large commercial banks) and their customers. A        
contract generally has no deposit requirement, and no commissions are charged   
at any stage for trades. A currency futures contract is a standardized contract 
for the future delivery of a specified amount of a foreign currency at a future 
date at a price set at the time of the contract. Currency futures contracts     
traded in the United States are designed and traded on exchanges regulated by   
the CFTC, such as the New York Mercantile Exchange.                             

  Forward currency contracts differ from currency futures contracts in certain
respects. For example, the maturity date of a forward contract may be any fixed 
number of days from the date of the contract agreed upon by the parties, rather 
than a predetermined date in a given month. Forward contracts may be in any     
amounts agreed upon by the parties rather than predetermined amounts. Also,     
forward contracts are traded directly between currency traders so that no       
intermediary is required. A forward contract generally requires no margin or    
other deposit.                                                                  

  At the maturity of a forward or futures contract, the Fund may either accept
or make delivery of the currency specified in the contract, or at or prior to   
maturity enter into a closing transaction involving the purchase or sale of an  
offsetting contract. Closing transactions with respect to forward contracts are 
usually effected with the currency trader who is a party to the original        
forward contract. Closing transactions with respect to futures contracts are    
effected on a commodities exchange; a clearing corporation associated with the  
exchange assumes responsibility for closing out such contracts.                 

Positions in currency futures contracts may be closed out only on an      
exchange or board of trade which provides a secondary market in such contracts. 
Although the Fund intends to purchase or sell currency futures contracts only   
on exchanges or boards of trade where there appears to be an active secondary   
market, there is no assurance that a secondary market on an exchange or board   
of trade will exist for any particular contract or at any particular time. In   
such event, it may not be possible to close a futures position and, in the      
event of adverse price movements, the Fund would continue to be required to     
make daily cash payments of variation margin.                                   

Currency options. In general, options on currencies operate similarly to  
options on securities and are subject to many similar risks. Currency options   
are traded primarily in the over-the-counter market, although options on        
currencies have recently been listed on several exchanges. Options are traded   
not only on the currencies of individual nations, but also on the European      
Currency Unit (ECU). The ECU is composed of amounts of a number of currencies,  
and is the official medium of exchange of the European Economic Community's     
European Monetary System.                                                       

The Fund will only purchase or write currency options when the Advisor    
believes that a liquid secondary market exists for such options. There can be   
no assurance that a liquid secondary market will exist for a particular option  
at any specified time. Currency options are affected by all of those factors    
which influence                                                                 

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exchange rates and investments generally. To the extent that these options are  
traded over the counter, they are considered to be illiquid by the SEC staff.   

The value of any currency, including the U.S. dollar, may be affected by  
complex political and economic factors applicable to the issuing country. In    
addition, the exchange rates of currencies (and therefore the values of         
currency options) may be significantly affected, fixed, or supported directly   
or indirectly by government actions. Government intervention may increase risks 
involved in purchasing or selling currency options, since exchange rates may    
not be free to fluctuate in respect to other market forces.                     

  The value of a currency option reflects the value of an exchange rate, which
in turn reflects relative values of two currencies, the U.S. dollar and the     
foreign currency in question. Because currency transactions occurring in the    
interbank market involve substantially larger amounts than those that may be    
involved in the exercise of currency options, investors may be disadvantaged by 
having to deal in an odd lot market for the underlying currencies in connection 
with options at prices that are less favorable than for round lots. Foreign     
governmental restrictions or taxes could result in adverse changes in the cost  
of acquiring or disposing of currencies.                                        

  There is no systematic reporting of last sale information for currencies and
there is no regulatory requirement that quotations available through dealers or 
other market sources be firm or revised on a timely basis. Available quotation  
information is generally representative of very large round-lot transactions in 
the interbank market and thus may not reflect exchange rates for smaller        
odd-lot transactions (less than $1 million) where rates may be less favorable.  
The interbank market in currencies is a global, around-the-clock market. To the 
extent that options markets are closed while the markets for the underlying     
currencies remain open, significant price and rate movements may take place in  
the underlying markets that cannot be reflected in the options markets.         

Settlement procedures. Settlement procedures relating to the Fund's       
investments in foreign securities and to the Fund's foreign currency exchange   
transactions may be more complex than settlements with respect to investments   
in debt or equity securities of U.S. issuers, and may involve certain risks not 
present in the Fund's domestic investments, including foreign currency risks    
and local custom and usage. Foreign currency transactions may also involve the  
risk that an entity involved in the settlement may not meet its obligations.    

  Foreign currency conversion. Although foreign exchange dealers do not charge
a fee for currency conversion, they do realize a profit based on the difference 
(spread) between prices at which they are buying and selling various            
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at  
one rate, while offering a lesser rate of exchange should the Fund desire to    
resell that currency to the dealer. Foreign currency transactions may also      
involve the risk that an entity involved in the settlement may not meet its     
obligation.                                                                     

Participation Interests                                                         

The Fund may invest in municipal obligations either by purchasing them    
directly or by purchasing certificates of accrual or similar instruments        
evidencing direct ownership of interest payments or principal payments, or      
both, on municipal obligations, provided that, in the opinion of counsel to the 
initial seller of each such certificate or instrument, any discount accruing on 
such certificate or instrument that is purchased at a yield not greater than    
the coupon rate of interest on the related municipal obligations will be exempt 
from federal income tax to the same extent as interest on such municipal        
obligations. The Fund may also invest in tax-exempt obligations by purchasing   
from banks participation interests in all or part of specific holdings of       
municipal obligations. Such participations may be backed in whole or part by an 
irrevocable letter of credit or guarantee of the selling bank. The selling bank 
may receive a fee from the Fund in connection with the arrangement. The Fund    
will not purchase such participation interests unless it receives an opinion of 
counsel or a ruling of the Internal Revenue Service that interest earned by it  
on municipal obligations in which it holds such participation interests is      
exempt from federal income tax.                                                 

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Stand-by Commitments                                                            

 When the Fund purchases municipal obligations, it may also acquire stand-by
commitments from banks and broker-dealers with respect to such municipal        
obligations. A stand-by commitment is the equivalent of a put option acquired   
by the Fund with respect to a particular municipal obligation held in its       
portfolio. A stand-by commitment is a security independent of the municipal     
obligation to which it relates. The amount payable by a bank or dealer during   
the time a stand-by commitment is exercisable, absent unusual circumstances     
relating to a change in market value, would be substantially the same as the    
value of the underlying municipal obligation. A stand-by commitment might not   
be transferable by the Fund, although it could sell the underlying municipal    
obligation to a third party at any time.                                        

The Fund expects that stand-by commitments generally will be available    
without the payment of direct or indirect consideration. However, if necessary  
and advisable, the Fund may pay for stand-by commitments either separately in   
cash or by paying a higher price for portfolio securities which are acquired    
subject to such a commitment (thus reducing the yield to maturity otherwise     
available for the same securities). The total amount paid in either manner for  
outstanding stand-by commitments held in the Fund portfolio will not exceed 10% 
of the value of the Fund's total assets calculated immediately after each       
stand-by commitment is acquired. The Fund will enter into stand-by commitments  
only with banks and broker-dealers that, in the judgment of the Trust's Board   
of Trustees, present minimal credit risks.                                      

Variable and Floating Rate Obligations                                          

Variable rate instruments provide for periodic adjustments in the interest
rate. Floating rate instruments provide for automatic adjustment of the         
interest rate whenever some other specified interest rate changes. Some         
variable and floating rate obligations are direct lending arrangements between  
the purchaser and the issuer and there may be no active secondary market.       
However, in the case of variable and floating rate obligations with a demand    
feature, a Fund may demand payment of principal and accrued interest at a time  
specified in the instrument or may resell the instrument to a third party. In   
the event an issuer of a variable or floating rate obligation defaulted on its  
payment obligation, a Fund might be unable to dispose of the note because of    
the absence of a secondary market and could, for this or other reasons, suffer  
a loss to the extent of the default. Variable or floating rate instruments      
issued or guaranteed by the U.S. Government or its agencies or                  
instrumentalities are similar in form but may have a more active secondary      
market. Substantial holdings of variable and floating rate instruments could    
reduce portfolio liquidity.                                                     

If a variable or floating rate instrument is not rated, the Fund's Advisor
must determine that such instrument is comparable to rated instruments eligible 
for purchase by the Funds and will consider the earning power, cash flows and   
other liquidity ratios of the issuers and guarantors of such instruments and    
will continuously monitor their financial status in order to meet payment on    
demand. In determining average weighted portfolio maturity of each of these     
Funds, a variable or floating rate instrument issued or guaranteed by the U.S.  
Government or an agency or instrumentality thereof will be deemed to have a     
maturity equal to the period remaining until the obligation's next interest     
rate adjustment. Variable and floating rate obligations with a demand feature   
will be deemed to have a maturity equal to the longer of the period remaining   
to the next interest rate adjustment or the demand notice period.               

Inverse Floaters                                                                

Inverse floaters are derivative securities whose interest rates vary      
inversely to changes in short-term interest rates and whose values fluctuate    
inversely to changes in long-term interest rates. The value of certain inverse  
floaters will fluctuate substantially more in response to a given change in     
long-term rates than would a traditional debt security. These securities have   
investment characteristics similar to leverage, in that interest rate changes   
have a magnified effect on the value of inverse floaters.                       

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Rule 144A Securities                                                            

The Fund may purchase securities that have been privately placed but that 
are eligible for purchase and sale pursuant to Rule 144A under the Securities   
Act of 1933, as amended (1933 Act). That Rule permits certain qualified         
institutional buyers, such as the Fund, to trade in privately placed securities 
that have not been registered for sale under the 1933 Act. The Advisor, under   
the supervision of the Board of Trustees, will consider whether securities      
purchased under Rule 144A are illiquid and thus subject to the Fund's           
investment restriction on illiquid securities. A determination of whether a     
Rule 144A security is liquid or not is a question of fact. In making this       
determination, the Advisor will consider the trading markets for the specific   
security, taking into account the unregistered nature of a Rule 144A security.  
In addition, the Advisor could consider the (1) frequency of trades and quotes, 
(2) number of dealers and potential purchasers, (3) dealer undertakings to make 
a market, and (4) nature of the security and of marketplace trades (e.g., the   
time needed to dispose of the security, the method of soliciting offers, and    
the mechanics of transfer). The liquidity of Rule 144A securities will be       
monitored and, if as a result of changed conditions, it is determined by the    
Advisor that a Rule 144A security is no longer liquid, the Fund's holdings of   
illiquid securities would be reviewed to determine what, if any, steps are      
required to assure that the Fund does not exceed its investment limit on        
illiquid securities. Investing in Rule 144A securities could have the effect of 
increasing the amount of the Fund's assets invested in illiquid securities if   
qualified institutional buyers are unwilling to purchase such securities.       

Currency Swaps. Currency swaps involve the exchange of rights to make or  
receive payments in specified currencies. Currency swaps usually involve the    
delivery of the entire principal value of one designated currency. Therefore,   
the entire principal value of a currency swap is subject to the risk that the   
other party to the swap will default on its contractual delivery obligations.   
The use of currency swaps is a highly specialized activity which involves       
investment techniques and risks different from those associated with ordinary   
portfolio securities transactions. If the Advisor is incorrect in its forecast  
of market value and currency exchange rates, the investment performance of a    
Fund would be less favorable than it would have been if this investment         
technique were not used.                                                        

Convertible Securities                                                          

  Convertible securities are fixed income securities which may be exchanged or
converted into a predetermined number of shares of the issuer's underlying      
common stock at the option of the holder during a specified time period.        
Convertible securities may take the form of convertible preferred stock,        
convertible bonds or debentures, units consisting of "usable" bonds and         
warrants or a combination of the features of several of these securities.       

Convertible bonds and convertible preferred stocks generally retain the   
investment characteristics of fixed income securities until they have been      
converted but also react to movements in the underlying equity securities. The  
holder is entitled to receive the fixed income of a bond or the dividend        
preference of a preferred stock until the holder elects to exercise the         
conversion privilege. Usable bonds are corporate bonds that can be used in      
whole or in part, customarily at full face value, in lieu of cash to purchase   
the issuer's common stock. When owned as part of a unit along with warrants,    
which are options to buy the common stock, they function as convertible bonds,  
except that the warrants generally will expire before the bond's maturity.      
Convertible securities are senior to equity securities and therefore have a     
claim to the assets of the issuer prior to the holders of common stock in the   
case of liquidation. However, convertible securities are generally subordinated 
to similar non-convertible securities of the same issuer. The interest income   
and dividends from convertible bonds and preferred stocks provide a stable      
stream of income with generally higher yields than common stocks, but lower     
than non-convertible securities of similar quality. A Fund will exchange or     
convert the convertible securities held in its portfolio into shares of the     
underlying common stock in instances in which, in the Advisor's opinion, the    
investment characteristics of the underlying common stock will assist the Fund  
in achieving its investment objective. Otherwise, the Fund will hold or trade   
the convertible securities. In selecting convertible securities for a Fund, the 
Advisor evaluates the investment characteristics of the convertible security as 
a fixed income instrument, and the investment potential of the underlying       
equity security for capital appreciation.                                       

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Guaranteed Investment Contracts                                                 

Pursuant to guaranteed investment contracts ("GICs"), which are issued by 
U.S. and Canadian insurance companies, a Fund makes cash contributions to a     
deposit fund of the insurance company's general account. The insurance company  
then credits to the fund payments at negotiated, floating or fixed interest     
rates. A GIC is a general obligation of the issuing insurance company and not a 
separate account. The purchase price paid for a GIC becomes part of the general 
assets of the insurance company, and the contract is paid from the company's    
general assets.                                                                 

  The Funds will only purchase GICs that are issued or guaranteed by insurance
companies that at the time of purchase are rated at least AA by S&P or receive  
a similar high quality rating from a nationally recognized service which        
provides ratings of insurance companies. GICs are considered illiquid           
securities and will be subject to any limitations on such investments described 
in Part 1 of this SAI, unless there is an active and substantial secondary      
market for the particular instrument and market quotations are readily          
available. No Fund will invest more than 20% of its total assets in GICs.       

Bank Investment Contracts                                                       

  Bank investment contracts ("BICs") issued by banks that meet certain quality
and asset size requirements for banks are available to the Funds. Pursuant to   
BICs, cash contributions are made to a deposit account at the bank in exchange  
for payments at negotiated, floating or fixed interest rates. A BIC is a        
general obligation of the issuing bank. BICs are considered illiquid securities 
and will be subject to any limitations on such investments described in Part 1  
of this SAI, unless there is an active and substantial secondary market for the 
particular instrument and market quotations are readily available.              

Loan Participations                                                             

Loan participations are interests in loans which are administered by the  
lending bank or agent for a syndicate of lending banks, and sold by the lending 
bank or syndicate member. The Funds may only purchase interests in loan         
participations issued by a bank in the United States with assets exceeding $1   
billion and for which the underlying loan is issued by borrowers in whose       
obligations the Funds may invest. Because the intermediary bank does not        
guarantee a loan participation in any way, a loan participation is subject to   
the credit risk generally associated with the underlying corporate borrower. In 
addition, in the event the underlying corporate borrower defaults, a Fund may   
be subject to delays, expenses and risks that are greater than those that would 
have been involved if the Fund had purchased a direct obligation (such as       
commercial paper) of the borrower. Under the terms of a loan participation, the 
purchasing Fund may be regarded as a creditor of the intermediary bank so that  
the Fund may also be subject to the risk that the issuing bank may become       
insolvent.                                                                      

Structured Investments                                                          

Structured investments are a relatively new innovation and may be designed
to have various combinations of equity and fixed-income characteristics.        
Equity-linked securities are a form of structured investment and generally      
consist of a conversion privilege to a single company's common stock plus a     
fixed annual distribution to the holder. Equity-linked securities have some     
derivative characteristics because the conversion feature is linked to the      
price of the company's common stock. Equity-linked securities are designed to   
provide investors with higher quarterly income than the dividend paid per share 
on the common stock. However, equity-linked securities have decreased potential 
for capital appreciation because of limitations of the conversion feature.      

Equity-linked securities include issues such as "Structured Yield Product 
Exchangeable for Stock" ("STRYPES"), "Trust Automatic Common Exchange           
Securities" ("TRACES"), "Trust Issued Mandatory Exchange Securities" ("TIMES"), 
"Trust Enhanced Dividend Securities" ("TRENDS") and other similar securities,   
including those which may be developed in the future. The issuers of the above  
listed examples of equity-linked securities generally purchase and hold a       
portfolio of stripped U.S. Treasury securities maturing on a quarterly basis    
through the conversion date, and a forward purchase contract with an existing   
shareholder of the                                                              

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company relating to the common stock. Quarterly distributions on equity-linked  
securities generally consist of the cash received from the U.S. Treasury        
securities and equity-linked securities generally are not entitled to any       
dividends that may be declared on the common stock.                             

Equity-linked securities may be issued by closed-end or other forms of    
investment companies. To the extent that equity-linked securities are issued by 
investment companies, a Fund's investments in equity-linked securities are      
subject to the same limitations as investments in more traditional forms of     
investment companies.                                                           

Yankee Obligations                                                              

Yankee obligations are U.S. dollar-denominated instruments of foreign     
issuers that are either registered with the SEC or issued pursuant to Rule 144A 
under the 1933 Act. These obligations consist of debt securities (including     
preferred or preference stock of non-governmental issuers), certificates of     
deposit, fixed time deposits and banker's acceptances issued by foreign banks,  
and debt obligations of foreign governments or their subdivisions, agencies and 
instrumentalities, international agencies and supranational entities. Some      
securities issued by foreign governments or their subdivisions, agencies and    
instrumentalities may not be backed by the full faith and credit of the foreign 
government.                                                                     

American, European, Continental and Global Depositary Receipts                  

  American Depositary Receipts ("ADRs") are receipts issued in registered form
by a U.S. bank or trust company evidencing ownership of underlying securities   
issued by a foreign issuer. European Depositary Receipts ("EDRs"), which are    
sometimes referred to as Continental Depositary Receipts ("CDRs"), are receipts 
issued in Europe typically by non-U.S. banks or trust companies and foreign     
branches of U.S. banks that evidence ownership of foreign or U.S. securities.   
Global Depositary Receipts ("GDRs") are receipts structured similarly to EDRs   
and CDRs and are marketed globally. ADRs may be listed on a national securities 
exchange or may be traded in the over-the-counter market. EDRs and CDRs are     
designed for use in European exchange and over-the-counter markets. GDRs are    
designed for trading in non-U.S. securities markets. ADRs, EDRs, CDRs and GDRs  
traded in the over-the-counter market which do not have an active or            
substantial secondary market will be considered illiquid and therefore will be  
subject to the Funds' respective limitations with respect to such securities,   
if any. If a Fund invests in an unsponsored ADR, EDR, CDR or GDR, there may be  
less information available to the Fund concerning the issuer of the securities  
underlying the unsponsored ADR, EDR, CDR or GDR than is available for an issuer 
of securities underlying a sponsored ADR, EDR, CDR or GDR. ADR prices are       
denominated in U.S. dollars although the underlying securities are denominated  
in a foreign currency. Investments in ADRs, EDRs, CDRs and GDRs involve risks   
similar to those accompanying direct investments in foreign securities.         

Temporary Cash Balances                                                         

 The Funds may hold very small temporary cash balances to efficiently manage
transactional expenses. These cash balances are expected, under normal          
conditions, not to exceed 2% of each Fund's net assets at any time (excluding   
amounts used as margin and segregated assets with respect to futures            
transactions and collateral for securities loans and repurchase agreements).    
The Funds may invest these temporary cash balances in short-term debt           
obligations issued or guaranteed by the U.S. Government or its agencies and     
instrumentalities ("U.S. Government Securities"), high quality commercial paper 
(rated A-1 or better by S&P or P-1 or better by Moody's), certificates of       
deposit and time deposits of banking institutions having total assets in excess 
of $1 billion, and repurchase agreements collateralized by U.S. Government      
Securities. The Funds may also hold these investments in connection with U.S.   
Treasury rolls, which are not subject to the 2% limitation above.               

TAXES                                                                           

In this section, all discussions of taxation at the shareholder and fund  
levels relate to U.S. federal taxes only. Consult your tax advisor for state,   
local and foreign tax considerations and for information about special tax      
considerations that may apply to shareholders that are not natural persons or   
not U.S. citizens or resident aliens.                                           

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Federal Taxes. The Fund (even if it is a fund in a Trust with multiple    
series) is treated as a separate entity for federal income tax purposes under   
the Internal Revenue Code of 1986, as amended (Code). The Fund has elected (or  
in the case of a new fund, intends to elect) to be, and intends to qualify to   
be treated each year as, a "regulated investment company" under Subchapter M of 
the Code by meeting all applicable requirements of Subchapter M, including      
requirements as to the nature of the Fund's gross income, the amount of its     
distributions (as a percentage of both its overall income and any tax-exempt    
income), and the composition of its portfolio assets.                           

 To qualify as a "regulated investment company," the Fund must (a) derive at
least 90% of its gross income from dividends, interest, payments with respect   
to certain securities loans, gains from the sale or other disposition of stock, 
securities or foreign currencies or other income (including, but not limited    
to, gains from options, futures or forward contracts) derived with respect to   
its business of investing in such stock, securities or currencies; (b)          
diversify its holdings so that, at the close of each quarter of its taxable     
year, (i) at least 50% of the market value of its total assets consists of      
cash, cash items, U.S. government securities, securities of other regulated     
investment companies and other securities limited generally with respect to any 
one issuer to not more than 5% of the total assets of the Fund and not more     
than 10% of the outstanding voting securities of such issuer, and (ii) not more 
than 25% of the value of its total assets is invested in the securities of any  
issuer (other than U.S. government securities or other regulated investment     
companies; or of two or more issuers which the Fund controls and which are      
engaged in the same, similar, or related trades or businesses; and (c)          
distribute with respect to each year at least 90% of its taxable net investment 
income, its tax-exempt interest income and the excess, if any, of net           
short-term capital gains over net long-term capital losses for such year. As a  
regulated investment company that is accorded special tax treatment, the Fund   
will not be subject to any federal income taxes on its net investment income    
and net realized capital gains that it distributes to shareholders on the form  
of dividends and in accordance with the timing requirements imposed by the      
Code. The Fund's foreign-source income, if any, may be subject to foreign       
withholding taxes. If the Fund were to fail to qualify as a "regulated          
investment company" in any year, it would incur a regular federal corporate     
income tax on all of its taxable income, whether or not distributed, and Fund   
distributions (including any distributions of net tax-exempt income and net     
long-term capital gains) would generally be taxable as ordinary income to the   
shareholders, except to the extent they were treated as "qualified dividend     
income," as described below. In addition, the Fund could be required to         
recognize unrealized gains, pay substantial taxes and interest and make         
substantial distributions before requalifying as a regulated investment company 
that is accorded special tax treatment.                                         

 If the Fund fails to distribute in a calendar year substantially all of its
ordinary income for such year and substantially all of its capital gain net     
income for the one-year period ending October 31 (or later if the Fund is       
permitted so to elect and so elects), plus any retained amount from the prior   
year, the Fund will be subject to a 4% excise tax on the underdistributed       
amounts. A dividend paid to shareholders by the Fund in January of a year       
generally is deemed to have been paid by the Fund on December 31 of the         
preceding year, if the dividend was declared and payable to shareholders of     
record on a date in October, November or December of that preceding year. The   
Fund intends generally to make distributions sufficient to avoid imposition of  
the 4% excise tax.                                                              

 Alternative Minimum Tax. Distributions derived from interest that is exempt
from regular federal income tax may subject corporate shareholders to or        
increase their liability under the corporate alternative minimum tax (AMT). A   
portion of such distributions may constitute a tax preference item for          
individual shareholders and may subject them to or increase their liability     
under the AMT.                                                                  

 Dividends Received Deductions. Distributions will qualify for the corporate
dividends received deduction only to the extent that dividends earned by the    
Fund qualify. Any such dividends may be, however, includable in adjusted        
current earnings for purposes of computing corporate AMT. The dividends         
received deduction for eligible dividends is subject to a holding period        
requirement.                                                                    

Return of Capital Distributions. If the Fund makes a distribution to a    
shareholder in excess of the Fund's current and accumulated "earning and        
profits" in any taxable year, the excess distribution will be treated as a      
return of capital to the extent of the shareholder's tax basis in his or her    
shares, and thereafter as capital gain.                                         

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A return of capital is not taxable, but it reduces tax basis in shares, thus    
reducing any loss or increasing any gain on a subsequent taxable disposition of 
such shares.                                                                    

Dividends and distributions on a Fund's shares are generally subject to   
federal income tax as described herein to the extent they do not exceed the     
Fund's realized income and gains, even though such dividends and distributions  
may economically represent a return of a particular shareholder's investment.   
Such distributions are likely to occur in respect of shares purchased at a time 
when a Fund's net asset value reflects gains that are either unrealized, or     
realized but not distributed. Such realized gains may be required to be         
distributed even when a Fund's net asset value also reflects unrealized losses. 

 Funds that invest in U.S. Government Securities. Many states grant tax-free
status to dividends paid to shareholders of mutual funds from interest income   
earned by the Fund from direct obligations of the U.S. government. Investments  
in mortgage-backed securities (including GNMA, FNMA and FHLMC Securities) and   
repurchase agreements collateralized by U.S. government securities do not       
qualify as direct federal obligations in most states. Shareholders should       
consult with their own tax advisors about the applicability of state and local  
intangible property, income or other taxes to their Fund shares and             
distributions and redemption proceeds received from the Fund.                   

Fund Distributions. Distributions from the Fund (other than qualified     
dividend income and exempt-interest dividends, as discussed below) will         
generally be taxable to shareholders as ordinary income to the extent derived   
from the Fund's investment income and net short-term gains. Distributions of    
long-term capital gains (that is, the excess of net gains from capital assets   
held for more than one year over net losses from capital assets held for not    
more than one year) will be taxable to shareholders as such, regardless of how  
long a shareholder has held shares in the Fund. In general, any distributions   
of net capital gains will be taxed to shareholders who are individuals at a     
maximum rate of 15% for taxable years beginning on or before December 31, 2008. 

 Distributions are taxable to shareholders even if they are paid from income
or gains earned by the Fund before a shareholder's investment (and thus were    
included in the price of the shareholder paid). Distributions are taxable       
whether received in cash or in Fund shares.                                     

  Qualified Dividend Income. For taxable years beginning on or before December
31, 2008, "qualified dividend income" received by an individual will be taxed   
at the rates applicable to long-term capital gain. In order for some portion of 
the dividends received by a Fund shareholder to be qualified dividend income,   
the Fund must meet holding period and other requirements with respect to some   
portion of the dividend paying stocks in its portfolio and the shareholder must 
meet holding period and other requirements with respect to the Fund's shares. A 
dividend will not be treated as qualified dividend income (at either the Fund   
or shareholder level) (1) if the dividend is received with respect to any share 
of stock held for fewer than 61 days during the 120-day period beginning on the 
date which is 60 days before the date on which such share becomes ex-dividend   
with respect to such dividend (or, in the case of certain preferred stock, 91   
days during the 180-day period beginning 90 days before such date), (2) to the  
extent that the recipient is under an obligation (whether pursuant to a short   
sale or otherwise) to make related payments with respect to positions in        
substantially similar or related property, (3) if the recipient elects to have  
the dividend income treated as investment income for purposes of the limitation 
on deductibility of investment interest, or (4) if the dividend is received     
from a foreign corporation that is (a) not eligible for the benefits of a       
comprehensive income tax treaty with the United States (with the exception of   
dividends paid on stock of such a foreign corporation readily tradable on an    
established securities market in the United States) or (b) treated as a foreign 
personal holding company, foreign investment company, or passive foreign        
investment company. In anticipation of the enactment of technical corrections   
legislation, the Internal Revenue Service has announced that it will treat the  
120-day and 180-day holding periods as though they have already been extended   
by such legislation to 121 days and 181 days, respectively. With respect to a   
Fund investing in bonds, the Fund does not expect a significant portion of Fund 
distributions to be derived from qualified dividend income.                     

In general, distributions of investment income properly designated by the 
Fund as derived from qualified dividend income may be treated as qualified      
dividend income by a shareholder taxed as an individual provided                

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the shareholder meets the holding period and other requirements described above 
with respect to his or her shares. Only qualified dividend income received by a 
Fund after December 31, 2002 is eligible for pass-through treatment. If the     
aggregate qualified dividends received by a fund during any taxable year are    
95% or more of its gross income, then 100% of the Fund's dividends (other than  
properly designated capital gain dividends) will be eligible to be treated as   
qualified dividend income. For this purpose, the only gain included in the term 
"gross income" is the excess of net short-term capital gain over net long-term  
capital loss.                                                                   

  Distributions from Tax-Exempt Funds. Each tax-exempt Fund will have at least
50% of its total assets invested in tax-exempt bonds at the end of each quarter 
so that dividends from net interest income on tax-exempt bonds will be exempt   
from federal income tax when received by a shareholder (but may be taxable for  
federal alternative minimum tax purposes and for state and local tax purposes). 
The tax-exempt portion of dividends paid will be designated within 60 days      
after year-end based upon the ratio of net tax-exempt income to total net       
investment income earned during the year. That ratio may be substantially       
different from the ratio of net tax-exempt income to total net investment       
income earned during any particular portion of the year. Thus, a shareholder    
who holds shares for only a part of the year may be allocated more or less      
tax-exempt dividends than would be the case if the allocation were based on the 
ratio of net tax-exempt income to total net investment income actually earned   
while a shareholder.                                                            

  Income from certain "private activity bonds" issued after August 7, 1986, is
treated as a tax preference item for the AMT at the maximum rate of 28% for     
individuals and 20% for corporations. If the Fund invests in private activity   
bonds, shareholders may be subject to the AMT on that part of the distributions 
derived from interest income on such bonds. Interest on all tax-exempt bonds is 
included in corporate adjusted current earnings when computing the AMT          
applicable to corporations. Seventy-five percent of the excess of adjusted      
current earnings over the amount of income otherwise subject to the AMT is      
included in a corporation's alternative minimum taxable income.                 

Dividends derived from any investments other than tax-exempt bonds and any
distributions of short-term capital gains are generally taxable to shareholders 
as ordinary income. Any distributions of long-term capital gains will in        
general be taxable to shareholders as long-term capital gains (generally        
subject to a maximum 15% tax rate for shareholders who are individuals)         
regardless of the length of time Fund shares are held by the shareholder.       

 A tax-exempt Fund may at times purchase tax-exempt securities at a discount
and some or all of this discount may be included in the Fund's ordinary income  
which will be taxable when distributed. Any market discount recognized on a     
tax-exempt bond purchased after April 30, 1993, with a term at time of issue of 
more than one year is taxable as ordinary income. A market discount bond is a   
bond acquired in the secondary market at a price below its "stated redemption   
price" (in the case of a bond with original issue discount, its "revised issue  
price").                                                                        

Shareholders receiving social security and certain retirement benefits may
be taxed on a portion of those benefits as a result of receiving tax-exempt     
income, including tax-exempt dividends from the Fund.                           

Special Tax Rules Applicable to Tax-Exempt Funds. In general,             
exempt-interest dividends, if any, attributable to interest received on certain 
private activity obligations and certain industrial development bonds will not  
be tax-exempt to any shareholders who are "substantial users" of the facilities 
financed by such obligations or bonds or who are "related persons" of such      
substantial users, as further defined in the Code. Income derived from the      
Fund's investments other than tax-exempt instruments may give rise to taxable   
income. The Fund's shares must be held for more than six months in order to     
avoid the disallowance of a capital loss on the sale of Fund shares to the      
extent of tax-exempt dividends paid during that period. Part or all of the      
interest on indebtedness, if any, incurred or continued by a shareholder to     
purchase or carry shares of the Fund paying exempt-interest dividends is not    
deductible. The portion of interest that is not deductible is equal to the      
total interest paid or accrued on the indebtedness, multiplied by the           
percentage of the Fund's total distributions (not including distributions from  
net long-term capital gains) paid to the shareholder that are exempt-interest   

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dividends. Under rules used by the Internal Revenue Service to determine when   
borrowed funds are considered used for the purpose of purchasing or carrying    
particular assets, the purchase of shares may be considered to have been made   
with borrowed funds even though such funds are not directly traceable to the    
purchase of shares.                                                             

Sales of Shares. The sale, exchange or redemption of Fund shares may give 
rise to a gain or loss. In general, any gain realized upon a taxable            
disposition of shares generally will be treated as long-term capital gain if    
the shares have been held for more than one year. Otherwise the gain on the     
sale, exchange or redemption of Fund shares will be treated as short-term       
capital gain. In general, any loss realized upon a taxable disposition of       
shares will be treated as long-term loss if the shares have been held more than 
one year, and otherwise as short-term loss. However, any loss realized upon a   
taxable disposition of shares held for six months or less will be treated as    
long-term, rather than short-term, capital loss to the extent of any long-term  
capital gain distributions received by the shareholder with respect to those    
shares. All or a portion of any loss realized upon a taxable disposition of     
shares will be disallowed if other shares are purchased within 30 days before   
or after the disposition. In such a case, the basis of the newly purchased      
shares will be adjusted to reflect the disallowed loss.                         

  Under recently promulgated Treasury regulations, if on a disposition of Fund
shares a shareholder recognizes a loss of $2 million or more for an individual  
shareholder or $10 million or more for a corporate shareholder, the shareholder 
must file with the Internal Revenue Service a disclosure statement on Form      
8886. Direct shareholders of portfolio securities are in many cases excepted    
from this reporting requirement, but under current guidance, shareholders of a  
regulated investment company are not excepted. Future guidance may extend the   
current exception from this reporting requirement to shareholders of most or    
all regulated investment companies. The fact that a loss is reportable under    
these regulations does not affect the legal determination of whether the        
taxpayer's treatment of the loss is proper. You are advised to consult with     
your tax advisor.                                                               

 Backup Withholding. Certain distributions and redemptions may be subject to
backup withholding for taxpayers who fail to furnish a correct tax              
identification number, who have under-reported dividend or interest income, or  
who fail to certify to the Fund that the shareholder is a United States person  
and is not subject to the withholding. This number and certification may be     
provided by either a Form W-9 or the accompanying application. In certain       
instances, CFS may be notified by the Internal Revenue Service that a           
shareholder is subject to backup withholding. The backup withholding rate is    
28% for amounts paid through 2010. The backup withholding rate will be 31% for  
amounts paid after December 31, 2010.                                           

  Hedging Transactions. If the Fund engages in hedging transactions, including
hedging transactions in options, futures contracts and straddles, or other      
similar transactions, it will be subject to special tax rules (including        
constructive sale, mark-to-market, straddle, wash sale and short sale rules),   
the effect of which may be to accelerate income to the Fund, defer losses to    
the Fund, cause adjustments in the holding periods of the Fund's securities,    
convert long-term capital gains into short-term capital gains or convert        
short-term capital losses into long-term capital losses. These rules could      
therefore affect the amount, timing and character of distributions to           
shareholders. The Fund will endeavor to make any available elections pertaining 
to such transactions in a manner believed to be in the best interests of the    
Fund and its shareholders.                                                      

Securities Issued at a Discount. The Fund's investment in debt securities 
issued at a discount and certain other obligations will (and investments in     
securities purchased at a discount may) require the Fund to accrue and          
distribute income not yet received. In such cases, the Fund may be required to  
sell assets (possibly at a time when it is not advantageous to do so) to        
generate the cash necessary to distribute as dividends to its shareholders all  
of its income and gains and therefore to eliminate any tax liability at the     
Fund level.                                                                     

Foreign Currency-Denominated Securities and Related Hedging Transactions. 
The Fund's transactions in foreign currencies, foreign currency-denominated     
debt securities, certain foreign currency options, futures contracts and        
forward contracts (and similar instruments) may give rise to ordinary income or 
loss to the extent such income or loss results from fluctuations in the value   
of the foreign currency concerned.                                              

If more than 50% of the Fund's total assets at the end of its fiscal year 
are invested in stock or securities of foreign corporate issuers, the Fund may  
make an election permitting its shareholders to take a deduction or credit      

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for federal income tax purposes for their pro rata portion of certain qualified 
foreign taxes paid by the Fund to foreign countries in respect of foreign       
securities the Fund has held for at least the minimum period specified in the   
Code. The Advisor will consider the value of the benefit to a typical           
shareholder, the cost to the Fund of compliance with the election, and          
incidental costs to shareholders in deciding whether to make the election. A    
shareholder's ability to claim such a foreign tax credit or deduction in        
respect of foreign taxes will be subject to certain limitations imposed by the  
Code, including a holding period requirement, as a result of which a            
shareholder may not get a full credit or deduction for the amount of foreign    
taxes so paid by the Fund. Shareholders who do not itemize on their federal     
income tax returns may claim a credit (but not a deduction) for such foreign    
taxes.                                                                          

Investment by the Fund in "passive foreign investment companies" could    
subject the Fund to a U.S. federal income tax or other charge on the proceeds   
from the sale of its investment in such a company; however, this tax can be     
avoided by making an election to mark such investments to market annually or to 
treat the passive foreign investment company as a "qualified electing Fund." A  
"passive foreign investment company" is any foreign corporation: (I) 75 percent 
or more of the income of which for the taxable year is passive income, or (ii)  
the average percentage of the assets of which (generally by value, but by       
adjusted tax basis in certain cases) that produce or are held for the           
production of passive income is at least 50 percent. Generally, passive income  
for this purpose means dividends, interest (including income equivalent to      
interest), royalties, rents, annuities, the excess of gain over losses from     
certain property transactions and commodities transactions, and foreign         
currency gains. Passive income for this purpose does not include rents and      
royalties received by the foreign corporation from active business and certain  
income received from related persons.                                           

ADDITIONAL TAX MATTERS CONCERNING TRUST SHARES (This section is applicable only 
to the Columbia Tax-Managed Growth Fund)                                        

 Federal Gift Taxes. An investment in Trust Shares may be a taxable gift for
federal tax purposes, depending upon the option selected and other gifts that   
the donor and his or her spouse may make during the year.                       

Under the Columbia Advantage Plan, the entire amount of the gift will be a
"present interest" that qualifies for the federal gift tax annual exclusion. In 
that case, the donor will be required to file a federal gift tax return on      
account of this gift only if (i) the aggregate present interest gifts by the    
donor to the particular beneficiary (including the gift of Trust Shares) exceed 
$11,000 or (ii) the donor wishes to elect gift splitting on gifts with his or   
her spouse for the year. The trustee will notify the beneficiary of his or her  
right of withdrawal promptly following any contribution under the Advantage     
Plan.                                                                           

Under the Columbia Gift Plan, the entire amount of the gift will be a     
"future interest" for federal gift tax purposes, so that none of the gift will  
qualify for the federal gift tax annual exclusion. Consequently, the donor will 
have to file a federal gift tax return (IRS Form 709) reporting the entire      
amount of the gift, even if the gift is less than $11,000.                      

  No federal gift tax will be payable by the donor until his or her cumulative
taxable gifts (i.e., gifts other than those qualifying for the annual exclusion 
or otherwise exempt), including taxable gifts of other assets as well as any    
taxable gifts of trust shares, exceed the federal gift and estate tax exemption 
equivalent amount, which is $1,000,000 for gifts made after December 31, 2001,  
and before January 1, 2010.                                                     

  Any gift of Trust Shares that does not qualify as a present interest or that
exceeds the available annual exclusion amount will reduce the amount of the     
donor's Federal gift and estate tax exemption (if any) that would otherwise be  
available for future gifts for transfers at death.                              

The donor and his or her spouse may elect "gift-splitting" for any gift of
Trust Shares (other than a gift to such spouse), meaning that the donor and his 
or her spouse may elect to treat the gift as having been made one-half by each  
of them, thus allowing a total gift of $22,000.                                 

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 The donor's gift of Fund shares may also have to be reported for state gift
tax purposes, if the state in which the donor resides imposes a gift tax. Many  
states do not impose such a tax. Some states follow the Federal rules           
concerning the types of transfers subject to tax and the availability of the    
annual exclusion.                                                               

Generation-Skipping Transfer Taxes                                              

If the beneficiary of a gift of Trust Shares is a relative who is two     
generations or more younger than the donor, or is not a relative and is more    
than 37 1/2years younger than the donor, the gift will be subject in whole or   
in part to the generation-skipping transfer tax (the "GST tax") unless the gift 
is made under the Columbia Advantage Plan and does not exceed the available     
annual exclusion amount. An exemption (the "GST exemption"), equal to $1.5      
million in 2004, is allowed against this tax, and so long as the GST exemption  
has not been used by other transfers it will automatically be allocated to a    
gift of Trust Shares that is subject to the GST tax unless the donor elects     
otherwise. Such an election is made by reporting the gift on a timely filed     
gift tax return and paying the applicable GST tax. The GST tax is imposed at a  
flat rate (48% for gifts made in 2004) on the amount of the gift, and payment   
of the tax by the donor is treated as an additional gift for gift tax purposes. 

Income Taxes                                                                    

  The Internal Revenue Service takes the position that a trust beneficiary who
is given a power of withdrawal over contributions to the trust should be        
treated, for Federal income tax purposes, as the "owner" of the portion of the  
trust that was subject to the power. Accordingly, if the donor selects Columbia 
Advantage Trust Shares, the beneficiary will be treated as the "owner" of all   
of the Fund shares in the account for Federal income tax purposes, and will be  
required to report all of the income and capital gains earned in the trust on   
his or her personal Federal income tax return. The trust will not pay Federal   
income taxes on any of the trust's income or capital gains. The trustee will    
prepare and file the Federal income tax information returns that are required   
each year (and any state income tax returns that may be required), and will     
send the beneficiary a statement following each year showing the amounts (if    
any) that the beneficiary must report on his or her income tax returns for that 
year. If the beneficiary is under fourteen years of age, these amounts may be   
subject to Federal income taxation at the marginal rate applicable to the       
beneficiary's parents. The beneficiary may at any time after the creation of    
the trust irrevocably elect to require the trustee to pay him or her a portion  
of the trust's income and capital gains annually thereafter to provide funds    
with which to pay any resulting income taxes, which the trustee will do by      
redeeming Trust Shares. The amount distributed will be a fraction of the        
trust's ordinary income and short-term capital gains and the trust's long-term  
capital gains equal to the highest marginal Federal income tax rate imposed on  
each type of income (currently, 35% and 15%, respectively). If the beneficiary  
selects this option, he or she will receive those fractions of his or her       
trust's income and capital gains annually for the duration of the trust.        

Under the Columbia Advantage Plan, the beneficiary will also be able to   
require the trustee to pay his or her tuition, room and board and other expense 
of his or her college or post-graduate education, and the trustee will raise    
the cash necessary to fund these distributions by redeeming Trust Shares. Any   
such redemption will result in the realization of capital gain or loss on the   
shares redeemed, which will be reportable by the beneficiary on his or her      
income tax returns for the year in which the shares are redeemed, as described  
above. Payments must be made directly to the educational institution.           

If the donor selects the Columbia Gift Plan, the trust that he or she     
creates will be subject to Federal income tax on all income and capital gains   
realized by it, less a $100 annual exemption (in lieu of the personal exemption 
allowed to individuals). The amount of the tax will be determined under the tax 
rate schedule applicable to estates and trusts, which is more sharply graduated 
than the rate schedule for individuals, reaching the same maximum marginal rate 
for ordinary income or short-term capital gains (currently, 35%), but at a much 
lower taxable income level than would apply to an individual. It is             
anticipated, however, that most of the gains taxable to the trust will be       
long-term capital gain, on which the Federal income tax rate is currently       
limited to 15%. The trustee will raise the cash necessary to pay any Federal or 
state income taxes by redeeming Fund shares. The beneficiary will not pay       
Federal income taxes on any of the trust's income or capital gains, except      
those earned in the year when the trust terminates. The trustee will prepare    
and file all Federal and state income tax returns that                          

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are required each year, and will send the beneficiary an information statement  
for the year in which the trust terminates showing the amounts (if any) that    
the beneficiary must report on his or her Federal and state income tax returns  
for that year.                                                                  

 When the trust terminates, the distribution of the remaining shares held in
the trust to the beneficiary will not be treated as a taxable disposition of    
the shares. Any Fund shares received by the beneficiary will have the same cost 
basis as they had in the trust at the time of termination. Any Fund shares      
received by the beneficiary's estate will have a basis equal to the value of    
the shares at the beneficiary's death (or the alternate valuation date for      
Federal estate tax purposes, if elected).                                       

Consultation with Qualified Advisor                                             

Due to the complexity of Federal and state gift, GST and income tax laws  
pertaining to all gifts in trust, prospective donors should consider consulting 
with their financial or tax advisor before investing in Trust Shares.           

MANAGEMENT OF THE FUNDS                                                         

  The Advisor provides administrative and management services to the Funds. On
April 1, 2003, Fleet Investment Advisors Inc., Stein Roe & Farnham              
Incorporated, Colonial Management Associates, Inc. and Newport Pacific          
Management, Inc. (NPMI), merged into Columbia Management Advisors, Inc. Each of 
the four merging companies was a registered investment advisor and advised      
various Funds in the Fund Complex. The Advisor, located at 100 Federal Street,  
Boston, Massachusetts 02110, is a direct wholly owned subsidiary of Columbia    
Management Group, Inc. (Columbia), which is an indirect wholly owned subsidiary 
of Bank of America Corporation. Prior to April 1, 2004, Columbia was an         
indirect wholly owned subsidiary of FleetBoston Financial Corporation, a U.S.   
financial holding company. Effective April 1, 2004, FleetBoston Financial       
Corporation was acquired by Bank of America Corporation. The Advisor has been   
an investment advisor since 1969.                                               

In addition, immediately prior to the mergers described above and also on 
April 1, 2003, Newport Fund Management, Inc. (NFMI), a subsidiary of NPMI and a 
registered investment advisor that advised several Funds in the Fund Complex,   
merged into NPMI. As a result of NPMI's merger into the Advisor, the Advisor is 
now the Advisor to the Funds previously advised by NFMI.                        

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Trustees and Officers (this section applies to all of the Funds)                

The Trustees and officers serve terms of indefinite duration. The names,  
addresses and ages of the Trustees and officers of the Fund Complex, the year   
each was first elected or appointed to office, their principal business         
occupations during at least the last five years, the number of portfolios       
overseen by each Trustee and other directorships they hold are shown below.     

                                                        [Enlarge/Download Table]

                                                                               Number of                          
                                                                               Portfolios                         
                                   Year First                                   in Fund                           
                                   Elected or                                   Complex                           
                         Position   Appointed      Principal Occupation(s)      Overseen                          
Name, Address and Age   with Funds to Office/1/    During Past Five Years      by Trustee Other Directorships Held
---------------------   ---------- -----------     ----------------------      ---------- ------------------------
                                                                                                                  
Disinterested Trustees                                                                                            
Douglas A. Hacker                                                                                                 
  (Age 48).............  Trustee      1996      Executive Vice President--        118         Orbitz, Inc.        
P.O. Box 66100                                  Strategy of United Airlines                   (on-line travel     
Chicago, IL 60666                               (airline) since December,                     company)            
                                                2002 (formerly President of                                       
                                                UAL Loyalty Services                                              
                                                (airline) from September,                                         
                                                2001 to December, 2002;                                           
                                                Executive Vice President and                                      
                                                Chief Financial Officer of                                        
                                                United Airlines from March,                                       
                                                1999 to September, 2001;                                          
                                                Senior Vice President-Finance                                     
                                                from March, 1993 to July,                                         
                                                1999).                                                            

Janet Langford Kelly                                                                                              
  (Age 46).............  Trustee      1996      Private Investor since March,     118              None           
9534 W. Gull Lake Drive                         2004 (formerly Chief                                              
Richland, MI                                    Administrative Officer and                                        
49083-8530                                      Senior Vice President, Kmart                                      
                                                Holding Corporation                                               
                                                (consumer goods), from                                            
                                                September, 2003 to March,                                         
                                                2004; Executive Vice                                              
                                                President-Corporate                                               
                                                Development and                                                   
                                                Administration, General                                           
                                                Counsel and Secretary,                                            
                                                Kellogg Company (food                                             
                                                manufacturer), from                                               
                                                September, 1999 to August,                                        
                                                2003; Senior Vice President,                                      
                                                Secretary and General                                             
                                                Counsel, Sara Lee                                                 
                                                Corporation (branded,                                             
                                                packaged, consumer-products                                       
                                                manufacturer) from January,                                       
                                                1995 to September, 1999).                                         

Richard W. Lowry                                                                                                  
  (Age 68).............  Trustee      1995      Private Investor since August,   120/3/            None           
10701 Charleston Drive                          1987 (formerly Chairman and                                       
Vero Beach, FL 32963                            Chief Executive Officer, U.S.                                     
                                                Plywood Corporation                                               
                                                (building products                                                
                                                manufacturer)).                                                   

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                                                                                   Number of                          
                                                                                   Portfolios                         
                                    Year First                                      in Fund                           
                                    Elected or                                      Complex                           
                          Position   Appointed        Principal Occupation(s)       Overseen                          
Name, Address and Age    with Funds to Office/1/      During Past Five Years       by Trustee Other Directorships Held
---------------------    ---------- -----------       ----------------------       ---------- ------------------------
                                                                                                                      
Disinterested Trustees                                                                                                
Charles R. Nelson                                                                                                     
  (Age 62)..............  Trustee      1981      Professor of Economics,              118              None           
Department of Economics                          University of Washington,                                            
University of Washington                         since January, 1976; Ford and                                        
Seattle, WA 98195                                Louisa Van Voorhis Professor                                         
                                                 of Political Economy,                                                
                                                 University of Washington,                                            
                                                 since September, 1993                                                
                                                 (formerly Director, Institute for                                    
                                                 Economic Research, University                                        
                                                 of Washington from                                                   
                                                 September, 2001 to June,                                             
                                                 2003) Adjunct Professor of                                           
                                                 Statistics, University of                                            
                                                 Washington, since September,                                         
                                                 1980; Associate Editor, Journal                                      
                                                 of Money Credit and Banking,                                         
                                                 since September, 1993;                                               
                                                 consultant on econometric and                                        
                                                 statistical matters.                                                 

John J. Neuhauser                                                                                                     
  (Age 61)..............  Trustee      1985      Academic Vice President and        121/3,4/   Saucony, Inc.          
84 College Road                                  Dean of Faculties since                       (athletic footwear)    
Chestnut Hill,                                   August, 1999, Boston College                                         
MA 02467-3838                                    (formerly Dean, Boston                                               
                                                 College School of                                                    
                                                 Management from                                                      
                                                 September, 1977 to                                                   
                                                 September, 1999).                                                    

Patrick J. Simpson                                                                                                    
  (Age 60)..............  Trustee      2000      Partner, Perkins Coie L.L.P.         118              None           
1120 N.W. Couch Street                           (law firm).                                                          
Tenth Floor                                                                                                           
Portland,                                                                                                             
OR 97209-4128                                                                                                         

Thomas E. Stitzel                                                                                                     
  (Age 68)..............  Trustee      1998      Business Consultant since            118              None           
2208 Tawny Woods Place                           1999 (formerly Professor of                                          
Boise, ID 83706                                  Finance from 1975 to 1999,                                           
                                                 College of Business, Boise                                           
                                                 State University); Chartered                                         
                                                 Financial Analyst.                                                   

Thomas C. Theobald                                                                                                    
  (Age 67)/5/...........  Trustee      1996      Partner and Senior Advisor,             118   Anixter International  
303 W. Madison            and                    Chicago Growth Partners                       (network support       
Suite 2500                Chairman               (private equity investing)                    equipment              
Chicago, IL 60606         of the                 since September, 2004                         distributor); Ventas,  
                          Board                  (formerly Managing Director,                  Inc. (real estate      
                                                 William Blair Capital                         investment trust);     
                                                 Partners (private equity                      Jones Lang LaSalle     
                                                 investing) from September,                    (real estate           
                                                 1994 to September, 2004).                     management services)   
                                                                                               and MONY Group         
                                                                                               (life insurance)       

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                                                                             Number of                          
                                                                             Portfolios                         
                                  Year First                                  in Fund                           
                                  Elected or                                  Complex                           
                        Position   Appointed      Principal Occupation(s)     Overseen                          
Name, Address and Age  with Funds to Office/1/    During Past Five Years     by Trustee Other Directorships Held
---------------------  ---------- -----------     ----------------------     ---------- ------------------------
                                                                                                                
Disinterested Trustees                                                                                          
Anne-Lee Verville                                                                                               
  (Age 59)............  Trustee      1998      Retired since 1997 (formerly    119/4/   Chairman of the         
359 Stickney Hill Road                         General Manager, Global                  Board of Directors,     
Hopkinton, NH 03229                            Education Industry, IBM                  Enesco Group, Inc.      
                                               Corporation (computer and                (designer, importer     
                                               technology) from 1994 to                 and distributor of      
                                               1997).                                   giftware and            
                                                                                        collectibles)           

Richard L. Woolworth                                                                                            
  (Age 63)............  Trustee      1991      Retired since December 2003        118   Northwest Natural       
100 S.W. Market Street                         (formerly Chairman and Chief             Gas Co. (natural gas    
#1500                                          Executive Officer, The                   service provider)       
Portland, OR 97207                             Regence Group (regional                                          
                                               health insurer); Chairman and                                    
                                               Chief Executive Officer,                                         
                                               BlueCross BlueShield of                                          
                                               Oregon; Certified Public                                         
                                               Accountant, Arthur Young &                                       
                                               Company)                                                         

Interested Trustee                                                                                              
William E. Mayer/2/                                                                                             
  (Age 64)............  Trustee      1994      Managing Partner, Park          120/3/   Lee Enterprises (print  
399 Park Avenue                                Avenue Equity Partners                   media), WR              
Suite 3204                                     (private equity) since                   Hambrecht + Co.         
New York, NY 10022                             February, 1999 (formerly                 (financial service      
                                               Founding Partner,                        provider); First Health 
                                               Development Capital LLC                  (healthcare); Reader's  
                                               from November 1996 to                    Digest (publishing);    
                                               February, 1999).                         OPENFIELD               
                                                                                        Solutions (retail       
                                                                                        industry technology     
                                                                                        provider)               

--------                                                                        
/1  /In October 2003, the trustees of the Liberty Funds and Stein Roe Funds     
 (both as defined in Part 1 of this SAI) were elected to the boards of the
Columbia Funds; simultaneous with that election, Patrick J. Simpson and 
   Richard L. Woolworth, who had been directors/trustees of the Columbia Funds
were appointed to serve as trustees of the Liberty Funds and Stein Roe  
  Funds. The date shown is the earliest date on which a trustee/director was
elected or appointed to the board of a Fund in the Fund Complex.        
/2  /Mr. Mayer is an "interested person" (as defined in the Investment Company  
    Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht + Co.
/3  /Messrs. Lowry, Neuhauser and Mayer also serve as directors/trustees of the 
All-Star Funds (as defined in Part 1 of this SAI).                      
/4  /Mr. Neuhauser and Ms. Verville also serve as disinterested directors of    
   Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the
Advisor.                                                                
/5  /Mr. Theobald was appointed as Chairman of the Board effective December 10, 
2003.                                                                   

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                                           Year First                                                    
                                Position   Elected or                                                    
                                  with     Appointed                Principal Occupation(s)              
Name, Address and Age            Funds     to Office                During Past Five Years               
---------------------           --------   ----------               ----------------------               
Officers                                                                                                 
                                                                                                         
Christopher L. Wilson (Age 47) President      2004    President of the Columbia Funds, Liberty Funds     
One Financial Center                                  and Stein Roe Funds since October, 2004            
Boston, MA 02111                                      (formerly President and Chief Executive            
                                                      Officer, CDC IXIS Asset Management Services,       
                                                      Inc. from September, 1998 to August, 2004).        

J. Kevin Connaughton (Age 39). Treasurer      2000    Treasurer of the Columbia Funds since October,     
One Financial Center                                  2003 and of the Liberty Funds, Stein Roe Funds     
Boston, MA 02111                                      and All-Star Funds since December, 2000; Vice      
                                                      President of the Advisor since April, 2003         
                                                      (formerly President of the Columbia Funds,         
                                                      Liberty Funds and Stein Roe Funds from             
                                                      February, 2004 to October, 2004; Chief             
                                                      Accounting Officer and Controller of the           
                                                      Liberty Funds and of the All-Star Funds from       
                                                      February, 1998 to October, 2000); Treasurer of     
                                                      the Galaxy Funds since September, 2002;            
                                                      Treasurer, Columbia Management Multi-              
                                                      Strategy Hedge Fund, LLC since December,           
                                                      2002 (formerly Vice President of Colonial          
                                                      Management Associates, Inc. from February,         
                                                      1998 to October, 2000).                            

Mary Joan Hoene (Age 54)...... Senior Vice    2004    Senior Vice President and Chief Compliance         
40 West 57th Street            President              Officer of the Columbia Funds, Liberty Funds and   
New York, NY 10019             and Chief              Stein Roe Funds since August, 2004; Chief          
                               Compliance             Compliance Officer of the All-Star Funds since     
                               Officer                August, 2004 (formerly Partner, Carter, Ledyard &  
                                                      Milburn LLP from January, 2001 to August, 2004;    
                                                      Counsel, Carter, Ledyard & Milburn LLP from        
                                                      November, 1999 to December, 2000; Vice             
                                                      President and Counsel, Equitable Life Assurance    
                                                      Society of the United States from April, 1998 to   
                                                      November, 1999,).                                  

Michael G. Clarke (Age 34).... Chief          2004    Chief Accounting Officer of the Columbia Funds,    
One Financial Center           Accounting             Liberty Funds, Stein Roe Funds and All-Star Funds  
Boston, MA 02111               Officer                since October, 2004 (formerly Controller of the    
                                                      Columbia Funds, Liberty Funds, Stein Roe Funds     
                                                      and All-Star Funds from May, 2004 to October,      
                                                      2004; Assistant Treasurer from June, 2002 to May,  
                                                      2004; Vice President, Product Strategy &           
                                                      Development of the Liberty Funds and Stein Roe     
                                                      Funds from February, 2001 to June, 2002;           
                                                      Assistant Treasurer of the Liberty Funds, Stein Roe
                                                      Funds and the All-Star Funds from August, 1999 to  
                                                      February, 2001; Audit Manager, Deloitte & Toche    
                                                      LLP from May, 1997 to August, 1999).               

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                                       Year First                                                
                             Position  Elected or                                                
                               with    Appointed              Principal Occupation(s)            
Name, Address and Age         Funds    to Office              During Past Five Years             
---------------------       ---------- ----------             ----------------------             
Officers                                                                                         
                                                                                                 
Jeffrey R. Coleman (Age 34) Controller    2004    Controller of the Columbia Funds, Liberty      
One Financial Center                              Funds, Stein Roe Funds and All-Star Funds      
Boston, MA 02111                                  since October, 2004 (formerly Vice President of
                                                  CDC IXIS Asset Management Services, Inc. and   
                                                  Deputy Treasurer of the CDC Nvest Funds and    
                                                  Loomis Sayles Funds from February, 2003 to     
                                                  September, 2004; Assistant Vice President of   
                                                  CDC IXIS Asset Management Services, Inc. and   
                                                  Assistant Treasurer of the CDC Nvest Funds     
                                                  from August, 2000 to February, 2003; Tax       
                                                  Manager of PFPC, Inc. from November, 1996 to   
                                                  August, 2000).                                 

David A. Rozenson (Age 50). Secretary     2003    Secretary of the Columbia Funds, Liberty       
One Financial Center                              Funds, Stein Roe Funds and All-Star Funds      
Boston, MA 02111                                  since December, 2003; Senior Counsel, Bank of  
                                                  America Corporation (formerly FleetBoston      
                                                  Financial Corporation) since January, 1996;    
                                                  Associate General Counsel, Columbia            
                                                  Management Group since November, 2002.         

Trustee Positions                                                               

 As of December 31, 2003, no disinterested Trustee or any of their immediate
family members owned beneficially or of record any class of securities of the   
Advisor, another investment advisor, sub-advisor or portfolio manager of any of 
the funds in the Fund Complex or any person controlling, controlled by or under 
common control with any such entity.                                            

Approving the Investment Advisory Contract                                      

In determining to approve the most recent annual extension of a Fund's    
management agreement, the Trustees met over the course of the year with the     
relevant investment advisory personnel from the Advisor and considered          
information provided by the Advisor relating to the education, experience and   
number of investment professionals and other personnel providing services under 
that agreement. See "Managing the Fund" in each Fund's Prospectus and "Trustees 
and Officers" in this SAI. The Trustees also took into account the time and     
attention devoted by senior management to the Funds and the other funds in the  
Fund Complex. The Trustees evaluated the level of skill required to manage the  
Funds and concluded that the human resources devoted by the Advisor to the      
Funds were appropriate to fulfill effectively the Advisor's duties under the    
agreement. The Trustees also considered the business reputation of the Advisor  
and its financial resources, and concluded that the Advisor would be able to    
meet any reasonably foreseeable obligations under the agreement.                

The Trustees received information concerning the investment philosophy and
investment process applied by the Advisor in managing the Funds. See "Principal 
Investment Strategies" and "Principal Investment Risks" in the Funds'           
Prospectuses. In this connection, the Trustees considered the Advisor's         
in-house research capabilities as well as other resources available to the      
Advisor's personnel, including research services available to the Advisor as a  
result of securities transactions effected for the Funds and other investment   
advisory clients. The Trustees concluded that the Advisor's investment process, 
research capabilities and philosophy were well suited to each Fund, given each  
Fund's investment goal(s) and policies.                                         

  The Trustees considered the scope of the services provided by the Advisor to
the Funds under the agreement relative to services provided by third parties to 
other mutual funds. See "Fund Charges and Expenses" and                         

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"Management of the Funds--The Management Agreement". The Trustees concluded     
that the scope of the Advisor's services to the Funds was consistent with the   
Funds' operational requirements, including, in addition to its investment goal, 
compliance with each Fund's investment restrictions, tax and reporting          
requirements and related shareholder services.                                  

 The Trustees considered the quality of the services provided by the Advisor
to the Funds. The Trustees evaluated the Advisor's record with respect to       
regulatory compliance and compliance with the investment policies of each Fund. 
The Trustees also evaluated the procedures of the Advisor designed to fulfill   
the Advisor's fiduciary duty to the Funds with respect to possible conflicts of 
interest, including the Advisor's code of ethics (regulating the personal       
trading of its officers and employees) (see "Management of the Funds--Code of   
Ethics"), the procedures by which the Advisor allocates trades among its        
various investment advisory clients and the record of the Advisor in these      
matters. The Trustees also received information concerning standards of the     
Advisor with respect to the execution of portfolio transactions. See            
"Management of the Funds--Portfolio Transactions."                              

The Trustees considered the Advisor's management of non-advisory services 
provided by persons other than the Advisor by reference, among other things, to 
each Fund's total expenses and the reputation of each Fund's other service      
providers. See "Your Expenses" in each Fund's Prospectus(es). The Trustees also 
considered information provided by third parties relating to each Fund's        
investment performance relative to its performance benchmark(s), relative to    
other similar funds managed by the Advisor and relative to funds managed        
similarly by other advisors. The Trustees reviewed performance over various     
periods, including each Fund's one, five and ten year calendar year periods     
and/or the life of the Fund, as applicable (See "Performance History" in the    
Fund's Prospectuses), as well as factors identified by the Advisor as           
contributing to each Fund's performance. See each Fund's most recent annual and 
semi-annual reports. The Trustees concluded that the scope and quality of the   
Advisor's services was sufficient to merit reapproval of the agreement for      
another year.                                                                   

In reaching that conclusion, the Trustees also gave substantial           
consideration to the fees payable under the agreement. The Trustees reviewed    
information concerning fees paid to investment advisors of similarly-managed    
funds. The Trustees also considered the fees of the Funds as a percentage of    
assets at different asset levels and possible economies of scale to the         
Advisor. The Trustees evaluated the Advisor's profitability with respect to the 
Funds, concluding that such profitability appeared to be generally consistent   
with levels of profitability that had been determined by courts to be "not      
excessive." For these purposes, the Trustees took into account not only the     
actual dollar amount of fees paid by the Funds directly to the Advisor, but     
also so-called "fallout benefits" to the Advisor such as reputational value     
derived from serving as investment Advisor to the Funds and the research        
services available to the Advisor by reason of brokerage commissions generated  
by each Fund's turnover. In evaluating the Funds' advisory fees, the Trustees   
also took into account the complexity of investment management for the Funds    
relative to other types of funds. Based on challenges associated with less      
readily available market information about foreign issuers and smaller          
capitalization companies, limited liquidity of certain securities, and the      
specialization required for focused funds, the Trustees concluded that          
generally greater research intensity and trading acumen is required for equity  
funds, and for international or global funds, as compared to funds investing,   
respectively, in debt obligations or in U.S. issuers. Similarly, the Trustees   
concluded that, generally, small capitalization equity funds and focused funds  
including state specific municipal funds, require greater intensity of research 
and trading acumen than larger capitalization or more diversified funds. See    
"The Fund" in each Fund's Prospectus.                                           

 Based on the foregoing, the Trustees concluded that the fees to be paid the
Advisor under the advisory agreement were fair and reasonable, given the scope  
and quality of the services rendered by the Advisor.                            

General                                                                     

Messrs. Lowry, Mayer and Neuhauser are also trustees/directors of the     
Liberty All-Star Funds. Mr. Neuhauser and Ms. Verville are also directors of    
Columbia Management Multi-Strategy Hedge Fund, LLC.                             

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 The Trustees serve as trustees of all open-end Funds managed by the Advisor
for which each Trustee will receive an annual retainer of $45,000 and           
attendance fees of $9,500 for each regular and special joint board meeting and  
$1,000 for each special telephonic joint board meeting. Beginning in December,  
2003, Mr. Theobald began serving as the Chairman of the Board. Mr. Theobald     
receives an additional annual retainer of $40,000 for serving in this capacity. 
All committee chairs, except the Audit Committee chair, receive an annual       
retainer of $5,000 and members of Committees, except the Audit Committee,       
receive $1,500 for each committee meeting. The Audit Committee chair receives   
an annual retainer of $10,000 and each Audit Committee member receives $2,000   
for each Audit Committee meeting. Committee members receive $1,500 for each     
special committee meeting attended on a day other than a regular joint board    
meeting day. Two-thirds of the Trustee fees are allocated among the Funds based 
on each Fund's relative net assets and one-third of the fees is divided equally 
among the Funds.                                                                

The Advisor and/or its affiliate, Colonial Advisory Services, Inc. (CASI),
has rendered investment advisory services to investment company, institutional  
and other clients since 1931. The Advisor currently serves as investment        
advisor or administrator for 133 open-end and 10 closed-end management          
investment company portfolios. Trustees and officers of the Trust, who are also 
officers of the Advisor or its affiliates, will benefit from the advisory fees, 
sales commissions and agency fees paid or allowed by the Trust.                 

The Agreement and Declaration of Trust (Declaration) of the Trust provides
that the Trust will indemnify its Trustees and officers against liabilities and 
expenses incurred in connection with litigation in which they may be involved   
because of their offices with the Trust but that such indemnification will not  
relieve any officer or Trustee of any liability to the Trust or its             
shareholders by reason of willful misfeasance, bad faith, gross negligence or   
reckless disregard of his or her duties. The Trust, at its expense, provides    
liability insurance for the benefit of its Trustees and officers.               

The Trustees have the authority to convert the Funds into a master        
fund/feeder fund structure. Under this structure, a Fund may invest all or a    
portion of its investable assets in investment companies with substantially the 
same investment goals, policies and restrictions as the Fund. The primary       
reason to use the master fund/feeder fund structure is to provide a mechanism   
to pool, in a single master fund, investments of different investor classes,    
resulting in a larger portfolio, investment and administrative efficiencies and 
economies of scale.                                                             

Management Agreement                                                            

Under a Management Agreement (Agreement), the Advisor has contracted to   
furnish each Fund with investment research and recommendations or fund          
management, respectively, and accounting and administrative personnel and       
services, and with office space, equipment and other facilities. For these      
services and facilities, each Fund pays a monthly fee based on the average of   
the daily closing value of the total net assets of each Fund for such month.    
Under the Agreement, any liability of the Advisor to the Trust, a Fund and/or   
its shareholders is limited to situations involving the Advisor's own willful   
misfeasance, bad faith, gross negligence or reckless disregard of its duties.   

The Agreement may be terminated with respect to the Fund at any time on 60
days' written notice by the Advisor or by the Trustees of the Trust or by a     
vote of a majority of the outstanding voting securities of the Fund. The        
Agreement will automatically terminate upon any assignment thereof and shall    
continue in effect from year to year only so long as such continuance is        
approved at least annually (i) by the Trustees of the Trust or by a vote of a   
majority of the outstanding voting securities of the Fund and (ii) by vote of a 
majority of the Trustees who are not interested persons (as such term is        
defined in the 1940 Act) of the Advisor or the Trust, cast in person at a       
meeting called for the purpose of voting on such approval.                      

The Advisor pays all salaries of officers of the Trust. The Trust pays all
expenses not assumed by the Advisor including, but not limited to, auditing,    
legal, custodial, investor servicing and shareholder reporting expenses. The    
Trust pays the cost of printing and mailing any Prospectuses sent to            
shareholders. Columbia Funds Distributor, Inc. (formerly named Liberty Funds    
Distributor, Inc.) pays the cost of printing and distributing all other         
Prospectuses.                                                                   

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Administration Agreement (this section applies only to certain Funds and their  
respective Trusts. See "Fund Charges and Expenses" in Part 1 of this SAI for    
information regarding your Fund).                                               

Under an Administration Agreement, the Advisor, in its capacity as the    
Administrator to each Fund, has contracted to perform the following             
administrative services:                                                        

(a) providing office space, equipment and clerical personnel;       

 (b) arranging, if desired by the respective Trust, for its directors,
   officers and employees to serve as Trustees, officers or agents of each Fund;

(c) preparing and, if applicable, filing all documents required for 
compliance by each Fund with applicable laws and regulations;             

  (d) preparation of agendas and supporting documents for and minutes of
meetings of Trustees, committees of Trustees and shareholders;            

(e) coordinating and overseeing the activities of each Fund's other 
third-party service providers; and                                        

(f) maintaining certain books and records of each Fund.             

With respect to Columbia Money Market Fund (formerly named Liberty Money  
Market Fund) and Columbia Municipal Money Market Fund (formerly named Liberty   
Municipal Money Market Fund), the Administration Agreement for these Funds      
provides that the Advisor will monitor compliance by the Fund with Rule 2a-7    
under the 1940 Act and report to the Trustees from time to time with respect    
thereto.                                                                        

The Advisor is paid a monthly fee at the annual rate of average daily net 
assets set forth in Part 1 of this SAI.                                         

Trust Services Agreement                                                        

Pursuant to a Trust Services Agreement, CFS provides the Columbia         
Tax-Managed Growth Fund's Trust Shares with trust administration services,      
including tax return preparation and filing, other tax and beneficiary          
reporting and recordkeeping. CFS's fee is described in the Prospectuses of the  
Columbia Tax-Managed Growth Fund.                                               

The Pricing and Bookkeeping Agreement                                           

  The Advisor is responsible for providing accounting and bookkeeping services
to each Fund pursuant to a pricing and bookkeeping agreement. Under a separate  
agreement (Outsourcing Agreement), the Advisor has delegated those functions to 
State Street Bank and Trust Company (State Street). The Advisor pays fees to    
State Street under the Outsourcing Agreement. See "Fund Charges and Expenses"   
in Part 1 of this SAI for information on these fees.                            

Portfolio Transactions                                                          

 Investment decisions. The Advisor acts as investment advisor to each of the
Funds. The Advisor's affiliate, CASI, advises other institutional, corporate,   
fiduciary and individual clients for which CASI performs various services.      
Various officers and Trustees of the Trust also serve as officers or Trustees   
of other funds and the other corporate or fiduciary clients of the Advisor. The 
Funds and clients advised by the Advisor or the Funds administered by the       
Advisor sometimes invest in securities in which the Fund also invests and       
sometimes engage in covered option writing programs and enter into transactions 
utilizing stock index options and stock index and financial futures and related 
options ("other instruments"). If the Fund, such other funds and such other     
clients desire to buy or sell the same portfolio securities, options or other   
instruments at about the same time, the purchases and sales are normally made   
as nearly as practicable on a pro rata basis in proportion to the amounts       

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desired to be purchased or sold by each. Although in some cases these practices 
could have a detrimental effect on the price or volume of the securities,       
options or other instruments as far as the Fund is concerned, in most cases it  
is believed that these practices should produce better executions. It is the    
opinion of the Trustees that the desirability of retaining the Advisor as       
investment advisor to the Funds outweighs the disadvantages, if any, which      
might result from these practices.                                              

Brokerage and research services. Consistent with the Conduct Rules of the 
National Association of Securities Dealers, Inc., and subject to seeking "best  
execution" (as defined below) and such other policies as the Trustees may       
determine, the Advisor may consider sales of shares of the Funds as a factor in 
the selection of broker-dealers to execute securities transactions for a Fund.  

The Advisor places the transactions of the Funds with broker-dealers      
selected by the Advisor and, if applicable, negotiates commissions.             
Broker-dealers may receive brokerage commissions on portfolio transactions,     
including the purchase and writing of options, the effecting of closing         
purchase and sale transactions, and the purchase and sale of underlying         
securities upon the exercise of options and the purchase or sale of other       
instruments. The Funds from time to time also execute portfolio transactions    
with such broker-dealers acting as principals. The Funds do not intend to deal  
exclusively with any particular broker-dealer or group of broker-dealers.       

It is the Advisor's policy generally to seek best execution, which is to  
place the Funds' transactions where the Funds can be expected to obtain the     
most favorable combination of price and execution services in particular        
transactions or provided on a continuing basis by a broker-dealer, and to deal  
directly with a principal market maker in connection with over-the-counter      
transactions, except when it is believed that best execution is obtainable      
elsewhere. In evaluating the execution services of, including the overall       
reasonableness of brokerage commissions paid to, a broker-dealer, consideration 
is given to, among other things, the firm's general execution and operational   
capabilities, and to its reliability, integrity and financial condition.        

Securities transactions of the Funds may be executed by broker-dealers who
also provide research services (as defined below) to the Advisor and the Funds. 
The Advisor may use all, some or none of such research services in providing    
investment advisory services to each of its investment company and other        
clients, including the Fund. To the extent that such services are used by the   
Advisor, they tend to reduce the Advisor's expenses. In the Advisor's opinion,  
it is impossible to assign an exact dollar value for such services.             

The Trustees have authorized the Advisor to cause the Funds to pay a      
broker-dealer which provides brokerage and research services to the Advisor an  
amount of commission for effecting a securities transaction, including the sale 
of an option or a closing purchase transaction, for the funds in excess of the  
amount of commission which another broker-dealer would have charged for         
effecting that transaction. As provided in Section 28(e) of the Securities      
Exchange Act of 1934, "brokerage and research services" include advice as to    
the value of securities, the advisability of investing in, purchasing or        
selling securities and the availability of securities or purchasers or sellers  
of securities; furnishing analyses and reports concerning issues, industries,   
securities, economic factors and trends and portfolio strategy and performance  
of accounts; and effecting securities transactions and performing functions     
incidental thereto (such as clearance and settlement). The Advisor must         
determine in good faith that such greater commission is reasonable in relation  
to the value of the brokerage and research services provided by the executing   
broker-dealer viewed in terms of that particular transaction or the Advisor's   
overall responsibilities to the Funds and all its other clients.                

The Trustees have authorized the Advisor to utilize the services of a     
clearing agent with respect to all call options written by Funds that write     
options and to pay such clearing agent commissions of a fixed amount per share  
(currently 1.25 cents) on the sale of the underlying security upon the exercise 
of an option written by a Fund.                                                 

The Advisor may use the services of affiliated broker-dealers, when buying
or selling securities for a Fund's portfolio pursuant to procedures adopted by  
the Trustees and 1940 Act Rule 17e-1. Under the Rule, the Advisor               

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must ensure that commissions a Fund pays to affiliates of the Advisor on        
portfolio transactions are reasonable and fair compared to commissions received 
by other broker-dealers in connection with comparable transactions involving    
similar securities being bought or sold at about the same time. The Advisor     
will report quarterly to the Trustees on all securities transactions placed     
through affiliates of the Advisor so that the Trustees may consider whether     
such trades complied with these procedures and the Rule.                        

Principal Underwriter                                                           

CFD is the principal underwriter of the Trust's shares. CFD has no        
obligation to buy the Funds' shares, and purchases the Funds' shares only upon  
receipt of orders from authorized FSFs or investors.                            

Investor Servicing and Transfer Agent                                           

CFS is the Trust's investor servicing agent (transfer, plan and dividend  
disbursing agent), for which it receives fees which are paid monthly by the     
Trust. The fee paid to CFS is based on number of accounts plus reimbursement    
for certain out-of-pocket expenses. See "Fund Charges and Expenses" in Part 1   
of this SAI for information on fees received by CFS. The agreement continues    
indefinitely but may be terminated by 90 days' notice by the Fund to CFS or     
generally by 6 months' notice by CFS to the Fund. The agreement limits the      
liability of CFS to the Fund for loss or damage incurred by the Fund to         
situations involving a failure of CFS to use reasonable care or to act in good  
faith and without negligence in performing its duties under the agreement. The  
Fund will indemnify CFS from, among other things, any and all claims, actions,  
suits, losses, costs, damages, and expenses incurred by it in connection with   
its acceptance of this Agreement, provided that: (i) to the extent such claims, 
actions, suits, losses, costs, damages, or expenses relate solely to a          
particular series or group of series of shares, such indemnification shall be   
only out of the assets of that series or group of series; (ii) this             
indemnification shall not apply to actions or omissions constituting negligence 
or misconduct of CFS or its agents or contractors, including but not limited to 
willful misfeasance, bad faith or gross negligence in the performance of their  
duties, or reckless disregard of their obligations and duties under this        
Agreement; and (iii) CFS shall give a Fund prompt notice and reasonable         
opportunity to defend against any such claim or action in its own name or in    
the name of CFS.                                                                

Code of Ethics                                                                  

  The Funds, the Advisor, and CFD have adopted Codes of Ethics pursuant to the
requirements of the Act. These Codes of Ethics permit personnel subject to the  
Codes to invest in securities, including securities that may be purchased or    
held by the Funds. These Codes of Ethics can be reviewed and copied at the      
SEC's Public Reference Room and may be obtained by calling the SEC at           
1-202-942-8090. These Codes are also available on the EDGAR Database on the     
SEC's internet web site at http://www.sec.gov, and may also be obtained, after  
paying a duplicating fee, by electronic request to publicinfo@sec.gov or by     
writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.     

Anti-Money Laundering Compliance                                                

  The Funds are required to comply with various anti-money laundering laws and
regulations. Consequently, the Funds may request additional information from    
you to verify your identity. If at any time the Funds believe a shareholder may 
be involved in suspicious activity or if certain account information matches    
information on government lists of suspicious persons, the Funds may choose not 
to establish a new account or may be required to "freeze" a shareholder's       
account. The Funds also may be required to provide a governmental agency with   
information about transactions that have occurred in a shareholder's account or 
to transfer monies received to establish a new account, transfer an existing    
account or transfer the proceeds of an existing account to a governmental       
agency. In some circumstances, the law may not permit a Fund to inform the      
shareholder that it has taken the actions described above.                      

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Proxy Voting Policies and Fund Proxy Voting Record                              

The Fund has delegated to the Advisor the responsibility to vote proxies  
relating to portfolio securities held by the Fund. In deciding to delegate this 
responsibility to the Advisor, the Board of Trustees of the Trust reviewed and  
approved the policies and procedures adopted by the Advisor. These included the 
procedures that the Advisor follows when a vote presents a conflict between the 
interests of the Fund and its shareholders and the Advisor, its affiliates, its 
other clients or other persons.                                                 

 The Advisor's policy is to vote all proxies for Fund securities in a manner
considered by the Advisor to be in the best interest of the Fund and its        
shareholders without regard to any benefit to the Advisor, its affiliates, its  
other clients or other persons. The Advisor examines each proposal and votes    
against the proposal, if, in its judgment, approval or adoption of the proposal 
would be expected to impact adversely the current or potential market value of  
the issuer's securities. The Advisor also examines each proposal and votes the  
proxies against the proposal, if, in its judgment, the proposal would be        
expected to affect adversely the best interest of the Fund. The Advisor         
determines the best interest of the Fund in light of the potential economic     
return on the Fund's investment.                                                

The Advisor addresses potential material conflicts of interest by having  
predetermined voting guidelines. For those proposals that require special       
consideration or in instances where special circumstances may require varying   
from the predetermined guideline, the Advisor's Proxy Committee determines the  
vote in the best interest of the Fund, without consideration of any benefit to  
the Advisor, its affiliates, its other clients or other persons. The Advisor's  
Proxy Committee is composed of representatives of the Advisor's equity          
investments, equity research, compliance, legal and fund administration         
functions. In addition to the responsibilities described above, the Proxy       
Committee has the responsibility to review, on a semi-annual basis, the         
Advisor's proxy voting policies to ensure consistency with internal and         
regulatory agency policies and to develop additional predetermined voting       
guidelines to assist in the review of proxy proposals.                          

  The Proxy Committee may vary from a predetermined guideline if it determines
that voting on the proposal according to the predetermined guideline would be   
expected to impact adversely the current or potential market value of the       
issuer's securities or to affect adversely the best interest of the client.     
References to the best interest of a client refer to the interest of the client 
in terms of the potential economic return on the client's investment. In        
determining the vote on any proposal, the Proxy Committee does not consider any 
benefit other than benefits to the owner of the securities to be voted. A       
member of the Proxy Committee is prohibited from voting on any proposal for     
which he or she has a conflict of interest by reason of a direct relationship   
with the issuer or other party affected by a given proposal. Persons making     
recommendations to the Proxy Committee or its members are required to disclose  
to the Committee any relationship with a party making a proposal or other       
matter known to the person that would create a potential conflict of interest.  

  The Advisor has retained Institutional Shareholder Services ("ISS"), a third
party vendor, to implement its proxy voting process. ISS provides proxy         
analysis, record keeping services and vote disclosure services.                 

The Advisor's proxy voting guidelines and procedures are included in this 
SAI as Appendix II. In accordance with SEC regulations, the fund's proxy voting 
record for the last twelve-month period ended June 30 has been filed with the   
SEC. You may obtain a copy of the fund's proxy voting record (i) at             
www.columbiamanagement.com; (ii) on the Securities and Exchange Commission's    
website at www.sec.gov and (iii) without charge, upon request, by calling       
800-368-0346.                                                                   

DETERMINATION OF NET ASSET VALUE                                                

Each Fund determines net asset value (NAV) per share for each class as of 
the close of the New York Stock Exchange (Exchange) (generally 4:00 p.m.        
Eastern time) each day the Exchange is open, except that certain classes of     
assets, such as index futures, for which the market close occurs shortly after  
the close of regular                                                            

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trading on the Exchange will be priced at the closing time of the market on     
which they trade. Currently, the Exchange is closed Saturdays, Sundays and the  
following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents'    
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and   
Christmas. Funds with portfolio securities which are primarily listed on        
foreign exchanges may experience trading and changes in NAV on days on which    
such Fund does not determine NAV due to differences in closing policies among   
exchanges. This may significantly affect the NAV of the Fund's redeemable       
securities on days when an investor cannot redeem such securities Debt          
securities generally are valued by a pricing service which determines           
valuations based upon market transactions for normal, institutional-size        
trading units of similar securities. However, in circumstances where such       
prices are not available or where the Advisor deems it appropriate to do so, an 
over-the-counter or exchange bid quotation is used. Securities listed on an     
exchange or on NASDAQ are valued at the last sale price (or the official        
closing price as determined by the NASDAQ system, if different, as applicable). 
Listed securities for which there were no sales during the day and unlisted     
securities generally are valued at the last quoted bid price. Options are       
valued at the last sale price or in the absence of a sale, the mean between the 
last quoted bid and offering prices. Short-term obligations with a maturity of  
60 days or less are valued at amortized cost pursuant to procedures adopted by  
the Trustees. The values of foreign securities quoted in foreign currencies are 
translated into U.S. dollars at the exchange rate for that day. Portfolio       
positions for which market quotations are not readily available and other       
assets are valued at fair value as determined by the Advisor in good faith      
under the direction of the Trust's Board of Trustees.                           

Generally, trading in certain securities (such as foreign securities) is  
substantially completed each day at various times prior to the close of the     
Exchange. Trading on certain foreign securities markets may not take place on   
all business days in New York, and trading on some foreign securities markets   
takes place on days which are not business days in New York and on which the    
Fund's NAV is not calculated. The values of these securities used in            
determining the NAV are computed as of such times. Also, because of the amount  
of time required to collect and process trading information as to large numbers 
of securities issues, the values of certain securities (such as convertible     
bonds, U.S. government securities, and tax-exempt securities) are determined    
based on market quotations collected earlier in the day at the latest           
practicable time prior to the close of the Exchange. Occasionally, events       
affecting the value of such securities may occur between such times and the     
close of the Exchange which will not be reflected in the computation of each    
Fund's NAV. If events materially affecting the value of such securities occur   
during such period, then these securities will be valued at fair value          
following procedures approved by the Trust's Board of Trustees.                 

 (The following two paragraphs are applicable only to Columbia Newport Tiger
Fund (formerly named Liberty Newport Tiger Fund), Columbia Newport Greater      
China Fund (formerly named Liberty Newport Greater China Fund), Columbia        
Newport Europe Fund (formerly named Liberty Newport Europe Fund) and Columbia   
Newport Asia Pacific Fund (formerly named Liberty Newport Asia Pacific Fund))   

Trading in securities on stock exchanges and over-the-counter markets in  
foreign securities markets is normally completed well before the close of the   
business day in New York. Trading on foreign securities markets may not take    
place on all business days in New York, and trading on some foreign securities  
markets does take place on days which are not business days in New York and on  
which the Fund's NAV is not calculated.                                         

The calculation of the Fund's NAV accordingly may not take place          
contemporaneously with the determination of the prices of the Fund's portfolio  
securities used in such calculations. Events affecting the values of portfolio  
securities that occur between the time their prices are determined and the      
close of the Exchange (when the Fund's NAV is calculated) will not be reflected 
in the Fund's calculation of NAV unless the Advisor, acting under procedures    
established by the Board of Trustees of the Trust, deems that the particular    
event would materially affect the Fund's NAV, in which case an adjustment will  
be made. Assets or liabilities initially expressed in terms of foreign          
currencies are translated prior to the next determination of the NAV of the     
Fund's shares into U.S. dollars at prevailing market rates.                     

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Amortized Cost for Money Market Funds (see "Amortized Cost for Money Market     
Funds" under "Information Concerning the Fund" in Part 1 of the SAI of Columbia 
Money Market Fund (formerly named Liberty Money Market Fund) and Columbia       
Municipal Money Market Fund (formerly named Liberty Municipal Money Market      
Fund))                                                                          

Money market funds generally value their portfolio securities at amortized
cost according to Rule 2a-7 under the 1940 Act.                                 

Under the amortized cost method a security is initially valued at cost and
thereafter any discount or premium from maturity value is amortized ratably to  
maturity. This method assures a constant NAV but may result in a yield          
different from that of the same portfolio under the market value method. The    
Trust's Trustees have adopted procedures intended to stabilize a money market   
fund's NAV per share at $1.00. If a money market fund's market value deviates   
from the amortized cost of $1.00, and results in a material dilution to         
existing shareholders, the Trust's Trustees will take corrective action that    
may include: realizing gains or losses; shortening the portfolio's maturity;    
withholding distributions; redeeming shares in kind; or converting to the       
market value method (in which case the NAV per share may differ from $1.00).    
All investments will be determined pursuant to procedures approved by the       
Trust's Trustees to present minimal credit risk.                                

  See the Statement of Assets and Liabilities in the shareholder report of the
Columbia Money Market Fund (formerly named Liberty Money Market Fund) or the    
Columbia Municipal Money Market Fund (formerly named Liberty Municipal Money    
Market Fund) for a specimen price sheet showing the computation of maximum      
offering price per share of Class A shares.                                     

HOW TO BUY SHARES                                                               

The Prospectus contains a general description of how investors may buy    
shares of the Fund and tables of charges. This SAI contains additional          
information which may be of interest to investors.                              

The Fund may accept unconditional orders for shares to be executed at the 
public offering price based on the NAV per share next determined after the      
order is placed in good order. The public offering price is the NAV plus the    
applicable sales charge, if any. In the case of orders for purchase of shares   
placed through FSFs, the public offering price will be determined on the day    
the order is placed in good order, but only if the FSF receives the order prior 
to the time at which shares are valued and transmits it to the Fund before the  
Fund processes that day's transactions. If the FSF fails to transmit before the 
Fund processes that day's transactions, the customer's entitlement to that      
day's closing price must be settled between the customer and the FSF. If the    
FSF receives the order after the time at which the Fund values its shares, the  
price will be based on the NAV determined as of the close of the Exchange on    
the next day it is open. If funds for the purchase of shares are sent directly  
to CFS, they will be invested at the public offering price next determined      
after receipt in good order. Payment for shares of the fund must be in U.S.     
dollars; if made by check, the check must be drawn on a U.S. bank. Investors    
should understand that, since the offering price of the Fund's shares is        
calculated to two decimal places using standard rounding methodology, the       
dollar amount of the sales charge paid as a percentage of the offering price    
and of the net amount invested for any particular purchase of fund shares may   
be higher or lower depending on whether downward or upward rounding was         
required during the calculation process.                                        

The Fund receives the entire NAV of shares sold. For shares subject to an 
initial sales charge, CFD's commission is the sales charge shown in the Fund's  
Prospectus less any applicable FSF discount. The FSF discount is the same for   
all FSFs, except that CFD retains the entire sales charge on any sales made to  
a shareholder who does not specify a FSF on the Investment Account Application  
("Application"), and except that CFD may from time to time reallow additional   
amounts to all or certain FSFs. CFD generally retains some or all of any        
asset-based sales charge (distribution fee) or contingent deferred sales        
charge. Such charges generally reimburse CFD for any up-front and/or ongoing    
commissions paid to FSFs.                                                       

Checks presented for the purchase of shares of the Fund which are returned
by the purchaser's bank or checkwriting privilege checks for which there are    
insufficient funds in a shareholder's account to cover                          

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redemption may subject such purchaser or shareholder to a $15 service fee for   
each check returned. Checks must be drawn on a U.S. bank and must be payable in 
U.S. dollars. Travelers checks, gift checks, credit card convenience checks,    
credit cards, cash and ban counter (starter checks) are not accepted.           

CFS acts as the shareholder's agent whenever it receives instructions to  
carry out a transaction on the shareholder's account. Upon receipt of           
instructions that shares are to be purchased for a shareholder's account, the   
designated FSF will receive the applicable sales commission. Shareholders may   
change FSFs at any time by written notice to CFS, provided the new FSF has a    
sales agreement with CFD.                                                       

 Shares credited to an account are transferable upon written instructions in
good order to CFS and may be redeemed as described under "How to Sell Shares"   
in the Prospectus. Certificates are not available for any class of shares       
offered by the Fund. If you currently hold previously issued share              
certificates, you may send the certificates to CFS for deposit to your account. 

In addition to the commissions specified in a Fund's prospectus and this  
SAI, CFD, or its advisory affiliates, from their own resources, may make cash   
payments to FSFs that agree to promote the sale of shares of funds that CFD     
distributes. A number of factors may be considered in determining the amount of 
those payments, including the FSF's sales, client assets invested in the funds  
and redemption rates, the quality of the FSF's relationship with CFD and/or its 
affiliates, and the nature of the services provided by FSFs to its clients. The 
payments may be made in recognition of such factors as marketing support,       
access to sales meetings and the FSF's representatives, and inclusion of the    
Fund on focus, select or other similar lists.                                   

 Subject to applicable rules, CFD may also pay non-cash compensation to FSFs
and their representatives, including: (i) occasional gifts (ii) occasional      
meals, or other entertainment; and/or (iii) support for FSF educational or      
training events.                                                                

In addition, CFD, and/or the Fund's investment advisor, transfer agent or 
their affiliates, may pay service, administrative or other similar fees to      
broker/dealers, banks, third-party administrators or other financial            
institutions (each commonly referred to as an "intermediary"). Those fees are   
generally for subaccounting, sub-transfer agency and other shareholder services 
associated with shareholders whose shares are held of record in omnibus or      
other group accounts. The rate of those fees may vary and is generally          
calculated on the average daily net assets of a Fund attributable to a          
particular intermediary.                                                        

 In some circumstances, the payments discussed above may create an incentive
for an intermediary or its employees or associated persons to recommend or sell 
shares of a Fund.                                                               

  CFD and its affiliates anticipate that the FSFs and intermediaries that will
receive the additional compensation described above include:                    

1st Global Capital Corp                                             

401 Company                                                         

ABN AMRO Trust Services                                             

ADP Retirement Services                                             

ADP Clearing                                                        

Advest                                                              

AEGON/Transamerica                                                  

AG Edwards                                                          

AIG Companies                                                       

American Century Services                                           

American Express                                                    

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AMG                                                                 

AON Consulting                                                      

AST Trust Company                                                   

AXA Advisors                                                        

Bank of America                                                     

Banc of America Investment Services                                 

BancOne                                                             

Bear Stearns                                                        

Benefit Plan Administrators                                         

Bidwell & Company                                                   

BNY Clearing                                                        

Bysis Retirement                                                    

C N A Trust                                                         

Ceridian Retirement                                                 

Charles Schwab                                                      

CIBC Oppenheimer                                                    

Citigroup Global Markets                                            

CitiStreet Associates LLC                                           

City National Bank                                                  

City of Milwaukee                                                   

Columbia Trust Company                                              

Commonwealth Financial                                              

Compensation & Capital                                              

CPI Qualified Plan Consultants                                      

Daily Access Concepts                                               

Davenport & Company                                                 

Delaware Investments                                                

Digital Retirement Solutions                                        

Discover Brokerage                                                  

Dreyfus/Mellon                                                      

Edgewood Services                                                   

Edward Jones                                                        

E-Trade,                                                            

ExpertPlan                                                          

FAS Liberty Life Spectrum                                           

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Ferris Baker Watts                                                  

Fidelity                                                            

First Union Bank of NC                                              

Financial Data Services                                             

Fleet Boston Financial                                              

Franklin Templeton                                                  

Freeman Welwood                                                     

Gem Group                                                           

Great West Life                                                     

Hartford Life                                                       

Hewitt Associates LLC                                               

Huntington Bank                                                     

ING                                                                 

Intermountain Health Care                                           

Investmart, Inc.                                                    

Investment Manager Services (IMS)                                   

Janney Montgomery Scott                                             

JJB Hilliard Lyons                                                  

JP Morgan/American Century                                          

Kenney Investments                                                  

Kirkpatrick Pettis Smith Polian Inc                                 

Legg Mason Wood Walker                                              

Liberty Life                                                        

Lincoln Financial                                                   

Lincoln Life                                                        

Linsco Private Ledger                                               

M & T Securities                                                    

Marquette Trust Company                                             

Mass Mutual Life                                                    

Matrix Settlement & Clearance Services (MSCS)                       

McDonald Investments                                                

Merrill Lynch                                                       

MetLife                                                             

MFS                                                                 

Mfund Trax                                                          

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MidAtlantic Capital                                                 

Milliman USA                                                        

Morgan Keegan                                                       

Morgan Stanley Dean Witter                                          

PFPC                                                                

Nationwide Investment Services                                      

Neuberger Berman Mgmt                                               

NFP Securities                                                      

Northeast Retirement Services                                       

NSD-NetStock Sharebuilder                                           

NYLife Distributors                                                 

Optimum Investment Advisors                                         

Orbitex                                                             

Pershing LLC                                                        

Phoenix Home Life                                                   

Piper Jaffray                                                       

PNC                                                                 

PPI Employee Benefits                                               

Private Bank & Trust                                                

Prudential                                                          

Putnam Investments                                                  

Raymond James                                                       

RBC Dain Rausher                                                    

Robert W Baird                                                      

Royal Alliance                                                      

RSM McGladrey Inc.                                                  

Safeco                                                              

Scott & Stringfellow                                                

Scudder Investments                                                 

Security Benefit                                                    

Segall Bryant Hamill                                                

South Trust Securities                                              

Southwest Securities                                                

Standard Insurance                                                  

Stanton Group                                                       

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State of NY Deferred Compensation Plan                              

Stephens, Inc.                                                      

Stifel Nicolaus & Co                                                

Strong Capital                                                      

Sungard T Rowe Price                                                

Trustar Retirement Services                                         

Trustlynx/Datalynx                                                  

UBS Financial Services                                              

Unified Trust                                                       

USAA Investment Management                                          

Vanguard                                                            

Wachovia                                                            

TD Waterhouse                                                       

Webster Investment Services                                         

Wells Fargo                                                         

Wilmington Trust                                                    

Please contact your FSF or intermediary for details about payments it may 
receive.                                                                        

SPECIAL PURCHASE PROGRAMS/INVESTOR SERVICES                                     

 The following special purchase programs/investor services may be changed or
eliminated at any time.                                                         

Automatic Investment Plan. As a convenience to investors, shares of most  
Funds advised by the Advisor may be purchased through the Automatic Investment  
Plan. Electronic fund transfers for a fixed amount of at least $50 ($25 for     
IRA) are used to purchase a Fund's shares at the public offering price next     
determined after CFD receives the proceeds. If your Automatic Investment Plan   
purchase is by electronic funds transfer, you may request the Automatic         
Investment Plan purchase for any day. Further information and application forms 
are available from FSFs or from CFD.                                            

Automated Dollar Cost Averaging (Classes A, B, C, D, T, G and Z). The     
Automated Dollar Cost Averaging program allows you to exchange $100 or more on  
a monthly basis from any fund distributed by CFD in which you have a current    
balance of at least $5,000 into the same class of shares of up to five other    
Funds. Complete the Automated Dollar Cost Averaging section of the Application. 
There is no charge for exchanges made pursuant to the Automated Dollar Cost     
Averaging program. Sales charges may apply if exchanging from a money market    
fund. Exchanges will continue so long as your fund balance is sufficient to     
complete the transfers. Your normal rights and privileges as a shareholder      
remain in full force and effect. Thus you can buy any Fund, exchange between    
the same Class of shares of Funds by written instruction or by telephone        
exchange if you have so elected and withdraw amounts from any Fund, subject to  
the imposition of any applicable CDSC or sales charges.                         

 Any additional payments or exchanges into your Fund will extend the time of
the Automated Dollar Cost Averaging program.                                    

An exchange is generally a capital sale transaction for federal income tax
purposes.                                                                       

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You may terminate your program, change the amount of the exchange (subject
to the $100 minimum), or change your selection of funds, by telephone or in     
writing; if in writing by mailing your instructions to Columbia Funds Services, 
Inc. (formerly named Liberty Funds Services, Inc.) (CFS) P.O. Box 8081, Boston, 
MA 02266-8081.                                                                  

  You should consult your FSF or financial advisor to determine whether or not
the Automated Dollar Cost Averaging program is appropriate for you.             

 CFD offers several plans by which an investor may obtain reduced initial or
contingent deferred sales charges. These plans may be altered or discontinued   
at any time. See "Programs For Reducing or Eliminating Sales Charges" below for 
more information.                                                               

 Class T Shareholder Services Plan. The Trustees have approved a Shareholder
Services Plan (the "Services Plan") pursuant to which the Trusts plan to enter  
into servicing agreements with institutions (including Bank of America          
Corporation and its affiliates). Pursuant to these servicing agreements,        
institutions render certain administrative and support services to customers    
who are the beneficial owners of Class T shares of each Fund other than the     
Columbia Newport Tiger Fund. Such services are provided to the institution's    
customers who are the beneficial owners of Class T shares and are intended to   
supplement the services provided by the Fund's administrator and transfer agent 
to the shareholders of record of the Class T shares. The Services Plan provides 
that each Fund will pay fees for such services at an annual rate of up to 0.50% 
of the average daily net asset value of Class T shares owned beneficially by    
the institution's customers. Institutions may receive up to one-half of this    
fee for providing one or more of the following services to such customers: (i)  
aggregating and processing purchase and redemption requests and placing net     
purchase and redemption orders with CFD; (ii) processing dividend payments from 
a Fund; (iii) providing sub-accounting with respect to Class T shares or the    
information necessary for sub-accounting; and (iv) providing periodic mailings  
to customers. Institutions may also receive up to one-half of this fee for      
providing one or more of these additional services to such customers: (i)       
providing customers with information as to their positions in Class T shares;   
(ii) responding to customer inquiries; and (iii) providing a service to invest  
the assets of customers in Class T shares.                                      

The payments under the servicing agreements entered into as of the date of
this SAI are limited to an aggregate fee of not more than 0.30% (on an          
annualized basis) of the average daily net asset value of the Class T shares of 
equity funds beneficially owned by customers of institutions and 0.15% (on an   
annualized basis) of the average daily net asset value of the Class T shares of 
bond funds beneficially owned by customers of institutions. The Funds           
understand that institutions may charge fees to their customers who are the     
beneficial owners of Class T shares in connection with their accounts with such 
institutions. Any such fees would be in addition to any amounts which may be    
received by an institution under the Services Plan. Under the terms of each     
servicing agreement, institutions are required to provide to their customers a  
schedule of any fees that they may charge in connection with customer           
investments in Class T shares.                                                  

Each servicing agreement with an institution ("Service Organization")     
relating to the Services Plan requires that, with respect to those Funds which  
declare dividends on a daily basis, the Service Organization agrees to waive a  
portion of the servicing fee payable to it under the Services Plan to the       
extent necessary to ensure that the fees required to be accrued with respect to 
the Class T shares of such Funds on any day do not exceed the income to be      
accrued to such Class T shares on that day.                                     

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During the last three fiscal years, the following payments were made to   
Service Organizations (net of expense reimbursements) with respect to Class T   
shares as shown in the table below:                                             

                                                                [Download Table]

                                   September 30, October 31, October 31,
FUND(1)(4)                             2003        2002(3)     2001(2)  
----------                         ------------- ----------- -----------
                                                                        
Columbia Asset Allocation Fund....   $506,628     $722,543   $  914,162 
Columbia Large Cap Growth Fund....   $621,536     $872,400   $1,213,883 
Columbia Disciplined Value Fund...   $328,843     $480,502   $  585,821 
Columbia Large Cap Core Fund......   $484,124     $666,709   $  634,076 
Columbia International Equity Fund   $107,527     $151,816          N/A 
Columbia Small Cap Fund...........   $318,591     $316,465   $  258,937 
Columbia Small Company Equity Fund   $156,029     $201,135   $  258,937 
Columbia Dividend Income Fund.....   $      0     $ 24,133   $   20,192 

--------                                                                        
(1)Information shown for each Fund for periods prior to its reorganization is   
 that of Retail A Shares of its predecessor fund. Class T shares are a newer
class of shares created as part of the reorganization of certain Galaxy   
Funds.                                                                    
(2)Expense reimbursements for the fiscal year ended October 31, 2001 were       
$26,074, $29,123, $5,541, $8,298 and $47,211, respectively, for the Asset 
 Allocation Fund, Large Cap Fund, Dividend Fund, Value Fund and Growth Fund.
(3)Expense reimbursements for the fiscal year ended October 31, 2002 were       
$19,673, $90,360, $70,449, $21,761 and $3,789, respectively for the Asset 
Allocation Fund, Growth Fund, International Fund, Small Company Fund and  
Dividend Fund.                                                            
(4)The Funds changed their fiscal year end from October 31 to September 30 in   
2003.                                                                     

                                                                [Download Table]

                                                Six Months                        
                                                  ended                           
                                                April 30,  October 31, October 31,
FUND(1)                          April 30, 2004  2003(3)      2002       2001(2)  
-------                          -------------- ---------- ----------- -----------
                                                                                  
Columbia Intermediate Government                                                  
  Income Fund...................    $70,533      $36,031     $7,041      $74,395  
Columbia Quality Plus Bond Fund.    $59,667      $29,033     $5,978      $52,592  

--------                                                                        
(1)Information shown for each Fund for periods prior to its reorganization is   
 that of Retail A Shares of its predecessor fund. Class T shares are a newer
class of shares created as part of the reorganization of certain Galaxy   
Funds.                                                                    
(2)Expense reimbursements for the fiscal year ended October 31, 2001 were       
$8,020 and $6,988, respectively for the Government Income Fund and Quality
Plus Bond Fund.                                                           
(3)The Funds changed their fiscal year end from October 31 to April 30 in 2003. 

 The Class T servicing agreements are governed by the Services Plan approved
by the Board of Trustees in connection with the offering of Class T shares of   
each Fund. Pursuant to the Services Plan, the Board of Trustees reviews, at     
least quarterly, a written report of the amounts paid under the servicing       
agreements and the purposes for which the expenditures were made. In addition,  
the arrangements with Service Organizations must be approved annually by a      
majority of the Trustees, including a majority of the trustees who are not      
"interested persons" of the Funds as defined in the 1940 Act and who have no    
direct or indirect financial interest in such arrangements (the "Disinterested  
Trustees").                                                                     

The Board of Trustees has approved the service agreements with Service    
Organizations based on information provided by the Funds' service contractors   
that there is a reasonable likelihood that the arrangements will benefit the    
Funds and their shareholders by affording the Funds greater flexibility in      
connection with the efficient servicing of the accounts of the beneficial       
owners of Class T shares of the Funds. Any material amendment to the Funds'     
arrangements with Service Organizations must be approved by a majority of the   
Board of Trustees (including a majority of the Disinterested Trustees). So long 
as the service agreements with Service                                          

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Organizations are in effect, the selection and nomination of the members of     
Columbia's Board of Trustees who are not "interested persons" (as defined in    
the 1940 Act) of the Funds will be committed to the discretion of such          
Disinterested Trustees.                                                         

Tax-Sheltered Retirement Plans (Retirement Plans). CFD offers prototype   
tax-qualified plans, including Pension and Profit-Sharing Plans for             
individuals, corporations, employees and the self-employed. The minimum initial 
Retirement Plan investment is $25. Columbia Trust Company (CTC) is the          
Custodian/Trustee and Plan Sponsor of the Columbia Management prototype plans   
offered through CFD. In general, a $20 annual fee is charged. Detailed          
information concerning these Retirement Plans and copies of the Retirement      
Plans are available from CFD.                                                   

Participants in Retirement Plans not sponsored by CTC, not including      
Individual Retirement Accounts (IRAs), may be subject to an annual fee of $20   
unless the Retirement Plan maintains an omnibus account with CFS. Participants  
in CTC sponsored prototype plans (other than IRAs) who liquidate the total      
value of their account may also be charged a $20 close-out processing fee       
payable to CFS. The close out fee applies to plans opened after September 1,    
1996. The fee is in addition to any applicable CDSC. The fee will not apply if  
the participant uses the proceeds to open a Columbia Management IRA Rollover    
account in any Fund distributed by CFD, or if the Retirement Plan maintains an  
omnibus account.                                                                

Consultation with a competent financial advisor regarding these Retirement
Plans and consideration of the suitability of Fund shares as an investment      
under the Employee Retirement Income Security Act of 1974 or otherwise is       
recommended.                                                                    

  Telephone Address Change Services. By calling CFS, shareholders or their FSF
of record may change an address on a recorded telephone line. Confirmations of  
address change will be sent to both the old and the new addresses. Telephone    
redemption privileges by check are suspended for 30 days after an address       
change is effected. Please have your account and taxpayer identification        
numbers available when calling.                                                 

  Cash Connection. Dividends and any other distributions, including Systematic
Withdrawal Plan (SWP) payments, may be automatically deposited to a             
shareholder's bank account via electronic funds transfer. Shareholders wishing  
to avail themselves of this electronic transfer procedure should complete the   
appropriate sections of the Application.                                        

Automatic Dividend Diversification. The automatic dividend diversification
reinvestment program (ADD) generally allows shareholders to have all            
distributions from a Fund automatically invested in the same class of shares of 
another Fund. An ADD account must be in the same name as the shareholder's      
existing open account with the particular Fund. Call CFS for more information   
at 1-800-345-6611.                                                              

PROGRAMS FOR REDUCING OR ELIMINATING SALES CHARGES                              

Rights of Accumulation (Class A, Class B and Class T shares only) (Class T
shares can only be purchased by the shareholders of Columbia Newport Tiger Fund 
(formerly named Liberty Newport Tiger Fund) who already own Class T shares).    
Reduced sales charges on Class A, B and T shares can be effected by combining a 
current purchase of Class A, Class B or Class T shares with prior purchases of  
other funds distributed by CFD. The applicable sales charge is based on the     
combined total of:                                                              

1. the current purchase; and                                            

 2. the value at the public offering price at the close of business on the
previous day of all funds' held by the shareholder.               

 CFD must be promptly notified of each purchase which entitles a shareholder
to a reduced sales charge. Such reduced sales charge will be applied upon       
confirmation of the shareholder's holdings by CFS. A Fund may terminate or      
amend this Right of Accumulation.                                               

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Statement of Intent (Class A, Class E and Class T shares only). Any person
may qualify for reduced sales charges on purchases of Class A, E and T shares   
made within a thirteen-month period pursuant to a Statement of Intent           
("Statement"). A shareholder may include, as an accumulation credit toward the  
completion of such Statement, the value of all fund shares held by the          
shareholder on the date of the Statement in Funds (except shares of any money   
market fund, unless such shares were acquired by exchange from Class A shares   
of another non-money market fund)). The value is determined at the public       
offering price on the date of the Statement. Purchases made through             
reinvestment of distributions do not count toward satisfaction of the           
Statement. Upon request, a Statement of Intent may be backdated to reflect      
purchases within 90 days.                                                       

During the term of a Statement, CFS will hold shares in escrow to secure  
payment of the higher sales charge applicable to Class A, E or T shares         
actually purchased. Dividends and capital gains will be paid on all escrowed    
shares and these shares will be released when the amount indicated has been     
purchased. A Statement does not obligate the investor to buy or a Fund to sell  
the amount of the Statement.                                                    

If a shareholder exceeds the amount of the Statement and reaches an amount
which would qualify for a further quantity discount, a retroactive price        
adjustment will be made at the time of expiration of the Statement. The         
resulting difference in offering price will purchase additional shares for the  
shareholder's account at the applicable offering price. As a part of this       
adjustment, the FSF shall return to CFD the excess commission previously paid   
during the thirteen-month period.                                               

  If the amount of the Statement is not purchased, the shareholder shall remit
to CFD an amount equal to the difference between the sales charge paid and the  
sales charge that should have been paid. If the shareholder fails within twenty 
days after a written request to pay such difference in sales charge, CFS will   
redeem that number of escrowed Class A, E or T shares to equal such difference. 
The additional amount of FSF discount from the applicable offering price shall  
be remitted to the shareholder's FSF of record.                                 

Additional information about and the terms of Statements of Intent are    
available from your FSF, or from CFS at 1-800-345-6611.                         

Reinstatement Privilege. Subject to the Fund's fund policy on trading of  
fund shares, an investor who has redeemed Class A, B, C or T shares (other than 
shares of the Columbia Newport Asia Pacific Fund (formerly named Liberty        
Newport Asia Pacific Fund), Columbia Newport Europe Fund (formerly named        
Liberty Newport Europe Fund), Columbia Newport Greater China Fund (formerly     
named Liberty Newport Greater China Fund), Columbia Global Equity Fund          
(formerly named Liberty Newport Global Equity Fund), Columbia Newport Tiger     
Fund (formerly named Liberty Newport Tiger Fund), Columbia International Equity 
Fund (formerly named Liberty International Equity Fund), Columbia European      
Thematic Equity Fund (formerly named Liberty European Thematic Equity Fund) and 
Columbia Global Thematic Equity Fund (formerly named Liberty Global Thematic    
Equity Fund) that were redeemed within 30 days of their acquisition by exchange 
from another fund) may, upon request, reinstate within one year a portion or    
all of the proceeds of such sale in shares of Class A of any Fund at the NAV    
next determined after CFS receives a written reinstatement request and payment. 
Investors who desire to exercise this privilege should contact their FSF or     
CFS. Shareholders may exercise this privilege an unlimited amount of times.     
Exercise of this privilege does not alter the federal income tax treatment of   
any capital gains realized on the prior sale of Fund shares, but to the extent  
any such shares were sold at a loss, some or all of the loss may be disallowed  
for tax purposes. Consult your tax advisor.                                     

Privileges of Columbia Employees or Financial Service Firms (in this      
section, the "Advisor" refers to Columbia Management Advisors, Inc. in its      
capacity as the Advisor or Administrator to certain Funds). Class A shares of   
certain Funds may be sold at NAV to the following individuals whether currently 
employed or retired: Trustees of funds advised or administered by the Advisor;  
directors, officers and employees of the Advisor, CFD and companies affiliated  
with the Advisor; registered representatives and employees of FSFs (including   
their affiliates) that are parties to dealer agreements or other sales          
arrangements with CFD; and such persons' families and their beneficial accounts.

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Privileges of Columbia Acorn Funds (formerly named Liberty Acorn Funds)   
Shareholders. Any shareholder who owned shares of any fund of Columbia Acorn    
Trust (formerly named Liberty Acorn Trust) on September 29, 2000 (when all of   
the then outstanding shares of Columbia Acorn Trust were re-designated Class Z  
shares) and who since that time has remained a shareholder of any fund          
distributed by CFD, may purchase Class A shares of any fund distributed by CFD  
at NAV in those cases where a Columbia Fund Class Z share is not available.     
Qualifying shareholders will not be subject to any Class A initial sales charge 
or CDSC; however, they will be subject to the annual Rule 12b-1 service fee.    

Fee-Based Compensation Arrangements. Class A, Class E and Class T shares  
(Class T shares can only be purchased by the shareholders of Liberty Newport    
Tiger Fund who already own Class T shares) of certain funds may also be         
purchased at reduced or no sales charge by clients of dealers, brokers or       
registered investment advisors that have entered into agreements with CFD       
pursuant to which the Funds are included as investment options in programs      
involving fee-based compensation arrangements, and by participants in certain   
retirement plans.                                                               

Waiver of Initial Sales Charges (Class A and Class T Shares)                    

Class A share initial sales charges (but not contingent deferred sales    
charges) are waived for the following categories of investors:                  

.   Galaxy Fund shareholders prior to December 1, 1995; and                 

.   Shareholders who (i) purchased Galaxy Fund Prime A Shares at net asset  
     value and received Class A shares in exchange for those shares during the
 Galaxy/Liberty Fund reorganization; and (ii) continue to maintain the
account in which the Prime A shares were originally purchased.      

Class T share sales charges are waived for the following categories of    
investors:                                                                      

.   Galaxy Fund shareholders prior to December 1, 1995;                     

.   Shareholders who (i) purchased Galaxy Fund Retail A Shares at net asset 
     value and received Class T shares in exchange for those shares during the
 Galaxy/Liberty Fund reorganization; and (ii) continue to maintain the
account in which the Retail A shares were originally purchased; and 

 .   Boston 1784 Fund shareholders on the date the Funds were reorganized into
Galaxy Funds.                                                       

Waiver of Contingent Deferred Sales Charges (CDSCs) (in this section, the 
"Advisor" refers to Columbia Management Advisors, Inc. in its capacity as the   
Advisor or Administrator to certain Funds) (Class A, B, C, D, E, matured F, G   
and T shares) CDSCs may be waived on redemptions in the following situations    
with the proper documentation:                                                  

  1. Death. CDSCs may be waived on redemptions within one year following
  the death of (i) the sole shareholder on an individual account, (ii) a joint
tenant where the surviving joint tenant is the deceased's spouse, or (iii)
the beneficiary of a Uniform Gifts to Minors Act (UGMA), Uniform Transfers
 to Minors Act (UTMA) or other custodial account. If, upon the occurrence of
  one of the foregoing, the account is transferred to an account registered in
  the name of the deceased's estate, the CDSC will be waived on any redemption
  from the estate account occurring within one year after the death. If shares
are not redeemed within one year of the death, they will remain subject to
the applicable CDSC, when redeemed from the transferee's account. If the  
account is transferred to a new registration and then a redemption is     
requested, the applicable CDSC will be charged.                           

   2. Systematic Withdrawal Plan (SWP). CDSCs may be waived on redemptions
occurring pursuant to a monthly, quarterly or semi-annual SWP established 
with CFS, to the extent the redemptions do not exceed, on an annual basis,
12% of the account's value. Otherwise, CDSCs will be charged on SWP       
redemptions until this requirement is met; this requirement does not apply
if the SWP is set up at the time the account is established, and          
distributions are being reinvested. See below under "Investor             
Services--Systematic Withdrawal Plan."                                    

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  3. Disability. CDSCs may be waived on redemptions occurring within one
year after the sole shareholder on an individual account or a joint tenant
on a spousal joint tenant account becomes disabled (as defined in Section 
 72(m)(7) of the Internal Revenue Code). To be eligible for such waiver, (i)
the disability must arise after the purchase of shares (ii) the disabled  
shareholder must have been under age 65 at the time of the initial        
determination of disability, and (iii) a letter from a physician signed   
under penalty of perjury stating the nature of the disability. If the     
account is transferred to a new registration and then a redemption is     
requested, the applicable CDSC will be charged.                           

    4. Death of a trustee. CDSCs may be waived on redemptions occurring upon
dissolution of a revocable living or grantor trust following the death of 
 the sole trustee where (i) the grantor of the trust is the sole trustee and
the sole life beneficiary, (ii) death occurs following the purchase and   
(iii) the trust document provides for dissolution of the trust upon the   
trustee's death. If the account is transferred to a new registration      
  (including that of a successor trustee), the applicable CDSC will be charged
upon any subsequent redemption.                                           

  5. Returns of excess contributions. CDSCs may be waived on redemptions
required to return excess contributions made to retirement plans or       
individual retirement accounts, so long as the FSF agrees to return the   
applicable portion of any commission paid by the Advisor.                 

6. Qualified Retirement Plans. CDSCs may be waived on redemptions   
required to make distributions from qualified retirement plans following  
normal retirement (as stated in the Plan document). CDSCs also will be    
waived on SWP redemptions made to make required minimum distributions from
qualified retirement plans that have invested in Funds distributed by CFD 
for at least two years. CDSC is also waived for participant loans.        

    7. Trust Share Taxes. CDSCs will be waived on redemptions of Class E and
F shares (i) where the proceeds are used to directly pay trust taxes, and 
(ii) where the proceeds are used to pay beneficiaries for the payment of  
trust taxes.                                                              

 The CDSC also may be waived where the FSF agrees to return all or an agreed
upon portion of the commission earned on the sale of the shares being redeemed. 

HOW TO SELL SHARES                                                              

 Shares may also be sold on any day the Exchange is open, either directly to
the Fund or through the shareholder's FSF. Sale proceeds generally are sent     
within seven days (usually on the next business day after your request is       
received in good form). However, for shares recently purchased by check, the    
Fund may delay selling or delay sending proceeds from your shares for up to 15  
days in order to protect the Fund against financial losses and dilution in net  
asset value caused by dishonored purchase payment checks.                       

 To sell shares directly to the Fund, send a signed letter of instruction to
CFS, along with any certificates for shares to be sold. The sale price is the   
net asset value (less any applicable contingent deferred sales charge) next     
calculated after the Fund receives the request in proper form. Signatures must  
be guaranteed by a bank, a member firm of a national stock exchange or another  
eligible guarantor that participates in the Medallion Signature Guarantee       
Program. Stock power forms are available from FSFs, CFS and many banks.         
Additional documentation may be required for sales by corporations, agents,     
fiduciaries, surviving joint owners, individual retirement account holders and  
other legal entities. Call CFS for more information 1-800-345-6611.             

FSFs must receive requests before the time at which the Fund's shares are 
valued to receive that day's price, FSF's are responsible for furnishing all    
necessary documentation to CFS and may charge for this service.                 

Systematic Withdrawal Plan (SWP). The shareholder may establish a SWP. A  
specified dollar amount, share amount or percentage of the then current net     
asset value of the shareholder's investment in any Fund designated by the       
shareholder will be paid monthly, quarterly or semi-annually to a designated    
payee. The                                                                      

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amount or percentage the shareholder specifies is run against available shares  
and generally may not, on an annualized basis, exceed 12% of the value, as of   
the time the shareholder makes the election, of the shareholder's investment.   
Withdrawals of shares of the Fund under a SWP will be treated as redemptions of 
shares purchased through the reinvestment of Fund distributions, or, to the     
extent such shares in the shareholder's account are insufficient to cover Plan  
payments, as redemptions from the earliest purchased shares of such Fund in the 
shareholder's account. No CDSCs apply to a redemption pursuant to a SWP of 12%  
or less, even if, after giving effect to the redemption, the shareholder's      
account balance is less than the shareholder's base amount. Qualified plan      
participants who are required by Internal Revenue Service regulation to         
withdraw more than 12%, on an annual basis, of the value of their share account 
may do so but may be subject to a CDSC ranging from 1% to 5% of the amount      
withdrawn in excess of 12% annually. If a shareholder wishes to participate in  
a SWP, the shareholder must elect to have all of the shareholder's income       
dividends and other Fund distributions payable in shares of the Fund rather     
than in cash.                                                                   

A shareholder or a shareholder's FSF of record may establish a SWP account
by telephone on a recorded line. However, SWP checks will be payable only to    
the shareholder and sent to the address of record. SWPs from retirement         
accounts cannot be established by telephone.                                    

A shareholder may not establish a SWP if the shareholder holds shares in  
certificate form. Purchasing additional shares (other than through dividend and 
distribution reinvestment) while receiving SWP payments is ordinarily           
disadvantageous because of sales charges. For this reason, a shareholder may    
not maintain a plan for the accumulation of shares of the Fund (other than      
through the reinvestment of dividends) and a SWP at the same time.              

 SWP payments are made through share redemptions, which may result in a gain
or loss for tax purposes, may involve the use of principal and may eventually   
use up all of the shares in a shareholder's account.                            

A Fund may terminate a shareholder's SWP if the shareholder's account     
balance falls below $5,000 due to any transfer or liquidation of shares other   
than pursuant to the SWP. SWP payments will be terminated on receiving          
satisfactory evidence of the death or incapacity of a shareholder. Until this   
evidence is received, CFS will not be liable for any payment made in accordance 
with the provisions of a SWP.                                                   

The cost of administering SWPs for the benefit of shareholders who        
participate in them is borne by the Fund as an expense of all shareholders.     

Shareholders whose positions are held in "street name" by certain FSFs may
not be able to participate in a SWP. If a shareholder's Fund shares are held in 
"street name," the shareholder should consult his or her FSF to determine       
whether he or she may participate in a SWP. The SWP on accounts held in "street 
name" must be made payable to the back office via the NSCC.                     

Telephone Redemptions. All Fund shareholders and/or their FSFs are        
automatically eligible to redeem up to $100,000 of the Fund's shares by calling 
1-800-422-3737 toll-free any business day between 9:00 a.m. and the close of    
trading of the Exchange (normally 4:00 p.m. Eastern time). Transactions         
received after 4:00 p.m. Eastern time will receive the next business day's      
closing price. Telephone redemptions by check and ACH are limited to a total of 
$100,000 in a 30-day period. Redemptions that exceed $100,000 may be            
accomplished by placing a wire order trade through a broker, to a pre-existing  
bank account or furnishing a signature guaranteed request. Signatures must be   
guaranteed by either a bank, a member firm of a national stock exchange or      
another eligible guarantor that participates in the Medallion Signature         
Guarantee Program. CFS will employ reasonable procedures to confirm that        
instructions communicated by telephone are genuine. Telephone redemptions are   
not available on accounts with an address change in the preceding 30 days and   
proceeds and confirmations will only be mailed or sent to the address of record 
unless the redemption proceeds are being sent to a pre-designated bank account. 
Shareholders and/or their FSFs will be required to provide their name, address  
account and taxpayer identification numbers. FSFs will also be required to      
provide their broker number. All telephone transactions are                     

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recorded. A loss to a shareholder may result from an unauthorized transaction   
reasonably believed to have been authorized. Certain restrictions apply to      
retirement plan accounts.                                                       

Checkwriting (in this section, the "Advisor" refers to Columbia Management
Advisors, Inc. its capacity as the Advisor or Administrator of certain Funds)   
(Available only on the Class A and Z shares of certain Funds)                   

  Shares may be redeemed by check if a shareholder has previously completed an
Application and Signature Card. CFS will provide checks to be drawn on Mellon   
Trust of New England, N.A. (the "Bank"). These checks may be made payable to    
the order of any person in the amount of not less than $500 ($250 for money     
market funds) nor more than $100,000. The shareholder will continue to earn     
dividends on shares until a check is presented to the Bank for payment. At such 
time a sufficient number of full and fractional shares will be redeemed at the  
next determined net asset value to cover the amount of the check. Certificate   
shares may not be redeemed in this manner.                                      

Shareholders utilizing checkwriting drafts will be subject to the Bank's  
rules governing checking accounts. There is currently no charge to the          
shareholder for the use of checks. However, you may incur customary fees for    
services such as a stop payment request or a request for copies of a check. The 
shareholder should make sure that there are sufficient shares in his or her     
open account to cover the amount of any check drawn since the net asset value   
of shares will fluctuate. If insufficient shares are in the shareholder's open  
account, the check will be returned marked "insufficient funds" and no shares   
will be redeemed; the shareholder will be charged a $15 service fee for each    
check returned. It is not possible to determine in advance the total value of   
an open account because prior redemptions and possible changes in net asset     
value may cause the value of an open account to change. Accordingly, a check    
redemption should not be used to close an open account. In addition, a check    
redemption, like any other redemption, may give rise to taxable capital gains.  

Non-Cash Redemptions. For redemptions of any single shareholder within any
90-day period exceeding the lesser of $250,000 or 1% of a Fund's net asset      
value, a Fund may make the payment or a portion of the payment with portfolio   
securities held by that Fund instead of cash, in which case the redeeming       
shareholder may incur brokerage and other costs in selling the securities       
received.                                                                       

Information Applicable to Class G and Class T Shares                            

The primary difference between Class G and Class T shares lies in their   
sales charge structures and shareholder servicing/distribution expenses.        
Investments in Class T shares of the Funds are subject to a front-end sales     
charge. Investments in Class G shares of the Funds are subject to a back-end    
sales charge. This back-end sales charge declines over time and is known as a   
"contingent deferred sales charge." An investor should understand that the      
purpose and function of the sales charge structures and shareholder             
servicing/distribution arrangements for both Class G and Class T shares are the 
same. Class T shares of a bond fund and an equity fund are currently subject to 
ongoing shareholder servicing fees at an annual rate of up to 0.15% and 0.30%,  
respectively, of the Fund's average daily net assets attributable to its Class  
T shares. Class G shares of a bond fund and an equity fund are currently        
subject to ongoing shareholder servicing and distribution fees at an annual     
rate of up to 0.80% and 0.95%, respectively, of the Fund's average daily net    
assets attributable to its Class G shares. These ongoing fees, which are higher 
than those charged on Class T shares, will cause Class G shares to have a       
higher expense ratio and pay lower dividends than Class T shares. Class G and   
Class T shares may only be purchased by current shareholders of Class G and     
Class T, respectively.                                                          

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  Class T Shares. The public offering price for Class T shares of the Funds is
the sum of the net asset value of the Class T shares purchased plus any         
applicable front-end sales charge as described in the applicable Prospectus. A  
deferred sales charge of up to 1.00% is assessed on certain redemptions of      
Class T shares that are purchased with no initial sales charge as part of an    
investment of $1,000,000 to $25,000,000. A portion of the front-end sales       
charge may be reallowed to broker-dealers as follows:                           

                                                                [Download Table]

                                                               REALLOWANCE TO     
                                   REALLOWANCE TO DEALERS     DEALERS AS A % OF   
                                  AS A % OF OFFERING PRICE     OFFERING PRICE     
AMOUNT OF TRANSACTION              PER SHARE--BOND FUNDS   PER SHARE--EQUITY FUNDS
---------------------             ------------------------ -----------------------
                                                                                  
Less than $50,000................           4.25                    5.00          
$50,000 but less than $100,000...           3.75                    3.75          
$100,000 but less than $250,000..           2.75                    2.75          
$250,000 but less than $500,000..           2.00                    2.00          
$500,000 but less than $1,000,000           1.75                    1.75          
$1,000,000 and over..............           0.00                    0.00          

 The appropriate reallowance to dealers will be paid by CFD to broker-dealer
organizations which have entered into agreements with CFD. The reallowance to   
dealers may be changed from time to time.                                       

Certain affiliates of the Advisor may, at their own expense, provide      
additional compensation to broker-dealer affiliates of Columbia and to          
unaffiliated broker-dealers whose customers purchase significant amounts of     
Class T shares of the Funds. Such compensation will not represent an additional 
expense to the Funds or their shareholders, since it will be paid from the      
assets of Bank of America Corporation's affiliates.                             

Information Applicable to Certain Class G Shares Received by Former Galaxy
Fund Retail B Shareholders in Connection with the Galaxy/Liberty                
Reorganization. The following table describes the CDSC schedule applicable to   
Class G shares received by former Galaxy Fund Retail B shareholders in exchange 
for Retail B Shares purchased prior to January 1, 2001:                         

                                                                [Download Table]

                              % DEDUCTED WHEN
HOLDING PERIOD AFTER PURCHASE SHARES ARE SOLD
----------------------------- ---------------
                                             
    Through first year.......      5.00      
    Through second year......      4.00      
    Through third year.......      3.00      
    Through fourth year......      3.00      
    Through fifth year.......      2.00      
    Through sixth year.......      1.00      
    Longer than six years....      None      

Class G shares received in exchange for Galaxy Fund Retail B Shares that  
were purchased prior to January 1, 2001 will automatically convert to Class T   
shares seven years after purchase. For purposes of calculating the CDSC, all    
purchases are considered to be made on the first day of the month in which each 
purchase was made.                                                              

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The following table describes the CDSC schedule applicable to Class G     
shareholders whose Galaxy Asset Allocation Fund and/or International Equity     
Fund Retail B Shares were acquired in connection with the reorganization of the 
Pillar Funds:                                                                   

                                                                [Download Table]

                              % DEDUCTED WHEN
HOLDING PERIOD AFTER PURCHASE SHARES ARE SOLD
----------------------------- ---------------
                                             
  Through first year.........      5.50      
  Through second year........      5.00      
  Through third year.........      4.00      
  Through fourth year........      3.00      
  Through fifth year.........      2.00      
  Through sixth year.........      1.00      
  Through the seventh year...      None      
  Longer than seven years....      None      

  If you acquired Retail B Shares in connection with the reorganization of the
Pillar Funds, your Class G shares will automatically convert to Class T shares  
eight years after you purchased the Pillar Fund Class B shares you held prior   
to the reorganization. For purposes of calculating the CDSC, all purchases are  
considered to be made on the first day of the month in which each purchase was  
made.                                                                           

  Class G Shares Purchased after the Galaxy/Liberty Reorganization. The public
offering price for Class G shares of the Funds is the net asset value of the    
Class G shares purchased. Although investors pay no front-end sales charge on   
purchases of Class G shares, such shares are subject to a contingent deferred   
sales charge at the rates set forth in the applicable Prospectus if they are    
redeemed within seven years of purchase. Securities dealers, brokers, financial 
institutions and other industry professionals will receive commissions from CFD 
in connection with sales of Class G shares. These commissions may be different  
than the reallowances or placement fees paid to dealers in connection with      
sales of Class T shares. Certain affiliates of Columbia may, at their own       
expense, provide additional compensation to broker-dealer affiliates of         
Columbia and to unaffiliated broker-dealers, whose customers purchase           
significant amounts of Class G shares of a Fund. See "Class T Shares." The      
contingent deferred sales charge on Class G shares is based on the lesser of    
the net asset value of the shares on the redemption date or the original cost   
of the shares being redeemed. As a result, no sales charge is imposed on any    
increase in the principal value of an investor's Class G shares. In addition, a 
contingent deferred sales charge will not be assessed on Class G shares         
purchased through reinvestment of dividends or capital gains distributions.     

 The proceeds from the contingent deferred sales charge that an investor may
pay upon redemption go to CFD, which may use such amounts to defray the         
expenses associated with the distribution-related services involved in selling  
Class G shares. Class G shares of a Fund will convert automatically to Class T  
shares eight years after purchase. The purpose of the conversion is to relieve  
a holder of Class G shares of the higher ongoing expenses charged to those      
shares, after enough time has passed to allow CFD to recover approximately the  
amount it would have received if the applicable front-end sales charge had been 
charged. The conversion from Class G shares to Class T shares takes place at    
net asset value, as a result of which an investor receives dollar-for-dollar    
the same value of Class T shares as he or she had of Class G shares. The        
conversion occurs eight years after the beginning of the calendar month in      
which the shares are purchased. Upon conversion, the converted shares will be   
relieved of the distribution and shareholder servicing fees borne by Class G    
shares, although they will be subject to the shareholder servicing fees borne   
by Class T shares.                                                              

  Class G shares acquired through a reinvestment of dividends or distributions
are also converted at the earlier of two dates--(i) eight years after the       
beginning of the calendar month in which the reinvestment occurred or (ii) the  
date of conversion of the most recently purchased Class G shares that were not  
acquired through reinvestment of dividends or distributions. For example, if an 
investor makes a one-time purchase of Class G shares of a Fund, and             
subsequently acquires additional Class G shares of the Fund only through        
reinvestment of dividends and/or distributions, all of such investor's Class G  
shares in the Fund, including those acquired through reinvestment, will convert 
to Class T shares of the Fund on the same date.                                 

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Information Applicable to Certain Class B Shareholders                          

Except for the following, Class B Share Contingent Deferred Sales Charges 
("CDSCs") and conversion schedules are described in the Prospectuses.           

  The following table describes the CDSC schedule applicable to Class B shares
received by Galaxy Quality Plus Bond Fund shareholders in exchange for Prime B  
Shares in connection with the Galaxy/Liberty reorganization.                    

Sales Charges                                                                   

                                                                [Download Table]

                              % DEDUCTED WHEN
HOLDING PERIOD AFTER PURCHASE SHARES ARE SOLD
----------------------------- ---------------
                                             
    Through first year.......      5.00      
    Through second year......      4.00      
    Through third year.......      3.00      
    Through fourth year......      3.00      
    Through fifth year.......      2.00      
    Through sixth year.......      1.00      
    Longer than six years....      0.00      

Automatic conversion to Class A shares occurs eight years after purchase. 

The Class B share discount program for purchases of $250,000 or more is not     
applicable to Class B shares received by Galaxy Fund Prime B shareholders in    
connection with the reorganization of the Galaxy Fund.                          

Information Applicable to Certain Class A Shareholders:                         

Except as set forth in the following paragraph, Class A share CDSCs are   
described in the Prospectuses:                                                  

Class A shares received by former Galaxy High Quality Bond Fund shareholders in 
exchange for Prime A Shares in connection with the Galaxy/Liberty               
reorganization of that Fund are subject to a 1% CDSC upon redemption of such    
Class A shares if the Prime A Shares were purchased without an initial sales    
charge in accounts aggregating $1 million or more at the time of purchase and   
the Class A shares are sold within 12 months of the time of purchase of the     
Prime A Shares. The 12-month holding period begins on the first day of the      
month in which each purchase was made.                                          

DISTRIBUTIONS                                                                   

Distributions are invested in additional shares of the same Class of the  
Fund at net asset value unless the shareholder elects to receive cash.          
Regardless of the shareholder's election, distributions of $10 or less will not 
be paid in cash, but will be invested in additional shares of the same class of 
the Fund at net asset value. Undelivered distribution checks returned by the    
post office will be reinvested in your account. If a shareholder has elected to 
receive dividends and/or capital gain distributions in cash and the postal or   
other delivery service selected by the Transfer Agent is unable to deliver      
checks to the shareholder's address of record, such shareholder's distribution  
option will automatically be converted to having all dividend and other         
distributions reinvested in additional shares. No interest will accrue on       
amounts represented by uncashed distribution or redemption checks. Shareholders 
may reinvest all or a portion of a recent cash distribution without a sales     
charge. No charge is currently made for reinvestment.                           

 Shares of some Funds that pay daily dividends (include Funds) will normally
earn dividends starting with the date the Fund receives payment for the shares  
and will continue through the day before the shares are                         

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redeemed, transferred or exchanged. Shares of some Funds that pay daily         
dividends (exclude Funds) Columbia will be earned starting with the day after   
that Fund receives payments for the shares. To determine whether a particular   
Fund is an include or exclude fund, customers can call 1-800-345-6611.          

HOW TO EXCHANGE SHARES                                                          

Shares of the Fund may be exchanged for the same class of shares of the   
other continuously offered funds (with certain exceptions) on the basis of the  
NAVs per share at the time of exchange. Class T and Z shares may be exchanged   
for Class A shares of certain other funds. The prospectus of each Fund          
describes its investment goal and policies, and shareholders should obtain a    
prospectus and consider these goals and policies carefully before requesting an 
exchange Consult CFS before requesting an exchange.                             

 If you acquire Class A shares of an international fund by exchange from any
other fund, you will not be permitted to exchange those shares into another     
fund for 30 calendar days, although you may redeem those shares at any time. An 
exchange order received prior to the expiration of the 30-day period will not   
be honored.                                                                     

By calling CFS, shareholders or their FSF of record may exchange among    
accounts with identical registrations, provided that the shares are held on     
deposit. During periods of unusual market changes or shareholder activity,      
shareholders may experience delays in contacting CFS by telephone to exercise   
the telephone exchange privilege. Because an exchange involves a redemption and 
reinvestment in another fund, completion of an exchange may be delayed under    
unusual circumstances, such as if the Fund suspends repurchases or postpones    
payment for the Fund shares being exchanged in accordance with federal          
securities law. CFS will also make exchanges upon receipt of a written exchange 
request and share certificates, if any. If the shareholder is a corporation,    
partnership, agent, or surviving joint owner, CFS may require customary         
additional documentation. Prospectuses of the other Funds are available from    
the CFD Literature Department by calling 1-800-426-3750.                        

A loss to a shareholder may result from an unauthorized transaction       
reasonably believed to have been authorized. No shareholder is obligated to use 
the telephone to execute transactions.                                          

Consult your FSF or CFS. In all cases, the shares to be exchanged must be 
registered on the records of the Fund in the name of the shareholder desiring   
to exchange.                                                                    

  Shareholders of the other open-end funds generally may exchange their shares
at NAV for the same class of shares of the Fund. Sales charges may apply for    
exchanges from money market funds.                                              

An exchange is generally a capital sale transaction for federal income tax
purposes. The exchange privilege may be revised, suspended or terminated at any 
time.                                                                           

SUSPENSION OF REDEMPTIONS                                                       

  A Fund may not suspend shareholders' right of redemption or postpone payment
for more than seven days unless the Exchange is closed for other than customary 
weekends or holidays, or if permitted by the rules of the SEC during periods    
when trading on the Exchange is restricted or during any emergency which makes  
it impracticable for the Fund to dispose of its securities or to determine      
fairly the value of its net assets, or during any other period permitted by     
order of the SEC for the protection of investors.                               

SHAREHOLDER LIABILITY                                                           

  Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Trust. However, the           
Declaration disclaims shareholder liability for acts or obligations of the Fund 
and the Trust and requires that notice of such disclaimer be given in each      
agreement, obligation, or                                                       

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instrument entered into or executed by the Fund or the Trust's Trustees. The    
Declaration provides for indemnification out of Fund property for all loss and  
expense of any shareholder held personally liable for the obligations of the    
Fund. Thus, the risk of a shareholder incurring financial loss on account of    
shareholder liability is limited to circumstances (which are considered remote) 
in which the Fund would be unable to meet its obligations and the disclaimer    
was inoperative.                                                                

  The risk of a particular fund incurring financial loss on account of another
fund of the Trust is also believed to be remote, because it would be limited to 
circumstances in which the disclaimer was inoperative and the other fund was    
unable to meet its obligations.                                                 

SHAREHOLDER MEETINGS                                                            

  As described under the caption "Organization and History", the Fund will not
hold annual shareholders' meetings. The Trustees may fill any vacancies in the  
Board of Trustees except that the Trustees may not fill a vacancy if,           
immediately after filling such vacancy, less than two-thirds of the Trustees    
then in office would have been elected to such office by the shareholders. In   
addition, at such times as less than a majority of the Trustees then in office  
have been elected to such office by the shareholders, the Trustees must call a  
meeting of shareholders. Trustees may be removed from office by a written       
consent signed by a majority of the outstanding shares of the Trust or by a     
vote of the holders of a majority of the outstanding shares at a meeting duly   
called for the purpose, which meeting shall be held upon written request of the 
holders of not less than 10% of the outstanding shares of the Trust. Upon       
written request by the holders of 1% of the outstanding shares of the Trust     
stating that such shareholders of the Trust, for the purpose of obtaining the   
signatures necessary to demand a shareholders' meeting to consider removal of a 
Trustee, request information regarding the Trust's shareholders, the Trust will 
provide appropriate materials (at the expense of the requesting shareholders).  
Except as otherwise disclosed in the Prospectus and this SAI, the Trustees      
shall continue to hold office and may appoint their successors.                 

At any shareholders' meetings that may be held, shareholders of all series
would vote together, irrespective of series, on the election of Trustees, but   
each series would vote separately from the others on other matters, such as     
changes in the investment policies of that series or the approval of the        
management agreement for that series.                                           

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APPENDIX I  

DESCRIPTION OF BOND RATINGS 
STANDARD & POOR'S (S&P) 

The following descriptions are applicable to municipal bond funds:        

 AAA bonds have the highest rating assigned by S&P. Capacity to pay interest
and repay principal is extremely strong.                                        

AA bonds have a very strong capacity to pay interest and repay principal, 
and they differ from AAA only in small degree.                                  

  A bonds have a strong capacity to pay interest and repay principal, although
they are somewhat more susceptible to the adverse effects of changes in         
circumstances and economic conditions than debt in higher rated categories.     

BBB bonds are regarded as having an adequate capacity to pay interest and 
repay principal. Whereas they normally exhibit adequate protection parameters,  
adverse economic conditions or changing circumstances are more likely to lead   
to a weakened capacity to pay interest and repay principal than for bonds in    
the A category.                                                                 

 BB, B, CCC, CC and C bonds are regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal in 
accordance with the terms of the obligation. BB indicates the lowest degree of  
speculation and C the highest degree. While such debt will likely have some     
quality and protective characteristics, these are outweighed by large           
uncertainties or large exposures to adverse conditions.                         

  BB bonds have less near-term vulnerability to default than other speculative
issues. However, they face major ongoing uncertainties or exposure to adverse   
business, financial, or economic conditions which could lead to inadequate      
capacity to meet timely interest and principal payments. The BB rating category 
is also used for debt subordinated to senior debt that is assigned an actual or 
implied BBB- rating.                                                            

B bonds have a greater vulnerability to default but currently have the    
capacity to meet interest payments and principal repayments. Adverse business,  
financial, or economic conditions will likely impair capacity or willingness to 
pay interest and repay principal. The B rating category is also used for debt   
subordinated to senior debt that is assigned an actual or implied BB or BB-     
rating.                                                                         

CCC bonds have a currently identifiable vulnerability to default, and are 
dependent upon favorable business, financial, and economic conditions to meet   
timely payment of interest and repayment of principal. In the event of adverse  
business, financial, or economic conditions, the bonds are not likely to have   
the capacity to pay interest and repay principal. The CCC rating category is    
also used for debt subordinated to senior debt that is assigned an actual or    
implied B or B- rating.                                                         

CC rating typically is applied to debt subordinated to senior debt that is
assigned an actual or implied CCC rating.                                       

C rating typically is applied to debt subordinated to senior debt which   
assigned an actual or implied CCC- debt rating. The C rating may be used to     
cover a situation where a bankruptcy petition has been filed, but debt service  
payments are continued.                                                         

CI rating is reserved for income bonds on which no interest is being paid.

 D bonds are in payment default. The D rating category is used when interest
payments or principal payments are not made on the date due even if the         
applicable grace period has not expired, unless S&P believes                    

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that such payments will be made during such grace period. The D rating also     
will be used upon the filing of a bankruptcy petition if debt service payments  
are jeopardized.                                                                

Plus(+) or minus(-) ratings from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major rating       
categories.                                                                     

Provisional Ratings. The letter "p" indicates that the rating is          
provisional. A provisional rating assumes the successful completion of the      
project being financed by the debt being rated and indicates that payment of    
debt service requirements is largely or entirely dependent upon the successful  
and timely completion of the project. This rating, however, although addressing 
credit quality subsequent to completion of the project, makes no comments on    
the likelihood of, or the risk of default upon failure of, such completion. The 
investor should exercise his own judgment with respect to such likelihood and   
risk.                                                                           

Municipal Notes:                                                                

 SP-1. Notes rated SP-1 have very strong or strong capacity to pay principal
and interest. Those issues determined to possess overwhelming safety            
characteristics are designated as SP-1+.                                        

SP-2. Notes rated SP-2 have satisfactory capacity to pay principal and    
interest.                                                                       

Notes due in three years or less normally receive a note rating. Notes    
maturing beyond three years normally receive a bond rating, although the        
following criteria are used in making that assessment:                          

Amortization schedule (the larger the final maturity relative to other    
maturities, the more likely the issue will be rated as a note).                 

Source of payment (the more dependent the issue is on the market for its  
refinancing, the more likely it will be rated as a note).                       

Demand Feature of Variable Rate Demand Securities:                              

S&P assigns dual ratings to all long-term debt issues that have as part of
their provisions a demand feature. The first rating addresses the likelihood of 
repayment of principal and interest as due, and the second rating addresses     
only the demand feature. The long-term debt rating symbols are used for bonds   
to denote the long-term maturity, and the commercial paper rating symbols are   
usually used to denote the put (demand) option (for example, AAA/A-1+).         
Normally, demand notes receive note rating symbols combined with commercial     
paper symbols (for example, SP-1+/A-1+).                                        

Commercial Paper:                                                               

A. Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with   
the designations 1, 2, and 3 to indicate the relative degree to safety.         

A-1. This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to       
possess overwhelming safety characteristics are designed A-1+.                  

Corporate Bonds:                                                                

The description of the applicable rating symbols and their meanings is    
substantially the same as the Municipal Bond ratings set forth above.           

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 The following descriptions are applicable to equity and taxable bond funds:

  AAA bonds have the highest rating assigned by S&P. The obligor's capacity to
meet its financial commitment on the obligation is extremely strong.            

  AA bonds differ from the highest rated obligations only in small degree. The
obligor's capacity to meet its financial commitment on the obligation is very   
strong.                                                                         

A bonds are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than obligations in higher rated          
categories. However, the obligor's capacity to meet its financial commitment on 
the obligation is still strong.                                                 

 BBB bonds exhibit adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a weakened      
capacity of the obligor to meet its financial commitment on the obligation.     

BB, B, CCC and CC bonds are regarded, as having significant speculative   
characteristics. BB indicates the least degree of speculation and C the         
highest. While such obligations will likely have some quality and protective    
characteristics, these may be outweighed by large uncertainties or major        
exposures to adverse conditions.                                                

BB bonds are less vulnerable to non-payment than other speculative issues.
However, they face major ongoing uncertainties or exposure to adverse business, 
financial, or economic conditions which could lead to the obligor's inadequate  
capacity to meet its financial commitment on the obligation.                    

  B bonds are more vulnerable to nonpayment than obligations rated BB, but the
obligor currently has the capacity to meet its financial commitment on the      
obligation. Adverse business, financial, or economic conditions will likely     
impair the obligor's capacity or willingness to meet its financial commitment   
on the obligation.                                                              

CCC bonds are currently vulnerable to nonpayment, and are dependent upon  
favorable business, financial, and economic conditions for the obligor to meet  
its financial commitment on the obligation. In the event of adverse business,   
financial, or economic conditions, the obligor is not likely to have the        
capacity to meet its financial commitment on the obligation.                    

CC bonds are currently highly vulnerable to nonpayment.                   

C ratings may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on the obligation are 
being continued.                                                                

 D bonds are in payment default. The D rating category is used when payments
on an obligation are not made on the date due even if the applicable grace      
period has not expired, unless S&P believes that such payments will be made     
during such grace period. The D rating also will be used upon the filing of a   
bankruptcy petition or the taking of a similar action if payments on an         
obligation are jeopardized.                                                     

Plus (+) or minus(-): The ratings from AA to CCC may be modified by the   
addition of a plus or minus sign to show relative standing within the major     
rating categories.                                                              

r This symbol is attached to the rating of instruments with significant   
noncredit risks. It highlights risks to principal or volatility of expected     
returns which are not addressed in the credit rating. Examples include:         
obligations linked or indexed to equities, currencies, or commodities;          
obligations exposed to severe prepayment risk, such as interest-only or         
principal-only mortgage securities; and obligations with unusually risky        
interest terms, such as inverse floaters.                                       

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MOODY'S INVESTORS SERVICE, INC. (MOODY'S) 

Aaa bonds are judged to be of the best quality. They carry the smallest   
degree of investment risk and are generally referred to as "gilt edge".         
Interest payments are protected by a large or by an exceptionally stable margin 
and principal is secure. While various protective elements are likely to        
change, such changes as can be visualized are most unlikely to impair a         
fundamentally strong position of such issues.                                   

Aa bonds are judged to be of high quality by all standards. Together with 
Aaa bonds they comprise what are generally known as high-grade bonds. They are  
rated lower than the best bonds because margins of protection may not be as     
large in Aaa securities or fluctuation of protective elements may be of greater 
amplitude or there may be other elements present which make the long-term risks 
appear somewhat larger than in Aaa securities.                                  

Those bonds in the Aa through B groups that Moody's believes possess the  
strongest investment attributes are designated by the symbol Aa1, A1 and Baa1.  

A bonds possess many favorable investment attributes and are to be        
considered as upper-medium-grade obligations. Factors giving security to        
principal and interest are considered adequate, but elements may be present     
that suggest a susceptibility to impairment sometime in the future.             

  Baa bonds are considered as medium grade obligations, i.e., they are neither
highly protected nor poorly secured. Interest payments and principal security   
appear adequate for the present but certain protective elements may be lacking  
or may be characteristically unreliable over any great length of time. Such     
bonds lack outstanding investment characteristics and in fact, have speculative 
characteristics as well.                                                        

Ba bonds are judged to have speculative elements: their future cannot be  
considered as well secured. Often, the protection of interest and principal     
payments may be very moderate, and thereby not well safeguarded during both     
good and bad times over the future. Uncertainty of position characterizes bonds 
in this class.                                                                  

B bonds generally lack characteristics of the desirable investment.       
Assurance of interest and principal payments or of maintenance of other terms   
of the contract over any long period of time may be small.                      

Caa bonds are of poor standing. Such issues may be in default or there may
be present elements of danger with respect to principal or interest.            

 Ca bonds represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings.                  

C bonds are the lowest rated class of bonds and issues so rated can be    
regarded as having extremely poor prospects of ever attaining any real          
investment standing.                                                            

Conditional Ratings. Bonds for which the security depends upon the        
completion of some act or the fulfillment of some condition are rated           
conditionally. These are bonds secured by (a) earnings of projects under        
construction, (b) earnings of projects unseasoned in operating experience, (c)  
rentals which begin when facilities are completed, or (d) payments to which     
some other limiting conditions attach. Parenthetical rating denotes probable    
credit stature upon completion of construction or elimination of basis of       
condition.                                                                      

Municipal Notes:                                                                

MIG 1. This designation denotes best quality. There is present strong     
protection by established cash flows, superior liquidity support or             
demonstrated broad-based access to the market for refinancing.                  

MIG 2. This designation denotes high quality. Margins of protection are   
ample although not so large as in the preceding group.                          

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  MIG 3. This designation denotes favorable quality. All security elements are
accounted for, but there is lacking the undeniable strength of the preceding    
grades. Liquidity and cash flow protection may be narrow and market access for  
refinancing is likely to be less well established.                              

Demand Feature of Variable Rate Demand Securities:                              

Moody's may assign a separate rating to the demand feature of a variable  
rate demand security. Such a rating may include:                                

VMIG 1. This designation denotes best quality. There is present strong    
protection by established cash flows, superior liquidity support or             
demonstrated broad-based access to the market for refinancing.                  

VMIG 2. This designation denotes high quality. Margins of protection are  
ample although not so large as in the preceding group.                          

VMIG 3. This designation denotes favorable quality. All security elements 
are accounted for, but there is lacking the undeniable strength of the          
preceding grades. Liquidity and cash flow protection may be narrow and market   
access for refinancing is likely to be less well established.                   

Commercial Paper:                                                               

Moody's employs the following three designations, all judged to be        
investment grade, to indicate the relative repayment capacity of rated issuers: 

Prime-1 Highest Quality                                                   
Prime-2 Higher Quality                                                    
Prime-3 High Quality                                                      

  If an issuer represents to Moody's that its Commercial Paper obligations are
supported by the credit of another entity or entities, Moody's, in assigning    
ratings to such issuers, evaluates the financial strength of the indicated      
affiliated corporations, commercial banks, insurance companies, foreign         
governments, or other entities, but only as one factor in the total rating      
assessment.                                                                     

Corporate Bonds:                                                                

The description of the applicable rating symbols (Aaa, Aa, A) and their   
meanings is identical to that of the Municipal Bond ratings as set forth above, 
except for the numerical modifiers. Moody's applies numerical modifiers 1, 2,   
and 3 in the Aa and A classifications of its corporate bond rating system. The  
modifier 1 indicates that the security ranks in the higher end of its generic   
rating category; the modifier 2 indicates a midrange ranking; and the modifier  
3 indicates that the issuer ranks in the lower end of its generic rating        
category.                                                                       

FITCH INC.  

Investment Grade Bond Ratings                                                   

AAA bonds are considered to be investment grade and of the highest credit 
quality. The obligor has an exceptionally strong ability to pay interest and/or 
dividends and repay principal, which is unlikely to be affected by reasonably   
foreseeable events.                                                             

AA bonds are considered to be investment grade and of very high credit    
quality. The obligor's ability to pay interest and repay principal is very      
strong, although not quite as strong as bonds rated 'AAA'. Because bonds rated  
in the 'AAA' and 'AA' categories are not significantly vulnerable to            
foreseeable future developments, short-term debt of these issuers is generally  
rated 'F-1+'.                                                                   

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A bonds are considered to be investment grade and of high credit quality. 
The obligor's ability to pay interest and repay principal is considered to be   
strong, but may be more vulnerable to adverse changes in economic conditions    
and circumstances than debt securities with higher ratings.                     

BBB bonds are considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest or dividends and repay principal 
is considered to be adequate. Adverse changes in economic conditions and        
circumstances, however, are more likely to have adverse impact on these         
securities and, therefore, impair timely payment. The likelihood that the       
ratings of these bonds will fall below investment grade is higher than for      
securities with higher ratings.                                                 

Conditional                                                                     

A conditional rating is premised on the successful completion of a project
or the occurrence of a specific event.                                          

Speculative-Grade Bond Ratings                                                  

BB bonds are considered speculative. The obligor's ability to pay interest
and repay principal may be affected over time by adverse economic changes.      
However, business and financial alternatives can be identified, which could     
assist the obligor in satisfying its debt service requirements.                 

B bonds are considered highly speculative. While securities in this class 
are currently meeting debt service requirements, the probability of continued   
timely payment of principal and interest reflects the obligor's limited margin  
of safety and the need for reasonable business and economic activity throughout 
the life of the issue.                                                          

CCC bonds have certain identifiable characteristics that, if not remedied,
may lead to default. The ability to meet obligations requires an advantageous   
business and economic environment.                                              

CC bonds are minimally protected. Default in payment of interest and/or   
principal seems probable over time.                                             

C bonds are in imminent default in payment of interest or principal.      

DDD, DD, and D bonds are in default on interest and/or principal payments.
Such securities are extremely speculative and should be valued on the basis of  
their ultimate recovery value in liquidation or reorganization of the obligor.  
'DDD' represents the highest potential for recovery on these securities, and    
'D' represents the lowest potential for recovery.                               

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APPENDIX II 

Columbia Management Advisors, Inc. ("CMA")  
Proxy Voting Policies and Procedures  
Adopted July 1, 2003 and revised February 11, 2004  

POLICY:                                                                         

All proxies for client securities for which Columbia Management Advisors, 
Inc. ("CMA") has been granted authority to vote shall be voted in a manner      
considered to be in the best interests of CMA's clients, including the CMG      
Family Funds/1/ and their shareholders without regard to any benefit to CMA or  
its affiliates. CMA shall examine each proposal and vote against the proposal,  
if, in its judgment, approval or adoption of the proposal would be expected to  
impact adversely the current or potential market value of the issuer's          
securities. In addition, CMA shall examine each proposal and vote the           
securities held on behalf of a client against the proposal, if, in its          
judgment, the proposal would be expected to effect adversely the best interest  
of the client. References to the best interest of a client refer to the         
interest of the client in terms of the potential economic return on the         
client's investment. In the event a client believes that its other interests    
require a different vote, CMA shall vote as the client instructs.               

CMA addresses potential material conflicts of interest by having a        
predetermined voting policy. For those proposals that require special           
consideration or in instances where special circumstances may require varying   
from the predetermined policy, the Proxy Committee will determine the vote in   
the best interest of CMA's clients, without consideration of any benefit to     
CMA, its affiliates or its other clients.                                       

OVERVIEW:                                                                       

CMA's policy is based upon its fiduciary obligation to act in its clients'
best interests. In addition, the SEC recently adopted rules under the           
Investment Company Act of 1940 and the Investment Advisers Act of 1940. These   
rules impose obligations with respect to proxy voting on investment advisers    
and investment companies.                                                       

PROCEDURES:                                                                     

I. ACCOUNT POLICIES                                                             

Except as otherwise directed by the client, CMA shall vote as follows:    

Separately Managed Accounts                                                     

   CMA shall vote proxies on securities held in its separately managed accounts.

Columbia Trust Company (CTC) Trust Pools                                        

CMA shall vote proxies on securities held in the trust pools.             

CMG Family Funds/CMA Fund Trust                                                 

CMA shall vote proxies on securities held in the Funds, including         
multi-managed and subadvised Funds.                                             

Columbia Private Portfolio                                                      

   CMA shall vote proxies on securities held in its separately managed accounts.

--------                                                                        
/1  /A CMG Family Fund or a Fund is a registered investment company or series   
of a registered investment company managed or adivsed by Columbia       
Management Advisors, Inc.                                               

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II. PROXY COMMITTEE                                                             

CMA shall establish a Proxy Committee whose standing members shall include
the heads of active equity and equity research, as well as representatives from 
fund administration, compliance and legal. Each portfolio manager (or           
sub-adviser) of a fund or account which holds securities of an issuer having a  
shareholder meeting, as well as the head of the asset class for which the       
security was selected, shall be an ad hoc member of the Proxy Committee in      
connection with the vote of proxies for the meeting.                            

The Proxy Committee's functions shall include, in part,                   

a) direction of the vote on proposals where there has been a        
recommendation to the Committee not to vote according to the predetermined
  policy provided in the Voting Guidelines in III (A) below or which proposals
require special consideration under III (B) below,                        

     b) semi-annual review of this Proxy Voting Policy and Procedure to ensure
consistency with internal policies and regulatory agency policies,        

  c) semi-annual review of existing Voting Guidelines and development of
  additional Voting Guidelines to assist in the review of proxy proposals, and

d) development and modification of Voting Procedures as it deems    
appropriate or necessary.                                                 

  In determining the vote of any proposal for which it has responsibility, the
Proxy Committee shall consider whether the proposal would be expected to impact 
adversely the current or potential market value of the issuer's securities. In  
addition, the Proxy Committee shall examine the proposal and vote the           
securities held on behalf of a client against the proposal, if, in its          
judgment, the proposal would be expected to effect adversely the best interest  
of the client. References to the best interest of a client refer to the         
interest of the client in terms of the potential economic return on the         
client's investment. In the event a client believes that its other interests    
require a different vote, CMA shall vote as the client instructs.               

In determining the vote on any proposal, the Proxy Committee shall not    
consider any benefit to CMA, any of its affiliates, any of its or its           
affiliates' clients, or of its customers or service providers, other than       
benefits to the owner of the securities to be voted.                            

The Proxy Committee shall create a charter, which shall be consistent with
this policy and procedure. The charter shall set forth the Committee's purpose, 
membership and operation. The charter shall include procedures prohibiting a    
member from voting on a matter for which he or she has a conflict of interest   
by reason of a direct relationship with the issuer or other party affected by a 
given proposal, e.g., is a portfolio manager for an account of the issuer.      

III. VOTING GUIDELINES                                                          

 In general, proposals which are designed to either dissuade or preclude the
acquisition and/or merger of one corporate entity by/with another, or have the  
effect of diluting the value of the existing shares outstanding, or reduce the  
shareholders' power over any company actions will be rejected.                  

A. The Proxy Committee has adopted the following guidelines for voting proxies: 

1. Matters Relating to the Board of Directors/Corporate Governance        

CMA generally will vote FOR:                                          

 .   Proposals for the election of directors or for an increase or decrease in
  the number of directors provided that a majority of directors would be
independent.                                                        

.   However, CMA generally will WITHHOLD votes for one or more director     
     nominees if: (i) the board as proposed to be constituted would not have a
majority of independent directors; or (ii) the board does not have  
nominating, audit and compensation committees comprised solely of   
independent directors.                                              

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.   On a CASE BY CASE basis, CMA may withhold votes for a director nominee  
     who has failed to observe good corporate governance practices or, through
specific action or inaction, has demonstrated a disregard for the   
interests of shareholders.                                          

.   Proposals that request that the board audit, compensation and/or        
nominating committees include independent directors exclusively. The
     Audit Committee must satisfy the independence and experience requirements
     established by the Securities and Exchange Commission ("SEC") and the New
York Stock Exchange. At least one member of the Audit Committee must
    qualify as a "financial expert" within the definition set forth in rules
of the SEC.                                                         

.   Proposals to declassify boards.                                         

.   Proposals to indemnify the board of directors through self-insurance    
plans or the purchase of insurance (though it is not the intent to  
     eliminate director responsibility for negligence or breaches of fiduciary
duty).                                                              

.   Proposals to create or eliminate positions or titles for senior         
     management, though CMA prefers that the role of Chairman of the Board and
     CEO be held by different persons. (In evaluating such proposals, CMA will
     consider the size of the company and the nature of the shareholder base).

 .   Proposals for the annual appointment or approval of independent corporate
     auditors. An auditor will usually be thought of as independent unless the
    auditor receives more than 50% of its revenues from non-audit activities
from the company and its affiliates.                                

.   Proposals that restore shareholder ability to remove directors with or  
without cause.                                                      

.   Proposals that encourage directors to own a minimum amount of stock.    

.   Proposals to permit shareholders to elect directors to fill board       
vacancies.                                                          

.   Proposals for the company to adopt confidential voting.                 

CMA will vote on a CASE-BY-CASE basis in contested elections of directors.

CMA generally will vote AGAINST:                                          

.   Proposals to classify boards.                                           

 .   Proposals that give management the ability to alter the size of the board
without shareholder approval.                                       

.   Proposals that provide directors may be removed only by supermajority   
vote.                                                               

.   Proposals which allow more than one vote per share in the election of   
directors.                                                          

.   Proposals that provide only continuing directors may elect replacements 
to fill board vacancies.                                            

.   Shareholder proposals that mandate a minimum amount of stock that       
directors must own.                                                 

.   Shareholder proposals to limit the tenure of outside directors.         

2. Compensation                                                                 

  CMA generally will vote FOR management sponsored compensation plans (such as
bonus plans, incentive plans, stock option plans, pension and retirement        
benefits, stock purchase plans, or thrift plans) if they are consistent with    
business practice. However, CMA generally is opposed to compensation plans that 
substantially dilute ownership interest in a company, provide participants with 
excessive awards, or have objectionable structural features. Specifically, for  
equity-based plans, if the proposed number of shares authorized for option      
programs (excluding authorized shares of expired options) exceed 10% of the     
currently outstanding shares overall or 3% for directors only, the proposal     
should be referred to the Proxy Committee. The Committee will then consider the 
circumstances surrounding the issue and vote in the best interests of the       
clients. CMA requires management to provide substantial justification for the   
repricing of options.                                                           

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CMA generally will vote FOR:                                              

.   Shareholder proposals to require golden and tin parachutes (executive   
severance agreements) to be submitted to shareholder ratification.  

.   Shareholder proposals asking a company to expense stock options.        

.   Shareholder proposals to put option repricings to a shareholder vote.   

.   Employee stock purchase plans that have the following features: (i) the 
 shares purchased under the plan are acquired for no loess than 85% of
    their market value, (ii) the offering period under the plan is 27 months
or less, and (iii) dilution is 10% or less.                         

CMA generally will vote AGAINST:                                          

 .   Stock option plans that permit issuance of options with an exercise price
below the stock's current market price.                             

3. Capitalization                                                               

CMA generally will vote FOR:                                              

.   Proposals to increase the authorized shares for stock dividends, stock  
     splits (and reverse stock splits) or general issuance, unless proposed as
  an anti-takeover action or the proposal increases the authorization by
more than 50% without a clear need presented by the company.        

.   Proposals for the elimination of authorized but unissued shares or      
    retirement of those shares purchased for sinking fund or treasury stock.

.   Proposals to institute/renew open market share repurchase plans in which
all shareholders may participate on equal terms.                    

.   Proposals to reduce or change the par value of common stock.            

.   Proposals to create blank check preferred stock (i.e., with unspecified 
   voting, conversion, dividend distribution and other rights), as long as
the company expressly states that the stock will not be used as an  
anti-takeover defense.                                              

CMA generally will vote AGAINST:                                          

 .   Proposals to create a new class of common stock with supermajority voting
rights (i.e., dual class stock).                                    

4. Mergers, Restructurings and Other Transactions                               

CMA will review, on a CASE BY CASE basis, business transactions such as   
mergers, acquisitions, asset sales, reorganizations, liquidations, spinoffs and 
other transactions.                                                             

5. Anti-Takeover Measures                                                       

CMA generally will vote AGAINST proposals intended largely to avoid       
acquisition prior to the occurrence of an actual event or to discourage         
acquisition by creating a cost constraint. With respect to the following        
measures, CMA generally will vote as follows:                                   

Poison Pills                                                              

.   CMA will vote FOR shareholder proposals that ask a company to submit its
poison pill for shareholder ratification.                           

 .   CMA generally votes FOR shareholder proposals to redeem a poison pill and
AGAINST management proposals to ratify a poison pill.               

Greenmail                                                                 

.   CMA will vote FOR proposals to adopt anti-greenmail charter or by law   
  amendments or otherwise restrict a company's ability to make greenmail
payments.                                                           

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Supermajority vote                                                        

.   CMA will vote AGAINST management proposals to require a supermajority   
    shareholder vote to approve any proxy proposal, in particular, proposals
to approve mergers and other significant corporate transactions.    

.   CMA will vote FOR shareholder proposals to lower supermajority vote     
requirements.                                                       

6. Other Business Matters                                                       

CMA generally will vote FOR                                               

.   Proposals to approve the minutes of a prior meeting, or to change the   
date, location or time of the annual meeting.                       

.   Bylaw or charter changes that are of a housekeeping nature (updates or  
corrections).                                                       

.   Proposals to approve a change in the company's name.                    

.   Proposals to change the location of the company's principal place of    
 business, provided the purpose is not to reduce the scope of adequate
regulatory or financial supervision.                                

.   Proposals to approve the annual reports and accounts provided the       
certifications required by the Sarbanes Oxley Act of 2002 have been 
provided.                                                           

.   Proposals that endorse the recruitment, development and promotion of    
     personnel on a non-discriminatory merit basis, regardless of race, creed,
color or gender.                                                    

CMA generally will vote AGAINST:                                          

.   Proposals to eliminate the right of shareholders to act by written      
consent or call special meetings.                                   

.   Authorization to transact other unidentified, substantive business at a 
meeting.                                                            

.   Proposals to provide management with the authority to adjourn an annual 
 or special meeting absent compelling reasons to support the proposal.

 .   Proposals authorizing the company's board of directors to adopt, amend or
repeal bylaws without shareholder approval.                         

.   Proposals to vote unmarked proxies in favor of management.              

B. Ability to Vote Proxies Other than as Provided in A Above.                   

 A Portfolio Manager, sub-adviser or other party involved with a client's or
Fund's account may conclude that the interest of the client or Fund requires    
that a proxy be voted on a proposal in a manner that differs from the           
predetermined proxy voting policy. In this situation, he or she shall request   
that the Proxy Committee consider voting the proxy on the proposal other than   
according to the predetermined policy provided in III (A) above. If any person  
(or entity) requests the Proxy Committee (or any of its members) to vote a      
proxy other than according to the predetermined policy, that person shall       
furnish to the Proxy Committee a written explanation of the reasons for the     
request and a description of the person's (or entity's) relationship with the   
party proposing the matter to shareholders.                                     

 The Proxy Committee may vary from the predetermined policy if it determines
that voting on the proposal according to the predetermined policy would be      
expected to impact adversely the current or potential market value of the       
issuer's securities or to effect adversely the best interest of the client.     
References to the best interest of a client refer to the interest of the client 
in terms of the potential economic return on the client's investment. In the    
event a client believes that its other interests require a different vote, CMA  
shall vote as the client instructs. In determining the vote on any proposal,    
the Proxy Committee shall not consider any benefit other than benefits to the   
owner of the securities to be voted.                                            

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C. Proposals Requiring Special Consideration                                    

  The following proposals require individual, special consideration. The Proxy
Committee will determine how proxies related to each of these proposals will be 
voted. The Proxy Committee shall determine to vote against any such proposal    
which would be expected to impact adversely the current or potential market     
value of the issuer's securities or to effect adversely the best interest of    
the client. References to the best interest of a client refer to the interest   
of the client in terms of the potential economic return on the client's         
investment. In the event a client believes that its other interests require a   
different vote, CMA shall vote as the client instructs In determining the vote  
on any proposal, the Proxy Committee shall not consider any benefit other than  
benefits to the owner of the securities to be voted.                            

  1. New Proposals. For each new type of proposal that is expected to be
proposed to shareholders of multiple companies, the Proxy Committee will  
develop a Guideline, which will be incorporated into this Proxy Voting    
Policy and Procedures.                                                    

    2. Accounts Adhering to Taft Hartley Principles. All proposals for these
accounts shall be voted according to the Taft Hartley Guidelines developed
by Institutional Shareholder Services, Inc. ("ISS").                      

  3. Accounts Adhering to Socially Responsible Principles. All proposals
for these accounts shall be voted according to the Socially Responsible   
Guidelines developed by ISS or as specified by the client.                

    4. Proxies of International Issuers which Block Securities Sales between
the Time a Shareholder submits a Proxy and the Vote. Proposals for these  
securities shall be voted only on the specific instruction of the Proxy   
Committee and to the extent practicable in accordance with these Proxy    
Voting Guidelines.                                                        

   5. Proxies of Investment Company Shares. Proposals on issues other than
 those specified above under III (A), e.g., election of directors, selection
of accountants.                                                           

   6. Shareholder Proposals. Shareholder proposals that are not covered by
III (A) above will be reviewed individually.                              

7. Executive/Director Compensation. Except as provided in III (A),  
proposals relating to compensation of any executive or director will be   
  voted as recommended by ISS or as otherwise directed by the Proxy Committee.

8. Pre-Emptive Rights. Proposals to create or eliminate pre-emptive 
rights. In evaluating proposals the Proxy Committee will consider the size
of the company and the nature of its shareholder base.                    

If any person (or entity) requests that the Proxy Committee (or any of its
members) vote a proxy in a specific manner, that person shall furnish to the    
Proxy Committee a written explanation of the reasons for the request and a      
description of the person's (or entity's) relationship with the party proposing 
the matter to shareholders.                                                     

IV. VOTING PROCEDURES                                                           

 The Proxy Committee has developed the following procedures to assist in the
voting of proxies according to the Voting Guidelines set forth in Section III   
above. The Proxy Committee may revise these procedures from time to time, as it 
deems appropriate or necessary to effect the purposes of this Policy and        
Procedures.                                                                     

.   CMA shall use Institutional Shareholder Services ("ISS"), a third party 
  vendor, to implement its proxy voting process. ISS shall provide proxy
analysis and record keeping services.                               

.   On a daily basis CMA shall send to ISS a holdings file detailing each   
   equity holding held in an account advised by CMA. Information on equity
holdings for the international portfolio shall be sent weekly.      

.   ISS shall receive proxy material information from Proxy Edge or the     
 custodian bank for the account. This shall include issues to be voted
upon, together with a breakdown of holdings for CMA accounts.       

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    ISS shall then reconcile information it receives from CMA with that it has
    received from Proxy Edge and custodian banks. Any discrepancies shall be
noted and resolved by ISS.                                          

 .   Whenever a vote is solicited, ISS shall send CMA a request to vote over a
     secure website. CMA personnel shall check this website daily. The request
     shall be accompanied by a recommended vote. The recommended vote shall be
    based upon CMA's Voting Guidelines previously delivered by CMA to ISS as
set forth in Section III. CMA shall promptly provide ISS with any   
   amendments or modifications to the Guidelines. CMA shall return a final
     instruction to vote to ISS, which ISS shall record with Proxy Edge or the
custodian bank as our agent.                                        

 .   ISS shall have procedures in place to ensure that a vote is cast on every
  security holding maintained by CMA on which a vote is solicited unless
otherwise directed by the Proxy Committee. On a yearly basis, or as 
 required by our clients CMA shall receive a report from ISS detailing
CMA's voting for the previous period.                               

.   Each time that ISS shall send CMA a request to vote the request shall be
   accompanied by the recommended vote determined in accordance with CMA's
    Voting Guidelines. ISS shall vote as indicated in the request unless the
   client has reserved discretion, the Proxy Committee determines that the
best interest of a client requires another vote or the proposal is a
   matter on which the Proxy Committee has discretion under Section III.C.
     In such situations ISS shall vote based on the direction of the client or
the Proxy Committee, as the case may be. The interests of CMA's Taft
 Hartley or "Socially Responsible " clients may impact a proposal that
  normally should be voted in a certain way. ISS shall inform CMA of all
    proposals having impact on its Taft Hartley and or "Socially Responsible
     " clients. The Proxy Voting Committee shall be consulted before a vote is
 placed in cases where Taft Hartley or Socially Responsible issues are
presented.                                                          

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EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
 VOTE THIS PROXY CARD TODAY!

THREE CONVENIENT WAYS TO VOTE YOUR PROXY.                             

    You can vote your proxies over the Internet, by telephone or by fax - it's
easy and confidential.                                                

     INTERNET, TELEPHONE AND FAX VOTING ARE AVAILABLE 24 HOURS A DAY, SEVEN DAYS
A WEEK.                                                               

   If you are voting by Internet, telephone or fax, you should NOT mail your
proxy card.                                                           

Vote by Internet:                                                     

     .    Read the proxy statement and have your proxy card available.

          .    Go to  https://vote.proxy-direct.com  and  follow  the on  screen
directions.                                       

Vote by Telephone:                                                    

     .    Read the proxy statement and have your proxy card available.

   .    When you are ready to vote, call toll free 1-866-837-1888.

     .    Follow the recorded instructions provided to cast your vote.

Vote by Fax:                                                          

          .    Fax  your  executed  proxy  to us  toll  free  at  1-888-796-9932
anytime.                                          

     If you have any questions or concerns, please call 1-866-348-1468 from 9:00
     a.m. to 11:00 p.m. EDT Monday through Friday, and Saturdays from 12:00 p.m.
to 6:00 p.m.                                                          

You may receive additional proxies for other accounts. These are not  
   duplicates; you should sign and return each proxy in order for your votes
to be counted.                                                        

Please detach at perforation before mailing.

                                                                           PROXY

 NATIONS STRATEGIC INCOME FUND
 A SERIES OF NATIONS FUNDS TRUST
 SPECIAL MEETING OF SHAREHOLDERS to be held September 16, 2005

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. The undersigned     
hereby appoints Christopher L. Wilson, J. Kevin Connaughton, Michael G. Clarke  
and Vincent P. Pietropaolo, and each of them, with full power of substitution to
each, to vote all shares at the Special Meeting of Shareholders to be held at   
One Financial Center, Boston, Massachusetts, on September 16, 2005 at 10:00 a.m.
Eastern time and at any and all adjournments, as specified herein and in        
accordance with their best judgment, on any other business that may properly    
come before the meeting.                                                        

Your vote is important, no matter how many shares you own. Please vote on the   
reverse side of this proxy card and sign in the space(s) provided. Return your  
completed proxy card in order for your votes to be counted.                     

VOTE VIA THE INTERNET: https://vote.proxy-direct.com                  
VOTE VIA THE TELEPHONE: 1-866-837-1888                                

Note: Please sign exactly as name or names appear hereon. Joint owners
should each sign personally. When signing as attorney, executor,      
  administrator, trustee or guardian, please give full title as such. If a
     corporation, please sign in corporate name by President or other authorized
  officer. If a partnership, please sign in partnership name by authorized
person.                                                               

____________________________________                                  
Shareholder sign here                                                 

____________________________________                                  
Co-owner sign here                                                    

____________________________________                                  
Date                       NSI_15358                                  

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
  ENCLOSED ENVELOPE.

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EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
 VOTE THIS PROXY CARD TODAY!

Please detach at perforation before mailing.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BELOW  
AND, ABSENT DIRECTION, WILL BE VOTED FOR THE PROPOSAL LISTED BELOW. THIS PROXY  
WILL BE VOTED IN ACCORDANCE WITH THE HOLDER'S BEST JUDGMENT AS TO ANY OTHER     
MATTER.                                                                         

THE TRUSTEES RECOMMEND A VOTE FOR THE PROPOSAL:                                 

PLEASE MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS. Example:  [X]          

                                                        [Enlarge/Download Table]
                                                                                                     
1. To approve an Agreement and Plan of Reorganization providing for (i) the     FOR  AGAINST  ABSTAIN
   sale of all of the assets of Nations Strategic Income Fund, a series of                           
   Nations Funds Trust (the "Acquired Fund") to, and the assumption of all of   [ ]    [ ]      [ ]  
   the liabilities of Nations Strategic Income Fund by, Columbia Strategic                           
   Income Fund, a series of Columbia Funds Trust I (the "Acquiring Fund"), in                        
   exchange for shares of the Acquiring Fund and (ii) the distribution of such                       
   shares to the shareholders of the Acquired Fund in complete liquidation of                        
   the Acquired Fund.                                                                                

MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE NEW ADDRESS BELOW. [ ]            

____________________________________________________________________            

____________________________________________________________________            
                                                                       NSI_15358

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘497’ Filing		Date		First		Last			Other Filings
		12/31/10		177
		1/1/10		178
		12/31/08		175
		12/31/06		36
		9/23/05		5		26
		9/22/05		15
		9/16/05		1		225			DEF 14A
		8/10/05		63
Filed as of / Effective on:		7/25/05		1		3
Filed on:		7/22/05
		7/13/05		3		72			497
		7/12/05		134		135
		7/5/05		2		40
		6/30/05		18					497,  N-PX
		6/28/05		10		13
		6/15/05		55
		6/9/05		57
		6/1/05		3		24
		5/31/05		5		76			24F-2NT,  N-CSR,  NSAR-B,  NSAR-B/A
		5/11/05		13
		4/29/05		6		41			497,  N-Q
		4/15/05		122					497
		4/11/05		7
		3/31/05		4		112
		3/21/05		57		115
		3/2/05		57		115
		2/10/05		56		114
		2/9/05		55		138			497
		1/11/05		56		114
		12/31/04		17		140
		12/1/04		7
		11/30/04		5		114			N-CSRS,  NSAR-A
		11/1/04		7		139			497
		10/15/04		132					497
		10/11/04		133
		10/1/04		73		135			485BPOS
		9/30/04		112
		9/29/04		56					N-Q
		9/8/04		56
		8/31/04		144		145			N-PX,  N-Q
		8/11/04		56
		8/10/04		56		143
		8/2/04		56
		8/1/04		4
		5/31/04		30		148			24F-2NT,  N-CSR,  NSAR-B,  NSAR-B/A
		4/1/04		180
		2/11/04		218
		12/31/03		142		185
		12/10/03		130		183
		12/1/03		81		112
		11/1/03		139
		10/13/03		135
		10/8/03		74		143
		7/1/03		218
		6/18/03		142
		5/31/03		73		76			24F-2NT,  N-CSR,  NSAR-BT,  NSAR-BT/A
		4/1/03		180					497
		12/31/02		176					24F-2NT,  N-30D,  NSAR-B,  NSAR-B/A
		10/31/02		200					24F-2NT,  N-30D,  NSAR-B
		12/31/01		59		178			24F-2NT,  N-30D,  NSAR-B
		10/31/01		200					24F-2NT,  N-30D,  NSAR-B
		1/1/01		59		207
		12/31/00		61					24F-2NT,  N-30D,  NSAR-B
		9/29/00		44		203
		7/14/00		135
		12/31/99		61					24F-2NT,  N-30D,  NSAR-B
		4/1/99		135
		1/29/99		62
		1/11/99		20
		7/1/97		20					485BPOS,  497
		9/1/96		201
		12/1/95		203
		4/30/93		176
		1/1/93		7		147
		5/15/92		20
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