Filed On 5/7/04 4:07pm ET · SEC File 811-03983 · Accession Number 891804-4-1054
As Of Filer Filing As/For/On Docs:Pgs Issuer Agent
5/07/04 Columbia Oregon Muni Bond Fu..Inc N-CSRS 2/29/04 3:402 891804
Certified Semi-Annual Shareholder Report of a Management Investment Company · Form N-CSR
Filing Table of Contents
Document/Exhibit Description Pages Size
1: N-CSRS Columbia Oregon Municipal Bond Fund, Inc. 399± 1,581K
2: EX-99.CERT Certifications 2± 10K
3: EX-99.906CERT Certifications 1 6K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-06341
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Columbia Oregon Municipal Bond Fund, Inc.
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(Exact name of registrant as specified in charter)
1301 SW Sixth Avenue, PO Box 1350, Portland, Oregon 97207
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(Address of principal executive offices) (Zip code)
Mark Wentzien, Esq.
Columbia Management Group
1301 SW Sixth Avenue, PO Box 1350
Portland, Oregon 97207
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-503-222-3600
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Date of fiscal year end: August 31, 2004
------------------
Date of reporting period: February 29, 2004
-----------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
COLUMBIA FUNDS
SEMIANNUAL REPORT
FEBRUARY 29, 2004
COLUMBIA COMMON STOCK FUND
COLUMBIA GROWTH FUND
COLUMBIA INTERNATIONAL STOCK FUND
COLUMBIA MID CAP GROWTH FUND
COLUMBIA SMALL CAP GROWTH FUND
COLUMBIA REAL ESTATE EQUITY FUND
COLUMBIA TECHNOLOGY FUND
COLUMBIA STRATEGIC INVESTOR FUND
COLUMBIA BALANCED FUND
COLUMBIA SHORT TERM BOND FUND
COLUMBIA FIXED INCOME SECURITIES FUND
COLUMBIA NATIONAL MUNICIPAL BOND FUND
COLUMBIA OREGON MUNICIPAL BOND FUND
COLUMBIA HIGH YIELD FUND
COLUMBIA DAILY INCOME COMPANY
Photo of Woman Standing
TABLE OF CONTENTS
Economic Update .................................... 1
Columbia Common Stock Fund ......................... 2
Columbia Growth Fund ............................... 5
Columbia International Stock Fund .................. 8
Columbia Mid Cap Growth Fund ....................... 11
Columbia Small Cap Growth Fund ..................... 14
Columbia Real Estate Equity Fund ................... 17
Columbia Technology Fund ........................... 20
Columbia Strategic Investor Fund ................... 23
Columbia Balanced Fund ............................. 26
Columbia Short Term Bond Fund ...................... 29
Columbia Fixed Income Securities Fund .............. 32
Columbia National Municipal Bond Fund .............. 35
Columbia Oregon Municipal Bond Fund ................ 38
Columbia High Yield Fund ........................... 41
Columbia Daily Income Company ...................... 44
Financial Statements ............................... 47
Shareholder Meeting Results ........................ 195
Important Information
About This Report .................................. 196
Columbia Funds ..................................... 197
Economic and market conditions change frequently. There is no assurance that the
trends described in this report will continue or commence.
Not FDIC May Lose Value
Insured No Bank Guarantee
TO OUR FELLOW SHAREHOLDERS______________________________________________________
COLUMBIA FUNDS
DEAR SHAREHOLDER:
We are pleased to let you know that FleetBoston Financial Corporation and Bank
of America Corporation have merged, effective April 1, 2004. As a result of the
merger, Columbia Management Group became part of the Bank of America family
of companies. Looking ahead, we believe this merger will be a real benefit to
our shareholders. Preserving and leveraging our strengths, the combined
organization will deliver additional research, management, and product
capabilities to you.
There are no immediate changes planned for fund names, product lines, or
customer service contacts. As always, we will provide you with updates at
www.columbiafunds.com or through other communications, such as newsletters and
shareholder reports.
As you might know, on March 15, 2004, FleetBoston Financial announced an
agreement in principle with the staff of the Securities and Exchange Commission
("SEC") and the New York Attorney General to settle charges involving market
timing in Columbia Management mutual funds. (Bank of America came to a similar
settlement in principle at the same time.) The agreement will require the final
approval of the SEC. This action reflects our full cooperation with the
investigation and our strong wish to put this regrettable situation behind us.
Columbia Management has taken and will continue to take steps to strengthen
policies, procedures and oversight to curb frequent trading of Columbia fund
shares.
We also want you to know that your fund's Board of Directors has been energetic
over the past year in strengthening its capacity to oversee the Columbia funds.
Recently, the Board of Directors:
o ELECTED AN INDEPENDENT DIRECTOR TO CHAIR THE TWELVE-PERSON BOARD. IN
ADDITION, EACH COMMITTEE OF THE BOARD IS COMPRISED OF DIRECTORS WHO
ARE COMPLETELY INDEPENDENT OF THE ADVISOR AND ITS AFFILIATES.
o APPOINTED A CHIEF COMPLIANCE OFFICER OF THE COLUMBIA FUNDS, WHO
REPORTS DIRECTLY TO EACH FUND'S AUDIT COMMITTEE. DIRECTORS WERE ALSO
ASSIGNED TO FOUR SEPARATE INVESTMENT OVERSIGHT COMMITTEES, EACH BETTER
ABLE TO MONITOR PERFORMANCE OF INDIVIDUAL FUNDS.
o VOTED TO DOUBLE THE REQUIRED INVESTMENT BY EACH DIRECTOR IN THE
COLUMBIA FUNDS -- TO FURTHER ALIGN THE INTERESTS OF THE DIRECTORS WITH
THOSE OF OUR FUND SHAREHOLDERS. AT THE SAME TIME, NEW POLICIES WERE
INSTITUTED REQUIRING ALL INVESTMENT PERSONNEL AND DIRECTORS TO HOLD
THEIR COLUMBIA FUND SHARES FOR A MINIMUM OF ONE YEAR (UNLESS
EXTRAORDINARY CIRCUMSTANCES WARRANT AN EXCEPTION TO BE GRANTED BY A
BOARD DESIGNATED COMMITTEE).
Both your fund's directors and Columbia Management are committed to serving the
interests of our shareholders, and we will continue to work hard to help you
achieve your financial goals.
In the pages that follow, you'll find valuable information about the economic
environment and the performance of 15 Columbia funds. The "Economic Update"
provides an overview of the investing environment during the past six months.
The individual fund reports feature commentary from fund managers, followed by
financial statements for each fund.
We hope that you will take time to read the reports of the funds you own and
discuss them with your financial advisor if you have any questions. If you have
any questions about your account, please feel free to call Columbia's
shareholder services department at 800-345-6611.
As always, thank you for choosing Columbia funds. It is a privilege to play a
role in your financial future.
Sincerely,
/s/ Thomas C. Theobald /s/ J. Kevin Connaughton
Thomas C. Theobald J. Kevin Connaughton
Chairman, Board of Directors President, Columbia Funds
J. Kevin Connaughton was named president of Columbia Funds on February 27, 2004.
Sidebar:
SUMMARY
FOR THE SIX-MONTH PERIOD THAT ENDED FEBRUARY 29, 2004
o THE US STOCK MARKET BENEFITED FROM INVESTOR ENTHUSIASM AND AN INCREASE IN
CORPORATE PROFITS. BOTH THE RUSSELL 3000 INDEX, WHICH TRACKS APPROXIMATELY
98% OF THE US STOCK MARKET, AND THE S&P 500 INDEX POSTED DOUBLE-DIGIT
RETURNS THIS PERIOD.
[Illustration of 2 arrows pointing up]
S&P 500 RUSSELL 3000
INDEX INDEX
14.59% 15.06%
O PERFORMANCE IN THE FIXED-INCOME UNIVERSE WAS LED BY HIGH-YIELD BONDS. AS
MEASURED BY THE MERRILL LYNCH US HIGH YIELD, CASH PAY ONLY INDEX, THIS
SECTOR POSTED A RETURN MORE THAN PERCENTAGE POINTS HIGHER THAN THE RETURN
FOR INVESTMENT-GRADE BONDS, AS MEASURED BY THE LEHMAN BROTHERS AGGREGATE
BOND INDEX.
[Illustration of 2 arrows pointing up]
MERRILL LYNCH LEHMAN
INDEX INDEX
10.32% 4.92%
The S&P 500 Index is an unmanaged index that tracks the performance of 500
widely held, large capitalization US stocks.
The Russell 3000 Index is an unmanaged index that tracks the performance of the
3,000 largest US companies based on total market capitalizations.
The Merrill Lynch US High Yield, Cash Pay Only Index is an unmanaged index that
tracks the performance of non-investment-grade corporate bonds.
The Lehman Brothers Aggregate Bond Index is a market value-weighted index that
tracks fixed-rate, publicly placed, dollar-denominated, and non-convertible
investment grade debt issues.
ECONOMIC UPDATE_________________________________________________________________
COLUMBIA FUNDS
The US economy grew rapidly in the six-month reporting period that began
September 1, 2003 and ended February 29, 2004. A combination of factors
accounted for the economy's stronger growth in the first half of this reporting
period. A sizeable package of tax cuts, implemented in 2003, gave disposable
income a boost. Federal income taxes fell across all tax brackets. Many
taxpayers received tax rebate checks late last summer, which helped prop up
consumer spending throughout this reporting period. There are warning signs for
2004, however. Early in 2004, consumer confidence slipped. Unemployment claims
rose. Even the housing market, which has been hot for years, showed signs of
weakness.
The business sector contributed to the economy's growth as industrial production
rose over the past six months. Business spending--especially on
technology-related items--showed strength as corporate profits rose. However,
orders for durable goods declined in January, interrupting five consecutive
months of gains. Computer and electronic equipment orders rose, but
transportation equipment orders fell sharply.
US STOCKS HEADED HIGHER
The US stock market gained ground, but its rate of return slowed in the final
month of the period as disappointing economic data gave investors pause. The S&P
500 Index returned 14.59% for this six-month period as all sectors of the market
benefited from rising corporate profits. Defensive sectors, such as energy,
materials and consumer staples were the strongest performers, as investors
started to hedge their bets on the economy. Technology, which led the stock
market rally in its early stage last year, pulled back during the period.
INTERNATIONAL STOCK MARKETS REPORTED STRONG RETURNS
A rebound in economic growth and a declining US dollar helped international
stock markets post returns that were generally stronger than in the United
States. The MSCI EAFE Index, a broad measure of performance of 21 developed
equity markets in Europe, Australasia (which includes Australia and New Zealand)
and the Far East, returned 25.22%. European stock markets responded to improving
economic data and relatively low interest rates. Japan's economy continued to
report steady but modest growth. Yet its stock market cooled after a run-up in
the six months prior to this reporting period. Although the Chinese economy
cooled somewhat in 2003, its stock market soared. The MSCI China Index returned
43.07%.
BONDS DELIVER RESPECTABLE GAINS
A growing economy continued to boost investor enthusiasm for high-yield bonds.
The Merrill Lynch US High Yield, Cash Pay Only Index returned 10.32%. And as
interest rates moved lower, other segments of the bond market delivered
respectable gains. The yield on the benchmark 10-year US Treasury bond edged
downward from 4.46% to 3.97% during the period. The Lehman Brothers Aggregate
Bond Index, a broad measure of investment-grade bond performance, returned
4.92%. However, money market fund yields remained below 1%, as the Fed kept
short-term interest rates at their historical lows.
1
Sidebar:
PERFORMANCE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04 ($)
SALES CHARGE WITHOUT WITH
-----------------------------------
Class A 24,071 22,680
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Class B 23,804 23,804
-----------------------------------
Class C 23,804 23,804
-----------------------------------
Class D 23,792 23,549
-----------------------------------
Class Z 24,187 n/a
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
PERFORMANCE INFORMATION_________________________________________________________
COLUMBIA COMMON STOCK FUND
VALUE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04
(MOUNTAIN CHART)
CLASS A CLASS A
SHARES SHARES
WITHOUT WITH SALES S&P 500
SALES CHARGE CHARGE INDEX
------------ ---------- ---------
03/1994 9425.00 10000.00 10000.00
9066.00 9619.00 9564.00
9200.00 9761.00 9686.00
9377.00 9949.00 9845.00
9065.00 9618.00 9604.00
9427.00 10002.00 9919.00
9721.00 10314.00 10326.00
9482.00 10061.00 10073.00
9531.00 10113.00 10299.00
9297.00 9864.00 9925.00
9494.00 10073.00 10071.00
9576.00 10160.00 10332.00
9970.00 10578.00 10735.00
10177.00 10797.00 11052.00
10290.00 10917.00 11377.00
10623.00 11271.00 11832.00
10780.00 11438.00 12106.00
11191.00 11874.00 12508.00
11292.00 11980.00 12540.00
11682.00 12395.00 13069.00
11518.00 12220.00 13022.00
12037.00 12771.00 13593.00
12421.00 13179.00 13856.00
12654.00 13427.00 14327.00
12848.00 13632.00 14460.00
13115.00 13915.00 14599.00
13296.00 14108.00 14813.00
13570.00 14398.00 15196.00
13657.00 14490.00 15253.00
13019.00 13814.00 14579.00
13549.00 14376.00 14887.00
14080.00 14939.00 15725.00
14127.00 14989.00 16159.00
15083.00 16003.00 17381.00
14991.00 15906.00 17036.00
15489.00 16434.00 18101.00
15636.00 16590.00 18242.00
15408.00 16348.00 17493.00
15838.00 16804.00 18537.00
16759.00 17782.00 19666.00
17446.00 18511.00 20547.00
18692.00 19833.00 22182.00
18144.00 19251.00 20940.00
18919.00 20073.00 22088.00
18204.00 19315.00 21350.00
18486.00 19614.00 22339.00
18793.00 19940.00 22723.00
18904.00 20057.00 22975.00
19970.00 21189.00 24631.00
20917.00 22193.00 25893.00
20934.00 22211.00 26154.00
20523.00 21775.00 25704.00
21738.00 23064.00 26748.00
21490.00 22801.00 26464.00
18297.00 19413.00 22638.00
19247.00 20421.00 24089.00
20413.00 21658.00 26047.00
21691.00 23014.00 27626.00
23732.00 25180.00 29217.00
24821.00 26335.00 30438.00
24198.00 25674.00 29491.00
25473.00 27027.00 30671.00
25873.00 27452.00 31858.00
25182.00 26719.00 31106.00
26993.00 28640.00 32833.00
26164.00 27761.00 31808.00
25688.00 27255.00 31652.00
25210.00 26748.00 30785.00
26710.00 28340.00 32734.00
27664.00 29352.00 33398.00
29847.00 31668.00 35365.00
28710.00 30461.00 33590.00
29867.00 31689.00 32955.00
32943.00 34953.00 36178.00
31912.00 33859.00 35089.00
30549.00 32413.00 34370.00
31924.00 33871.00 35219.00
31541.00 33465.00 34669.00
33493.00 35536.00 36822.00
30984.00 32875.00 34878.00
30002.00 31833.00 34732.00
27605.00 29289.00 31995.00
28138.00 29854.00 32152.00
28670.00 30419.00 33293.00
25559.00 27118.00 30257.00
23928.00 25388.00 28338.00
25790.00 27363.00 30540.00
25906.00 27486.00 30745.00
25201.00 26739.00 29998.00
24705.00 26212.00 29704.00
23017.00 24422.00 27844.00
20810.00 22080.00 25595.00
21203.00 22497.00 26083.00
22868.00 24263.00 28084.00
23188.00 24603.00 28331.00
22562.00 23938.00 27918.00
22097.00 23445.00 27379.00
22840.00 24233.00 28408.00
21307.00 22607.00 26687.00
21331.00 22632.00 26489.00
19729.00 20932.00 24603.00
17906.00 18998.00 22687.00
18092.00 19196.00 22834.00
16187.00 17174.00 20352.00
17522.00 18591.00 22143.00
18684.00 19824.00 23447.00
17399.00 18460.00 22071.00
17002.00 18039.00 21493.00
16664.00 17680.00 21170.00
16757.00 17779.00 21375.00
18087.00 19191.00 23137.00
18916.00 20070.00 24356.00
19114.00 20280.00 24668.00
19476.00 20664.00 25102.00
20095.00 21321.00 25592.00
19733.00 20937.00 25320.00
20854.00 22126.00 26753.00
21133.00 22423.00 26989.00
21985.00 23326.00 28403.00
22231.00 23588.00 28926.00
02/2004 22680.00 24071.00 29318.00
The above illustration assumes a $10,000 investment made on March 1,1994, and
reinvestment of income and capital gains distributions. In addition, the graph
and table do not reflect a deduction of the taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. The Standard & Poor's
(S&P) 500 Index tracks the performance of 500 large-capitalization US stocks.
Unlike the fund, indices are not investments, do not incur fees or expenses and
are not professionally managed. It is not possible to invest directly in an
index. Securities in the fund may not match those in an index.
AVERAGE ANNUAL TOTAL RETURN AS OF 02/29/04 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
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INCEPTION 11/01/02 11/01/02 10/13/03 11/01/02 10/01/91
----------------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
----------------------------------------------------------------------------------------------------------------
6-month (cumulative) 12.90 6.40 12.44 7.44 12.44 11.44 12.45 10.33 13.09
----------------------------------------------------------------------------------------------------------------
1-year 36.14 28.31 34.90 29.90 34.90 33.90 34.83 32.49 36.60
----------------------------------------------------------------------------------------------------------------
5-year -1.29 -2.45 -1.51 -1.84 -1.51 -1.51 -1.52 -1.71 -1.19
----------------------------------------------------------------------------------------------------------------
10-year 9.18 8.53 9.06 9.06 9.06 9.06 9.05 8.94 9.23
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
-------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
-------------------------------------------------------------------------------------------------------
6-month (cumulative) 15.02 8.40 14.53 9.53 14.59 13.59 14.53 12.40 15.27
-------------------------------------------------------------------------------------------------------
1-year 26.36 19.09 25.29 20.29 25.35 24.35 25.20 22.96 26.87
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5-year -1.52 -2.68 -1.72 -2.05 -1.71 -1.71 -1.72 -1.92 -1.43
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10-year 8.98 8.34 8.87 8.87 8.88 8.88 8.87 8.77 9.03
All results shown assume reinvestment of distributions. The "with sales charge"
returns include the maximum 5.75% charge for class A shares, the appropriate
class B contingent deferred sales charge (CDSC) for the holding period after
purchase as follows: through first year - 5%, second year - 4%, third year - 3%,
fourth year - 3%, fifth year - 2%, sixth year - 1%, and thereafter - 0%. Class C
has a CDSC of 1% which is applicable for the first year only. Class D has a
sales charge of 1% and also carries a CDSC of 1% that is applied to shares sold
within the first year after they are purchased.
Effective October 13, 2003, class D shares are closed to all new investors and
new accounts. Existing class D shareholders will be able to make additional
purchases at any time. In addition, the class D sales charge of 1% is waived
after October 13, 2003. Performance for different share classes will vary based
on differences in sales charges and fees associated with each class.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Classes A, B, and D (newer class shares) share performance information includes
returns of the fund's class Z shares (the oldest existing fund class) for
periods prior to the inception of the newer class shares. The returns for class
C include the returns of class B prior to 10/13/03, the date on which class C
was initially offered by the fund. The returns shown for class C also include
the performance of class Z prior to the inception of class B (11/01/02). Class Z
share returns are not restated to reflect any expense differential (e.g., Rule
12b-1 fees) between class Z shares and the newer class shares. Had the expense
differential been reflected, the returns for the periods prior to the inception
of classes A, B, C, and D would have been lower.
2
Sidebar:
SUMMARY
o FOR THE SIX-MONTH PERIOD THAT ENDED FEBRUARY 29, 2004, THE FUND'S CLASS A
SHARES RETURNED 12.90% WITHOUT SALES CHARGE.
o THE FUND'S RETURN WAS LESS THAN THE S&P 500 INDEX BUT SLIGHTLY BETTER THAN
THE AVERAGE OF THE LIPPER LARGE CAP CORE FUNDS CATEGORY.
o STRONG STOCK SELECTION IN HEALTH CARE, CONSUMER STAPLES AND TECHNOLOGY
SECTORS HELPED THE FUND'S PERFORMANCE. HOWEVER, HIGHER-THAN-INDEX EXPOSURE TO
INDUSTRIAL STOCKS AND CONSUMER CYCLICALS DETRACTED SOMEWHAT FROM THE FUND'S
RETURN.
[Illustration of 2 arrows pointing up]
CLASS A SHARES S&P 500 INDEX
12.90% 14.59%
OBJECTIVE
Seeks capital appreciation
TOTAL NET ASSETS
$415.6 million
NET ASSET VALUE PER SHARE AS OF 02/29/04 ($)
Class A 19.41
---------------------------
Class B 19.25
---------------------------
Class C 19.25
---------------------------
Class D 19.24
---------------------------
Class Z 19.41
DISTRIBUTIONS DECLARED PER SHARE 09/01/03 -- 02/29/04 ($)
Class A 0.03
--------------------------
Class B 0.00
--------------------------
Class C 0.00
--------------------------
Class D 0.00
--------------------------
Class Z 0.10
PORTFOLIO MANAGERS' REPORT______________________________________________________
COLUMBIA COMMON STOCK FUND
For the six-month period ended February 29, 2004, Columbia Common Stock Fund
class A shares returned 12.90% without sales charge. This was less than the S&P
500 Index, which returned 14.59% over the same period. The fund's performance
was slightly better than the average return of its peer group, the Lipper Large
Cap Core Funds Category which gained 12.49%.1 The fund's above-average
investment in industrials relative to the S&P 500 hurt performance when that
sector lagged from late December through early February. The fund's above-index
weight in consumer cyclical stocks also was a slight drag on performance.
However, good stock selection in financials, consumer staples, technology and
health care sectors helped overall returns.
BULL MARKET STILL STRONG
The stock market continued to rise during the period, powered by tax cuts,
historically low interest rates and a global economic recovery. Rapid growth in
China and India increased demand for industrial commodities, and the industrials
sector rebounded early in the period. However, industrial and technology stocks
began to lose steam late in the period. We viewed this as the beginning of a
transition in investor sentiment, as signs of concern over how long the good
times would last began to emerge.
THE FUND WAS POSITIONED FOR A RECOVERING ECONOMY
During the period the portfolio was positioned for a recovering economy, with
higher allocations in economically-sensitive sectors such as industrials,
information technology, basic materials and consumer cyclicals.
Our decision to overweight these sectors relative to the S&P 500 Index produced
mixed results. Our investments in basic materials stocks did well, while
industrial and consumer cyclical stocks detracted from performance. Although
industrial stocks 3M, Dover and General Electric all had positive returns for
the period, they failed to keep pace with their industry peers and the S&P 500
Index. We significantly reduced our position in Dover during the period.
In technology, where we focused on broadband, wireless information access and
digital media, the fund benefited from good stock selection. Our positions in
QUALCOMM and Broadcom both gained more than 45%, while Motorola rose 73% during
the period. Motorola, the leading supplier of wireless infrastructure equipment
and the number two manufacturer of wireless handsets, benefited from growth in
cell phone usage in a variety of international markets. On the down side,
Seagate Technology fared poorly when its earnings disappointed overly hopeful
investors.
1 Lipper Inc., a widely respected data provider in the industry, calculates
an average total return for mutual funds with similar investment
objectives as those of the fund.
3
Sidebar:
TOP 5 SECTORS AS OF 02/29/04 (%)
Information technology 20.8
----------------------------------
Financials 19.6
----------------------------------
Industrials 14.0
----------------------------------
Consumer discretionary 11.2
----------------------------------
Health Care 10.2
TOP 10 HOLDINGS AS OF 02/29/04 (%)
Wal-mart Stores 4.2
----------------------------------
Citigroup 3.8
----------------------------------
General Electric 3.4
----------------------------------
Pfizer 3.2
----------------------------------
Microsoft 2.8
----------------------------------
Dow Chemical 2.3
----------------------------------
Exxon Mobil 2.3
----------------------------------
American Express 1.9
----------------------------------
American International Group 1.7
----------------------------------
Bank One 1.7
HOLDINGS DISCUSSED IN THIS REPORT AS OF 02/29/04 (%)
3M 1.0
----------------------------------
Dover 0.0
----------------------------------
General Electric 3.4
----------------------------------
QUALCOMM 0.8
----------------------------------
Broadcom 0.5
----------------------------------
Motorola 0.5
----------------------------------
Seagate Technology 0.6
----------------------------------
Citigroup 3.8
----------------------------------
Bank One 1.7
----------------------------------
American Express 1.9
----------------------------------
Wal-Mart Stores 4.2
----------------------------------
Altria Group 1.5
----------------------------------
Shire Pharmaceuticals Group 0.5
Your fund is actively managed and the composition of its portfolio will change
over time. Information provided is calculated as a percentage of net assets.
________________________________________________________________________________
COLUMBIA COMMON STOCK FUND
We also missed out on strong gains from telecommunications and utilities sectors
during the period. Although both have relatively small weights in the index, the
sectors rebounded during the period as investors were willing to buy back into
stocks that had been severely beaten down during the recent bear market.
STOCK SELECTION IN DEFENSIVE SECTORS HELPED PERFORMANCE
Although the fund was slightly underweight in financials relative to the index,
strong stock selection in the sector helped performance. Our holdings in
Citigroup, Bank One and American Express all gained ground as the economy picked
up and interest rates remained low. Stock selection was also a plus in the
consumer staples and health care sectors. Wal-Mart, our largest holding, and
consumer staples giant Altria Group both delivered attractive returns. Shire
Pharmaceuticals Group gained 33% as investors became more convinced of its
growth prospects.
PUTTING EXPECTATIONS IN PERSPECTIVE
Looking ahead, we anticipate lower earnings growth rates in 2004, largely
because 2003 was so strong. We believe that the economy has the potential to
continue to expand, but future growth is likely to be somewhat slower, as we
move from economic recovery to economic growth. We have some concerns about weak
new job figures, but believe that other factors, such as low interest rates and
growing global economic strength, should help market conditions remain
favorable. We continue to position the portfolio for a positive economic
environment, but may begin to shift our allocations to favor companies that
would do well in a slower growing economy.
Columbia Common Stock Fund is managed by a group of managers from Columbia's
large cap core team:
/s/ Scott J. Drysdale /s/ Ronald F. Gibbs
Scott J. Drysdale Ronald F. Gibbs, CFA
/s/ Trent E. Nevills /s/ Guy W. Pope
Trent E. Nevills Guy W. Pope, CFA
An investment in the fund may present certain risks, including stock market
fluctuations that occur in response to economic and business developments.
4
Sidebar:
PERFORMANCE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04 ($)
SALES CHARGE WITHOUT WITH
------------------------------------
Class A 20,010 18,862
------------------------------------
Class B 19,809 19,809
------------------------------------
Class C 19,765 19,765
------------------------------------
Class D 19,832 19,636
------------------------------------
Class G 19,839 19,839
------------------------------------
Class Z 20,107 n/a
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
PERFORMANCE INFORMATION ________________________________________________________
COLUMBIA GROWTH FUND
VALUE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04
(MOUNTAIN CHART)
CLASS A CLASS A RUSSELL
SHARES SHARES 1000
WITHOUT WITH SALES S&P 500 GROWTH
SALES CHARGE CHARGE INDEX INDEX
------------ ---------- --------- --------
03/1994 9425.00 10000.00 10000.00 10000.00
8865.00 9406.00 9564.00 9517.00
8956.00 9502.00 9686.00 9561.00
8983.00 9531.00 9845.00 9706.00
8646.00 9173.00 9604.00 9419.00
9011.00 9561.00 9919.00 9741.00
9356.00 9926.00 10326.00 10283.00
9129.00 9686.00 10073.00 10145.00
9300.00 9867.00 10299.00 10383.00
8994.00 9543.00 9925.00 10050.00
9121.00 9677.00 10071.00 10219.00
9143.00 9700.00 10332.00 10437.00
9587.00 10172.00 10735.00 10875.00
9932.00 10538.00 11052.00 11192.00
10071.00 10685.00 11377.00 11437.00
10299.00 10927.00 11832.00 11835.00
10688.00 11340.00 12106.00 12292.00
11110.00 11788.00 12508.00 12803.00
11305.00 11994.00 12540.00 12818.00
11602.00 12310.00 13069.00 13408.00
11305.00 11995.00 13022.00 13418.00
12010.00 12743.00 13593.00 13940.00
12129.00 12869.00 13856.00 14019.00
12255.00 13003.00 14327.00 14487.00
12817.00 13599.00 14460.00 14753.00
12772.00 13551.00 14599.00 14772.00
13195.00 13999.00 14813.00 15160.00
13577.00 14405.00 15196.00 15689.00
13573.00 14401.00 15253.00 15711.00
12556.00 13322.00 14579.00 14791.00
12983.00 13775.00 14887.00 15172.00
13743.00 14581.00 15725.00 16277.00
13986.00 14839.00 16159.00 16374.00
14839.00 15745.00 17381.00 17604.00
14651.00 15545.00 17036.00 17259.00
15165.00 16090.00 18101.00 18469.00
15179.00 16105.00 18242.00 18343.00
14406.00 15285.00 17493.00 17351.00
15121.00 16043.00 18537.00 18503.00
16150.00 17136.00 19666.00 19839.00
16822.00 17849.00 20547.00 20633.00
18314.00 19432.00 22182.00 22457.00
17642.00 18719.00 20940.00 21143.00
18343.00 19462.00 22088.00 22183.00
17880.00 18971.00 21350.00 21362.00
18376.00 19497.00 22339.00 22270.00
18504.00 19633.00 22723.00 22520.00
19000.00 20159.00 22975.00 23193.00
20397.00 21641.00 24631.00 24937.00
21362.00 22665.00 25893.00 25932.00
21426.00 22733.00 26154.00 26290.00
20909.00 22185.00 25704.00 25543.00
22494.00 23867.00 26748.00 27107.00
22166.00 23518.00 26464.00 26928.00
18517.00 19647.00 22638.00 22886.00
19208.00 20380.00 24089.00 24643.00
20286.00 21523.00 26047.00 26625.00
21622.00 22942.00 27626.00 28651.00
24124.00 25596.00 29217.00 31235.00
25644.00 27208.00 30438.00 33069.00
24793.00 26305.00 29491.00 31557.00
26297.00 27902.00 30671.00 33221.00
26347.00 27955.00 31858.00 33264.00
25689.00 27256.00 31106.00 32243.00
27636.00 29322.00 32833.00 34500.00
26671.00 28299.00 31808.00 33402.00
25941.00 27523.00 31652.00 33947.00
25458.00 27011.00 30785.00 33234.00
26884.00 28524.00 32734.00 35743.00
28177.00 29896.00 33398.00 37673.00
30403.00 32258.00 35365.00 41591.00
29366.00 31158.00 33590.00 39641.00
31031.00 32924.00 32955.00 41579.00
34320.00 36414.00 36178.00 44556.00
32920.00 34929.00 35089.00 42435.00
30843.00 32725.00 34370.00 40297.00
33579.00 35627.00 35219.00 43351.00
33397.00 35435.00 34669.00 41543.00
36089.00 38291.00 36822.00 45303.00
32931.00 34940.00 34878.00 41017.00
30979.00 32869.00 34732.00 39077.00
27305.00 28970.00 31995.00 33317.00
27987.00 29695.00 32152.00 32264.00
29574.00 31378.00 33293.00 34494.00
24860.00 26377.00 30257.00 28637.00
22150.00 23502.00 28338.00 25521.00
24923.00 26444.00 30540.00 28750.00
24657.00 26161.00 30745.00 28327.00
24119.00 25591.00 29998.00 27670.00
23084.00 24493.00 29704.00 26978.00
21095.00 22382.00 27844.00 24771.00
18810.00 19958.00 25595.00 22299.00
19871.00 21083.00 26083.00 23470.00
21951.00 23291.00 28084.00 25725.00
21998.00 23340.00 28331.00 25676.00
21093.00 22380.00 27918.00 25222.00
19978.00 21196.00 27379.00 24175.00
20743.00 22008.00 28408.00 25012.00
19009.00 20168.00 26687.00 22971.00
18784.00 19930.00 26489.00 22415.00
16912.00 17943.00 24603.00 20341.00
15283.00 16215.00 22687.00 19223.00
15515.00 16462.00 22834.00 19280.00
13930.00 14779.00 20352.00 17281.00
15101.00 16022.00 22143.00 18866.00
15775.00 16737.00 23447.00 19890.00
14617.00 15508.00 22071.00 18516.00
14294.00 15166.00 21493.00 18066.00
14209.00 15076.00 21170.00 17983.00
14441.00 15322.00 21375.00 18317.00
15550.00 16499.00 23137.00 19671.00
16307.00 17302.00 24356.00 20652.00
16469.00 17473.00 24668.00 20937.00
16826.00 17853.00 25102.00 21459.00
17269.00 18322.00 25592.00 21993.00
16847.00 17875.00 25320.00 21758.00
17767.00 18851.00 26753.00 22980.00
17991.00 19089.00 26989.00 23222.00
18412.00 19535.00 28403.00 24025.00
18742.00 19885.00 28926.00 24515.00
02/2004 18862.00 20010.00 29318.00 24668.00
The above illustration assumes a $10,000 investment made on March 1, 1994, and
reinvestment of income and capital gains distributions. In addition, the graph
and table do not reflect a deduction of the taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. The S&P 500 Index tracks
the performance of 500 large-capitalization US stocks. The Russell 1000 Growth
Index is an unmanaged index that measures the performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth values
(the Russell 1000 Index measures the performance of the 1000 largest US
companies based on total market capitalization). Unlike the fund, indices are
not investments, do not incur fees or expenses and are not professionally
managed. It is not possible to invest directly in an index. Securities in the
fund may not match those in an index.
AVERAGE ANNUAL TOTAL RETURN AS OF 02/29/04 (%)
· Enlarge/Download Table
SHARE CLASS A B C D G Z
-------------------------------------------------------------------------------------------------------------------
INCEPTION 11/01/02 11/01/02 10/13/03 11/01/02 11/01/02 6/16/67
-------------------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
-------------------------------------------------------------------------------------------------------------------
6-month (cumulative) 9.22 2.94 8.75 3.75 8.50 7.50 8.82 6.75 8.82 3.82 9.35
-------------------------------------------------------------------------------------------------------------------
1-year 32.74 25.11 31.67 26.67 31.37 30.37 31.82 29.51 31.87 26.87 33.25
-------------------------------------------------------------------------------------------------------------------
5-year -5.32 -6.44 -5.51 -5.82 -5.56 -5.56 -5.49 -5.68 -5.49 -5.95 -5.23
-------------------------------------------------------------------------------------------------------------------
10-year 7.18 6.55 7.07 7.07 7.05 7.05 7.09 6.98 7.09 7.09 7.23
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
· Enlarge/Download Table
SHARE CLASS A B C D G Z
--------------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
--------------------------------------------------------------------------------------------------------------
6-month (cumulative) 11.80 5.37 11.29 6.29 11.08 10.08 11.42 9.32 11.46 6.46 12.02
--------------------------------------------------------------------------------------------------------------
1-year 25.97 18.73 24.98 19.98 24.74 23.74 25.07 22.83 25.11 20.11 26.47
--------------------------------------------------------------------------------------------------------------
5-year -5.26 -6.37 -5.42 -5.73 -5.46 -5.46 -5.41 -5.60 -5.39 -5.85 -5.17
--------------------------------------------------------------------------------------------------------------
10-year 7.21 6.58 7.12 7.12 7.10 7.10 7.13 7.02 7.14 7.14 7.26
All results shown assume reinvestment of distributions. The "with sales charge"
returns include the maximum 5.75% charge for class A shares, the appropriate
class B contingent deferred sales charge (CDSC) for the holding period after
purchase as follows: through first year - 5%, second year - 4%, third year - 3%,
fourth year - 3%, fifth year - 2%, sixth year - 1%, and thereafter - 0%. Class C
has a CDSC of 1% which is applicable for the first year only. Class D has a
sales charge of 1% and also carries a CDSC of 1% that is applied to shares sold
within the first year after they are purchased. For class G shares, the CDSC for
the holding period after purchase is as follows: through first year - 5%, second
year - 4%, third year - 4%, fourth year - 4%, fifth year - 3%, sixth year - 2%,
seventh year - 1%, thereafter - 0%.
Effective October 13, 2003, class D shares are closed to all new investors and
new accounts. Existing class D shareholders will be able to make additional
purchases at any time. In addition, the class D sales charge of 1% is waived
after October 13, 2003. Performance for different share classes will vary based
on differences in sales charges and fees associated with each class.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Classes A, B, D and G (newer class shares) share performance information
includes returns of the fund's class Z shares (the oldest existing fund class)
for periods prior to the inception of the newer class shares. The returns for
class C include the returns of class B prior to 10/13/03, the date on which
class C was initially offered by the fund. The returns shown for class C also
include the performance of class Z prior to the inception of class B (11/01/02).
Class Z share returns are not restated to reflect any expense differential
(e.g., Rule 12b-1 fees) between class Z shares and the newer class shares. Had
the expense differential been reflected, the returns for the periods prior to
the inception of classes A, B, C, D and G would have been lower.
5
Sidebar:
SUMMARY
o FOR THE SIX-MONTH PERIOD THAT ENDED FEBRUARY 29, 2004, THE FUND'S CLASS A
SHARES RETURNED 9.22% WITHOUT SALES CHARGE.
o THE FUND TRAILED THE RUSSELL 1000 GROWTH AND S&P 500 INDICES, AS WELL AS THE
LIPPER LARGE CAP GROWTH FUNDS CATEGORY AVERAGE.
o WEAK STOCK SELECTION IN THE TECHNOLOGY SECTOR AS WELL AS LACKLUSTER RETURNS
FROM MEDIA STOCKS DETRACTED FROM RELATIVE PERFORMANCE.
[Illustration of 2 arrows pointing up]
RUSSELL 1000
CLASS A SHARES GROWTH INDEX
9.22% 12.17%
OBJECTIVE
Seeks capital appreciation
TOTAL NET ASSETS
$960.2 million
NET ASSET VALUE PER SHARE AS OF 02/29/04 ($)
Class A 26.88
---------------------------
Class B 26.61
---------------------------
Class C 26.55
---------------------------
Class D 26.64
---------------------------
Class G 26.65
---------------------------
Class Z 27.01
DISTRIBUTIONS DECLARED PER SHARE 09/01/03 - 02/29/04 ($)
Class A 0.00
---------------------------
Class B 0.00
---------------------------
Class C 0.00
---------------------------
Class D 0.00
---------------------------
Class G 0.00
---------------------------
Class Z 0.00
PORTFOLIO MANAGERS' REPORT______________________________________________________
COLUMBIA GROWTH FUND
For the six-month period ended February 29, 2004, Columbia Growth Fund's class A
shares returned 9.22% without sales charge. The fund came out behind the Russell
1000 Growth Index and S&P 500 Index, which returned 12.17% and 14.59%,
respectively, over the same period. The fund also trailed the Lipper Large Cap
Growth Funds Category average, which returned 9.91%.1 Stock selection in the
technology sector and lackluster returns from media holdings hurt the fund's
return relative to its benchmarks, and we believe the same factors hurt the
fund's return relative to its peer group.
CYCLICAL BIAS IN AN IMPROVING ECONOMY
Throughout the period, we favored cyclical stocks--particularly technology,
industrial and media names--which we believed would benefit from a strengthening
economy. Across sectors, we targeted large companies with strong competitive
positions, high and sustainable profits, good balance sheets and above-average
sales growth. As the stock market rallied, these high quality large company
stocks did well, but they trailed smaller company issues with less dependable
earnings.
STRONG GAINS FROM HEALTH CARE, INDUSTRIALS
Health care, industrials and materials stocks were among the fund's best
performers. Within health care, our focus on medical device companies paid off.
St. Jude Medical, which makes cardiac rhythm management products, and Boston
Scientific, which makes drug-coated stents, both posted robust gains. Another
standout was Caremark Rx, a pharmacy benefits manager, that began to reap
benefits from a recently announced merger. The fund sustained losses from its
investment in Gilead Sciences, a biotechnology company with short-term inventory
issues, and Biovail, a generic drug company, which we sold after accounting
problems surfaced.
Industrials and materials stocks benefited from increased demand and higher
commodity prices. We boosted the fund's stake, targeting global companies
positioned to take advantage of exploding growth in countries such as China. New
purchases included 3M, Alcoa and Praxair, an industrial gas company. Among the
top gainers were Tyco International, which rebounded under new management, and
Alcoa, which rallied amid rising demand and tight bauxite supplies. Bauxite is
the principal ore used in manufacturing aluminum.
DISAPPOINTING TECHNOLOGY AND MEDIA RETURNS
Corporations continued to limit discretionary spending, which hindered
technology and media sales. In technology, we focused on themes such as the
spread of broadband and WiFi (the wireless Internet), the growing
1 Lipper Inc., a widely respected data provider in the industry, calculates an
average total return for mutual funds with similar investment objectives as
the fund.
6
Sidebar:
TOP 5 SECTORS AS OF 02/29/04 (%)
Information technology 31.7
----------------------------------
Health care 19.7
----------------------------------
Consumer discretionary 15.1
----------------------------------
Industrials 12.8
----------------------------------
Consumer staples 9.8
TOP 10 HOLDINGS AS OF 02/29/04 (%)
General Electric 6.4
----------------------------------
Pfizer 4.9
----------------------------------
Intel 4.1
----------------------------------
Microsoft 3.8
----------------------------------
Cisco Systems 3.5
----------------------------------
Wal-mart Stores 2.6
----------------------------------
Amgen 2.5
----------------------------------
Teva Pharmaceutical Industries 2.4
----------------------------------
Caremark Rx 2.0
----------------------------------
Viacom 2.0
HOLDINGS DISCUSSED IN THIS REPORT AS OF 02/29/04 (%)
St. Jude Medical 1.3
----------------------------------
Boston Scientific 1.5
----------------------------------
Caremark Rx 2.0
----------------------------------
Gilead Sciences 1.3
----------------------------------
3M 1.3
----------------------------------
Alcoa 1.6
----------------------------------
Praxair 1.5
----------------------------------
Tyco International 1.7
----------------------------------
Cisco Systems 3.5
----------------------------------
QUALCOMM 1.8
----------------------------------
QLogic 0.4
----------------------------------
Paychex 0.9
----------------------------------
Viacom 2.0
Your fund is actively managed and the composition of its portfolio will change
over time. Information provided is calculated as a percentage of net assets.
________________________________________________________________________________
COLUMBIA GROWTH FUND
popularity of notebook computers, advances in computer graphics, increased
spending on data networking and growing cell phone handset sales. Both Cisco
Systems, a leader in data networking, and QUALCOMM, which makes semiconductors
for cell phones, rallied nicely. However, QLogic and Seagate Technology, which
supply parts, peripherals and other components to technology systems companies,
declined amid earnings shortfalls. We reduced our stake in QLogic and sold
Seagate. Our investment in Paychex, a company that provides payroll and
processing services for small businesses, was a disappointment. The stock
suffered as job growth remained weak.
Media stocks such as Liberty Media (no longer in the portfolio) and Viacom
faltered as advertising spending failed to pick up as quickly as we expected in
a strengthening economy. Nevertheless, media stocks started to turn around late
in the period. We remain optimistic that the industry will benefit as
year-over-year earnings comparisons improve and the summer Olympics and
Presidential election bolster ad spending.
FAVORABLE OUTLOOK FOR LARGE-CAP STOCKS
As the US economic expansion moves into its later stages, we expect large
company and higher quality stocks to lead the market. Most large companies have
global businesses that can benefit from continued strong economic growth in
countries such as China and India. As the rate of US economic growth slows, we
plan to shift the portfolio's bias away from cyclical stocks and toward stocks
with less economic sensitivity and records of more consistent earnings growth.
Alexander S. Macmillan, CFA, has managed or
co-managed Columbia Growth Fund since 1992 and has
been with the advisor and its predecessors since
1989.
/s/ Alexander S. Macmillan
Paul J. Berlinquet has co-managed the fund since
October 2003 and has been with the advisor and its
predecessors since 2003.
/s/ Paul J. Berlinquet
An investment in the fund may present certain risks, including stock market
fluctuations that occur in response to economic and business developments. The
fund may invest in foreign securities, which have special risks, including
political or economic instability and higher transaction costs; different
regulations, accounting standards, trading practices and levels of information;
and currency exchange rate fluctuations.
The fund's approach offers the potential for long-term growth, but also involves
the possibility of losses due to the sensitivity of growth stock prices to
changes in current or expected earnings.
7
Sidebar:
PERFORMANCE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04 ($)
SALES CHARGE WITHOUT WITH
-----------------------------------
Class A 16,456 15,515
-----------------------------------
Class B 16,228 16,228
-----------------------------------
Class C 16,276 16,276
-----------------------------------
Class D 16,336 16,169
-----------------------------------
Class Z 16,595 n/a
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
PERFORMANCE INFORMATION_________________________________________________________
COLUMBIA INTERNATIONAL STOCK FUND
VALUE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04
(MOUNTAIN CHART)
CLASS A
SHARES
WITHOUT CLASS A MSCI ALL
SALES SHARES WITH COUNTRY WORLD MSCI EAFE
CHARGE SALES CHARGE EX US INDEX INDEX
-------- ------------- ------------- ---------
03/1994 10000.00 9425.00 10000.00 10000.00
9549.00 9000.00 9542.00 9569.00
9800.00 9237.00 9865.00 9975.00
9711.00 9153.00 9868.00 9918.00
9756.00 9195.00 9938.00 10058.00
9793.00 9230.00 10100.00 10154.00
10082.00 9502.00 10440.00 10395.00
9742.00 9182.00 10181.00 10067.00
10045.00 9467.00 10455.00 10403.00
9527.00 8980.00 9951.00 9902.00
9350.00 8813.00 9928.00 9965.00
8636.00 8139.00 9477.00 9582.00
8486.00 7998.00 9426.00 9554.00
8809.00 8302.00 9959.00 10150.00
9005.00 8487.00 10347.00 10532.00
8899.00 8387.00 10301.00 10407.00
8862.00 8352.00 10158.00 10225.00
9448.00 8905.00 10734.00 10862.00
9291.00 8756.00 10362.00 10448.00
9516.00 8969.00 10539.00 10652.00
9411.00 8870.00 10258.00 10365.00
9599.00 9047.00 10499.00 10653.00
9832.00 9267.00 10914.00 11083.00
9960.00 9387.00 11064.00 11128.00
9960.00 9387.00 11064.00 11166.00
10329.00 9735.00 11271.00 11403.00
10720.00 10104.00 11612.00 11734.00
10893.00 10266.00 11438.00 11518.00
11089.00 10451.00 11497.00 11583.00
10517.00 9912.00 11115.00 11245.00
10682.00 10067.00 11180.00 11269.00
10953.00 10323.00 11458.00 11569.00
10893.00 10266.00 11343.00 11451.00
11314.00 10664.00 11781.00 11907.00
11464.00 10804.00 11644.00 11753.00
11456.00 10797.00 11430.00 11342.00
11779.00 11101.00 11639.00 11528.00
11894.00 11210.00 11615.00 11570.00
12175.00 11475.00 11714.00 11631.00
12877.00 12137.00 12436.00 12388.00
13489.00 12713.00 13123.00 13071.00
13894.00 13095.00 13388.00 13282.00
12818.00 12081.00 12334.00 12290.00
13695.00 12908.00 13001.00 12978.00
12745.00 12012.00 11894.00 11980.00
12687.00 11958.00 11745.00 11858.00
12779.00 12044.00 11880.00 11961.00
12881.00 12140.00 12235.00 12508.00
13404.00 12633.00 13051.00 13311.00
13861.00 13064.00 13503.00 13721.00
14206.00 13389.00 13600.00 13829.00
14402.00 13574.00 13353.00 13762.00
14448.00 13617.00 13303.00 13866.00
14532.00 13696.00 13430.00 14006.00
12554.00 11832.00 11536.00 12271.00
11892.00 11209.00 11293.00 11894.00
12853.00 12114.00 12476.00 13133.00
13749.00 12959.00 13146.00 13806.00
14419.00 13590.00 13598.00 14350.00
14857.00 14003.00 13583.00 14307.00
14493.00 13660.00 13279.00 13966.00
14867.00 14012.00 13921.00 14549.00
15325.00 14444.00 14617.00 15138.00
14784.00 13934.00 13930.00 14358.00
15540.00 14646.00 14570.00 14918.00
16174.00 15244.00 14911.00 15361.00
16528.00 15577.00 14963.00 15418.00
16873.00 15903.00 15064.00 15574.00
17788.00 16765.00 15624.00 16158.00
20027.00 18876.00 16249.00 16719.00
22771.00 21462.00 17799.00 18220.00
21682.00 20436.00 16833.00 17063.00
23120.00 21791.00 17287.00 17522.00
22741.00 21433.00 17937.00 18202.00
20853.00 19654.00 16936.00 17244.00
19237.00 18131.00 16503.00 16824.00
20036.00 18883.00 17206.00 17481.00
19118.00 18019.00 16526.00 16749.00
19697.00 18565.00 16731.00 16895.00
18480.00 17417.00 15802.00 16072.00
17652.00 16637.00 15300.00 15693.00
16854.00 15885.00 14615.00 15104.00
17618.00 16605.00 15113.00 15640.00
17522.00 16515.00 15340.00 15633.00
16580.00 15626.00 14125.00 14460.00
15434.00 14547.00 13126.00 13496.00
16388.00 15446.00 14019.00 14434.00
16137.00 15209.00 13632.00 13924.00
15613.00 14715.00 13110.00 13355.00
15101.00 14232.00 12817.00 13112.00
14814.00 13962.00 12499.00 12780.00
13347.00 12580.00 11173.00 11485.00
13717.00 12928.00 11486.00 11779.00
14039.00 13232.00 12011.00 12214.00
14364.00 13538.00 12166.00 12286.00
13730.00 12941.00 11645.00 14468.00
13826.00 13031.00 11729.00 11715.00
14471.00 13638.00 12352.00 12405.00
14543.00 13707.00 12447.00 12429.00
14687.00 13842.00 12583.00 12587.00
14293.00 13471.00 12039.00 12086.00
13064.00 12313.00 10865.00 10893.00
12945.00 12201.00 10866.00 10868.00
11620.00 10951.00 9715.00 9701.00
12041.00 11349.00 10235.00 10222.00
12425.00 11711.00 10728.00 10686.00
12054.00 11361.00 10382.00 10327.00
11514.00 10852.00 10018.00 9896.00
11346.00 10693.00 9814.00 9670.00
11262.00 10614.00 9624.00 9480.00
12041.00 11349.00 10552.00 10409.00
12701.00 11971.00 11224.00 11040.00
12928.00 12185.00 11535.00 11307.00
13276.00 12513.00 11842.00 11581.00
13600.00 12818.00 12194.00 11860.00
13971.00 13168.00 12536.00 12225.00
14799.00 13948.00 13348.00 12987.00
14942.00 14083.00 13639.00 13275.00
15937.00 15021.00 14680.00 14312.00
16261.00 15326.00 14916.00 14514.00
02/2004 16456.00 15515.00 15297.00 14852.00
The above illustration assumes a $10,000 investment made on March 1, 1994, and
reinvestment of income and capital gains distributions. In addition, the graph
and table do not reflect a deduction of the taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. The Morgan Stanley
Capital International (MSCI) All Country (AC) World ex US Index is an unmanaged
index representing both developed and emerging markets of 49 countries,
excluding the U.S. The MSCI EAFE Index, also unmanaged, is a market-weighted
index composed of companies representative of the market structure of 20
developed market countries in Europe, Australia, and the Far East. The MSCI EAFE
Index is the former benchmark of the fund. Unlike the fund, indices are not
investments, do not incur fees or expenses and are not professionally managed.
It is not possible to invest directly in an index. Securities in the fund may
not match those in an index.
AVERAGE ANNUAL TOTAL RETURN AS OF 02/29/04 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
------------------------------------------------------------------------------------------------------------
INCEPTION 11/01/02 11/01/02 10/13/03 11/01/02 10/01/92
------------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
------------------------------------------------------------------------------------------------------------
6-month (cumulative) 21.08 14.11 20.57 15.57 20.93 19.93 20.94 18.78 21.46
------------------------------------------------------------------------------------------------------------
1-year 45.14 36.79 43.89 38.89 44.31 43.31 44.69 42.18 46.21
------------------------------------------------------------------------------------------------------------
5-year 2.58 1.37 2.29 1.97 2.35 2.35 2.43 2.22 2.75
------------------------------------------------------------------------------------------------------------
10-year 5.11 4.49 4.96 4.96 4.99 4.99 5.03 4.92 5.20
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
------------------------------------------------------------------------------------------------------
6-month (cumulative) 23.28 16.20 22.71 17.71 22.80 21.80 22.93 20.69 23.50
------------------------------------------------------------------------------------------------------
1-year 32.24 24.64 31.04 26.04 31.14 30.14 31.64 29.35 33.08
------------------------------------------------------------------------------------------------------
5-year 2.02 0.82 1.77 1.45 1.79 1.79 1.86 1.65 2.15
------------------------------------------------------------------------------------------------------
10-year 5.21 4.59 5.08 5.08 5.09 5.09 5.13 5.03 5.28
All results shown assume reinvestment of distributions. The "with sales charge"
returns include the maximum 5.75% charge for class A shares and the appropriate
class B contingent deferred sales charge (CDSC) for the holding period after
purchase as follows: through first year - 5%, second year - 4%, third year - 3%,
fourth year - 3%, fifth year - 2%, sixth year - 1%, and thereafter - 0%. Class C
has a CDSC of 1% which is applicable for the first year only. Class D has a
sales charge of 1% and also carries a CDSC of 1% that is applied to shares sold
within the first year after they are purchased.
Effective October 13, 2003, class D shares are closed to all new investors and
new accounts. Existing class D shareholders will be able to make additional
purchases at any time. In addition, the class D sales charge of 1% is waived
after October 13, 2003. Performance for different share classes will vary based
on differences in sales charges and fees associated with each class.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Classes A, B, and D (newer class shares) share performance information includes
returns of the fund's class Z shares (the oldest existing fund class) for
periods prior to the inception of the newer class shares. The returns for class
C include the returns of class B prior to 10/13/03, the date on which class C
was initially offered by the fund. The returns shown for class C also include
the performance of class Z prior to the inception of class B (11/01/02). Class Z
share returns are not restated to reflect any expense differential (e.g., Rule
12b-1 fees) between class Z shares and the newer class shares. Had the expense
differential been reflected, the returns for the periods prior to the inception
of classes A, B, C and D would have been lower.
8
Sidebar:
SUMMARY
o FOR THE SIX-MONTH PERIOD THAT ENDED FEBRUARY 29, 2004, THE FUND'S CLASS A
SHARES RETURNED 21.08% WITHOUT SALES CHARGE.
o THE FUND'S RETURN WAS LESS THAN ITS BENCHMARK, THE MSCI AC WORLD EX US INDEX.
o THE FUND'S PERFORMANCE WAS HINDERED BY A RELATIVELY SMALL COMMITMENT TO
GERMAN SECURITIES, WHICH WERE STRONG PERFORMERS DURING THE PERIOD.
[Illustration of 2 arrows pointing up]
MSCI AC WORLD
CLASS A SHARES EX US INDEX
21.08% 25.41%
OBJECTIVE
Seeks long-term
capital appreciation
TOTAL NET ASSETS
$542.9 million
NET ASSET VALUE PER SHARE
AS OF 02/29/04 ($)
Class A 13.73
---------------------------
Class B 13.54
---------------------------
Class C 13.58
---------------------------
Class D 13.63
---------------------------
Class Z 13.80
DISTRIBUTIONS DECLARED PER SHARE
09/01/03 - 02/29/04 ($)
Class A 0.00
--------------------------
Class B 0.00
--------------------------
Class C 0.00
--------------------------
Class D 0.00
--------------------------
Class Z 0.04
PORTFOLIO MANAGER'S REPORT______________________________________________________
COLUMBIA INTERNATIONAL STOCK FUND
For the six-month period ended February 29, 2004, Columbia International Stock
Fund class A shares returned 21.08% without sales charge. The fund's return was
strong as prospects for improved global economic growth drove international
stock markets higher over the six-month reporting period. However, the fund
trailed the MSCI AC World ex US Index, which returned 25.41% during the same
period. The portfolio underperformed its benchmark principally because of a
relatively small commitment to German securities.
GERMAN STOCKS REBOUNDED
We limited our investment in German stocks because the prospects for the German
market appeared unattractive at the beginning of the period and indeed, the
German stock market had performed poorly prior to this reporting period in the
first half of 2003. However, German stocks rebounded strongly in the second half
of 2003 in response to government changes in financial policy, and the fund did
not fully participate in the gains. We subsequently added to our German holdings
after research visits to Europe provided a more positive view of the country's
investment and economic environment. We invested in Allianz AG, a German
insurance company, which aided the fund's return.
AN IMPROVED INVESTMENT ENVIRONMENT
The portfolio benefited from investments in the materials, energy and
industrials sectors, all of which responded positively to an improving economy.
As the dollar fell, returns to US investors got an additional boost because the
value of securities purchased in local currencies rose when converted to US
dollars. The dollar was particularly weak against the Japanese yen and the euro,
which gained 7% and 14% against the dollar, respectively, during the period.
EXPOSURE TO JAPAN AND THAILAND MAINTAINED, CHINA REDUCED
We maintained relatively large weights in Thailand and Japan, a strategy that
generally benefited the fund's return. In Thailand, which was the strongest
performing market held by the fund during the period, we favored stocks with the
potential to benefit from the country's infrastructure development, such as Siam
Cement and Land and Houses. Both positions gained ground during the period. In
Japan, which was the portfolio's largest country weight, we added UFJ Holdings,
a large bank, to the portfolio and added to our position in Millea Holdings, an
insurance company, after they reacted positively to changes in government
policies regarding financial institutions. Both stocks were strong performers
for the portfolio, although Japanese stocks generally lagged other world markets
in the last months of the period.
9
Sidebar:
TOP 5 COUNTRIES AS OF 02/29/04 (%)
Japan 21.7
--------------------------------------
United Kingdom 21.6
--------------------------------------
Germany 8.6
--------------------------------------
France 6.4
--------------------------------------
Netherlands 4.8
TOP 10 HOLDINGS AS OF 02/29/04 (%)
BP PLC, ADR 2.2
--------------------------------------
Eni S.p.A. 2.2
--------------------------------------
Siemens AG 1.9
--------------------------------------
Credit Suisse Group 1.8
--------------------------------------
Samsung Electronics 1.8
--------------------------------------
Allianz AG 1.7
--------------------------------------
Matsushita Electronic Industrial 1.6
--------------------------------------
Ing Groep NV 1.6
--------------------------------------
Smith & Nephew PLC 1.6
--------------------------------------
Reckitt Benckiser PLC 1.6
HOLDINGS DISCUSSED IN THIS REPORT AS OF 02/29/04 (%)
Allianz AG 1.7
--------------------------------------
Siam Cement 1.3
--------------------------------------
Land and Houses 0.5
--------------------------------------
UFJ Holdings 0.8
--------------------------------------
Millea Holdings 1.4
Your fund is actively managed and the composition of its portfolio will change
over time. Information provided is calculated as a percentage of net assets.
________________________________________________________________________________
COLUMBIA INTERNATIONAL STOCK FUND
Near the end of the period, we reduced our exposure to China and other emerging
markets in Asia because valuations were high. While we continue to believe in
China's prospects, we became concerned about the country's ability to sustain
its recent strong economic growth. We believe that the emergence of a property
construction bubble, structural weakness in the banking system and rapidly
developing shortages in electric power capacity could cause Chinese authorities
to slow the country's extraordinary growth.
POSITIVE OUTLOOK FOR EUROPEAN AND JAPANESE COMPANIES
We have positioned the portfolio to take advantage of the trend toward
restructuring among European companies and the attractive valuations and
earnings forecasts offered by Japanese companies. Although we reduced the fund's
overall exposure to emerging markets, we made modest new investments in the
emerging markets of Eastern Europe. We believe that these markets have the
potential to perform well as they become more integrated with Western Europe. We
will continue to monitor emerging markets and take advantage of investment
opportunities as they arise.
Photo of: James M. McAlear
James M. McAlear has managed the Columbia
International Stock Fund since its inception.
/s/ James M. McAlear
An investment in the fund offers the potential for long-term growth, but also
involves certain risks, including stock market fluctuations due to economic and
business developments. There are also specific risks involved when investing in
foreign stocks, such as currency exchange rate fluctuations, economic change,
instability of emerging countries and political developments.
10
Sidebar:
PERFORMANCE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04 ($)
SALES CHARGE WITHOUT WITH
-----------------------------------
Class A 23,038 21,716
-----------------------------------
Class B 22,814 22,814
-----------------------------------
Class C 22,849 22,849
-----------------------------------
Class D 22,826 22,593
-----------------------------------
Class G 22,778 22,778
-----------------------------------
Class T 23,097 21,772
-----------------------------------
Class Z 23,203 n/a
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
PERFORMANCE INFORMATION ________________________________________________________
COLUMBIA MID CAP GROWTH FUND
VALUE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04
(MOUNTAIN CHART)
CLASS A
SHARES CLASS A RUSSELL
WITHOUT SHARES WITH MIDCAP RUSSELL
SALES CHARGE SALES CHARGE GROWTH INDEX MIDCAP INDEX
------------ ------------ ------------ ------------
03/1994 9425.00 10000.00 10000.00 10000.00
9064.00 9617.00 9529.00 9574.00
9119.00 9676.00 9506.00 9640.00
9027.00 9578.00 9520.00 9654.00
8708.00 9239.00 9111.00 9368.00
8870.00 9411.00 9363.00 9689.00
9258.00 9823.00 9921.00 10148.00
9235.00 9798.00 9758.00 9901.00
9471.00 10049.00 9927.00 9976.00
9059.00 9612.00 9489.00 9536.00
9233.00 9797.00 9622.00 9660.00
9139.00 9697.00 9737.00 9858.00
9455.00 10032.00 10255.00 10369.00
9707.00 10299.00 10662.00 10665.00
9737.00 10331.00 10752.00 10826.00
9851.00 10452.00 11016.00 11182.00
10478.00 11118.00 11518.00 11558.00
11274.00 11961.00 12242.00 12120.00
11462.00 12161.00 12377.00 12305.00
11644.00 12355.00 12653.00 12583.00
11160.00 11841.00 12333.00 12302.00
11762.00 12480.00 12884.00 12913.00
11959.00 12688.00 12890.00 12988.00
11869.00 12593.00 13118.00 13262.00
12399.00 13155.00 13614.00 13574.00
12700.00 13475.00 13722.00 13770.00
13810.00 14652.00 14385.00 14160.00
14201.00 15067.00 14678.00 14374.00
13387.00 14204.00 14235.00 14158.00
12076.00 12813.00 13130.00 13282.00
12813.00 13595.00 13840.00 13914.00
13309.00 14121.00 14719.00 14602.00
12935.00 13724.00 14547.00 14718.00
13654.00 14487.00 15404.00 15615.00
13522.00 14347.00 15145.00 15455.00
13842.00 14687.00 15815.00 16033.00
13625.00 14456.00 15467.00 16009.00
12964.00 13755.00 14593.00 15329.00
12868.00 13653.00 14950.00 15711.00
14074.00 14932.00 16290.00 16858.00
14530.00 15416.00 16741.00 17409.00
15348.00 16284.00 18343.00 18861.00
15300.00 16234.00 18163.00 18655.00
16042.00 17021.00 19083.00 19720.00
15109.00 16030.00 18127.00 18953.00
15266.00 16197.00 18317.00 19404.00
15232.00 16161.00 18557.00 19940.00
14825.00 15730.00 18223.00 19565.00
15773.00 16735.00 19936.00 21095.00
16773.00 17796.00 20771.00 22095.00
16721.00 17741.00 21053.00 22150.00
16284.00 17278.00 20188.00 21466.00
16548.00 17558.00 20760.00 21764.00
15420.00 16360.00 19871.00 20726.00
13487.00 14310.00 16078.00 17410.00
14428.00 15308.00 17293.00 18536.00
15029.00 15946.00 18566.00 19800.00
15721.00 16680.00 19819.00 20737.00
17767.00 18851.00 21872.00 21952.00
17407.00 18469.00 22528.00 21915.00
15971.00 16945.00 21427.00 21185.00
16423.00 17424.00 22620.00 21848.00
16956.00 17991.00 23652.00 23463.00
17002.00 18039.00 23347.00 23395.00
18191.00 19300.00 24976.00 24220.00
17716.00 18797.00 24182.00 23554.00
17384.00 18445.00 23931.00 22944.00
17624.00 18700.00 23727.00 22137.00
18685.00 19825.00 25561.00 23186.00
20995.00 22276.00 28209.00 23854.00
24222.00 25700.00 33095.00 25953.00
24634.00 26136.00 33089.00 25094.00
31659.00 33591.00 40044.00 27024.00
31149.00 33050.00 40084.00 28572.00
28106.00 29821.00 36192.00 27221.00
26569.00 28190.00 33553.00 26499.00
29515.00 31316.00 37113.00 27284.00
28349.00 30079.00 34764.00 26978.00
32315.00 34287.00 40007.00 29562.00
31637.00 33567.00 38050.00 29140.00
29429.00 31224.00 35448.00 28691.00
25164.00 26700.00 27745.00 26109.00
27578.00 29260.00 29207.00 28096.00
27100.00 28754.00 30875.00 28548.00
24054.00 25522.00 25533.00 26809.00
21986.00 23327.00 21880.00 25147.00
24088.00 25557.00 25527.00 27297.00
23695.00 25140.00 25407.00 27805.00
23259.00 24678.00 25420.00 27544.00
22410.00 23777.00 23706.00 26756.00
21137.00 22427.00 21988.00 25726.00
18749.00 19892.00 18353.00 22623.00
19427.00 20613.00 20282.00 23519.00
21018.00 22301.00 22466.00 25490.00
21790.00 23119.00 23320.00 26515.00
21055.00 22340.00 22562.00 26356.00
20110.00 21337.00 21283.00 26076.00
21299.00 22598.00 22907.00 27641.00
20753.00 22019.00 21695.00 27105.00
20419.00 21665.00 21049.00 26798.00
19008.00 20168.00 18725.00 25003.00
17552.00 18623.00 16905.00 22563.00
17141.00 18187.00 16846.00 22687.00
16386.00 17385.00 15508.00 20593.00
16841.00 17868.00 16710.00 21633.00
17319.00 18376.00 18018.00 23134.00
16419.00 17420.00 16930.00 22222.00
16419.00 17420.00 16764.00 21774.00
16041.00 17020.00 16618.00 21486.00
16141.00 17125.00 16927.00 21699.00
16952.00 17987.00 18080.00 23274.00
18409.00 19532.00 19819.00 25404.00
18709.00 19850.00 20103.00 25660.00
19109.00 20275.00 20820.00 26507.00
20110.00 21337.00 21968.00 27658.00
19032.00 20194.00 21541.00 27312.00
20566.00 21821.00 23278.00 29396.00
21134.00 22423.00 23902.00 30222.00
21322.00 22623.00 24162.00 31128.00
21779.00 23107.00 24959.00 32034.00
02/2004 21716.00 23038.00 25373.00 32718.00
The above illustration assumes a $10,000 investment made on March 1, 1994, and
reinvestment of income and capital gains distributions. In addition, the graph
and table do not reflect a deduction of the taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. The Russell MidCap Index
is an unmanaged index that measures the performance of the 800 smallest
companies in the Russell 1000 Index, as ranked by total market capitalization.
The Russell MidCap Growth Index is an unmanaged index that measures the
performance of those Russell MidCap companies with higher price-to-book ratios
and higher forecasted growth values. Unlike the fund, indices are not
investments, do not incur fees or expenses and are not professionally managed.
It is not possible to invest directly in an index. Securities in the fund may
not match those in an index.
AVERAGE ANNUAL TOTAL RETURN AS OF 02/29/04 (%)
· Enlarge/Download Table
SHARE CLASS A B C D G T Z
----------------------------------------------------------------------------------------------------------------------------
INCEPTION 11/01/02 11/01/02 10/13/03 11/01/02 11/01/02 11/01/02 11/20/85
----------------------------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
----------------------------------------------------------------------------------------------------------------------------
6-month (cumulative) 7.96 1.75 7.56 2.56 7.73 6.73 7.62 5.55 7.40 2.40 8.06 1.82 8.26
----------------------------------------------------------------------------------------------------------------------------
1-year 35.34 27.56 34.31 29.31 34.51 33.51 34.37 32.04 34.00 29.00 35.50 27.72 36.03
----------------------------------------------------------------------------------------------------------------------------
5-year 6.33 5.08 6.13 5.84 6.16 6.16 6.14 5.93 6.09 5.66 6.39 5.13 6.49
----------------------------------------------------------------------------------------------------------------------------
10-year 8.70 8.06 8.60 8.60 8.61 8.61 8.60 8.49 8.58 8.58 8.73 8.09 8.78
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
· Enlarge/Download Table
SHARE CLASS A B C D G T Z
--------------------------------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
--------------------------------------------------------------------------------------------------------------------------------
6-month (cumulative) 13.96 7.41 13.48 8.48 13.60 12.60 13.55 11.43 13.43 8.43 14.00 7.43 14.21
--------------------------------------------------------------------------------------------------------------------------------
1-year 29.86 22.39 28.86 23.86 29.00 28.00 28.86 26.58 28.64 23.64 29.95 22.50 30.43
--------------------------------------------------------------------------------------------------------------------------------
5-year 3.71 2.49 3.54 3.26 3.56 3.56 3.54 3.33 3.52 3.10 3.76 2.54 3.83
--------------------------------------------------------------------------------------------------------------------------------
10-year 8.98 8.33 8.89 8.89 8.90 8.90 8.89 8.77 8.87 8.87 9.00 8.36 9.04
All results shown assume reinvestment of distributions. The "with sales charge"
returns include the maximum 5.75% charge for class A shares, the appropriate
class B contingent deferred sales charge (CDSC) for the holding period after
purchase as follows: through first year - 5%, second year - 4%, third year - 3%,
fourth year - 3%, fifth year - 2%, sixth year - 1%, thereafter - 0%, and the
class D sales charge of 1% and a CDSC of 1% that is applied to shares sold
within the first year after they are purchased. Class C has a CDSC of 1% which
is applicable for the first year only. For class G shares, the CDSC for the
holding period after purchase is as follows: through first year - 5%, second
year - 4%, third year - 4%, fourth year - 4%, fifth year - 3%, sixth year - 2%,
seventh year - 1%, thereafter - 0%. For class T shares, the "with sales charge"
returns include the maximum 5.75% charge. Performance for different share
classes will vary based on differences in sales charges and fees associated with
each class.
Effective October 13, 2003, class D shares are closed to all new investors and
new accounts. Existing class D shareholders will be able to make additional
purchases at any time. In addition, the class D sales charge of 1% is waived
after October 13, 2003. Performance for different share classes will vary based
on differences in sales charges and fees associated with each class.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Classes A, B, D, G and T (newer class shares) share performance information
includes returns of the fund's class Z shares (the oldest existing fund class)
for periods prior to the inception of the newer class shares. The returns for
class C include the returns of class B prior to 10/13/03, the date on which
class C was initially offered by the fund. The returns shown for class C also
include the performance of class Z prior to the inception of class B (11/01/02).
Class Z share returns are not restated to reflect any expense differential
(e.g., Rule 12b-1 fees) between class Z shares and the newer class shares. Had
the expense differential been reflected, the returns for the periods prior to
the inception of classes A, B, C, D, G and T would have been lower.
11
Sidebar:
SUMMARY
o FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 29, 2004, THE FUND'S CLASS A SHARES
RETURNED 7.96% WITHOUT SALES CHARGE.
o THE FUND UNDERPERFORMED ITS BENCHMARKS, THE RUSSELL MIDCAP GROWTH INDEX AND
RUSSELL MIDCAP INDEX, AS WELL AS ITS PEER GROUP, THE LIPPER MIDCAP GROWTH
FUNDS CATEGORY.
o STOCK SELECTION IN HEALTH CARE AND AN EMPHASIS ON HIGHER QUALITY TECHNOLOGY
STOCKS, WHICH UNDERPERFORMED MORE SPECULATIVE TECHNOLOGY ISSUES, WERE THE
PRIMARY REASONS THE FUND LAGGED ITS BENCHMARKS.
[Illustration of 3 arrows pointing up]
RUSSELL RUSSELL
CLASS A MIDCAP MIDCAP
SHARES GROWTH INDEX INDEX
7.96% 15.52% 18.31%
OBJECTIVE
Seeks significant capital appreciation
TOTAL NET ASSETS
$1,070.3 million
NET ASSET VALUE PER SHARE
AS OF 02/29/04 ($)
Class A 19.53
---------------------------
Class B 19.34
---------------------------
Class C 19.37
---------------------------
Class D 19.35
---------------------------
Class G 19.31
---------------------------
Class T 19.58
---------------------------
Class Z 19.67
PORTFOLIO MANAGER'S REPORT _____________________________________________________
COLUMBIA MID CAP GROWTH FUND
For the six-month period ended February 29, 2004, Columbia Mid Cap Growth Fund
class A shares returned 7.96% without sales charge. The fund underperformed both
the Russell MidCap Growth Index, which returned 15.52%, and the Russell MidCap
Index, which returned 18.31% during the same period. The fund also
underperformed its peer group. The Lipper MidCap Growth Funds Category average
was 11.75%. 1 Small-cap and mid-cap stocks rose more than large-cap stocks
because investors believed smaller companies had more to gain in an improving
economy. The fund was the beneficiary of this positive investor sentiment.
However, it trailed its benchmark indices primarily because of stock selection
in health care and because it focused on higher quality technology stocks, which
underperformed more speculative technology issues. We believe these are also the
principal reasons that the fund underperformed its peers.
HEALTH CARE HOLDINGS DID POORLY
The fund's health care stocks underperformed over the past six months. We
eliminated our investment in Biovail, but not before a major earnings
disappointment brought the stock price down sharply. Investors lost confidence
in the stock after a truck accident destroyed a large shipment of one of the
company's primary drug products and questions were raised about their accounting
practices. The fund's performance was also hurt by its position in Gilead
Sciences, which declined sharply during the period. The company was hurt by
declining sales prospects for the biotech firm's flagship product, the anti-HIV
drug Viread. Yet, several high-quality health care stocks made positive
contributions to the fund, including DaVita, a dialysis services company; IVAX,
a pharmaceuticals company; and Varian Medical Systems, a medical equipment
company.
INVESTORS ATTRACTED TO SPECULATIVE TECHNOLOGY NAMES
Although the fund was overweight in technology, it did not participate in some
of the strong gains by speculative technology companies because of its emphasis
on high-quality technology companies with established earnings. Still, the
fund's bottom-up research process did help us identify companies with
above-average earnings growth and reasonable valuations, such as Fairchild
Semiconductor International, Novell and AU Optronics. All three stocks made
positive contributions to the fund's performance. We sold AU Optronics because
it reached our price target.
1 Lipper Inc., a widely respected data provider in the industry, calculates an
average total return for mutual funds with similar investment objectives as
those of the fund.
12
Sidebar:
TOP 5 SECTORS AS OF 02/29/04 (%)
Information technology 39.2
-----------------------------------------
Health care 20.4
-----------------------------------------
Consumer discretionary 17.5
-----------------------------------------
Industrials 10.6
-----------------------------------------
Energy 6.5
TOP 10 HOLDINGS AS OF 02/29/04 (%)
Univision Communications 2.1
-----------------------------------------
Comverse Technology 1.9
-----------------------------------------
Microchip Technology 1.8
-----------------------------------------
Autoliv 1.7
-----------------------------------------
Caremark Rx 1.7
-----------------------------------------
Amphenol 1.7
-----------------------------------------
American Power Conversion 1.6
-----------------------------------------
Agilent Technologies 1.6
-----------------------------------------
Amdocs 1.6
-----------------------------------------
Fair Isaac 1.6
HOLDINGS DISCUSSED IN THIS REPORT AS OF 02/29/04 (%)
Gilead Sciences 0.4
-----------------------------------------
DaVita 1.5
-----------------------------------------
IVAX 0.9
-----------------------------------------
Varian Medical Systems 1.2
-----------------------------------------
Fairchild Semiconductor International 1.2
-----------------------------------------
Novell 0.8
-----------------------------------------
XTO Energy 1.0
-----------------------------------------
National-Oilwell 1.2
Your fund is actively managed and the composition of its portfolio will change
over time. Information provided is calculated as a percentage of net assets.
________________________________________________________________________________
COLUMBIA MID CAP GROWTH FUND
ENERGY PRODUCERS AND SERVICE COMPANIES IN FAVOR
The fund's above-average weight in energy investments slightly hurt performance,
because the energy portion of the Russell MidCap Growth Index lagged the overall
index return. However, energy made a positive contribution to the fund's
performance relative to the index because we were invested in the types of
companies that did the best within the sector--energy producers and energy
service companies. Energy, in general, benefited as cold weather and global
economic growth resulted in higher demand for oil and gas. But energy producers
and service companies were the primary beneficiaries, as higher demand resulted
in higher commodity prices and the expectation that drilling activity would be
more attractive. These factors favored investments such as XTO Energy and
National-Oilwell, which were strong performers for the fund.
POSITIVE OUTLOOK FOR ECONOMY AND STOCK MARKET
The fund's positioning at the end of the period reflects our outlook for
sustained economic growth. We continue to believe that selected technology and
energy companies have the potential to benefit from an improving economy.
However, we also believe that investors are likely to seek strong revenue and
earnings growth to justify higher stock prices after a year of strong returns,
particularly from smaller company stocks. And although we believe that many
companies have the potential to generate attractive revenue growth, it is
unlikely to be enough to fuel another year of returns as high as 2003. As a
result, we are seeking to reduce the overall risk exposure of the portfolio by
focusing on companies with reasonable valuations as well as good growth
prospects.
Photo of Richard J. Johnson
Richard J. Johnson, CFA, has managed Columbia Mid
Cap Growth Fund since October 1998 and has been
with the advisor and its predecessors since 1994.
/s/ Richard J. Johnson
An investment in the fund offers the potential for long-term growth, but also
involves certain risks, including stock market fluctuations due to economic and
business developments. Mid-cap stocks can present special risks including
greater price volatility than stocks of larger, more established companies.
13
Sidebar:
PERFORMANCE OF A $10,000 INVESTMENT 10/01/96 - 02/29/04 ($)
SALES CHARGE WITHOUT
-----------------------
Class Z $24,432
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
PERFORMANCE INFORMATION ________________________________________________________
COLUMBIA SMALL CAP GROWTH FUND
VALUE OF A $10,000 INVESTMENT 10/01/96 - 02/29/04
(MOUNTAIN CHART)
CLASS Z
SHARES
WITHOUT RUSSELL 2000 RUSSELL 2000
SALES CHARGE INDEX GROWTH INDEX
------------ ----------- ------------
10/1996 10000.00 10000.00 10000.00
10174.00 9876.00 9628.00
10488.00 10283.00 9896.00
10762.00 10552.00 10089.00
11508.00 10763.00 10341.00
10820.00 10503.00 9716.00
10224.00 10007.00 9030.00
10191.00 10035.00 8926.00
11475.00 11151.00 10267.00
12245.00 11629.00 10615.00
13098.00 12170.00 11159.00
13753.00 12449.00 11493.00
15021.00 13360.00 12411.00
14449.00 12774.00 11665.00
14201.00 12691.00 11387.00
14432.00 12913.00 11394.00
13817.00 12709.00 11242.00
14953.00 13648.00 12235.00
16261.00 14210.00 12748.00
16435.00 14288.00 12825.00
15247.00 13518.00 11893.00
15715.00 13547.00 12014.00
14978.00 12449.00 11011.00
11771.00 10032.00 8470.00
12854.00 10817.00 9329.00
12984.00 11258.00 9816.00
13720.00 11848.00 10577.00
15109.00 12582.00 11534.00
15030.00 12749.00 12054.00
13452.00 11716.00 10951.00
13678.00 11899.00 11340.00
14077.00 12965.00 12342.00
14381.00 13155.00 12362.00
15682.00 13749.00 13013.00
16089.00 13373.00 12611.00
15726.00 12878.00 12139.00
16002.00 12880.00 12374.00
17555.00 12933.00 12690.00
19965.00 13705.00 14032.00
24048.00 15257.00 16505.00
24250.00 15011.00 16352.00
30795.00 17489.00 20157.00
29560.00 16337.00 18039.00
26350.00 15353.00 16217.00
24885.00 14458.00 14796.00
28386.00 15719.00 16708.00
26206.00 15213.00 15276.00
29285.00 16374.00 16883.00
28067.00 15892.00 16044.00
26663.00 15183.00 14741.00
23453.00 13624.00 12064.00
25451.00 14794.00 12802.00
25767.00 15565.00 13838.00
22982.00 14544.00 11941.00
20994.00 13833.00 10856.00
23433.00 14915.00 12184.00
23600.00 15282.00 12467.00
23984.00 15809.00 12807.00
22785.00 14954.00 11715.00
21092.00 14471.00 10983.00
17835.00 12523.00 9210.00
19105.00 13255.00 10096.00
20452.00 14281.00 10939.00
21839.00 15163.00 11621.00
21249.00 15005.00 11207.00
20197.00 14594.00 10482.00
21535.00 15766.00 11393.00
20856.00 15909.00 11147.00
20089.00 15203.00 10494.00
18741.00 14449.00 9605.00
16203.00 12267.00 8128.00
16459.00 12236.00 8124.00
15751.00 11358.00 7538.00
16027.00 11722.00 7919.00
16942.00 12768.00 8704.00
16038.00 12057.00 8103.00
15988.00 11723.00 7883.00
15742.00 11369.00 7672.00
16056.00 11515.00 7788.00
17346.00 12607.00 8525.00
18950.00 13960.00 9486.00
19422.00 14212.00 9669.00
20141.00 15102.00 10400.00
21273.00 15794.00 10958.00
20624.00 15502.00 10681.00
22670.00 16804.00 11604.00
23191.00 17400.00 11982.00
23142.00 17753.00 12036.00
24519.00 18524.00 12668.00
24432.00 18695.00 12652.00
23142.00
24519.00
02/2004 24432.00
The above illustration assumes a $10,000 investment made on October 1, 1996, and
reinvestment of income and capital gains distributions. In addition, the graph
and table do not reflect a deduction of the taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. The Russell 2000 Index
is an unmanaged market capitalization weighted index that tracks the performance
of 2000 small companies. The Russell 2000 Growth Index, also an unmanaged index,
measures the performance of those Russell 2000 companies with higher
price-to-book ratios and higher forecasted growth values. Unlike the fund,
indices are not investments, do not incur fees or expenses, and are not
professionally managed. It is not possible to invest directly in an index.
Securities in the fund may not match those in an index.
Index performance is from October 1, 1996.
AVERAGE ANNUAL TOTAL RETURN AS OF 02/29/04 (%)
SHARE CLASS Z
-----------------------------------
INCEPTION 10/01/96
-----------------------------------
SALES CHARGE WITHOUT
-----------------------------------
6-month (cumulative) 14.85
-----------------------------------
1-year 55.19
-----------------------------------
5-year 12.67
-----------------------------------
Life 12.81
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
SHARE CLASS Z
-----------------------------------
SALES CHARGE WITHOUT
-----------------------------------
6-month (cumulative) 19.15
-----------------------------------
1-Year 44.29
-----------------------------------
5-Year 8.90
-----------------------------------
Life 12.27
All results shown assume reinvestment of distributions.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
14
SUMMARY
o FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 29, 2004, THE FUND'S CLASS Z SHARES
RETURNED 14.85% WITHOUT SALES CHARGE.
o THE FUND'S RETURN LAGGED THAT OF ITS BENCHMARKS, THE RUSSELL 2000 GROWTH
INDEX AND THE RUSSELL 2000 INDEX, BUT IT WAS HIGHER THAN THE RETURN OF ITS
PEER GROUP, THE LIPPER SMALL-CAP GROWTH FUNDS CATEGORY.
o THE FUND PROVIDED A STRONG ABSOLUTE RETURN FOR THE PERIOD, BUT ITS
PERFORMANCE FELL SHORT OF ITS BENCHMARKS PRIMARILY BECAUSE THE MANAGER
EMPHASIZED COMPANIES WITH CURRENT EARNINGS WHILE THE BEST PERFORMANCE DURING
THE PERIOD WAS GENERATED BY MORE SPECULATIVE COMPANIES.
[Illustration of 3 arrows pointing up]
RUSSELL 2000
CLASS Z GROWTH RUSSELL 2000
SHARES INDEX INDEX
14.85% 15.42% 18.34%
OBJECTIVE
Seeks capital appreciation
TOTAL NET ASSETS
$784.0 million
NET ASSET VALUE PER SHARE AS OF 02/29/04 ($)
Class Z 24.83
PORTFOLIO MANAGER'S REPORT _____________________________________________________
COLUMBIA SMALL CAP GROWTH FUND
For the six-month period ended February 29, 2004, Columbia Small Cap Growth Fund
class Z shares returned 14.85% without sales charge. That was less than the
return of the Russell 2000 Growth Index, which was 15.42%, and the Russell 2000
Index, which was 18.34%, during the same period. However, it was higher than the
Lipper Small-Cap Growth Funds Category average, which was 14.45%.1 The fund
benefited from its emphasis on technology stocks, which posted strong gains
during the period, and from stock selection in the energy sector. However, our
emphasis on companies with current earnings hurt our performance relative to the
indices, since by far the best performance during the period was generated by
more speculative companies. Investors were far more willing to take on risk as
war worries lessened and economic recovery came into focus.
SMALL CAP STOCKS BENEFITED IN IMPROVING ECONOMY
With the end of major military action in Iraq and an economy on the mend, the US
stock market moved higher during the six-month reporting period. Small caps were
the greatest beneficiaries of the trend. Investors favored small caps on the
expectation that they had more to gain in an improving economy. And, they
favored sectors that were likely to benefit from a stronger economy. The fund
was positioned to capitalize on both trends.
STRONGEST GAINS FROM TECHNOLOGY STOCKS
During this six-month period, the fund's strongest gains came from many of the
same technology stocks that had been hit hard during the three-year bear market.
Technology companies benefited from stronger demand as the economy improved.
Among the fund's technology holdings, Cognizant Technology Solutions, Aspect
Communications and F5 Networks did well.
HIGH DEMAND FOR OIL AND GAS BOOSTS ENERGY SECTOR
The fund's above-average weight in energy investments was a slight drag on
performance, because the energy portion of the Russell 2000 Growth Index
slightly trailed the overall index return. However, energy made a positive
contribution to the fund's performance relative to the index because we were
invested in the types of companies that did the best within the sector--energy
producers and energy service companies. Energy, in general, benefited as cold
weather and global economic growth resulted in higher demand for oil and gas.
But energy producers and
1 Lipper Inc., a widely respected data provider in the industry, calculates an
average total return for mutual funds with similar investment objectives as
those of the fund.
15
Sidebar:
TOP 5 SECTORS AS OF 02/29/04 (%)
Information technology 40.3
-------------------------------------
Health care 15.5
-------------------------------------
Consumer discretionary 14.6
-------------------------------------
Industrials 13.3
-------------------------------------
Energy 6.1
TOP 10 HOLDINGS AS OF 02/29/04 (%)
Amphenol 2.4
-------------------------------------
Education Management 1.9
-------------------------------------
Fair Isaac 1.9
-------------------------------------
AVX 1.7
-------------------------------------
Autoliv 1.7
-------------------------------------
Electronics for Imaging 1.6
-------------------------------------
Polycom 1.5
-------------------------------------
Henry Schein 1.5
-------------------------------------
DaVita 1.4
-------------------------------------
Renal Care Group 1.4
HOLDINGS DISCUSSED IN THIS REPORT AS OF 02/29/04 (%)
Cognizant Technology Solutions 0.7
-------------------------------------
Aspect Communications 1.0
-------------------------------------
F5 Networks 0.9
-------------------------------------
XTO Energy 1.3
-------------------------------------
National-Oilwell 1.2
-------------------------------------
Chesapeake Energy 0.5
Your fund is actively managed and the composition of its portfolio will change
over time. Information provided is calculated as a percentage of net assets.
________________________________________________________________________________
COLUMBIA SMALL CAP GROWTH FUND
service companies were the primary beneficiaries of these trends, as higher
demand resulted in higher commodity prices and the expectation that drilling
activity would be more attractive. These factors favored investments such as XTO
Energy, National-Oilwell and Chesapeake Energy, which were strong performers for
the fund.
STRONG RETURNS FROM SPECULATIVE HEALTH CARE STOCKS
In the health care sector, the fund was hurt by its emphasis on high-quality
companies with track records of consistent earnings growth during a period when
more speculative companies were the sector's top performers. However, we believe
that our strategy will benefit the fund in the long-term, and we have stayed
with it. We were also hurt by our position in First Health Group, which declined
sharply in the face of strong competition from major health maintenance
organizations. We sold the stock.
POSITIONED FOR A RECOVERING ECONOMY
At the end of the period, the fund was positioned to take advantage of an
improving economy. We maintained our emphasis on technology companies, because
their prospects are closely linked to economic growth. However, in light of the
strong run-up in small-cap stock prices, we do not expect returns in 2004 to
match the returns of 2003. We believe that investors are likely to become more
selective--and more demanding of revenue and earnings growth to justify higher
stock prices. As a result, we have focused on companies with reasonable
valuations as well as growth prospects in order to manage the fund's overall
risk exposure.
Photo of Richard J. Johnson
Richard J. Johnson, CFA, has managed Columbia
Small Cap Growth Fund since October 1996 and has
been with the advisor and its predecessors
since 1994.
/s/ Richard J. Johnson
An investment in the fund offers the potential for long-term growth, but also
involves certain risks, including stock market fluctuations due to economic and
business developments. Investing in small-cap stocks may present special risks,
including possible illiquidity and greater price volatility than stocks of
larger, more established companies.
16
Sidebar:
PERFORMANCE OF A $10,000 INVESTMENT 04/01/94 - 02/29/04 ($)
SALES CHARGE WITHOUT WITH
-----------------------------------
Class A 35,003 32,997
-----------------------------------
Class B 34,687 34,687
-----------------------------------
Class C 34,684 34,684
-----------------------------------
Class D 34,711 34,368
-----------------------------------
Class Z 35,222 n/a
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
PERFORMANCE INFORMATION_________________________________________________________
COLUMBIA REAL ESTATE EQUITY FUND
VALUE OF A $10,000 INVESTMENT 04/01/94 - 02/29/04
(MOUNTAIN CHART)
CLASS A CLASS A
SHARES SHARES
WITHOUT WITH NAREIT
SALES CHARGE SALES CHARGE INDEX
------------ ------------ -----
04/1994 10000.00 9425.00 10000.00
10017.00 9441.00 10170.00
10326.00 9732.00 10397.00
10135.00 9552.00 10185.00
9966.00 9393.00 10135.00
10118.00 9536.00 10165.00
9908.00 9339.00 9976.00
9610.00 9057.00 9630.00
9253.00 8721.00 9299.00
10177.00 9592.00 9977.00
9803.00 9240.00 9760.00
9899.00 9329.00 10001.00
9968.00 9395.00 9961.00
9818.00 9254.00 9958.00
10303.00 9711.00 10381.00
10562.00 9955.00 10546.00
10724.00 10107.00 10728.00
10795.00 10175.00 10856.00
11065.00 10429.00 11042.00
10820.00 10197.00 10806.00
10910.00 10283.00 10904.00
11894.00 11210.00 11500.00
12118.00 11422.00 11689.00
12221.00 11519.00 11826.00
12147.00 11448.00 11761.00
12137.00 11439.00 11821.00
12413.00 11699.00 12126.00
12707.00 11976.00 12284.00
12726.00 11994.00 12376.00
13342.00 12575.00 12863.00
13901.00 13101.00 13087.00
14173.00 13358.00 13476.00
14903.00 14046.00 14090.00
16449.00 15503.00 15554.00
16774.00 15810.00 15728.00
16877.00 15906.00 15697.00
17108.00 16124.00 15664.00
16523.00 15573.00 15233.00
17046.00 16066.00 15681.00
17819.00 16794.00 16443.00
18752.00 17674.00 16951.00
18565.00 17497.00 16911.00
20225.00 19062.00 18387.00
19533.00 18410.00 17891.00
20025.00 18874.00 18277.00
20518.00 19338.00 18708.00
20442.00 19266.00 18609.00
20060.00 18906.00 18293.00
20736.00 19543.00 18620.00
19836.00 18695.00 18013.00
19681.00 18549.00 17887.00
19626.00 18497.00 17766.00
18470.00 17408.00 16613.00
17114.00 16130.00 15044.00
18002.00 16967.00 15896.00
17698.00 16680.00 15602.00
18057.00 17019.00 15831.00
17983.00 16949.00 15432.00
17663.00 16648.00 15110.00
17538.00 16529.00 14755.00
17434.00 16432.00 14688.00
18876.00 17791.00 16082.00
19442.00 18325.00 16436.00
19003.00 17910.00 16170.00
18302.00 17250.00 15655.00
18291.00 17239.00 15457.00
17473.00 16469.00 14869.00
17119.00 16134.00 14503.00
16977.00 16000.00 14267.00
17540.00 16532.00 14719.00
17612.00 16599.00 14768.00
17179.00 16191.00 14592.00
18070.00 17031.00 15072.00
19155.00 18053.00 16085.00
19314.00 18203.00 16243.00
20032.00 18880.00 16660.00
21757.00 20506.00 18116.00
20895.00 19694.00 17381.00
21758.00 20507.00 17933.00
20723.00 19531.00 17157.00
21334.00 20107.00 17377.00
22601.00 21301.00 18600.00
22386.00 21099.00 18793.00
22071.00 20802.00 18493.00
21691.00 20444.00 18672.00
22457.00 21166.00 19118.00
22942.00 21623.00 19581.00
23938.00 22561.00 20728.00
23514.00 22162.00 20316.00
24259.00 22864.00 21059.00
22728.00 21422.00 20185.00
21958.00 20695.00 19608.00
23223.00 21887.00 20687.00
23822.00 22452.00 21191.00
23967.00 22589.00 21234.00
24442.00 23036.00 21643.00
25366.00 23907.00 22942.00
25551.00 24082.00 23137.00
26057.00 24558.00 23449.00
26429.00 24910.00 24090.00
25060.00 23619.00 22830.00
24805.00 23378.00 22784.00
23825.00 22455.00 21909.00
23117.00 21788.00 20855.00
24299.00 22901.00 21838.00
24527.00 23117.00 21999.00
23865.00 22493.00 21359.00
24139.00 22751.00 21711.00
24557.00 23145.00 22146.00
25581.00 24110.00 23120.00
26827.00 25284.00 24517.00
27414.00 25838.00 25051.00
28766.00 27112.00 26391.00
29338.00 27651.00 26534.00
30098.00 28367.00 27436.00
30534.00 28779.00 27933.00
31817.00 29987.00 29150.00
33093.00 31190.00 30171.00
34135.00 32172.00 31474.00
02/2004 35003.00 32997.00 32030.00
The above illustration assumes a $10,000 investment made on April 1, 1994, and
reinvestment of income and capital gains distributions. In addition, the graph
and table do not reflect a deduction of the taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. The National Association
of Real Estate Investment Trusts (NAREIT) Index is an unmanaged index that
tracks performance of all publicly traded equity REIT. Unlike the fund, indices
are not investments, do not incur fees or expenses and are not professionally
managed. It is not possible to invest directly in an index. Securities in the
fund may not match those in an index.
Index performance is from March 31, 1994.
AVERAGE ANNUAL TOTAL RETURN AS OF 02/29/04 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
-------------------------------------------------------------------------------------------------------
INCEPTION 11/01/02 11/01/02 10/13/03 11/01/02 04/01/94
-------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
-------------------------------------------------------------------------------------------------------
6-month (cumulative) 19.28 12.42 18.86 13.86 18.85 17.85 18.93 16.76 19.46
-------------------------------------------------------------------------------------------------------
1-year 44.96 36.63 43.84 38.84 43.82 42.82 44.02 41.56 45.58
-------------------------------------------------------------------------------------------------------
5-year 14.82 13.46 14.61 14.38 14.61 14.61 14.63 14.39 14.96
-------------------------------------------------------------------------------------------------------
Life 13.47 12.80 13.37 13.37 13.37 13.37 13.38 13.26 13.54
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
-----------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
-----------------------------------------------------------------------------------------------------
6-month (cumulative) 20.72 13.78 20.28 15.28 20.26 19.26 20.29 18.09 20.86
-----------------------------------------------------------------------------------------------------
1-year 34.93 27.17 33.91 28.91 33.90 32.90 33.95 31.62 35.47
-----------------------------------------------------------------------------------------------------
5-year 12.98 11.65 12.80 12.55 12.80 12.80 12.81 12.58 13.10
-----------------------------------------------------------------------------------------------------
Life 13.06 12.38 12.97 12.97 12.97 12.97 12.97 12.86 13.12
All results shown assume reinvestment of distributions. The "with sales charge"
returns include the maximum 5.75% charge for class A shares and the appropriate
class B contingent deferred sales charge (CDSC) for the holding period after
purchase as follows: through first year - 5%, second year - 4%, third year - 3%,
fourth year - 3%, fifth year - 2%, sixth year - 1%, and thereafter - 0%. Class C
has a CDSC of 1% which is applicable for the first year only. Class D has a
sales charge of 1% and also carries a CDSC of 1% that is applied to shares sold
within the first year after they are purchased.
Effective October 13, 2003, class D shares are closed to all new investors and
new accounts. Existing class D shareholders will be able to make additional
purchases at any time. In addition, the class D sales charge of 1% is waived
after October 13, 2003. Performance for different share classes will vary based
on differences in sales charges and fees associated with each class.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Classes A, B, and D (newer class shares) share performance information includes
returns of the fund's class Z shares (the oldest existing fund class) for
periods prior to the inception of the newer class shares. The returns for class
C include the returns of class B prior to 10/13/03, the date on which class C
was initially offered by the fund. The returns shown for class C also include
the performance of class Z prior to the inception of class B (11/01/02). Class Z
share returns are not restated to reflect any expense differential (e.g., Rule
12b-1 fees) between class Z shares and the newer class shares. Had the expense
differential been reflected, the returns for the periods prior to the inception
of classes A, B, C and D would have been lower.
17
Sidebar:
SUMMARY
o FOR THE SIX-MONTH PERIOD THAT ENDED FEBRUARY 29, 2004, THE FUND'S CLASS A
SHARES RETURNED 19.28% WITHOUT SALES CHARGE.
o THE FUND'S RETURN WAS LOWER THAN ITS BENCHMARK, THE NAREIT INDEX, AND LOWER
THAN THE AVERAGE RETURN OF THE LIPPER REAL ESTATE FUNDS CATEGORY.
o THE FUND'S INVESTMENTS IN PAPER AND FOREST PRODUCTS SECURITIES WERE LARGELY
RESPONSIBLE FOR ITS RELATIVE UNDERPERFORMANCE DURING THE PERIOD, ALTHOUGH
THESE HOLDINGS REBOUNDED LATE IN THE PERIOD.
[Illustration of 2 arrows pointing up]
CLASS A SHARES NAREIT INDEX
19.28% 20.69%
OBJECTIVE
Seeks capital appreciation and
above-average income
TOTAL NET ASSETS
$1,088.0 million
NET ASSET VALUE PER SHARE AS OF 02/29/04 ($)
Class A 24.49
---------------------------
Class B 24.50
---------------------------
Class C 24.49
---------------------------
Class D 24.50
---------------------------
Class Z 24.51
DISTRIBUTIONS DECLARED PER SHARE 09/01/03 - 02/29/04 ($)
Class A 0.54
---------------------------
Class B 0.45
---------------------------
Class C 0.28
---------------------------
Class D 0.46
---------------------------
Class Z 0.58
PORTFOLIO MANAGER'S REPORT _____________________________________________________
COLUMBIA REAL ESTATE EQUITY FUND
For the six-month period ended February 29, 2004, Columbia Real Estate Equity
Fund class A shares returned 19.28% without sales charge. Although the fund
generated a strong absolute return, it was slightly less than the 20.69% gain of
its benchmark, the NAREIT Index, a common measure of real estate securities'
performance. The fund also underperformed the Lipper Real Estate Funds Category
average, which was 20.37%.1 The fund's substantial allocation to paper and
forest product securities and a relatively light exposure to health care REITs,
which were one of the better-performing sectors in the index, were a slight drag
on performance.
SECTOR ALLOCATION DECISIONS AIDED RESULTS
Average vacancy rates in major office markets were significantly higher than
their historical average during the period. Similarly, apartment vacancy rates
increased as weaker job growth decreased demand. We maintained an underweight
position in both office and apartment REITs, which benefited the fund's return.
In addition, our investments in cyclically-oriented sectors of the real estate
markets, including higher-quality regional malls and shopping centers, and
industrial and lodging companies, were solid performers. We did not participate
in the rally in health care REITs. These companies rarely meet our selection
criteria because their cash flow streams are dependent on government policy.
CAPITAL INFLOWS BOOSTED VALUATIONS
REITs continued to attract sizeable inflows of investor capital over the past
six months, in many cases driving prices up to premium levels. As a result, we
maintained the fund's defensive positioning. We continued to add to our
investment in non-real-estate related companies, which accounted for 17% of the
fund's net assets by the end of the period. (The fund's investment policy
permits us to hold up to 20% of assets in non-real-estate related companies.) We
like the paper and forest-products sectors because we believe they are early in
their product pricing cycles and that cash flows are set to grow strongly. These
stocks, many of which were disappointments when we first purchased them in the
fourth quarter of 2002 and in early 2003, recovered nicely as manufacturing
activity rebounded near the end of the period.
We also added a relatively new investment vehicle called an income deposit
security (IDS) by initiating a small position in Volume Services America
Holdings, a national operator of concessions at stadiums and convention centers.
Popular in Canada, an IDS combines a share of dividend-paying common stock along
with an interest in corporate subordinated debt. The security pays both a
dividend, which is now taxed at the lower dividend tax rate, and interest, which
is taxed at the
1 Lipper Inc., a widely respected data provider in the industry, calculates an
average total return for mutual funds with similar investment objectives as
those of the fund.
18
Sidebar:
TOP 5 SECTORS AS OF 02/29/04 (%)
Retail 28.3
------------------------------------------
Industrial 26.2
------------------------------------------
Office 14.4
------------------------------------------
Residential 8.0
------------------------------------------
Lodging 5.5
TOP 10 HOLDINGS AS OF 02/29/04 (%)
Simon Property Group 6.0
-----------------------------------------
General Growth Properties 5.3
-----------------------------------------
iStar Financial 4.4
-----------------------------------------
ProLogis 4.2
-----------------------------------------
Bowater 3.9
-----------------------------------------
Alexandria Real Estate Equities 3.7
-----------------------------------------
Cousins Properties 3.7
-----------------------------------------
Rouse 3.6
-----------------------------------------
Regency Centers 3.5
-----------------------------------------
Duke Realty 3.4
HOLDINGS DISCUSSED IN THIS REPORT AS OF 02/29/04 (%)
Volume Services America Holdings 1.0
Your fund is actively managed and the composition of its portfolio will change
over time. Information provided is calculated as a percentage of net assets.
________________________________________________________________________________
COLUMBIA REAL ESTATE EQUITY FUND
ordinary income tax rate. We purchased the security for its income
potential--the yield was approximately 9% at the end of the period. We expect to
add to our IDS allocation on a selective basis.
RISKS MAY RISE FOR REITS
Strong performance by REITs during the reporting period continued to be driven
by investors seeking an alternative to lower-yielding fixed-income sectors.
However, REITs face a number of challenges. Recent tax legislation may cause
REITs to look relatively less attractive because, generally speaking, the
dividends they pay are taxed at a higher rate than other dividends. Real estate
stock valuations have been high for more than a year now. Although we were early
in positioning the fund more defensively, we believe the portfolio's defensive
positioning is appropriate for this environment. We believe that the environment
for industrial REITs is likely to improve more quickly than for apartment and
office REITs, and that expectation is reflected in our allocations at the end of
the period. Over the long term, we believe that the fund's investments have the
potential to benefit from the economic recovery that has been underway for
nearly a year.
David Jellison has managed the fund since 1994
and has been with the advisor and its
predecessors since 1992.
/s/ David Jellison
An investment in the fund may present certain risks, including stock market
fluctuations that occur in response to economic and business developments. The
fund may be subject to the same types of risks associated with direct ownership
of real estate including the decline of property value due to general, local and
regional economic conditions. In addition, the fund's share price will likely be
subject to more volatility than the overall stock market because it concentrates
in real estate stocks.
19
Sidebar:
PERFORMANCE OF A $10,000 INVESTMENT 11/09/00 - 02/29/04 ($)
SALES CHARGE WITHOUT WITH
----------------------------------
Class A 7,353 6,931
----------------------------------
Class B 7,273 7,055
----------------------------------
Class C 7,273 7,273
----------------------------------
Class D 7,303 7,231
----------------------------------
Class Z 7,393 n/a
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
PERFORMANCE INFORMATION ________________________________________________________
COLUMBIA TECHNOLOGY FUND
VALUE OF A $10,000 INVESTMENT 11/09/00 - 02/29/04
(MOUNTAIN CHART)
CLASS A CLASS A MERRILL LYNCH
SHARES SHARES 100
WITHOUT WITH TECHNOLOGY
SALES CHARGE SALES CHARGE INDEX
------------ ------------ -------------
11/2000 10000.00 9425.00 10000.00
8713.00 8212.00 7744.00
8622.00 8127.00 7317.00
9142.00 8617.00 8577.00
6815.00 6423.00 6096.00
6145.00 5792.00 5123.00
7365.00 6941.00 6259.00
7135.00 6725.00 5891.00
7285.00 6866.00 5912.00
6745.00 6357.00 5377.00
6095.00 5745.00 4719.00
4547.00 4285.00 3495.00
5166.00 4869.00 4158.00
5896.00 5557.00 4944.00
6126.00 5773.00 4935.00
6086.00 5736.00 4962.00
5367.00 5058.00 4289.00
6106.00 5755.00 4788.00
5376.00 5067.00 4204.00
5047.00 4757.00 3969.00
4607.00 4342.00 3321.00
3888.00 3664.00 2877.00
3858.00 3636.00 2776.00
3468.00 3269.00 2277.00
3818.00 3598.00 2774.00
4258.00 4013.00 3386.00
3788.00 3570.00 2885.00
3828.00 3608.00 2876.00
3808.00 3589.00 2901.00
3679.00 3467.00 2880.00
4138.00 3900.00 3218.00
4888.00 4607.00 3764.00
4988.00 4701.00 3746.00
5398.00 5088.00 3916.00
5907.00 5568.00 4353.00
5977.00 5634.00 4204.00
6727.00 6340.00 4711.00
7066.00 6660.00 4862.00
6977.00 6576.00 4871.00
7496.00 7065.00 5182.00
02/2004 7353.00 6931.00 5085.00
The above illustration assumes a $10,000 investment made on November 9, 2000,
and reinvestment of income and capital gains distributions. In addition, the
graph and table do not reflect a deduction of the taxes that a shareholder would
pay on fund distributions or the redemption of fund shares. The Merrill Lynch
100 Technology Index is an equally weighted, unmanaged index of 100 leading
technology stocks. Unlike the fund, indices are not investments, do not incur
fees or expenses, and are not professionally managed. It is not possible to
invest directly in an index. Securities in the fund may not match those in an
index. Index performance is from November 9, 2000.
AVERAGE ANNUAL TOTAL RETURN AS OF 02/29/04 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
--------------------------------------------------------------------------------------------------------------
INCEPTION 11/01/02 11/01/02 10/13/03 11/01/02 11/09/00
--------------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
--------------------------------------------------------------------------------------------------------------
6-month (cumulative) 24.53 17.37 24.23 19.23 24.23 23.23 24.32 22.09 24.79
--------------------------------------------------------------------------------------------------------------
1-year 93.18 82.07 91.58 86.58 91.58 90.58 92.37 89.45 93.72
--------------------------------------------------------------------------------------------------------------
Life -8.89 -10.50 -9.19 -10.02 -9.19 -9.19 -9.07 -9.35 -8.74
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
-------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
-------------------------------------------------------------------------------------------------------
6-month (cumulative) 39.88 31.84 39.80 34.80 39.80 38.80 39.56 37.17 40.12
-------------------------------------------------------------------------------------------------------
1-year 84.17 73.58 83.07 78.07 83.07 82.07 83.86 81.03 85.22
-------------------------------------------------------------------------------------------------------
Life -10.84 -12.50 -11.08 -11.94 -11.08 -11.08 -10.96 -11.24 -10.68
All results shown assume reinvestment of distributions. The "with sales charge"
returns include the maximum 5.75% charge for class A shares and the appropriate
class B contingent deferred sales charge (CDSC) for the holding period after
purchase as follows: through first year - 5%, second year - 4%, third year - 3%,
fourth year - 3%, fifth year - 2%, sixth year - 1%, and thereafter - 0%. Class C
has a CDSC of 1% which is applicable for the first year only. Class D has a
sales charge of 1% and also carries a CDSC of 1% that is applied to shares sold
within the first year after they are purchased.
Effective October 13, 2003, class D shares are closed to all new investors and
new accounts. Existing class D shareholders will be able to make additional
purchases at any time. In addition, the class D sales charge of 1% is waived
after October 13, 2003. Performance for different share classes will vary based
on differences in sales charges and fees associated with each class.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Classes A, B, and D (newer class shares) share performance information includes
returns of the fund's class Z shares (the oldest existing fund class) for
periods prior to the inception of the newer class shares. The returns for class
C include the returns of class B prior to 10/13/03, the date on which class C
was initially offered by the fund. The returns shown for class C also include
the performance of class Z prior to the inception of class B (11/01/02). Class Z
share returns are not restated to reflect any expense differential (e.g., Rule
12b-1 fees) between class Z shares and the newer class shares. Had the expense
differential been reflected, the returns for the periods prior to the inception
of classes A, B, C and D would have been lower.
20
Sidebar:
SUMMARY
o FOR THE SIX-MONTH PERIOD THAT ENDED FEBRUARY 29, 2004, THE FUND'S CLASS A
SHARES RETURNED 24.53% WITHOUT SALES CHARGE.
o THE FUND'S RETURN WAS SIGNIFICANTLY BETTER THAN BOTH THE MERRILL LYNCH 100
TECHNOLOGY INDEX AND THE LIPPER SCIENCE & Technology Funds Category average.
o THE FUND'S EMPHASIS ON SEMICONDUCTOR AND WIRELESS COMPANIES, THE TWO
TOP-PERFORMING INDUSTRIES FOR THE PERIOD, CONTRIBUTED TO ITS STRONG
PERFORMANCE.
[Illustration of 2 arrows pointing up]
MERRILL LYNCH 100
CLASS A SHARES TECHNOLOGY INDEX
24.53% 16.80%
OBJECTIVE
Seeks capital appreciation
TOTAL NET ASSETS
$40.3 million
NET ASSET VALUE PER SHARE AS OF 02/29/04 ($)
Class A 7.36
--------------------------
Class B 7.28
--------------------------
Class C 7.28
--------------------------
Class D 7.31
--------------------------
Class Z 7.40
PORTFOLIO MANAGERS' REPORT _____________________________________________________
COLUMBIA TECHNOLOGY FUND
For the six-month period ended February 29, 2004, Columbia Technology Fund class
A shares returned 24.53% without sales charge. The fund outpaced its benchmark,
the Merrill Lynch 100 Technology Index, which returned 16.80% for the same
period. It also surpassed the Lipper Science & Technology Funds Category average
of 13.33%.1 The fund's heavy emphasis on semiconductor and wireless
companies--the two top-performing industries for the period--helped performance.
HIGH RETURNS IN A RISING MARKET
A growing economy in all areas except job creation helped propel technology
stocks during the period. The largest gains came in the fourth quarter of 2003
and January, boosted by consumer purchases during the holidays and year-end
corporate spending. In many cases, cost cutting efforts implemented during the
tech downturn helped profitability as market conditions improved. In February
the market was weaker, causing the fund to give back some of its gains.
DIVERSIFICATION--AND A FEW BIG BETS
Our strategy remained fairly consistent during the period, as we emphasized
semiconductor and wireless companies. We pared back our exposure to Internet
stocks and tended to favor larger, more stable companies. Of the approximately
120 stocks in the portfolio, we concentrated on those about which we felt
particularly confident, which worked to our advantage during this period.
FOCUS ON SEMICONDUCTORS AND WIRELESS PAID OFF
During the period we established a large position--over 6% of net assets--in
semiconductor manufacturer ZiLOG, which makes microcontrollers. Its price had
been beaten down, but a new management team, cost cutting measures and a more
focused strategy brought it back to life. It was one of our best performers. In
the wireless area, we did well with Millicom International Cellular, a cellular
service provider in developing countries such as Vietnam. Other international
stocks that helped performance were American Tower and Crown Castle
International, companies that own and operate communications towers in the
United States, the United Kingdom and in the fast growing markets of Mexico and
Brazil.
OPPORTUNITIES IN SOFTWARE, OUTSOURCING
Another theme we pursued was the growing trend for businesses--particularly
outside the United States--to adopt the Linux operating
1 Lipper Inc., a widely respected data provider in the industry, calculates an
average total return for mutual funds with similar investment objectives as
those of the fund.
21
Sidebar:
TOP 5 SECTORS AS OF 02/29/04 (%)
Semiconductors & semiconductor
equipment 31.7
-----------------------------------------
Communications equipment 16.4
-----------------------------------------
Software 10.3
-----------------------------------------
Wireless telecommunication services 7.8
-----------------------------------------
IT services 6.3
TOP 10 HOLDINGS AS OF 02/29/04 (%)
ZiLOG 6.2
-----------------------------------------
Formfactor 5.0
-----------------------------------------
ECI Telecom 3.8
-----------------------------------------
Samsung Electronics 3.5
-----------------------------------------
Millicom International Cellular 2.4
-----------------------------------------
Marvell Technology Group 2.4
-----------------------------------------
Vimpelcom 1.9
-----------------------------------------
XM Satellite Radio Holdings 1.8
-----------------------------------------
Telefonaktiebolaget LM Ericsson 1.8
-----------------------------------------
Agilent Technologies 1.7
HOLDINGS DISCUSSED IN THIS REPORT AS OF 02/29/04 (%)
ZiLOG 6.2
-----------------------------------------
Millicom International Cellular 2.4
-----------------------------------------
American Tower 0.5
-----------------------------------------
Crown Castle International 0.9
-----------------------------------------
Microsoft 0.9
-----------------------------------------
Novell 1.1
-----------------------------------------
Cognizant Technology Solutions 1.6
Your fund is actively managed and the composition of its portfolio will change
over time. Information provided is calculated as a percentage of net assets.
________________________________________________________________________________
COLUMBIA TECHNOLOGY FUND
system, a major competitor to market leader Microsoft. Software company Novell
was already in the portfolio, but we added to our stake when it became clear
that the firm was repositioning itself as a major Linux player. Toward the end
of the period we took some profits, but Novell remained one of our largest
software holdings. We also initiated a successful position in Cognizant
Technology Solutions in an effort to benefit from the outsourcing trend.
Cognizant specializes in application maintenance services and software design
with development centers in India, Ireland and the United States.
STILL ROOM FOR GROWTH
We believe there are plenty of opportunities ahead for technology stocks.
Despite concerns about low job growth, we see underlying strengths in the
economy that should benefit tech companies. Valuations have corrected themselves
to healthy levels, but still with room for growth. Moving forward, we will
continue to seek out investment opportunities that focus on product cycle
themes, such as broadband and Linux, which we believe have the potential for
above-average growth under a variety of market conditions.
Wayne Collette has co-managed the Columbia
Technology Fund since June 2002 and has been with
the advisor and its predecessors since 2001.
/s/ Wayne Collette
Theodore Wendell has co-managed the fund since
June 2002 and has been with the advisor and its
predecessors since 2000.
/s/ Theodore Wendell
Trent Nevills has co-managed the fund since August
2003 and has been with the advisor since 2003.
/s/ Trent Nevills
An investment in the fund may present certain risks, including stock market
fluctuations that occur in response to economic and business developments. In
addition, the fund's share price will likely be subject to more volatility than
the overall stock market because it concentrates in technology stocks.
22
Sidebar:
PERFORMANCE OF A $10,000 INVESTMENT 11/09/00 - 02/29/04 ($)
SALES CHARGE WITHOUT WITH
-----------------------------------
Class A 18,938 17,852
-----------------------------------
Class B 18,730 18,430
-----------------------------------
Class C 18,730 18,730
-----------------------------------
Class D 18,710 18,525
-----------------------------------
Class Z 19,009 n/a
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
PERFORMANCE INFORMATION ________________________________________________________
COLUMBIA STRATEGIC INVESTOR FUND
VALUE OF A $10,000 INVESTMENT 11/09/00 - 02/29/04
(MOUNTAIN CHART)
CLASS A CLASS A
SHARES SHARES RUSSELL
WITHOUT WITH 3000
SALES SALES VALUE S&P 500
CHARGE CHARGE INDEX INDEX
------ ------ ----- -----
11/2000 10000.00 9425.00 10000.00 10000.00
9790.00 9227.00 9730.00 9399.00
11224.00 10579.00 10253.00 9445.00
12274.00 11568.00 10308.00 9780.00
12254.00 11549.00 10040.00 8888.00
11984.00 11295.00 9699.00 8325.00
12934.00 12190.00 10172.00 8972.00
13743.00 12953.00 10403.00 9032.00
13963.00 13160.00 10218.00 8812.00
13884.00 13085.00 10182.00 8726.00
13664.00 12879.00 9799.00 8180.00
12325.00 11616.00 9082.00 7519.00
12736.00 12003.00 9024.00 7662.00
13896.00 13097.00 9558.00 8250.00
14568.00 13731.00 9808.00 8323.00
14599.00 13759.00 9747.00 8201.00
14719.00 13872.00 9766.00 8043.00
15591.00 14695.00 10248.00 8345.00
15521.00 14629.00 9951.00 7840.00
15541.00 14648.00 9970.00 7782.00
14900.00 14043.00 9426.00 7228.00
13636.00 12852.00 8510.00 6665.00
13676.00 12889.00 8567.00 6708.00
12311.00 11603.00 7639.00 5979.00
12894.00 12153.00 8172.00 6505.00
14141.00 13328.00 8696.00 6888.00
13310.00 12544.00 8318.00 6484.00
12945.00 12201.00 8115.00 6314.00
12681.00 11952.00 7895.00 6219.00
12620.00 11894.00 7913.00 6279.00
13827.00 13032.00 8613.00 6797.00
14982.00 14121.00 9192.00 7155.00
15125.00 14255.00 9310.00 7247.00
15601.00 14704.00 9472.00 7374.00
16169.00 15239.00 9634.00 7518.00
16037.00 15114.00 9539.00 7438.00
16928.00 15955.00 10137.00 7859.00
17294.00 16299.00 10294.00 7928.00
18117.00 17075.00 10908.00 8344.00
18503.00 17439.00 11114.00 8497.00
02/2004 18938.00 17852.00 11353.00 8614.00
The above illustration assumes a $10,000 investment made on November 9, 2000,
and reinvestment of income and capital gains distributions. In addition, the
graph and table do not reflect a deduction of the taxes that a shareholder would
pay on fund distributions or the redemption of fund shares. The Russell 3000
Value Index measures the performance of those Russell 3000 Index companies with
lower price-to-book ratios and lower forecasted growth values. The stocks in
this index are also members of either the Russell 1000 Value or the Russell 2000
Value indices. The S&P 500 Index tracks the performance of 500
large-capitalization US stocks. Unlike the fund, indices are not investments, do
not incur fees or expenses and are not professionally managed. It is not
possible to invest directly in an index. Securities in the fund may not match
those in an index. Index performance is from November 9, 2000.
AVERAGE ANNUAL TOTAL RETURN AS OF 02/29/04 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
----------------------------------------------------------------------------------------------------------
INCEPTION 11/01/02 11/01/02 10/13/03 11/01/02 11/09/00
----------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
----------------------------------------------------------------------------------------------------------
6-month (cumulative) 17.15 10.41 16.81 11.81 16.81 15.81 16.76 14.60 17.36
----------------------------------------------------------------------------------------------------------
1-year 49.36 40.77 48.20 43.20 48.20 47.20 48.04 45.56 49.68
----------------------------------------------------------------------------------------------------------
Life 21.32 19.17 20.92 20.33 20.92 20.92 20.88 20.51 21.46
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
-----------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
-----------------------------------------------------------------------------------------------------
6-month (cumulative) 19.79 12.90 19.43 14.43 19.43 18.43 19.38 17.20 20.01
-----------------------------------------------------------------------------------------------------
1-year 36.12 28.29 35.11 30.11 35.11 34.11 34.86 32.52 36.45
-----------------------------------------------------------------------------------------------------
Life 20.81 18.56 20.44 19.80 20.44 20.44 20.40 20.02 20.93
All results shown assume reinvestment of distributions. The "with sales charge"
returns include the maximum 5.75% charge for class A shares, the appropriate
class B contingent deferred sales charge (CDSC) for the holding period after
purchase as follows: through first year - 5%, second year - 4%, third year - 3%,
fourth year - 3%, fifth year - 2%, sixth year - 1%, and thereafter - 0%. Class C
has a CDSC of 1% which is applicable for the first year only. Class D has a
sales charge of 1% and also carries a CDSC of 1% that is applied to shares sold
within the first year after they are purchased.
Effective October 13, 2003, class D shares are closed to all new investors and
new accounts. Existing class D shareholders will be able to make additional
purchases at any time. In addition, the class D sales charge of 1% is waived
after October 13, 2003. Performance for different share classes will vary based
on differences in sales charges and fees associated with each class.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Classes A, B and D (newer class shares) share performance information includes
returns of the fund's class Z shares (the oldest existing fund class) for
periods prior to the inception of the newer class shares. The returns for class
C include the returns of class B prior to 10/13/03, the date on which class C
was initially offered by the fund. The returns shown for class C also include
the performance of class Z prior to the inception of class B (11/01/02). Class Z
share returns are not restated to reflect any expense differential (e.g., Rule
12b-1 fees) between class Z shares and the newer class shares. Had the expense
differential been reflected, the returns for the periods prior to the inception
of classes A, B, C and D would have been lower.
23
Sidebar:
SUMMARY
o FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 29, 2004, THE FUND'S CLASS A SHARES
RETURNED 17.15% WITHOUT SALES CHARGE.
o THE FUND'S RETURN NEARLY MATCHED THAT OF ITS BENCHMARK, THE RUSSELL 3000
VALUE INDEX, AND BEAT BOTH THE S&P 500 AND THE LIPPER MULTI-CAP VALUE FUND
CATEGORY.
o THE FUND BENEFITED FROM INVESTMENTS IN CYCLICAL, SMALL-CAP, MID-CAP AND
EMERGING MARKET STOCKS, BUT GAVE UP SOME RETURN BECAUSE OF ITS SIZABLE CASH
POSITION.
[Illustration of 2 arrows pointing up]
RUSSELL 3000
CLASS A SHARES VALUE INDEX
17.15% 17.82%
OBJECTIVE
Seeks long-term growth
TOTAL NET ASSETS
$346.5 million
NET ASSET VALUE PER SHARE AS OF 02/29/04 ($)
Class A 18.61
---------------------------
Class B 18.48
---------------------------
Class C 18.48
---------------------------
Class D 18.46
---------------------------
Class Z 18.64
DISTRIBUTIONS DECLARED PER SHARE 09/01/03 - 02/29/04 ($)
Class A 0.07
---------------------------
Class B 0.00
---------------------------
Class C 0.00
---------------------------
Class D 0.00
---------------------------
Class Z 0.11
PORTFOLIO MANAGERS' REPORT _____________________________________________________
COLUMBIA STRATEGIC INVESTOR FUND
For the six-month period ended February 29, 2004, Columbia Strategic Investor
Fund class A shares returned 17.15% without sales charge. The fund came out
slightly behind the Russell 3000 Value Index, which returned 17.82%. A sizable
cash position, which resulted from selling stocks that had appreciated, held
back performance. However, the fund beat both the S&P 500 Index and the Lipper
Multi-Cap Value Fund Category average, which returned 14.59%, and 16.65%,
respectively.1 The fund benefited from a bias toward economically sensitive
stocks as well as small- and mid-cap names, many of which posted strong gains.
The fund's investments in the emerging markets of Eastern Europe, Russia and
Indonesia also boosted performance.
HEAVY CONCENTRATION IN CYCLICAL SECTORS
The fund began the period with an emphasis on semiconductor, industrial and
basic materials stocks that had the potential to benefit from an improving
economy. As corporate profits and economic growth strengthened early in the
six-month reporting period, these investments did well. Among our best gainers
were semiconductor manufacturers Atmel and Texas Instruments. We sold Atmel
because we believed the stock was fully valued. In addition, Polycom, a leader
in voice and video conferencing, benefited from increased demand as companies
continued to cut costs by reducing business travel. In the industrial sector,
Copart, an auctioneer of wrecked vehicles and auto parts that is expanding its
market potential by moving online, and Eaton, an engineering company, were also
strong performers. Materials producers, such as Dow Chemical and
Georgia-Pacific, a paper and pulp company, rallied nicely as demand and pricing
improved.
ATTRACTIVE VALUATIONS OVERSEAS, PARTICULARLY IN EMERGING MARKETS
We found many attractively valued stocks overseas. Some of the fund's best gains
came from cellular phone companies operating in emerging markets where current
usage is relatively low but growing rapidly. Standouts included Millicom
International Cellular, which is active in Vietnam, Pakistan and other emerging
markets, and Russia's VimpelCom. We also increased foreign holdings within the
financial sector because we believed they would hold up better if interest rates
rose in the United States. In that regard, we added to existing positions in
Japanese firms such as Mitsubishi Tokyo Financial Group and Nomura Holdings.
1 Lipper Inc., a widely respected data provider in the industry, calculates an
average total return for mutual funds with similar investment objectives as
those of the fund.
24
Sidebar:
TOP 5 SECTORS AS OF 02/29/04 (%)
Financials 12.5
--------------------------------------
Consumer discretionary 11.4
--------------------------------------
Industrials 10.2
--------------------------------------
Information technology 10.1
--------------------------------------
Health care 9.2
TOP 10 HOLDINGS AS OF 02/29/04 (%)
3M 1.5
--------------------------------------
Millicom International Cellular 1.0
--------------------------------------
Pfizer 0.9
--------------------------------------
Schlumberger 0.9
--------------------------------------
Nokian Renkaat Oyj 0.9
--------------------------------------
Transocean 0.9
--------------------------------------
Wesco Financial 0.8
--------------------------------------
DST Systems 0.8
--------------------------------------
J.P. Morgan Chase 0.8
--------------------------------------
Citigroup 0.8
HOLDINGS DISCUSSED IN THIS REPORT AS OF 02/29/04 (%)
Texas Instruments 0.4
--------------------------------------
Polycom 0.7
--------------------------------------
Copart 0.5
--------------------------------------
Eaton 0.7
--------------------------------------
Dow Chemical 0.6
--------------------------------------
Georgia-Pacific 0.4
--------------------------------------
Millicom International Cellular 1.0
--------------------------------------
VimpelCom 0.6
--------------------------------------
Mitsubishi Tokyo Financial Group 0.5
--------------------------------------
Nomura Holdings 0.3
--------------------------------------
Nokian Renkaat Oyj 0.9
--------------------------------------
Biogen Idec 0.7
--------------------------------------
Cytyc 0.3
--------------------------------------
Pfizer 0.9
--------------------------------------
Tenet Healthcare 0.2
Your fund is actively managed and the composition of its portfolio will change
over time. Information provided is calculated as a percentage of net assets.
________________________________________________________________________________
COLUMBIA STRATEGIC INVESTOR FUND
MIXED RESULTS FROM CONSUMER-RELATED SECTORS
Within the consumer sector, the fund maintained a heavy concentration in media
stocks, despite disappointing returns for the period. We expect spending on
advertising to increase in advance of the presidential election and summer
Olympics. We sold our stakes in other weak performers, including Newell
Rubbermaid, which suffered when an expected turnaround failed to materialize.
The fund, however, maintained a sizable investment in Nokian Renkaat Oyj, a
Finnish tire company that rallied sharply as sales and profits improved in its
key Nordic and Russian markets.
MORE GROWTH-ORIENTED, LESS CYCLICAL FOCUS
By period end, we believed many cyclical stocks had reached fair market value
and we were concerned about the sustainability of the economic recovery beyond
2004. As a result, we shifted the fund more toward stocks with strong earnings
growth prospects and fewer ties to the economy. New additions included health
care stocks, such as Biogen Idec, a biotechnology company, and Cytyc, a testing
company. We also doubled our stake in Pfizer, a large pharmaceutical company
with an attractive valuation, and reduced our investment in Tenet Healthcare, a
health services company mired in Medicare fraud issues. In the technology
sector, we trimmed hardware stocks and replaced them with software stocks, which
are less sensitive to economic conditions.
Photo of: Robert A. Unger
Robert A. Unger, CFA, has managed or co-managed
Columbia Strategic Investor Fund since November
2000 and has been with the advisor and its
predecessors since 1984.
/s/ Robert A. Unger
Photo of: Emil A. Gjester
Emil A. Gjester has served as an assistant
portfolio manager or co-portfolio manager of the
fund since November 2002 and has been with the
advisor and its predecessors since 1996.
/s/ Emil A. Gjester
An investment in the fund may present certain risks, including stock market
fluctuations that occur in response to economic and business developments; and a
greater degree of social, political and economic volatility associated with
international investing. Stocks of small- and mid-cap companies may trade less
frequently, may trade smaller volumes and may fluctuate more sharply in price
than stocks of larger companies.
25
Sidebar:
PERFORMANCE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04 ($)
SALES CHARGE WITHOUT WITH
-----------------------------------
Class A 22,021 20,753
-----------------------------------
Class B 21,811 21,811
-----------------------------------
Class C 21,812 21,812
-----------------------------------
Class D 21,830 21,614
-----------------------------------
Class Z 22,159 n/a
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
PERFORMANCE INFORMATION ________________________________________________________
COLUMBIA BALANCED FUND
VALUE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04
(MOUNTAIN CHART)
CLASS A CLASS A
SHARES SHARES LEHMAN
WITHOUT WITH S & P BROTHERS
SALES SALES 500 AGGREGATE
CHARGE CHARGE INDEX BOND INDEX
------ ------ ----- ----------
03/01/94 10000.00 9425.00 10000.00 10000.00
9700.00 9142.00 9564.00 9753.00
9745.00 9184.00 9686.00 9675.00
9851.00 9284.00 9845.00 9674.00
9666.00 9110.00 9604.00 9653.00
9959.00 9387.00 9919.00 9845.00
10140.00 9557.00 10326.00 9857.00
9942.00 9370.00 10073.00 9712.00
9959.00 9386.00 10299.00 9703.00
9817.00 9252.00 9925.00 9682.00
9959.00 9386.00 10071.00 9748.00
10097.00 9517.00 10332.00 9941.00
10431.00 9832.00 10735.00 10178.00
10582.00 9973.00 11052.00 10240.00
10715.00 10099.00 11377.00 10384.00
11087.00 10449.00 11832.00 10785.00
11232.00 10586.00 12106.00 10864.00
11449.00 10791.00 12508.00 10840.00
11573.00 10907.00 12540.00 10971.00
11836.00 11156.00 13069.00 11078.00
11819.00 11139.00 13022.00 11222.00
12168.00 11469.00 13593.00 11390.00
12456.00 11739.00 13856.00 11550.00
12611.00 11886.00 14327.00 11626.00
12605.00 11880.00 14460.00 11424.00
12705.00 11974.00 14599.00 11344.00
12754.00 12021.00 14813.00 11280.00
12879.00 12139.00 15196.00 11257.00
12999.00 12251.00 15253.00 11408.00
12734.00 12002.00 14579.00 11439.00
12936.00 12192.00 14887.00 11420.00
13328.00 12562.00 15725.00 11618.00
13487.00 12711.00 16159.00 11876.00
14072.00 13263.00 17381.00 12079.00
13924.00 13124.00 17036.00 11967.00
14267.00 13447.00 18101.00 12004.00
14308.00 13486.00 18242.00 12034.00
14094.00 13283.00 17493.00 11901.00
14488.00 13655.00 18537.00 12079.00
14972.00 14111.00 19666.00 12194.00
15421.00 14535.00 20547.00 12339.00
16300.00 15363.00 22182.00 12672.00
15805.00 14896.00 20940.00 12564.00
16252.00 15318.00 22088.00 12749.00
16068.00 15144.00 21350.00 12934.00
16385.00 15443.00 22339.00 12993.00
16532.00 15582.00 22723.00 13125.00
16764.00 15800.00 22975.00 13293.00
17351.00 16353.00 24631.00 13282.00
17845.00 16819.00 25893.00 13327.00
17947.00 16915.00 26154.00 13397.00
17870.00 16842.00 25704.00 13524.00
18468.00 17406.00 26748.00 13639.00
18391.00 17333.00 26464.00 13667.00
17010.00 16032.00 22638.00 13890.00
17590.00 16578.00 24089.00 14215.00
18160.00 17115.00 26047.00 14140.00
18831.00 17749.00 27626.00 14220.00
19852.00 18711.00 29217.00 14263.00
20418.00 19244.00 30438.00 14364.00
19965.00 18817.00 29491.00 14113.00
20615.00 19430.00 30671.00 14191.00
20813.00 19617.00 31858.00 14236.00
20407.00 19234.00 31106.00 14111.00
21105.00 19892.00 32833.00 14066.00
20688.00 19498.00 31808.00 14005.00
20443.00 19268.00 31652.00 13998.00
20347.00 19177.00 30785.00 14160.00
20978.00 19772.00 32734.00 14213.00
21425.00 20193.00 33398.00 14211.00
22370.00 21084.00 35365.00 14143.00
21853.00 20596.00 33590.00 14097.00
22487.00 21194.00 32955.00 14267.00
23917.00 22542.00 36178.00 14455.00
23417.00 22071.00 35089.00 14414.00
22834.00 21521.00 34370.00 14406.00
23590.00 22233.00 35219.00 14706.00
23517.00 22164.00 34669.00 14840.00
24526.00 23115.00 36822.00 15055.00
23491.00 22140.00 34878.00 15150.00
23143.00 21812.00 34732.00 15250.00
22164.00 20890.00 31995.00 15500.00
22556.00 21259.00 32152.00 15788.00
22969.00 21648.00 33293.00 16047.00
21524.00 20287.00 30257.00 16187.00
20788.00 19593.00 28338.00 16268.00
21688.00 20441.00 30540.00 16199.00
21788.00 20535.00 30745.00 16297.00
21481.00 20246.00 29998.00 16358.00
21421.00 20189.00 29704.00 16725.00
20643.00 19456.00 27844.00 16917.00
19607.00 18479.00 25595.00 17115.00
19987.00 18838.00 26083.00 17473.00
20771.00 19576.00 28084.00 17232.00
20887.00 19686.00 28331.00 17121.00
20595.00 19410.00 27918.00 17260.00
20413.00 19240.00 27379.00 17428.00
20707.00 19517.00 28408.00 17138.00
20016.00 18865.00 26687.00 17471.00
20088.00 18933.00 26489.00 17619.00
19244.00 18138.00 24603.00 17771.00
18261.00 17211.00 22687.00 17986.00
18507.00 17443.00 22834.00 18290.00
17473.00 16468.00 20352.00 18586.00
18144.00 17100.00 22143.00 18501.00
18846.00 17762.00 23447.00 18495.00
18179.00 17133.00 22071.00 18878.00
17940.00 16909.00 21493.00 18895.00
17836.00 16811.00 21170.00 19156.00
17910.00 16880.00 21375.00 19140.00
18827.00 17744.00 23137.00 19299.00
19472.00 18353.00 24356.00 19658.00
19579.00 18454.00 24668.00 19619.00
19611.00 18483.00 25102.00 18960.00
20060.00 18906.00 25592.00 19085.00
19988.00 18838.00 25320.00 19591.00
20659.00 19471.00 26753.00 19408.00
20837.00 19639.00 26989.00 19455.00
21466.00 20232.00 28403.00 19653.00
21666.00 20420.00 28926.00 19811.00
02/29/04 22021.00 20753.00 29318.00 20029.00
The above illustration assumes a $10,000 investment made on March 1, 1994, and
reinvestment of income and capital gains distributions. In addition, the graph
and table do not reflect a deduction of the taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. The Lehman Brothers
Aggregate Bond Index is an unmanaged index that represents average
market-weighted performance of US Treasury and agency securities,
investment-grade corporate bonds, and mortgage-backed securities with maturities
greater than one year. The S&P 500 Index tracks the performance of 500
large-capitalization US stocks. Unlike the fund, indices are not investments, do
not incur fees or expenses and are not professionally managed. It is not
possible to invest directly in an index. Securities in the fund may not match
those in an index.
AVERAGE ANNUAL TOTAL RETURN AS OF 02/29/04 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
--------------------------------------------------------------------------------------------------------------
INCEPTION 11/01/02 11/01/02 10/13/03 11/01/02 10/01/91
--------------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
--------------------------------------------------------------------------------------------------------------
6-month (cumulative) 9.79 3.47 9.40 4.40 9.40 8.40 9.37 7.29 9.99
--------------------------------------------------------------------------------------------------------------
1-year 23.48 16.38 22.60 17.60 22.60 21.60 22.77 20.56 24.08
--------------------------------------------------------------------------------------------------------------
5-year 1.98 0.78 1.79 1.45 1.79 1.79 1.80 1.59 2.11
--------------------------------------------------------------------------------------------------------------
10-year 8.21 7.57 8.11 8.11 8.11 8.11 8.12 8.01 8.28
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
-----------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
-----------------------------------------------------------------------------------------------------
6-month (cumulative) 9.64 3.33 9.29 4.29 9.29 8.29 9.32 7.24 9.90
-----------------------------------------------------------------------------------------------------
1- year 18.08 11.29 17.28 12.28 17.28 16.28 17.44 15.28 18.73
-----------------------------------------------------------------------------------------------------
5-year 1.57 0.38 1.41 1.07 1.41 1.41 1.42 1.22 1.69
-----------------------------------------------------------------------------------------------------
10-year 7.99 7.35 7.90 7.90 7.90 7.90 7.91 7.80 8.05
All results shown assume reinvestment of distributions. The "with sales charge"
returns include the maximum 5.75% charge for class A shares, the appropriate
class B contingent deferred sales charge (CDSC) for the holding period after
purchase as follows: through the first year - 5%, second year - 4%, third year -
3%, fourth year - 3%, fifth year - 2%, sixth year - 1%, and thereafter - 0%.
Class C has a CDSC of 1% which is applicable for the first year only. Class D
has a sales charge of 1% and also carries a CDSC of 1% that is applied to shares
sold within the first year after they are purchased.
Effective October 13, 2003, class D shares are closed to all new investors and
new accounts. Existing class D shareholders will be able to make additional
purchases at any time. In addition, the class D sales charge of 1% is waived
after October 13, 2003. Performance for different share classes will vary based
on differences in sales charges and fees associated with each class.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Classes A, B, and D (newer class shares) share performance information includes
returns of the fund's class Z shares (the oldest existing fund class) for
periods prior to the inception of the newer class shares. The returns for class
C include the returns of class B prior to 10/13/03, the date on which class C
was initially offered by the fund. The returns shown for class C also include
the performance of class Z prior to the inception of class B (11/01/02). Class Z
share returns are not restated to reflect any expense differential (e.g., Rule
12b-1 fees) between class Z shares and the newer class shares. Had the expense
differential been reflected, the returns for the periods prior to the inception
of classes A, B, C, and D would have been lower.
26
Sidebar:
SUMMARY
o FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 29, 2004, THE FUND'S CLASS A SHARES
RETURNED 9.79% WITHOUT SALES CHARGE.
o THE FUND'S RETURN WAS LOWER THAN BOTH THE STANDARD & POOR'S 500 INDEX AND THE
LIPPER BALANCED FUNDS CATEGORY AVERAGE, BUT AHEAD OF THE LEHMAN BROTHERS
AGGREGATE BOND INDEX.
o ABOVE-AVERAGE EXPOSURE TO INDUSTRIAL STOCKS HURT RELATIVE PERFORMANCE WITHIN
THE FUND'S STOCK PORTFOLIO. THE FIXED INCOME PORTION OF THE FUND TRACKED ITS
BENCHMARK.
[Illustration of 2 arrows pointing up]
S&P 500
CLASS A SHARES INDEX
9.79% 14.59%
OBJECTIVE
Seeks high total return
TOTAL NET ASSETS
$622.1 million
NET ASSET VALUE PER SHARE AS OF 02/29/04 ($)
Class A 20.92
---------------------------
Class B 20.90
---------------------------
Class C 20.90
---------------------------
Class D 20.89
---------------------------
Class Z 20.91
DISTRIBUTIONS DECLARED PER SHARE 09/01/03 - 02/29/04 ($)
Class A 0.13
---------------------------
Class B 0.06
---------------------------
Class C 0.04
---------------------------
Class D 0.07
---------------------------
Class Z 0.18
PORTFOLIO MANAGERS' REPORT _____________________________________________________
COLUMBIA BALANCED FUND
For the six-month period ended February 29, 2004, Columbia Balanced Fund class A
shares returned 9.79% without sales charge. That was higher than the Lehman
Brothers Aggregate Bond Index, which returned 4.92%, and lower than the S&P 500
Index, which returned 14.59%. The fund's performance was slightly lower than the
Lipper Balanced Funds Category average, which returned 10.56%.1 The fund's
above-average exposure to industrial stocks hurt relative performance within the
fund's stock portfolio when that sector declined from late December through
early February. The fund's emphasis on asset-backed securities and a modest
holding of lower quality bonds helped performance within the fixed income
portion of the fund. But those gains were almost entirely offset by the fund's
relatively short duration, which held back performance as interest rates
declined.
FUND POSITIONED FOR RECOVERING ECONOMY
During the period, the portfolio was positioned for a recovering economy, with
higher allocations in economically-sensitive sectors such as industrials,
information technology, basic materials and consumer cyclicals. Our decision to
overweight these sectors relative to the S&P 500 Index produced mixed results.
Our investments in basic materials stocks did well, while industrial and
cyclical stocks detracted from relative performance. Although industrial stocks
3M, Dover and General Electric all had positive returns for the period, they
failed to keep pace with their industry peers and the S&P 500 Index. We sold our
position in Dover during the period.
In technology, where we focused on broadband, wireless information access and
digital media, the fund benefited from good stock selection. Our positions in
National Semiconductor and Advanced Micro Devices both gained more than 30%,
while Motorola rose 73% during the period. On the down side, Seagate Technology
fared poorly when its earnings disappointed overly hopeful investors. We also
missed out on gains from the telecommunications and utilities sector, which were
strong performers, because the fund had little exposure to either group.
FIXED-INCOME RETURNS STILL MUTED
The return on the fund's bond holdings was in line with the Lehman Brothers
Aggregate Bond Index. The fund's small position in B and BB-rated bonds, which
was well within its 10% limit on below-investment grade securities, and an
emphasis on asset-backed securities aided performance. However, we maintained a
slightly shorter duration than our benchmark and that hurt performance. Duration
is a measure of interest rate sensitivity. We shortened duration because we
expected interest rates to rise in a strengthening economy, and our shorter
1 Lipper Inc., a widely respected data provider in the industry, calculates an
average total return for mutual funds with similar investment objectives as
those of the fund.
27
Sidebar:
PORTFOLIO COMPOSITION AS OF 02/29/04 (%)
Common stock 65.9
-----------------------------------------
Corporate notes & bonds 13.8
-----------------------------------------
Government issues 13.7
-----------------------------------------
Collateralized mortgage obligations 2.3
-----------------------------------------
Cash & cash equivalents,
net receivables & payables 1.2
-----------------------------------------
Asset-backed securities 1.1
-----------------------------------------
Preferred stock 1.0
-----------------------------------------
Commercial mortgage-backed
securities 1.0
TOP 10 EQUITY HOLDINGS AS OF 02/29/04 (%)
Wal-Mart Stores 2.8
-----------------------------------------
Citigroup 2.6
-----------------------------------------
General Electric 2.3
-----------------------------------------
Pfizer 2.2
-----------------------------------------
Microsoft 1.9
-----------------------------------------
Dow Chemical 1.6
-----------------------------------------
Exxon Mobil 1.6
-----------------------------------------
American Express 1.3
-----------------------------------------
Bank One 1.2
-----------------------------------------
American International Group 1.2
HOLDINGS DISCUSSED IN THIS REPORT AS OF 02/29/04 (%)
3M 0.7
-----------------------------------------
General Electric 2.3
-----------------------------------------
National Semiconductor 0.3
-----------------------------------------
Advanced Micro Devices 0.3
-----------------------------------------
Motorola 0.3
-----------------------------------------
Seagate Technology 0.4
Your fund is actively managed and the composition of its portfolio will change
over time. Information provided is calculated as a percentage of net assets.
________________________________________________________________________________
COLUMBIA BALANCED FUND
duration would have afforded the fund some protection because interest rates and
bond prices move in opposite directions. Instead, interest rates fell and the
fund gave up some performance because of this move.
TEMPERING EXPECTATIONS
Looking ahead, we believe the economy has the potential to continue to expand,
but future growth is likely to be somewhat slower as we move from recovery into
an economic growth phase. We think there will probably be continued volatility
in interest rates as investors try to come to grips with a strong economy and
rising commodity prices, on one hand, but little or no rise in job growth on the
other. We have positioned the portfolio for a positive economic environment, but
may begin to shift our allocations to favor companies that will do well in a
slower growing economy.
Columbia Balanced Fund is managed by a group of managers from Columbia's large
cap core team:
/s/ Scott J. Drysdale /s/ Ronald F. Gibbs
Scott J. Drysdale Ronald F. Gibbs, CFA
/s/ Trent E. Nevills /s/ Guy W. Pope
Trent E. Nevills Guy W. Pope, CFA
and Columbia's bond team:
/s/ Leonard A. Aplet /s/ Jeffrey L. Rippey
Leonard A. Aplet, CFA Jeffrey L. Rippey, CFA
An investment in the fund may present certain risks, including stock market
fluctuations that occur in response to economic and business developments. The
fund is also subject to risks associated with investments in bonds, including
interest rate risk, credit risk and prepayment risk.
28
Sidebar:
PERFORMANCE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04 ($)
SALES CHARGE WITHOUT WITH
-----------------------------------
Class A 16,516 15,737
-----------------------------------
Class B 16,347 16,347
-----------------------------------
Class C 16,373 16,373
-----------------------------------
Class D 16,478 16,321
-----------------------------------
Class G 16,397 16,397
-----------------------------------
Class T 16,542 15,763
-----------------------------------
Class Z 16,586 n/a
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
PERFORMANCE INFORMATION ________________________________________________________
COLUMBIA SHORT TERM BOND FUND
VALUE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04
(MOUNTAIN CHART)
CLASS A MERRILL
CLASS A SHARES LYNCH MERRILL LYNCH
SHARES WITH 1-3 YEAR 1-5 YEAR
WITHOUT SALES TREASURY GOVERNMENT/
SALES CHARGE CHARGE INDEX CORPORATE INDEX
------------ ------ ----- ---------------
03/1994 10000.00 9525.00 10000.00 10000.00
9947.00 9475.00 9950.00 9909.00
9918.00 9447.00 9915.00 9852.00
9928.00 9456.00 9929.00 9865.00
9951.00 9478.00 9959.00 9886.00
10026.00 9549.00 10044.00 9991.00
10054.00 9576.00 10080.00 10027.00
10022.00 9546.00 10056.00 9975.00
10041.00 9565.00 10079.00 9989.00
10011.00 9536.00 10033.00 9937.00
10022.00 9546.00 10056.00 9963.00
10147.00 9665.00 10196.00 10114.00
10254.00 9767.00 10336.00 10286.00
10307.00 9817.00 10394.00 10348.00
10395.00 9901.00 10486.00 10454.00
10561.00 10060.00 10670.00 10699.00
10609.00 10105.00 10727.00 10763.00
10642.00 10136.00 10771.00 10791.00
10701.00 10193.00 10836.00 10865.00
10747.00 10237.00 10889.00 10927.00
10847.00 10332.00 10980.00 11034.00
10959.00 10439.00 11077.00 11151.00
11045.00 10520.00 11162.00 11252.00
11143.00 10614.00 11257.00 11352.00
11064.00 10538.00 11210.00 11274.00
11014.00 10491.00 11200.00 11242.00
11003.00 10480.00 11209.00 11231.00
11009.00 10486.00 11232.00 11239.00
11094.00 10567.00 11313.00 11335.00
11130.00 10601.00 11357.00 11376.00
11151.00 10621.00 11396.00 11403.00
11268.00 10733.00 11500.00 11529.00
11402.00 10861.00 11630.00 11688.00
11492.00 10946.00 11719.00 11802.00
11472.00 10927.00 11719.00 11772.00
11520.00 10973.00 11774.00 11825.00
11536.00 10988.00 11801.00 11845.00
11502.00 10956.00 11797.00 11816.00
11608.00 11057.00 11893.00 11930.00
11673.00 11119.00 11974.00 12017.00
11750.00 11192.00 12057.00 12111.00
11887.00 11322.00 12189.00 12289.00
11878.00 11314.00 12200.00 12272.00
11956.00 11388.00 12293.00 12386.00
12049.00 11476.00 12384.00 12497.00
12054.00 11481.00 12414.00 12521.00
12133.00 11557.00 12498.00 12614.00
12256.00 11674.00 12620.00 12761.00
12241.00 11660.00 12631.00 12759.00
12275.00 11692.00 12683.00 12808.00
12338.00 11752.00 12742.00 12869.00
12402.00 11813.00 12810.00 12947.00
12450.00 11859.00 12876.00 13022.00
12500.00 11906.00 12937.00 13081.00
12669.00 12067.00 13100.00 13270.00
12851.00 12241.00 13273.00 13508.00
12914.00 12301.00 13338.00 13551.00
12868.00 12257.00 13326.00 13532.00
12914.00 12301.00 13373.00 13582.00
12958.00 12343.00 13426.00 13650.00
12857.00 12246.00 13360.00 13527.00
12946.00 12331.00 13452.00 13638.00
12972.00 12355.00 13495.00 13683.00
12937.00 12322.00 13487.00 13630.00
12978.00 12362.00 13529.00 13669.00
13005.00 12388.00 13572.00 13684.00
13017.00 12399.00 13612.00 13712.00
13092.00 12471.00 13700.00 13823.00
13107.00 12484.00 13737.00 13855.00
13120.00 12497.00 13763.00 13877.00
13145.00 12521.00 13783.00 13880.00
13133.00 12509.00 13777.00 13849.00
13214.00 12587.00 13869.00 13947.00
13267.00 12637.00 13955.00 14056.00
13303.00 12671.00 13992.00 14066.00
13358.00 12723.00 14049.00 14107.00
13462.00 12822.00 14195.00 14293.00
13518.00 12876.00 14285.00 14395.00
13609.00 12963.00 14390.00 14528.00
13666.00 13017.00 14494.00 14659.00
13725.00 13073.00 14572.00 14725.00
13877.00 13218.00 14711.00 14894.00
14101.00 13431.00 14886.00 15110.00
14274.00 13596.00 15072.00 15330.00
14391.00 13708.00 15170.00 15449.00
14496.00 13808.00 15296.00 15590.00
14512.00 13823.00 15337.00 15599.00
14596.00 13903.00 15423.00 15691.00
14647.00 13952.00 15475.00 15749.00
14872.00 14165.00 15649.00 16001.00
14992.00 14280.00 15739.00 16118.00
15194.00 14473.00 15999.00 16406.00
15380.00 14649.00 16151.00 16600.00
15280.00 14554.00 16116.00 16500.00
15242.00 14518.00 16122.00 16466.00
15298.00 14571.00 16154.00 16514.00
15367.00 14637.00 16232.00 16616.00
15279.00 14554.00 16121.00 16450.00
15464.00 14730.00 16302.00 16677.00
15558.00 14819.00 16367.00 16805.00
15650.00 14907.00 16505.00 16951.00
15743.00 14995.00 16706.00 17168.00
15854.00 15101.00 16763.00 17314.00
16019.00 15258.00 16902.00 17534.00
15933.00 15176.00 16941.00 17532.00
15936.00 15179.00 16888.00 17501.00
16081.00 15317.00 17049.00 17769.00
16100.00 15336.00 17047.00 17777.00
16227.00 15457.00 17119.00 17934.00
16242.00 15471.00 17149.00 17970.00
16305.00 15531.00 17182.00 18051.00
16428.00 15647.00 17247.00 18244.00
16434.00 15654.00 17273.00 18268.00
16193.00 15424.00 17180.00 18032.00
16212.00 15442.00 17192.00 18043.00
16384.00 15606.00 17348.00 18330.00
16332.00 15556.00 17284.00 18218.00
16320.00 15545.00 17276.00 18216.00
16423.00 15643.00 17376.00 18354.00
16471.00 15688.00 17411.00 18422.00
02/2004 16516.00 15737.00 17490.00 18561.00
The above illustration assumes a $10,000 investment made on March 1, 1994, and
reinvestment of income and capital gains distributions. In addition, the graph
and table do not reflect a deduction of the taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. The Merrill Lynch 1-3
Year Treasury Index is an unmanaged index that measures the return of Treasury
bills with maturities of 1-3 years and is intended to provide a benchmark for
the prior investment objective and strategy of the fund. The Merrill Lynch 1-5
Year Government/Corporate Index is an unmanaged index that includes all US
government debt with at least $100 million face value outstanding, as well as
investment-grade rated corporate debt with at least $100 million face value
outstanding and a maturity of 1-5 years. Unlike the fund, indices are not
investments, do not incur fees or expenses and are not professionally managed.
It is not possible to invest directly in an index. Securities in the fund may
not match those in an index.
AVERAGE ANNUAL TOTAL RETURN AS OF 02/29/04 (%)
· Enlarge/Download Table
SHARE CLASS A B C D G T Z
-------------------------------------------------------------------------------------------------------------------------
INCEPTION 11/01/02 11/01/02 10/13/03 11/01/02 11/01/02 11/01/02 11/06/86
-------------------------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
-------------------------------------------------------------------------------------------------------------------------
6-month (cumulative) 1.89 -2.95 1.49 -3.51 1.65 0.65 1.82 -0.23 1.59 -3.41 1.93 -2.92 2.02
-------------------------------------------------------------------------------------------------------------------------
1-year 1.80 -2.99 1.05 -3.94 1.21 0.22 1.66 -0.37 1.24 -3.76 1.93 -2.86 2.10
-------------------------------------------------------------------------------------------------------------------------
5-year 5.14 4.13 4.92 4.59 4.95 4.95 5.09 4.89 4.98 4.49 5.17 4.16 5.23
-------------------------------------------------------------------------------------------------------------------------
10-year 5.15 4.64 5.04 5.04 5.05 5.05 5.12 5.02 5.07 5.07 5.16 4.66 5.19
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
· Enlarge/Download Table
SHARE CLASS A B C D G T Z
-------------------------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
-------------------------------------------------------------------------------------------------------------------------
6-month (cumulative) -0.06 -4.84 -0.46 -5.41 -0.32 -1.31 -0.14 -2.13 -0.36 -5.31 -0.02 -4.81 0.07
-------------------------------------------------------------------------------------------------------------------------
1-year 2.14 -2.69 1.38 -3.62 1.52 0.52 1.99 -0.05 1.58 -3.42 2.27 -2.56 2.47
-------------------------------------------------------------------------------------------------------------------------
5-year 4.92 3.90 4.73 4.40 4.76 4.76 4.88 4.68 4.79 4.29 4.95 3.93 5.00
-------------------------------------------------------------------------------------------------------------------------
10-year 5.06 4.54 4.96 4.96 4.98 4.98 5.04 4.94 4.99 4.99 5.07 4.56 5.10
All results shown assume reinvestment of distributions. The "with sales charge"
returns include the maximum 4.75% charge for class A shares, the appropriate
class B contingent deferred sales charge (CDSC) for the holding period after
purchase as follows: through first year - 5%, second year - 4%, third year - 3%,
fourth year - 3%, fifth year - 2%, sixth year - 1%, and thereafter - 0%. Class C
has a CDSC of 1% which is applicable for the first year only. Class D has a
sales charge of 1% and also carries a CDSC of 1% that is applied to shares sold
within the first year after they are purchased. For class G shares, the CDSC for
the holding period after purchase is as follows: through first year - 5%, second
year - 4%, third year - 4%, fourth year - 4%, fifth year - 3%, sixth year - 2%,
seventh year - 1%, thereafter - 0%. For class T shares, the "with sales charge"
returns include the maximum 4.75% charge.
Effective October 13, 2003, class D shares are closed to all new investors and
new accounts. Existing class D shareholders will be able to make additional
purchases at any time. In addition, the class D sales charge of 1% is waived
after October 13, 2003. Performance for different share classes will vary based
on differences in sales charges and fees associated with each class.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Classes A, B, D, G and T (newer class shares) share performance information
includes returns of the fund's class Z shares (the oldest existing fund class)
for periods prior to the inception of the newer class shares. The returns for
class C include the returns of class B prior to 10/13/03, the date on which
class C was initially offered by the fund. The returns shown for class C also
include the performance of class Z prior to the inception of class B (11/01/02).
Class Z share returns are not restated to reflect any expense differential
(e.g., Rule 12b-1 fees) between class Z shares and the newer class shares. Had
the expense differential been reflected, the returns for the periods prior to
the inception of classes A, B, C, D, G and T would have been lower.
29
Sidebar:
SUMMARY
o FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 29, 2004, THE FUND'S CLASS A SHARES
RETURNED 1.89% WITHOUT SALES CHARGE.
o THE FUND'S RETURN WAS HIGHER THAN THE MERRILL LYNCH 1-3 YEAR TREASURY INDEX,
BUT LESS THAN THE MERRILL LYNCH 1-5 YEAR GOVERNMENT/CORPORATE INDEX AND THE
LIPPER SHORT TERM INVESTMENT GRADE DEBT CATEGORY AVERAGE.
o THE FUND'S EMPHASIS ON BOTH SHORT-TERM FLOATING RATE NOTES AND LONGER-TERM
SECURITIES WITHIN THE FUND'S MATURITY RANGE AIDED PERFORMANCE DURING THE
PERIOD.
[Illustration of 2 arrows pointing up]
MERRILL LYNCH 1-3
CLASS A SHARES YEAR TREASURY INDEX
1.89% 1.75%
OBJECTIVE
Seeks a high level of current
income consistent with a high
degree of principal stability
TOTAL NET ASSETS
$543.5 million
NET ASSET VALUE PER SHARE AS OF 02/29/04 ($)
Class A 8.70
--------------------------
Class B 8.70
--------------------------
Class C 8.70
--------------------------
Class D 8.70
--------------------------
Class G 8.70
--------------------------
Class T 8.70
--------------------------
Class Z 8.70
DISTRIBUTIONS DECLARED PER SHARE 09/01/03 - 02/29/04 ($)
Class A 0.08
--------------------------
Class B 0.05
--------------------------
Class C 0.05
--------------------------
Class D 0.08
--------------------------
Class G 0.06
--------------------------
Class T 0.09
--------------------------
Class Z 0.09
PORTFOLIO MANAGERS' REPORT _____________________________________________________
COLUMBIA SHORT TERM BOND FUND
For the six-month period ended February 29, 2004, Columbia Short Term Bond Fund
class A shares returned 1.89% without sales charge. The fund's performance was
higher than the benchmark Merrill Lynch 1-3 Year Treasury Index, which returned
1.75%, and lower than the Merrill Lynch 1-5 Year Government/Corporate Index,
which returned 2.84%, during the period. The fund slightly underperformed its
peer group. The Lipper Short Term Investment Grade Debt Category average was
2.02%.1 The fund's "barbell" structure--emphasizing short-term floating rate
notes and longer-term securities within the fund's maturity range--aided
performance during the period.
BONDS PERFORMED WELL EVEN AS THE ECONOMY IMPROVED
Most economic indicators were strong throughout the second half of 2003,
highlighted by impressive third-quarter GDP growth of 8.2%. Fourth quarter GDP
growth of 4.1% was moderate by comparison, but still indicative of a recovering
economy. Although interest rates tend to rise as economic activity picks up, the
Federal Reserve Board has maintained a monetary policy aimed at keeping interest
rates low because inflationary pressures have not materialized and the job
market has remained sluggish. The Fed left a key short-term interest rate--the
fed funds rate--unchanged at just 1.0% throughout the period. Against this
backdrop, rates on 2-year Treasury notes fell by 33 basis points and the 5-year
Treasury rate declined by 53 basis points. A basis point is one one-hundredth of
a percent.
The market environment that prevailed during the period favored fixed-income
investments with longer maturities. Generally speaking, risk-taking was rewarded
throughout the bond market, as lower-quality securities consistently
outperformed investment grade bonds. These trends were modestly negative for the
fund, which focuses on higher-quality short-term bonds.
BARBELL APPROACH OFFSETS IMPACT OF SHORTER DURATION
The fund was able to generate a competitive return even though its overall
duration was shorter than that of the benchmark. Duration is a measure of
interest rate sensitivity. By keeping the fund's duration short while interest
rates declined, we gave up some performance relative to the market. However we
more than made up for that decision with the fund's "barbell" investment
approach--combining short-term floating rate instruments with securities at the
long end of our maturity spectrum (five years). The floating rate securities
carried higher yields than Treasury securities of comparable maturities, while
the longer-term securities increased in value as long-term rates declined.
1 Lipper Inc., a widely respected data provider in the industry, calculates an
average total return for mutual funds with similar investment objectives as
those of the fund.
30
Sidebar:
PORTFOLIO QUALITY AS OF 02/29/04 (%)
Aaa 37.1
----------------------------------
Aa 11.4
----------------------------------
A 20.0
----------------------------------
Baa 10.3
----------------------------------
Agency 17.4
----------------------------------
Treasury 3.8
Portfolio quality is calculated as a percentage of total investments.
Ratings shown represent the highest rating assigned to a particular bond by one
of the following nationally recognized rating agencies: Standard & Poor's
Corporation, Moody's Investors Service, Inc. or Fitch Investors Service, Inc.
PORTFOLIO COMPOSITION AS OF 02/29/04 (%)
Corporate notes & bonds 39.5
------------------------------------------
Collateralized mortgage obligations 20.3
------------------------------------------
U.s. Government & Agency 18.4
------------------------------------------
Asset-backed securities 13.7
------------------------------------------
Cash & Cash Equivalents,
net receivables & payables 7.3
------------------------------------------
Commercial mortgage-backed
securities 0.8
MATURITY BREAKDOWN AS OF 02/29/04 (%)
0-1 YEARS 50.1
------------------------------------------
1-3 YEARS 31.9
------------------------------------------
3-5 YEARS 16.0
------------------------------------------
5+ YEARS 2.0
Your fund is actively managed and the composition of its portfolio will change
over time. Portfolio composition and holdings discussed are calculated as a
percentage of net assets.
________________________________________________________________________________
COLUMBIA SHORT TERM BOND FUND
We also repositioned the fund's mortgage investments during the period. We
modestly shifted away from conventional pass-through securities in favor of
structured instruments, such as collateralized mortgage obligations (CMOs). This
move was designed to defend against changes in mortgage prepayment activity.
Mortgage prepayments have been quite high due to low mortgage rates. But if
rates rise and the level of prepayments drops, it would hurt the value of
conventional mortgage bonds.
Separately, we increased our position in corporate bonds from 32% to 39% of the
portfolio. As yields on corporate bonds came down during the period, their
prices rose and this move aided overall performance.
PREPARING FOR HIGHER INTEREST RATES
We expect the economy to continue to expand throughout 2004. If the economy
lives up to this estimate, we expect economic growth to translate into higher
short-term interest rates, especially if the labor market begins to improve.
Although the timing of such an upward shift is impossible to pinpoint, the
portfolio's shorter-than-average duration and its emphasis on floating rate
securities make it well positioned for such a scenario, and our emphasis on
relatively well-structured mortgage-related securities should provide additional
protection.
Leonard A. Aplet, CFA, has co-managed Columbia
Short Term Bond Fund since November 2000 and has
been with the advisor and its predecessors since
1987.
/s/ Leonard A. Aplet
Richard R. Cutts, CFA, has co-managed the fund
since December 2002 and has been with the advisor
and its predecessors since 1994.
/s/ Richard R. Cutts
The fund offers the potential for current income and capital preservation but is
subject to interest rate risk, credit risk and prepayment risk.
31
Sidebar:
PERFORMANCE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04 ($)
SALES CHARGE WITHOUT WITH
-----------------------------------
Class A 18,871 17,974
-----------------------------------
Class B 18,681 18,681
-----------------------------------
Class C 18,687 18,687
-----------------------------------
Class D 18,735 18,552
-----------------------------------
Class Z 18,994 n/a
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
PERFORMANCE INFORMATION_________________________________________________________
COLUMBIA FIXED INCOME SECURITIES FUND
VALUE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04
(MOUNTAIN CHART)
CLASS A CLASS A
SHARES SHARES LEHMAN
WITHOUT WITH BROTHERS
SALES SALES AGGREGATE
CHARGE CHARGE BOND INDEX
------ ------ ----------
03/1994 10000.00 9525.00 10000.00
9764.00 9300.00 9753.00
9685.00 9225.00 9675.00
9677.00 9217.00 9674.00
9661.00 9202.00 9653.00
9832.00 9365.00 9845.00
9840.00 9372.00 9857.00
9700.00 9239.00 9712.00
9679.00 9219.00 9703.00
9656.00 9198.00 9682.00
9731.00 9268.00 9748.00
9917.00 9446.00 9941.00
10143.00 9661.00 10178.00
10212.00 9726.00 10240.00
10362.00 9869.00 10384.00
10775.00 10263.00 10785.00
10861.00 10345.00 10864.00
10833.00 10318.00 10840.00
10970.00 10448.00 10971.00
11089.00 10562.00 11078.00
11234.00 10701.00 11222.00
11406.00 10864.00 11390.00
11570.00 11021.00 11550.00
11641.00 11088.00 11626.00
11426.00 10883.00 11424.00
11350.00 10811.00 11344.00
11263.00 10728.00 11280.00
11238.00 10704.00 11257.00
11397.00 10855.00 11408.00
11415.00 10873.00 11439.00
11406.00 10864.00 11420.00
11611.00 11059.00 11618.00
11857.00 11294.00 11876.00
12077.00 11503.00 12079.00
11962.00 11394.00 11967.00
12010.00 11439.00 12004.00
12047.00 11475.00 12034.00
11919.00 11353.00 11901.00
12094.00 11520.00 12079.00
12207.00 11627.00 12194.00
12347.00 11761.00 12339.00
12687.00 12084.00 12672.00
12574.00 11977.00 12564.00
12755.00 12149.00 12749.00
12949.00 12334.00 12934.00
12988.00 12371.00 12993.00
13106.00 12483.00 13125.00
13263.00 12633.00 13293.00
13252.00 12623.00 13282.00
13283.00 12652.00 13327.00
13352.00 12718.00 13397.00
13484.00 12844.00 13524.00
13593.00 12948.00 13639.00
13614.00 12967.00 13667.00
13836.00 13179.00 13890.00
14099.00 13429.00 14215.00
13975.00 13311.00 14140.00
14033.00 13367.00 14220.00
14082.00 13413.00 14263.00
14182.00 13509.00 14364.00
13910.00 13249.00 14113.00
13999.00 13334.00 14191.00
14045.00 13378.00 14236.00
13878.00 13219.00 14111.00
13817.00 13161.00 14066.00
13724.00 13073.00 14005.00
13697.00 13046.00 13998.00
13866.00 13207.00 14160.00
13904.00 13244.00 14213.00
13921.00 13260.00 14211.00
13867.00 13208.00 14143.00
13785.00 13130.00 14097.00
13926.00 13264.00 14267.00
14102.00 13433.00 14455.00
14053.00 13386.00 14414.00
14042.00 13375.00 14406.00
14346.00 13665.00 14706.00
14448.00 13762.00 14840.00
14668.00 13971.00 15055.00
14771.00 14069.00 15150.00
14852.00 14146.00 15250.00
15122.00 14404.00 15500.00
15429.00 14696.00 15788.00
15702.00 14956.00 16047.00
15839.00 15087.00 16187.00
15924.00 15168.00 16268.00
15824.00 15072.00 16199.00
15930.00 15173.00 16297.00
15976.00 15217.00 16358.00
16342.00 15566.00 16725.00
16499.00 15715.00 16917.00
16672.00 15880.00 17115.00
17009.00 16201.00 17473.00
16796.00 15999.00 17232.00
16684.00 15891.00 17121.00
16786.00 15988.00 17260.00
16922.00 16118.00 17428.00
16683.00 15891.00 17138.00
16992.00 16185.00 17471.00
17121.00 16308.00 17619.00
17184.00 16368.00 17771.00
17349.00 16525.00 17986.00
17646.00 16808.00 18290.00
17903.00 17053.00 18586.00
17696.00 16855.00 18501.00
17676.00 16837.00 18495.00
17945.00 17093.00 18878.00
17967.00 17113.00 18895.00
18216.00 17351.00 19156.00
18203.00 17339.00 19140.00
18340.00 17469.00 19299.00
18633.00 17748.00 19658.00
18574.00 17692.00 19619.00
17981.00 17127.00 18960.00
18095.00 17235.00 19085.00
18554.00 17673.00 19591.00
18391.00 17517.00 19408.00
18382.00 17509.00 19455.00
18551.00 17670.00 19653.00
18694.00 17806.00 19811.00
02/2004 18871.00 17974.00 20029.00
The above illustration assumes a $10,000 investment made on March 1, 1994, and
reinvestment of income and capital gains distributions. In addition, the graph
and table do not reflect a deduction of the taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. The Lehman Brothers
Aggregate Bond Index is a market value-weighted index that tracks the daily
price, coupon, pay-downs, and total return performance of fixed-rate, publicly
placed, dollar-denominated, and non-convertible investment grade debt issues
with at least $100 million per amount outstanding and with at least one year to
final maturity. Unlike the fund, indices are not investments, do not incur fees
or expenses and are not professionally managed. It is not possible to invest
directly in an index. Securities in the fund may not match those in an index.
AVERAGE ANNUAL TOTAL RETURN AS OF 02/29/04 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
------------------------------------------------------------------------------------------------------------
INCEPTION 11/01/02 11/01/02 10/13/03 11/01/02 02/25/83
------------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
------------------------------------------------------------------------------------------------------------
6-month (cumulative) 4.28 -0.71 3.88 -1.12 3.91 2.91 3.97 1.98 4.43
------------------------------------------------------------------------------------------------------------
1-year 3.58 -1.34 2.82 -2.18 2.85 1.85 3.07 1.03 4.11
------------------------------------------------------------------------------------------------------------
5-year 6.29 5.27 6.08 5.76 6.08 6.08 6.14 5.93 6.43
------------------------------------------------------------------------------------------------------------
10-year 6.56 6.04 6.45 6.45 6.45 6.45 6.48 6.38 6.63
------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
------------------------------------------------------------------------------------------------------
6-month (cumulative) -0.12 -4.89 -0.50 -5.41 -0.46 -1.44 -0.38 -2.36 0.11
------------------------------------------------------------------------------------------------------
1-year 3.38 -1.50 2.61 -2.39 2.65 1.65 2.85 0.81 3.94
------------------------------------------------------------------------------------------------------
5-year 5.67 4.65 5.49 5.16 5.49 5.49 5.54 5.32 5.80
------------------------------------------------------------------------------------------------------
10-year 6.30 5.79 6.21 6.21 6.21 6.21 6.24 6.13 6.37
All results shown assume reinvestment of distributions. The "with sales charge"
returns include the maximum 4.75% charge for class A shares and the appropriate
class B contingent deferred sales charge (CDSC) for the holding period after
purchase as follows: through first year - 5%, second year - 4%, third year - 3%,
fourth year - 3%, fifth year - 2%, sixth year - 1%, and thereafter - 0%. Class C
has a CDSC of 1% which is applicable for the first year only. Class D has a
sales charge of 1% and also carries a CDSC of 1% that is applied to shares sold
within the first year after they are purchased.
Effective October 13, 2003, class D shares are closed to all new investors and
new accounts. Existing class D shareholders will be able to make additional
purchases at any time. In addition, the class D sales charge of 1% is waived
after October 13, 2003. Performance for different share classes will vary based
on differences in sales charges and fees associated with each class.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Classes A, B, and D (newer class shares) share performance information includes
returns of the fund's class Z shares (the oldest existing fund class) for
periods prior to the inception of the newer class shares. The returns for class
C include the returns of class B prior to 10/13/2003, the date on which class C
was initially offered by the fund. The returns shown for class C also include
the performance of class Z prior to the inception of class B (11/01/02). Class Z
share returns are not restated to reflect any expense differential (e.g., Rule
12b-1 fees) between class Z shares and the newer class shares. Had the expense
differential been reflected, the returns for the periods prior to the inception
of classes A, B, C and D would have been lower.
32
Sidebar:
SUMMARY
o FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 29, 2004, THE FUND'S CLASS A SHARES
RETURNED 4.28% WITHOUT SALES CHARGE.
o THE FUND UNDERPERFORMED ITS BENCHMARK, THE LEHMAN BROTHERS AGGREGATE BOND
INDEX, AS WELL AS ITS PEER GROUP, THE LIPPER CORPORATE DEBT FUNDS A RATED
CATEGORY.
o THE FUND'S RELATIVELY CONSERVATIVE POSITIONING HURT ITS RELATIVE RETURN IN A
PERIOD WHEN MORE SPECULATIVE SECURITIES OUTPERFORMED.
[Illustration of 2 arrows pointing up]
LEHMAN BROTHERS
AGGREGATE
CLASS A SHARES BOND INDEX
4.28% 4.92%
OBJECTIVE
Seeks long-term capital appreciation
TOTAL NET ASSETS
$405.5 million
NET ASSET VALUE PER SHARE AS OF 02/29/04 ($)
Class A 13.65
---------------------------
Class B 13.65
---------------------------
Class C 13.65
---------------------------
Class D 13.65
---------------------------
Class Z 13.65
DISTRIBUTIONS DECLARED PER SHARE 09/01/03 - 02/29/04 ($)
Class A 0.26
---------------------------
Class B 0.20
---------------------------
Class C 0.17
---------------------------
Class D 0.22
---------------------------
Class Z 0.28
PORTFOLIO MANAGERS' REPORT______________________________________________________
COLUMBIA FIXED INCOME SECURITIES FUND
For the six-month period ended February 29, 2004, Columbia Fixed Income
Securities Fund class A shares returned 4.28% without sales charge. By
comparison, the Lehman Brothers Aggregate Bond Index and the Lipper Corporate
Debt Funds A Rated Category average returned 4.92% and 5.19%, respectively, over
the same period.1 We believe the fund trailed its benchmark and peer group
primarily because of its relatively conservative positioning: it carried a
duration that was slightly shorter than the index while interest rates were
falling. And, its average credit quality was higher than the market at a time
when lower-rated bonds outperformed higher-rated bonds. Duration is a measure of
interest rate sensitivity. We shortened duration as a defensive move. With
interest rates at historical lows, we wanted to limit the potential for capital
erosion if interest rates rose as well as to provide investors with current
income. In fact, interest rates fell during the period, and we gave up some
short-term performance because of our decision. However, those results were
partially offset by the portfolio's increased exposure to corporate bonds, which
outperformed during the period.
BONDS PERFORMED WELL EVEN AS THE ECONOMY IMPROVED
Most economic indicators were strong throughout the second half of 2003,
highlighted by impressive third-quarter GDP growth of 8.2%. Fourth quarter GDP
growth of 4.1% was more moderate by comparison, but still indicative of a
recovering economy. Although interest rates tend to rise as economic activity
picks up, the Federal Reserve Board has maintained a monetary policy aimed at
keeping interest rates low. With no great build-up in inflation and a sluggish
job market, the Fed left a key short-term interest rate--the fed funds
rate--unchanged at just 1.0% throughout the period. Against this backdrop, rates
on 5-Year Treasury notes fell by 53 basis points and the 10-year Treasury rate
declined by 49 basis points. A basis point is one one-hundredth of a percent.
LONGER MATURITIES AND LOWER QUALITY PREVAILED
As noted above, declining interest rates favored fixed-income investments with
longer maturities, so our relatively short duration modestly decreased
performance. The fund also lost some ground because lower-quality securities
outperformed the investment grade securities in which the fund exclusively
invests. For example, during the period A-rated corporate bonds returned 5.83%,
while Baa-rated bonds returned 7.78%--a difference of 1.95 percentage points. We
believe that our Baa
1 Lipper Inc., a widely respected data provider in the industry, calculates an
average total return for mutual funds with similar investment objectives as
the fund.
33
Sidebar:
PORTFOLIO QUALITY AS OF 02/29/04 (%)
Treasury/Agency 40.8
------------------------------
Aaa 16.3
------------------------------
Aa 9.3
------------------------------
A 14.1
------------------------------
Baa 12.8
------------------------------
Ba 3.8
------------------------------
B 2.8
------------------------------
Caa 0.1
Portfolio quality is calculated as a percentage of total investments.
Ratings shown represent the highest rating assigned to a particular bond by one
of the nationally recognized rating agencies: Standard & Poor's Corporation,
Moody's Investors Service, Inc. or Fitch Investors Service, Inc.
PORTFOLIO COMPOSITION AS OF 02/29/04 (%)
Corporate notes & bonds 43.3
----------------------------------------------
U.S. Government & agency 39.7
----------------------------------------------
Collateralized mortgage obligations 7.2
----------------------------------------------
Cash & Cash Equivalents,
net receivables & payables 4.9
----------------------------------------------
Asset-backed securities 4.3
----------------------------------------------
Commercial mortgage-backed
securities 0.6
MATURITY BREAKDOWN AS OF 02/29/04 (%)
0-1 YEARS 20.3
----------------------------
1-5 YEARS 45.7
----------------------------
5-10 YEARS 21.6
----------------------------
10-20 YEARS 4.1
----------------------------
20+ YEARS 8.3
Your fund is actively managed and the composition of its portfolio will change
over time. Portfolio composition and holdings discussed are calculated as a
percentage of net assets.
________________________________________________________________________________
COLUMBIA FIXED INCOME SECURITIES FUND
weighting was below that of our peer group. Even at the low-quality end of our
holdings, we concentrated on bonds that we believed were candidates for a
ratings upgrade rather than the marginal credits whose higher yields were in
strong demand during the period.
MORTGAGE INVESTMENTS REPOSITIONED
We also repositioned the fund's mortgage investments during the period. We
shifted away from 30-year conventional pass-through securities in favor of
15-year securities and structured instruments, such as collateralized mortgage
obligations (CMOs). This move was designed to defend against changes in mortgage
prepayment activity. Mortgage prepayments have been quite high due to low
mortgage rates. But if rates rise and the level of prepayments drops, it would
hurt the value of conventional mortgage bonds.
Separately, we increased our position in corporate bonds from 41% to 43% of the
portfolio. As yields on corporate bonds came down during the period, their
prices rose, and this move aided overall performance.
PREPARING FOR HIGHER INTEREST RATES
We expect the economy to continue to expand throughout 2004. At some point we
expect this growth to translate into higher interest rates. Although the timing
of an upward shift in rates is impossible to pinpoint, the portfolio's
shorter-than-average duration makes it well positioned for a rising-rate
scenario, and our shift from pass-throughs to CMOs has the potential to provide
additional protection.
Leonard A. Aplet, CFA, has co-managed Columbia
Fixed Income Securities Fund since January 1988
and has been with the advisor and its predecessors
since 1987.
/s/ Leonard A. Aplet
Richard R. Cutts, CFA, has co-managed the fund
since December 2002 and has been with the advisor
and its predecessors since 1994.
/s/ Richard R. Cutts
Investing in fixed-income securities offers the potential for attractive current
income and total returns but also involves certain risks. The value and return
of your investment may fluctuate as a result of changes in interest rates; the
financial strength of issuers of lower-rated bonds; foreign, political and
economic developments; and changes in currency exchange rates.
34
Sidebar:
PERFORMANCE OF A $10,000 INVESTMENT 02/24/99 - 02/29/04 ($)
SALES CHARGE WITHOUT WITH
-----------------------------------
Class A 13,068 12,446
-----------------------------------
Class B 12,941 12,841
-----------------------------------
Class C 12,954 12,954
-----------------------------------
Class D 12,996 12,867
-----------------------------------
Class Z 13,122 n/a
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
PERFORMANCE INFORMATION_________________________________________________________
COLUMBIA NATIONAL MUNICIPAL BOND FUND
VALUE OF A $10,000 INVESTMENT 02/24/99 - 02/29/04
(MOUNTAIN CHART)
CLASS A CLASS A
SHARES SHARES LEHMAN
WITHOUT WITH BROTHERS
SALES SALES MUNICIPAL
CHARGE CHARGE BOND INDEX
------ ------ ----------
02/1999 10000.00 9525.00 10000.00
9934.00 9462.00 10014.00
9920.00 9449.00 10039.00
9951.00 9478.00 9981.00
9893.00 9423.00 9837.00
9733.00 9271.00 9872.00
9768.00 9304.00 9794.00
9671.00 9212.00 9797.00
9675.00 9216.00 9692.00
9567.00 9112.00 9794.00
9674.00 9214.00 9721.00
9608.00 9152.00 9678.00
9543.00 9089.00 9790.00
9641.00 9183.00 10004.00
9868.00 9399.00 9945.00
9791.00 9326.00 9893.00
9714.00 9253.00 10155.00
9985.00 9511.00 10296.00
10110.00 9630.00 10455.00
10267.00 9779.00 10401.00
10209.00 9724.00 10514.00
10336.00 9845.00 10594.00
10407.00 9913.00 10856.00
10654.00 10148.00 10963.00
10749.00 10238.00 10998.00
10765.00 10253.00 11097.00
10861.00 10345.00 10977.00
10737.00 10227.00 11096.00
10844.00 10329.00 11170.00
10918.00 10399.00 11335.00
11082.00 10555.00 11522.00
11256.00 10721.00 11483.00
11216.00 10684.00 11620.00
11346.00 10807.00 11522.00
11217.00 10684.00 11413.00
11097.00 10570.00 11610.00
11297.00 10760.00 11750.00
11426.00 10883.00 11519.00
11205.00 10673.00 11744.00
11454.00 10910.00 11816.00
11517.00 10970.00 11941.00
11649.00 11096.00 12095.00
11818.00 11257.00 12240.00
11952.00 11384.00 12508.00
12236.00 11655.00 12300.00
12017.00 11446.00 12249.00
11950.00 11382.00 12507.00
12209.00 11629.00 12476.00
12137.00 11561.00 12651.00
12328.00 11742.00 12658.00
12339.00 11753.00 12742.00
12431.00 11841.00 13040.00
12733.00 12129.00 12985.00
12665.00 12063.00 12531.00
12210.00 11630.00 12625.00
12302.00 11717.00 12996.00
12694.00 12091.00 12931.00
12585.00 11987.00 13065.00
12694.00 12091.00 13174.00
12803.00 12195.00 13249.00
12851.00 12240.00 13450.00
02/2004 13068.00 12446.00
The above illustration assumes a $10,000 investment made on February 24, 1999,
and reinvestment of income and capital gains distributions. In addition, the
graph and table do not reflect a deduction of the taxes that a shareholder would
pay on fund distributions or the redemption of fund shares. The Lehman Brothers
Municipal Bond Index is an unmanaged index that tracks the performance of the
municipal bond market. Unlike the fund, indices are not investments, do not
incur fees or expenses and are not professionally managed. It is not possible to
invest directly in an index. Securities in the fund may not match those in an
index. Index performance is from February 28, 1999.
AVERAGE ANNUAL TOTAL RETURN AS OF 02/29/04 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
---------------------------------------------------------------------------------------------------------------
INCEPTION 11/01/02 11/01/02 10/13/03 11/01/02 02/24/99
---------------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
---------------------------------------------------------------------------------------------------------------
6-month (cumulative) 6.28 1.23 5.89 0.89 6.00 5.00 6.07 4.04 6.41
---------------------------------------------------------------------------------------------------------------
1-year 6.04 1.00 5.26 0.26 5.37 4.37 5.62 3.61 6.38
---------------------------------------------------------------------------------------------------------------
5-year 5.64 4.60 5.43 5.10 5.45 5.45 5.52 5.31 5.72
---------------------------------------------------------------------------------------------------------------
Life 5.49 4.46 5.28 5.12 5.30 5.30 5.37 5.16 5.57
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
-----------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
-----------------------------------------------------------------------------------------------------
6-month (cumulative) 1.09 -3.71 0.71 -4.21 0.80 -0.19 0.87 -1.15 1.19
-----------------------------------------------------------------------------------------------------
1-year 4.86 -0.12 4.09 -0.91 4.17 3.17 4.43 2.44 5.21
-----------------------------------------------------------------------------------------------------
Life 5.22 4.17 5.03 4.69 5.05 5.05 5.11 4.90 5.30
All results shown assume reinvestment of distributions. The "with sales charge"
returns include the maximum 4.75% charge for class A shares, the appropriate
class B contingent deferred sales charge (CDSC) for the holding period after
purchase as follows: through first year - 5%, second year - 4%, third year - 3%,
fourth year - 3%, fifth year - 2%, sixth year - 1%, and thereafter - 0%. Class C
has a CDSC of 1% which is applicable for the first year only. Class D has a
sales charge of 1% and also carries a CDSC of 1% that is applied to shares sold
within the first year after they are purchased.
Effective October 13, 2003, class D shares are closed to all new investors and
new accounts. Existing class D shareholders will be able to make additional
purchases at any time. In addition, the class D sales charge of 1% is waived
after October 13, 2003. Performance for different share classes will vary based
on differences in sales charges and fees associated with each class.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Classes A, B, and D (newer class shares) share performance information includes
returns of the fund's class Z shares (the oldest existing fund class) for
periods prior to the inception of the newer class shares. The returns for class
C include the returns of class B prior to 10/13/03, the date on which class C
was initially offered by the fund. The returns shown for class C also include
the performance of class Z prior to the inception of class B (11/01/02). Class Z
share returns are not restated to reflect any expense differential (e.g., Rule
12b-1 fees) between class Z shares and the newer class shares. Had the expense
differential been reflected, the returns for the periods prior to the inception
of classes A, B, C, and D would have been lower.
35
Sidebar:
SUMMARY
o FOR THE SIX-MONTH PERIOD THAT ENDED FEBRUARY 29, 2004, THE FUND'S CLASS A
SHARES RETURNED 6.28% WITHOUT SALES CHARGE.
o THE FUND'S RETURN WAS SLIGHTLY LESS THAN THE RETURN FOR ITS BENCHMARK, THE
LEHMAN BROTHERS MUNICIPAL BOND INDEX, AND THE AVERAGE FOR ITS PEER GROUP, THE
LIPPER GENERAL MUNICIPAL DEBT FUNDS CATEGORY.
o ALTHOUGH THE FUND'S FOCUS ON MUNICIPAL BONDS WITH LONGER INTERMEDIATE
MATURITIES HELPED GENERATE A STRONG ABSOLUTE RETURN, WE BELIEVE THAT ITS
SHORTER DURATION OVERALL ACCOUNTED FOR A SLIGHT SHORTFALL RELATIVE TO ITS
BENCHMARK AND PEER GROUP. THE FUND'S INVESTMENTS IN NON-RATED BONDS ALSO
AIDED ITS RETURN.
[Illustration of 2 arrows pointing up]
LEHMAN BROTHERS
MUNICIPAL BOND
CLASS A SHARES INDEX
6.28% 6.52%
OBJECTIVE
Seeks a high level of income
exempt from federal income tax
TOTAL NET ASSETS
$16.1 million
NET ASSET VALUE PER SHARE AS OF 02/29/04 ($)
Class A 10.48
---------------------------
Class B 10.48
---------------------------
Class C 10.48
---------------------------
Class D 10.48
---------------------------
Class Z 10.48
DISTRIBUTIONS DECLARED PER SHARE 09/01/03 - 02/29/04 ($)
Class A 0.26
---------------------------
Class B 0.22
---------------------------
Class C 0.20
---------------------------
Class D 0.24
---------------------------
Class Z 0.27
PORTFOLIO MANAGER'S REPORT______________________________________________________
COLUMBIA NATIONAL MUNICIPAL BOND FUND
For the six-month period ended February 29, 2004, Columbia National Municipal
Bond Fund class A shares returned 6.28% without sales charge. It fell just short
of the return on its benchmark, the Lehman Brothers Municipal Bond Index, which
was 6.52% over the same period. The fund also trailed the average return of the
Lipper General Municipal Debt Funds Category, which was 6.44%.1 Our focus on
municipal bonds with intermediate maturities at the longer end of the range as
well as non-rated bonds helped the fund's return. A slightly shorter duration
[see sidebar on next page] overall modestly hampered relative returns as
interest rates trended down.
MORE FAVORABLE ENVIRONMENT FOR MUNICIPAL BONDS
After a period of volatile performance in the summer of 2003, municipal bonds
rebounded during the six months covered by this report. Although economic growth
was strong, inflation remained in check because of weak job growth and excess
capacity in the manufacturing sector. With little likelihood of a near-term rise
in interest rates, bond yields drifted lower and bond prices moved higher. The
combination of sluggish job growth and federal tax cuts lowered revenues to
state and local governments, leading to heavier-than-usual issuance of municipal
bonds in 2003. Demand for muni bonds remained strong, although added supply put
pressure on the prices of existing bonds.
FOCUS ON LONGER BONDS AND INCREASED GEOGRAPHIC DIVERSIFICATION
The fund continued to concentrate on high-quality issues diversified nationally
across both states and sectors. We focused on muni bonds with maturities between
10 and 20 years. This structure benefited performance, as interest rates for
longer maturity bonds dropped more than those for shorter maturity munis. Since
bond prices tend to move up as interest rates move down, prices on longer
maturity bonds did better than those on shorter maturity bonds.
The fund's non-rated muni bonds did well in an environment where investors were
willing to take on more risk for higher returns. We trimmed some of our
non-rated holdings and shifted the proceeds into higher-quality bonds that
helped increase the fund's geographic diversification. As part of our
diversification effort, we also reduced the fund's exposure to Oregon and
Illinois bonds from approximately 27% to 22% of net assets.
1 Lipper Inc., a widely respected data provider in the industry, calculates an
average total return for mutual funds with similar investment objectives as
the fund.
36
Sidebar:
PORTFOLIO QUALITY AS OF 02/29/04 (%)
Aaa 60.1
--------------------------------
Aa 16.8
--------------------------------
A 5.8
--------------------------------
BBB 1.0
--------------------------------
Non Rated 12.2
--------------------------------
Net Cash & equivalents 4.1
Ratings shown represent the highest rating assigned to a particular bond by one
of the nationally-recognized rating agencies: Standard and Poor's Corporation,
Moody's Investors Service, Inc. or Fitch Investors Service, Inc.
TOP 10 STATES AS OF 02/29/04 (%)
Washington 13.8
--------------------------------
Oregon 11.1
--------------------------------
Illinois 10.7
--------------------------------
Michigan 5.9
--------------------------------
Indiana 5.2
--------------------------------
Texas 4.5
--------------------------------
Tennessee 4.1
--------------------------------
New York 3.6
--------------------------------
Wisconsin 3.4
--------------------------------
Alaska 3.1
Your fund is actively managed and the composition of its portfolio will change
over time. Portfolio composition and holdings discussed are calculated as a
percentage of net assets.
MATURITY BREAKDOWN AS OF 02/29/04 (%)
0-1 YEARS 1.1
--------------------------------
1-3 YEARS 1.7
--------------------------------
3-5 YEARS 3.2
--------------------------------
5-7 YEARS 5.5
--------------------------------
7-10 YEARS 23.6
--------------------------------
10-15 YEARS 50.2
--------------------------------
15-20 YEARS 8.9
--------------------------------
20-25 YEARS 1.7
--------------------------------
Net cash & equivalents 4.1
Portfolio quality and maturity breakdown are calculated as a percentage of total
investments including short-term obligations.
ABOUT DURATION
Duration is a measure, expressed in years, of interest-rate sensitivity. It is
similar to maturity, but because it takes into consideration the entire stream
of future principal and interest payments and how long it will take to collect
them, it is a more complex and more accurate measure of a fund's exposure to
changing interest rates.
Because we are active duration managers, we tend to use duration as a tactical
tool to anticipate or respond to interest rate changes. Because bond prices and
interest rates move in opposite directions, we lower duration when we expect
interest rates to rise and we raise duration when we expect interest rates to
fall. This adjustment provides the potential to benefit performance. If we are
wrong and interest rates rise after we lengthen duration, or fall after we
shorten duration, fund performance could be hurt.
________________________________________________________________________________
COLUMBIA NATIONAL MUNICIPAL BOND FUND
POTENTIAL FOR IMPROVING MUNICIPAL BOND ENVIRONMENT
Our outlook is for a more stable environment in the municipal bond market for
the period ahead. Low mortgage rates and steady real estate prices should
continue to support the housing market and consumer spending despite weak job
growth. If economic growth remains solid, state and local governments can expect
tax revenues to move higher. This, in turn, would aid balance sheets and slow
credit downgrades. With less financial pressure, states and local governments
would also be able to reduce issuance, creating a better environment for
existing bonds. The presidential election is a wildcard, as the candidates' tax
policies would likely have different effects on state and local revenues and the
creation of additional investments with tax incentives.
Going forward, we plan to focus the fund on the longer end of the intermediate
maturity range, targeting issues with 8- to 20-year maturities. We think this
part of the market represents the best return opportunities in an environment
with the potential for volatile or rising interest rates. We also intend to
reduce the fund's already small position in bonds that are subject to the
alternative minimum tax.
Susan Sanderson has managed Columbia National
Municipal Bond Fund since December 2003 and has
been with the advisor and its predecessors since
1985.
/s/ Susan Sanderson
Tax-exempt investing offers current tax-free income, but it also involves
certain risks. The value of the fund shares will be affected by interest rate
changes and the creditworthiness of issues held in the funds. Interest income
from certain tax-exempt bonds may be subject to the federal alternative minimum
tax for individuals and corporations.
37
Sidebar:
PERFORMANCE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04 ($)
SALES CHARGE WITHOUT WITH
-----------------------------------
Class A 17,195 16,378
-----------------------------------
Class B 17,027 17,027
-----------------------------------
Class C 17,046 17,046
-----------------------------------
Class D 17,112 16,935
-----------------------------------
Class Z 17,288 n/a
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
PERFORMANCE INFORMATION_________________________________________________________
COLUMBIA OREGON MUNICIPAL BOND FUND
VALUE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04
(MOUNTAIN CHART)
CLASS A CLASS A LEHMAN
SHARES SHARES BROTHERS
WITHOUT WITH GENERAL
SALES SALES OBLIGATION
CHARGE CHARGE BOND INDEX
------ ------ ----------
03/1994 10000.00 9525.00 10000.00
9642.00 9184.00 9632.00
9693.00 9233.00 9736.00
9762.00 9298.00 9811.00
9715.00 9254.00 9752.00
9858.00 9390.00 9905.00
9894.00 9424.00 9948.00
9764.00 9300.00 9809.00
9643.00 9185.00 9667.00
9486.00 9036.00 9516.00
9675.00 9216.00 9684.00
9907.00 9437.00 9913.00
10127.00 9646.00 10175.00
10234.00 9748.00 10314.00
10245.00 9758.00 10320.00
10497.00 9998.00 10628.00
10413.00 9918.00 10556.00
10503.00 10004.00 10678.00
10636.00 10131.00 10814.00
10707.00 10199.00 10883.00
10833.00 10318.00 11007.00
10983.00 10461.00 11163.00
11047.00 10522.00 11251.00
11111.00 10583.00 11360.00
11055.00 10530.00 11308.00
10939.00 10420.00 11182.00
10894.00 10377.00 11143.00
10887.00 10370.00 11125.00
10996.00 10473.00 11238.00
11088.00 10561.00 11343.00
11089.00 10562.00 11342.00
11218.00 10685.00 11480.00
11330.00 10792.00 11614.00
11507.00 10960.00 11830.00
11461.00 10916.00 11782.00
11490.00 10945.00 11814.00
11582.00 11032.00 11922.00
11460.00 10915.00 11768.00
11535.00 10987.00 11860.00
11670.00 11116.00 12036.00
11775.00 11216.00 12166.00
12075.00 11502.00 12481.00
11998.00 11428.00 12372.00
12124.00 11548.00 12513.00
12184.00 11605.00 12581.00
12241.00 11659.00 12642.00
12418.00 11828.00 12821.00
12538.00 11942.00 12953.00
12522.00 11928.00 12964.00
12512.00 11918.00 12975.00
12470.00 11878.00 12907.00
12651.00 12050.00 13120.00
12679.00 12076.00 13167.00
12708.00 12104.00 13197.00
12900.00 12287.00 13406.00
13060.00 12439.00 13584.00
13037.00 12418.00 13587.00
13076.00 12455.00 13631.00
13110.00 12488.00 13676.00
13276.00 12645.00 13856.00
13173.00 12548.00 13785.00
13181.00 12555.00 13790.00
13220.00 12592.00 13828.00
13099.00 12477.00 13750.00
12913.00 12300.00 13548.00
12964.00 12348.00 13601.00
12852.00 12242.00 13521.00
12859.00 12248.00 13533.00
12726.00 12122.00 13417.00
12853.00 12243.00 13553.00
12762.00 12156.00 13468.00
12683.00 12081.00 13418.00
12790.00 12182.00 13552.00
13056.00 12435.00 13826.00
12985.00 12368.00 13756.00
12905.00 12292.00 13683.00
13217.00 12589.00 14036.00
13397.00 12760.00 14221.00
13600.00 12954.00 14424.00
13528.00 12886.00 14352.00
13676.00 13026.00 14503.00
13765.00 13111.00 14604.00
14073.00 13404.00 14949.00
14233.00 13557.00 15111.00
14273.00 13595.00 15156.00
14389.00 13705.00 15289.00
14233.00 13557.00 15132.00
14386.00 13702.00 15285.00
14476.00 13789.00 15379.00
14676.00 13979.00 15598.00
14912.00 14204.00 15849.00
14872.00 14166.00 15814.00
15061.00 14346.00 15977.00
14888.00 14181.00 15836.00
14712.00 14013.00 15710.00
14952.00 14242.00 15967.00
15127.00 14408.00 16162.00
14855.00 14149.00 15853.00
15146.00 14426.00 16180.00
15241.00 14517.00 16269.00
15421.00 14688.00 16451.00
15628.00 14885.00 16653.00
15812.00 15061.00 16843.00
16158.00 15391.00 17185.00
15863.00 15109.00 16907.00
15742.00 14994.00 16824.00
16052.00 15290.00 17154.00
15990.00 15230.00 17125.00
16237.00 15466.00 17361.00
16224.00 15454.00 17394.00
16338.00 15562.00 17505.00
16725.00 15931.00 17892.00
16633.00 15843.00 17806.00
16039.00 15277.00 17215.00
16144.00 15377.00 17375.00
16630.00 15840.00 17872.00
16508.00 15724.00 17752.00
16681.00 15889.00 17898.00
16818.00 16019.00 18025.00
16882.00 16080.00 18115.00
02/2004 17195.00 16378.00 18395.00
The above illustration assumes a $10,000 investment made on March 1, 1994 and
reinvestment of income and capital gains distributions. In addition, the graph
and table do not reflect a deduction of the taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. The Lehman Brothers
General Obligation Bond Index is a unmanaged index that represents average
market-weighted performance of general obligation securities that have been
issued in the last five years with maturities greater than one year. Unlike the
fund, indices are not investments, do not incur fees or expenses and are not
professionally managed. It is not possible to invest directly in an index.
Securities in the fund may not match those in an index.
AVERAGE ANNUAL TOTAL RETURN AS OF 02/29/04 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
---------------------------------------------------------------------------------------------------------------
INCEPTION 11/01/02 11/01/02 10/13/03 11/01/02 07/02/84
---------------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
---------------------------------------------------------------------------------------------------------------
6-month (cumulative) 6.49 1.43 6.09 1.09 6.21 5.21 6.28 4.23 6.65
---------------------------------------------------------------------------------------------------------------
1-year 5.87 0.84 5.06 0.06 5.18 4.18 5.48 3.44 6.26
---------------------------------------------------------------------------------------------------------------
5-year 5.47 4.45 5.27 4.94 5.29 5.29 5.37 5.15 5.59
---------------------------------------------------------------------------------------------------------------
10-year 5.57 5.06 5.47 5.47 5.48 5.48 5.52 5.41 5.63
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
------------------------------------------------------------------------------------------------------
6-month (cumulative) 1.11 -3.70 0.71 -4.19 0.79 -0.19 0.91 -1.07 1.29
------------------------------------------------------------------------------------------------------
1-year 4.76 -0.21 3.96 -1.02 4.05 3.05 4.38 2.35 5.16
------------------------------------------------------------------------------------------------------
5-year 5.11 4.10 4.93 4.60 4.95 4.95 5.02 4.81 5.22
------------------------------------------------------------------------------------------------------
10-year 5.18 4.67 5.09 5.09 5.10 5.10 5.14 5.03 5.23
All results shown assume reinvestment of distributions. The "with sales charge"
returns include the maximum 4.75% charge for class A shares, the appropriate
class B contingent deferred sales charge (CDSC) for the holding period after
purchase as follows: through first year - 5%, second year - 4%, third year - 3%,
fourth year - 3%, fifth year - 2%, sixth year - 1%, and thereafter - 0%. Class C
has a CDSC of 1% which is applicable for the first year only. Class D has a
sales charge of 1% and also carries a CDSC of 1% that is applied to shares sold
within the first year after they are purchased.
Effective October 13, 2003, class D shares are closed to all new investors and
new accounts. Existing class D shareholders will be able to make additional
purchases at any time. In addition, the class D sales charge of 1% is waived
after October 13, 2003. Performance for different share classes will vary based
on differences in sales charges and fees associated with each class.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Classes A, B, and D (newer class shares) share performance information includes
returns of the fund's class Z shares (the oldest existing fund class) for
periods prior to the inception of the newer class shares. The returns for class
C include the returns of class B prior to 10/13/03, the date on which class C
was initially offered by the fund. The returns shown for class C also include
the performance of class Z prior to the inception of class B (11/01/02). Class Z
share returns are not restated to reflect any expense differential (e.g., Rule
12b-1 fees) between class Z shares and the newer class shares. Had the expense
differential been reflected, the returns for the periods prior to the inception
of classes A, B, C, and D would have been lower.
38
Sidebar:
SUMMARY
o FOR THE SIX-MONTH PERIOD THAT ENDED FEBRUARY 29, 2004, THE FUND'S CLASS A
SHARES RETURNED 6.49% WITHOUT SALES CHARGE.
o THE FUND'S RETURN WAS HIGHER THAN ITS BENCHMARK, THE LEHMAN BROTHERS GENERAL
OBLIGATION BOND INDEX, AND THE AVERAGE RETURN FOR ITS PEER GROUP, THE LIPPER
OREGON MUNICIPAL DEBT FUNDS CATEGORY.
o THE FUND'S STRONG PERFORMANCE WAS THE RESULT OF OUR CONCENTRATION ON
MUNICIPAL BONDS WITH INTERMEDIATE MATURITIES, WHICH DID BETTER THAN BONDS
WITH EITHER LONG OR SHORT MATURITIES.
[Illustration of 2 arrows pointing up]
LEHMAN BROTHERS
GENERAL OBLIGATION
CLASS A SHARES BOND INDEX
6.49% 5.90%
OBJECTIVE
Seeks a high level of income
exempt from federal and
Oregon income tax
TOTAL NET ASSETS
$486.4 million
NET ASSET VALUE PER SHARE AS OF 02/29/04 ($)
Class A 12.66
---------------------------
Class B 12.66
---------------------------
Class C 12.66
---------------------------
Class D 12.66
---------------------------
Class Z 12.66
DISTRIBUTIONS DECLARED PER SHARE 09/01/03 - 02/29/04 ($)
Class A 0.38
---------------------------
Class B 0.33
---------------------------
Class C 0.30
---------------------------
Class D 0.35
---------------------------
Class Z 0.40
PORTFOLIO MANAGER'S REPORT______________________________________________________
COLUMBIA OREGON MUNICIPAL BOND FUND
For the six-month period ended February 29, 2004, Columbia Oregon Municipal Bond
Fund class A shares returned 6.49% without sales charge. This was higher than
the fund's benchmark, the Lehman Brothers General Obligation Bond Index, which
returned 5.90%. The fund also beat its peer group, the Lipper Oregon Municipal
Debt Funds Category, which returned an average of 5.73%.1 The fund's strong
performance resulted from its focus on bonds with intermediate maturities, which
did better than bonds with either long or short maturities over the period.
A FAVORABLE ENVIRONMENT FOR MUNICIPAL BONDS
After a period of volatile performance in the summer of 2003, municipal bonds
rebounded during the six months covered by this report. Although economic growth
was strong, inflation remained in check because of weak job growth and excess
capacity in the manufacturing sector. With little likelihood of a near-term rise
in interest rates, bond yields drifted lower and bond prices moved higher. The
combination of sluggish job growth and federal tax cuts lowered revenues to
state and local governments, leading to heavier-than-usual issuance of municipal
bonds nationwide.
In Oregon, 2003 muni bond issuance was 60% higher than the previous year.
Oregon's economy, which relied heavily on the technology industry in the `90s,
remained slightly behind the rest of the country, with higher unemployment and
continued budget shortfalls. A recent ballot initiative to cover part of the
budget deficit failed, forcing the state to make cuts to balance its 2004-2005
budget and weakening its credit position.
During the period, yields on bonds with intermediate maturities dropped more
than bonds with short or long maturities. The fund's concentration in the
intermediate part of the market benefited performance, as prices on intermediate
maturity issues appreciated more than longer or shorter maturity issues.
The fund also benefited from its investments in hospital and non-rated bonds.
Hospital bonds performed well, as the financial outlook improved for many
issuers. The fund's non-rated bonds did well as investors became more willing to
take on added risk for higher returns.
Certain securities detracted from performance. Multi-family housing bonds hurt
performance as low mortgage rates favored individual home ownership over rental
housing, which made it difficult for issuers to maintain occupancy levels. In
addition, a decline in tourism over the last few years led to cash flow
shortfalls at the Oregon Coast Aquarium. We continue to work with the Aquarium
to resolve these issues or seek alternatives to enhance the value of the
outstanding bonds.
1 Lipper Inc., a widely respected data provider in the industry, calculates an
average total return for mutual funds with similar investment objectives as
the fund.
39
Sidebar:
PORTFOLIO QUALITY AS OF 02/29/04 (%)
AAA 39.8
--------------------------------
AA 36.9
--------------------------------
A 7.1
--------------------------------
BBB 4.3
--------------------------------
Non rated 10.0
--------------------------------
Net cash & equivalents 1.9
Ratings shown represent the highest rating assigned to a particular bond by one
of the nationally-recognized rating agencies: Standard and Poor's Corporation,
Moody's Investors Service, Inc. or Fitch Investors Service, Inc.
PORTFOLIO COMPOSITION AS OF 02/29/04 (%)
Revenue 34.0
----------------------------------------------
Insured revenue 20.8
----------------------------------------------
General obligations 17.8
----------------------------------------------
Insured general obligations 13.5
----------------------------------------------
Other bonds 6.2
----------------------------------------------
State of Oregon general obligations 4.4
----------------------------------------------
CASH & cash equivalents,
net receivables & payables 2.3
----------------------------------------------
PRE-refunded bond 0.8
----------------------------------------------
U.S. territories bonds 0.2
HOLDINGS DISCUSSED IN THIS REPORT AS OF 02/29/04 (%)
OREGON COAST AQUARIUM
(OREGON ST HEALTH HSG EDL) 0.1
MATURITY BREAKDOWN AS OF 02/29/04 (%)
0-3 Years 1.4
--------------------------------
3-5 Years 2.0
--------------------------------
5-7 Years 8.6
--------------------------------
7-10 Years 23.1
--------------------------------
10-15 Years 38.9
--------------------------------
15-20 Years 13.5
--------------------------------
20-25 Years 4.5
--------------------------------
25+ Years 6.1
--------------------------------
Net Cash & Equivalents 1.9
Portfolio quality and maturity breakdown are calculated as a percentage of total
investments including short-term obligations.
Your fund is actively managed and the composition of its portfolio will change
over time. Portfolio composition and holdings discussed are calculated as a
percentage of net assets.
________________________________________________________________________________
COLUMBIA OREGON MUNICIPAL BOND FUND
POTENTIAL FOR GRADUALLY IMPROVING ENVIRONMENT
Our outlook calls for increased stability in the municipal bond market. Despite
high unemployment, low mortgage rates and steady real estate prices have helped
housing prices and consumer spending remain strong. If economic growth remains
solid, state and local governments can expect tax revenues to move higher. This,
in turn, would aid balance sheets and slow credit downgrades. With less
financial pressure, states and local governments would also be able to reduce
issuance, creating a better environment for existing bonds. In Oregon
specifically, we believe revenue streams are slowly starting to pick up. Near
term the state may continue to have budget problems, which would affect credit
ratings. However, we expect Oregon's municipal market to benefit from a healthy,
although lower, level of issuance and continued strong demand.
We expect to focus on the longer end of the intermediate maturity range, which
we think offers the best opportunity in a gradually improving environment. In an
effort to enhance tax-free returns to shareholders, we intend to reduce the
fund's exposure to bonds that are subject to the alternative minimum tax. Our
goal is also to de-emphasize exposure to the multi-family housing sector and
pare back on non-rated bonds. We expect to invest the proceeds in high-quality
essential services bonds, including water, sewer and school bonds.
Photo of: Brian Mcgreevy
Brian McGreevy has managed the Columbia Oregon
Municipal Bond Fund since December 2003 and has
been with the advisor and its predecessors
since 1994.
/s/ Brian McGreevy
Tax-exempt investing offers current tax-free income, but it also involves
certain risks. The value of the fund shares will be affected by interest rate
changes and the creditworthiness of issues held in the funds. Single-state
municipal bond funds pose additional risks due to limited geographical
diversification. Interest income from certain tax-exempt bonds may be subject to
the federal alternative minimum tax for individuals and corporations.
40
Sidebar:
PERFORMANCE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04 ($)
SALES CHARGE WITHOUT WITH
-----------------------------------
Class A 19,903 18,966
-----------------------------------
Class B 19,681 19,681
-----------------------------------
Class C 19,675 19,675
-----------------------------------
Class D 19,729 19,532
-----------------------------------
Class Z 19,983 n/a
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
PERFORMANCE INFORMATION_________________________________________________________
COLUMBIA HIGH YIELD FUND
VALUE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04
(MOUNTAIN CHART)
CLASS A CLASS A MERRILL
SHARES SHARES LYNCH US
WITHOUT WITH HIGH YIELD,
SALES SALES CASH PAY
CHARGE CHARGE ONLY INDEX
------ ------ ----------
03/1994 10000.00 9525.00 10000.00
9695.00 9234.00 9674.00
9527.00 9075.00 9561.00
9606.00 9150.00 9526.00
9632.00 9175.00 9562.00
9691.00 9231.00 9629.00
9752.00 9289.00 9695.00
9801.00 9335.00 9691.00
9812.00 9346.00 9715.00
9703.00 9242.00 9633.00
9803.00 9337.00 9740.00
9956.00 9483.00 9877.00
10201.00 9716.00 10185.00
10293.00 9804.00 10327.00
10524.00 10024.00 10568.00
10790.00 10278.00 10898.00
10865.00 10349.00 10981.00
11015.00 10491.00 11106.00
11034.00 10510.00 11174.00
11213.00 10680.00 11301.00
11361.00 10821.00 11382.00
11491.00 10945.00 11493.00
11676.00 11121.00 11678.00
11838.00 11276.00 11863.00
11877.00 11313.00 11880.00
11743.00 11185.00 11848.00
11726.00 11169.00 11854.00
11737.00 11179.00 11940.00
11770.00 11211.00 12011.00
11857.00 11294.00 12093.00
12082.00 11508.00 12217.00
12291.00 11707.00 12480.00
12426.00 11836.00 12617.00
12687.00 12085.00 12872.00
12777.00 12170.00 12971.00
12890.00 12278.00 13071.00
13086.00 12464.00 13254.00
12888.00 12276.00 13107.00
13040.00 12421.00 13257.00
13353.00 12719.00 13524.00
13521.00 12879.00 13730.00
13885.00 13226.00 14059.00
13873.00 13214.00 14036.00
14059.00 13391.00 14269.00
14046.00 13379.00 14363.00
14206.00 13531.00 14499.00
14399.00 13715.00 14637.00
14634.00 13939.00 14855.00
14720.00 14021.00 14916.00
14812.00 14108.00 15044.00
14886.00 14179.00 15115.00
14932.00 14223.00 15221.00
15038.00 14324.00 15297.00
15221.00 14498.00 15384.00
14617.00 13923.00 14719.00
14876.00 14169.00 14749.00
14804.00 14101.00 14507.00
15293.00 14566.00 15167.00
15297.00 14571.00 15172.00
15486.00 14750.00 15322.00
15400.00 14669.00 15205.00
15584.00 14843.00 15336.00
15694.00 14949.00 15575.00
15492.00 14756.00 15468.00
15444.00 14710.00 15439.00
15428.00 14696.00 15462.00
15342.00 14613.00 15304.00
15325.00 14597.00 15246.00
15328.00 14600.00 15156.00
15578.00 14838.00 15329.00
15661.00 14917.00 15408.00
15581.00 14841.00 15331.00
15595.00 14854.00 15345.00
15506.00 14769.00 15130.00
15577.00 14837.00 15135.00
15568.00 14828.00 14968.00
15895.00 15140.00 15224.00
16038.00 15276.00 15334.00
16309.00 15534.00 15521.00
16309.00 15534.00 15431.00
16172.00 15404.00 14979.00
15941.00 15183.00 14510.00
16382.00 15604.00 14825.00
16944.00 16139.00 15708.00
17086.00 16275.00 15957.00
16998.00 16190.00 15746.00
16957.00 16151.00 15574.00
17067.00 16256.00 15873.00
16917.00 16113.00 15546.00
17121.00 16308.00 15787.00
17344.00 16520.00 15940.00
16666.00 15874.00 14919.00
17238.00 16419.00 15357.00
17689.00 16849.00 15856.00
17470.00 16640.00 15744.00
17575.00 16740.00 15832.00
17415.00 16588.00 15680.00
17578.00 16743.00 16053.00
17661.00 16822.00 16308.00
17626.00 16788.00 16220.00
17178.00 16362.00 15067.00
16893.00 16090.00 14467.00
17155.00 16340.00 14829.00
17088.00 16276.00 14592.00
17066.00 16255.00 14469.00
17547.00 16713.00 15332.00
17663.00 16824.00 15565.00
17816.00 16970.00 16013.00
17957.00 17104.00 16220.00
18266.00 17398.00 16640.00
18681.00 17793.00 17575.00
18696.00 17807.00 17765.00
18924.00 18025.00 18250.00
18564.00 17682.00 17989.00
18688.00 17801.00 18224.00
19094.00 18187.00 18711.00
19308.00 18391.00 19093.00
19426.00 18503.00 19356.00
19635.00 18703.00 19805.00
19824.00 18882.00 20114.00
02/2004 19903.00 18966.00 20108.00
The above illustration assumes a $10,000 investment made on March 1, 1994, and
reinvestment of income and capital gains distributions. In addition, the graph
and table do not reflect a deduction of the taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. The Merrill Lynch US
High Yield, Cash Pay Only Index is an unmanaged index of non-investment-grade
corporate bonds. Unlike the fund, indices are not investments, do not incur fees
or expenses and are not professionally managed. It is not possible to invest
directly in an index. Securities in the fund may not match those in an index.
AVERAGE ANNUAL TOTAL RETURN AS OF 02/29/04 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
---------------------------------------------------------------------------------------------------------------
INCEPTION 11/01/02 11/01/02 10/13/03 11/01/02 10/01/93
---------------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
---------------------------------------------------------------------------------------------------------------
6-month (cumulative) 6.48 1.46 6.06 1.06 6.03 5.03 6.15 4.05 6.60
---------------------------------------------------------------------------------------------------------------
1-year 10.81 5.55 9.89 4.89 9.85 8.85 10.11 7.96 11.10
---------------------------------------------------------------------------------------------------------------
5-year 5.26 4.23 5.02 4.72 5.01 5.01 5.07 4.86 5.34
---------------------------------------------------------------------------------------------------------------
10-year 7.13 6.61 7.01 7.01 7.00 7.00 7.03 6.92 7.17
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
· Enlarge/Download Table
SHARE CLASS A B C D Z
------------------------------------------------------------------------------------------------------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
------------------------------------------------------------------------------------------------------
6-month (cumulative) 3.75 -1.14 3.32 -1.68 3.28 2.28 3.42 1.37 3.87
------------------------------------------------------------------------------------------------------
1-year 11.16 5.85 10.23 5.23 10.19 9.19 10.45 8.42 11.49
------------------------------------------------------------------------------------------------------
5-year 5.12 4.10 4.91 4.61 4.90 4.90 4.95 4.74 5.19
------------------------------------------------------------------------------------------------------
10-year 7.10 6.57 6.99 6.99 6.99 6.99 7.01 6.91 7.14
All results shown assume reinvestment of distributions. The "with sales charge"
returns include the maximum 4.75% charge for class A shares and the appropriate
class B contingent deferred sales charge (CDSC) for the holding period after
purchase as follows: through first year - 5%, second year - 4%, third year - 3%,
fourth year - 3%, fifth year - 2%, sixth year - 1%, and thereafter - 0%. Class C
has a CDSC of 1% which is applicable for the first year only. Class D has a
sales charge of 1% and also carries a CDSC of 1% that is applied to shares sold
within the first year after they are purchased.
Effective October 13, 2003, class D shares are closed to all new investors and
new accounts. Existing class D shareholders will be able to make additional
purchases at any time. In addition, the class D sales charge of 1% is waived
after October 13, 2003. Performance for different share classes will vary based
on differences in sales charges and fees associated with each class.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Classes A, B, and D (newer class shares) share performance information includes
returns of the fund's class Z shares (the oldest existing fund class) for
periods prior to the inception of the newer class shares. The returns for Class
C include the returns of Class B prior to 10/13/2003, the date on which class C
was initially offered by the fund. The returns shown for Class C also include
the performance of Class Z prior to the inception of Class B (11/01/02). Class Z
share returns are not restated to reflect any expense differential (e.g., Rule
12b-1 fees) between class Z shares and the newer class shares. Had the expense
differential been reflected, the returns for the periods prior to the inception
of classes A, B, C and D would have been lower.
41
Sidebar:
SUMMARY
o FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 29, 2004, THE FUND'S CLASS A SHARES
RETURNED 6.48% WITHOUT SALES CHARGE.
o THE FUND'S RETURN WAS LESS THAN ITS BENCHMARK, THE MERRILL LYNCH US HIGH
YIELD, CASH PAY ONLY INDEX.
o THE FUND TRAILED ITS BENCHMARK PRIMARILY BECAUSE OF ITS RELATIVELY
CONSERVATIVE POSITIONING IN A PERIOD WHEN MORE SPECULATIVE SECURITIES
OUTPERFORMED.
[Illustration of 2 arrows pointing up]
MERRILL LYNCH US
HIGH YIELD, CASH
CLASS A SHARES PAY ONLY INDEX
6.48% 10.32%
OBJECTIVE
Seeks a high level of income
with capital appreciation as
a secondary goal
TOTAL NET ASSETS
$1,878.0 million
NET ASSET VALUE PER SHARE AS OF 02/29/04 ($)
Class A 8.77
--------------------------
Class B 8.77
--------------------------
Class C 8.77
--------------------------
Class D 8.77
--------------------------
Class Z 8.77
DISTRIBUTIONS DECLARED PER SHARE 09/01/03 - 02/29/04 ($)
Class A 0.26
--------------------------
Class B 0.23
--------------------------
Class C 0.18
--------------------------
Class D 0.24
--------------------------
Class Z 0.27
PORTFOLIO MANAGER'S REPORT______________________________________________________
COLUMBIA HIGH YIELD FUND
For the six-month period ended February 29, 2004, Columbia High Yield Fund class
A shares returned 6.48% without sales charge. The fund lagged the Merrill Lynch
US High Yield, Cash Pay Only Index, which returned 10.32%. The fund's relative
performance was hurt by its emphasis on the higher-quality segment of the
high-yield marketplace. The fund generally holds no Caa-rated bonds, which
constitute approximately 15% of the index. These ultra low-quality bonds have
outperformed B- and Ba-rated bonds for more than a year. The fund suffered from
its underweight in industries that are dominated by companies with Caa
ratings--specifically, electric utilities, telecom and airlines. The fund's
performance was also held back by its overweight positions in health care and
gaming, two sectors that lagged the overall market.
LOWER QUALITY BONDS PREVAILED
The market's preference for lower-rated securities during the period can be
traced to several factors. Early in the period, lower-quality bonds enjoyed a
substantial yield advantage. As yield-hungry investors poured money into lower
quality bonds, companies were able to refinance their debt on advantageous terms
and bankruptcy rates began to decline from record levels. Finally, the emergence
of a genuine economic recovery in the third quarter of 2003 gave investors hope
that many struggling companies would be able to improve their competitive
positions. Yet, the overall credit quality of the high-yield market actually
declined as measured by the rating agencies (S&P and Moody's) because many more
companies were downgraded than upgraded.
REDUCED CABLE EXPOSURE AND ADDED TO SATELLITE TELEVISION PROVIDERS
The composition of the fund was relatively unchanged during the period. However,
we reduced our commitment to the cable sector by selling our positions in
Cablevision and Mediacom, which, in our judgment, no longer represented good
values. From an operating perspective, we have been concerned that cable as a
group has been losing market share to satellite TV, especially in rural markets.
In an effort to participate in this trend, we purchased bonds of satellite dish
company, Echostar DBS to supplement our existing position in DirecTV Holdings.
42
Sidebar:
PORTFOLIO QUALITY AS OF 02/29/04 (%)
Baa 4.1
---------------------------
Ba 54.4
---------------------------
B 38.9
---------------------------
Caa 2.6
Portfolio quality is calculated as a percentage of total investments.
Ratings shown represent the highest rating assigned to a particular bond by one
of the nationally recognized rating agencies: Standard and Poor's Corporation,
Moody's Investors Service, Inc. or Fitch Investors Service, Inc.
TOP 5 SECTORS AS OF 02/29/04 (%)
Energy 10.3
---------------------------
Health care 9.4
---------------------------
Casinos & gaming 7.4
---------------------------
Cable TV 5.5
---------------------------
Services 4.9
HOLDINGS DISCUSSED IN THIS REPORT AS OF 02/29/04 (%)
Echostar DBS 1.8
---------------------------
DirecTV Holdings 1.4
MATURITY BREAKDOWN AS OF 02/29/04 (%)
0-3 Years 6.5
---------------------------
3-5 Years 14.7
---------------------------
5-10 Years 76.3
---------------------------
10+ Years 2.5
Your fund is actively managed and the composition of its portfolio will change
over time. Portfolio composition and holdings discussed are calculated as a
percentage of net assets.
________________________________________________________________________________
COLUMBIA HIGH YIELD FUND
PREPARED FOR HIGHER INTEREST RATES
Although we believe that a combination of GDP growth and low inflation have the
potential to extend the favorable environment for high-yield securities into
2004, we believe that the market's advances in 2003 already reflect much of this
improvement. If the economic recovery proves unsustainable because it has been
built on a combination of factors that may have run their course--historically
low interest rates, massive tax cuts and substantial budget deficits--we would
enjoy an advantage in having maintained a conservative posture for the fund. The
fund's focus on quality hurt relative performance last year, but the yield
advantage of low-quality bonds has already contracted sharply. If the economy is
stronger than we expect, the fund should benefit from having a
shorter-than-average maturity relative to its benchmark, a defensive stance
designed to cushion the fund against the possibility of higher interest rates.
Photo of: Jeffry L. Rippey
Jeffry L. Rippey, CFA, has managed or co-managed
Columbia High Yield Fund since October 1993 and
has been with the advisor and its predecessors
since 1981.
/s/ Jeffry L. Rippey
Investing in high-yield securities offers the potential for high current income
and attractive total return, but involves certain risks. Lower-rated bond risks
include default of the issuer, rising interest rates and risk associated with
investing in securities of foreign and emerging markets, including currency
exchange rate fluctuations and economic and political change.
43
Sidebar:
PERFORMANCE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04 ($)
SALES CHARGE WITHOUT
------------------------
Class Z 14,792
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
PERFORMANCE INFORMATION_________________________________________________________
COLUMBIA DAILY INCOME COMPANY
VALUE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04
(MOUNTAIN CHART)
CONSUMER
CLASS Z PRICE
SHARES INDEX
------ -----
03/1994 10000.00 10000.00
10074.00 10055.00
10171.00 10158.00
10283.00 10205.00
10417.00 10287.00
10563.00 10375.00
10707.00 10423.00
10846.00 10471.00
10983.00 10560.00
11113.00 10676.00
11249.00 10724.00
11385.00 10813.00
11522.00 10881.00
11665.00 10915.00
11815.00 10963.00
11964.00 11011.00
12116.00 11039.00
12270.00 11101.00
12427.00 11142.00
12580.00 11183.00
12722.00 11217.00
12862.00 11332.00
13007.00 11393.00
13164.00 11475.00
13339.00 11571.00
13526.00 11679.00
13735.00 11782.00
13943.00 11871.00
14141.00 11987.00
14301.00 12116.00
14425.00 12103.00
14513.00 12096.00
14564.00 12124.00
14609.00 12259.00
14652.00 12321.00
14690.00 12361.00
14719.00 12484.00
14744.00 12511.00
14762.00 12586.00
14775.00 12580.00
02/2004 14792.00 12693.00
The above illustration assumes a $10,000 investment made on March 1, 1994, and
reinvestment of income and capital gains distributions. In addition, the graph
and table do not reflect a deduction of the taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. An investment in the
fund is not insured or guaranteed by the Federal Deposit Insurance Corporation
or any other governmental agency. Although the fund seeks to preserve the value
of your investment at $1 per share, it is possible to lose money by investing in
the fund.
AVERAGE ANNUAL TOTAL RETURN AS OF 02/29/04 (%)
CONSUMER PRICE
CLASS Z INDEX (INFLATION)
------------------------------------------------------
6-Month (Cumulative) 0.17 0.87
------------------------------------------------------
1-Year 0.46 1.69
------------------------------------------------------
5-Year 3.06 2.51
------------------------------------------------------
10-Year 3.99 2.41
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
CONSUMER PRICE
CLASS Z INDEX (INFLATION)
------------------------------------------------------
6-Month (Cumulative) 0.19 0.33
------------------------------------------------------
1-Year 0.52 1.88
------------------------------------------------------
5-Year 3.20 2.37
------------------------------------------------------
10-Year 4.03 2.37
All results shown assume reinvestment of distributions.
44
Sidebar:
SUMMARY
o FOR THE SIX-MONTH PERIOD THAT ENDED FEBRUARY 29, 2004, THE FUND'S CLASS Z
SHARES RETURNED 0.17%.
o THE FUND'S RETURN WAS EQUAL TO THAT OF THE LIPPER MONEY MARKET FUNDS CATEGORY
AVERAGE.
o YIELDS ON ALL SHORT-TERM FIXED-INCOME SECURITIES WERE LOW THROUGHOUT THE
PERIOD.
[Illustration of 2 arrows pointing up]
CONSUMER PRICE
CLASS Z SHARES INDEX (INFLATION)
0.17% 0.87%
OBJECTIVE
Seeks a high level of income consistent with the
maintenance of liquidity and the preservation of capital
by investing primarily in high quality money market securities.
TOTAL NET ASSETS
$749.7 million
NET ASSET VALUE PER SHARE AS OF 02/29/04 ($)
Class Z 1.00
PORTFOLIO MANAGER'S REPORT______________________________________________________
COLUMBIA DAILY INCOME COMPANY
For the six-month period ended February 29, 2004, Columbia Daily Income Company
class Z shares returned 0.17%. The Lipper Money Market Funds Category also
averaged 0.17% for the period.1
The Federal Reserve Board lowered a key short-term interest rate--the fed funds
rate--to 1.0% in June of 2003, and continued to maintain this historically low
rate in an effort to stimulate economic growth. As a result, yields on all
short-term fixed-income securities were low throughout the period.
With the year-over-year inflation rate approximating 2% during 2003, real
returns on money-market funds (returns after factoring in inflation) have been
in negative territory, a development that has caused considerable frustration
for money-market investors. However, the Fed's actions have been deliberate and
consistent with textbook economics: Negative real short-term returns provide an
incentive for consumers to spend and for businesses to invest. The net
expectation of this stimulus is heightened economic activity. And indeed, that's
what the economy delivered during the six-month period covered by this report.
Third quarter GDP growth was reported at 7.2%, then revised to 8.2%, the fastest
pace of growth since the first quarter of 1984. Fourth-quarter growth, was
lower, but nonetheless respectable at 4.1%. These advances occurred despite
higher prices for oil and other commodities and suggested that a solid economic
recovery was underway.
Unfortunately, the employment picture has not followed the same upward
trajectory. The industrial sector still carries considerable excess capacity,
and although the overall unemployment rate has declined from a high point of
6.4% in June 2003, non-farm payroll increases have been well below the levels
that ordinarily prevail at this stage of the economic cycle.
Until excess capacity is whittled down and the economy begins to add jobs in
meaningful numbers, we do not believe we are likely to see the sort of
inflationary pressures that might induce the Federal Reserve to raise short-term
rates. The chance of a rate increase prior to November is low, given the
realities of presidential election year politics. Prevailing
1 Lipper Inc., a widely respected data provider in the industry, calculates an
average total return for mutual funds with similar investment objectives as
those of the fund.
45
Sidebar:
PORTFOLIO HIGHLIGHTS AS OF 02/29/04
Seven day current yield 0.36%
-------------------------------------
Seven day effective yield 0.36%
-------------------------------------
Average days to maturity 34
________________________________________________________________________________
COLUMBIA DAILY INCOME COMPANY
investor opinion, as reflected in the federal funds futures market, indicates
the potential for a short-term rate increase toward the end of the year,
possibly preceded by a rise in longer-term interest rates. The bottom line is
that investors in money market funds are likely to experience negative real
returns for months to come. However, the role of a money market fund in your
portfolio should be examined in light of your need for diversification and
stability as well as for its return potential.
Leonard Aplet has managed the fund since
1988 and has been with the advisor and
its predecessors since 1987.
/s/ Leonard Aplet
There is a chance that the fund's investments may not keep pace with the rate of
inflation over the long-term. Also, an investment in the fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency. Although the fund seeks to preserve the value of our
investment at $1 per share, it is possible to lose money by investing in the
fund.
46
FINANCIAL STATEMENTS____________________________________________________________
FEBRUARY 29, 2004 COLUMBIA FUNDS
· Enlarge/Download Table
A GUIDE TO UNDERSTANDING YOUR FUND'S FINANCIAL STATEMENTS
----------------------------------------------------------------------------------
INVESTMENT PORTFOLIO The investment portfolio details all of the fund's holdings and their market
value as of the last day of the reporting period. Portfolio holdings are
organized by type of asset, industry, country or geographic region (if
applicable) to demonstrate areas of concentration and diversification.
----------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES This statement details the fund's assets, liabilities, net assets and share price
for each share class. Net assets are calculated by subtracting all the fund's
liabilities (including any unpaid expenses) from the total of the fund's
investment and non-investment assets. The share price for each class is
calculated by dividing net assets for that class by the number of shares
outstanding in that class as of the last day of the reporting period.
----------------------------------------------------------------------------------
STATEMENT OF OPERATIONS This statement details income earned by the fund and the expenses charged to
the fund. The Statement of Operations also shows any net gain or loss the
fund realized on the sales of its holdings during the period, as well as any
unrealized gains or losses recognized over the period. The total of these results
represents the fund's net increase or decrease in net assets from operations.
----------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS This statement demonstrates how the fund's net assets were affected by its
operating results, distributions to shareholders and shareholder transactions
(e.g., subscriptions, redemptions and dividend reinvestments). The
Statement of Changes in Net Assets also reconciles changes in the number
of shares outstanding.
----------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS The financial highlights demonstrate how the fund's net asset value per share
was affected by the fund's operating results. The financial highlights table also
discloses certain key fund ratios (e.g., fund expenses and net investment
income as a percentage of average net assets).
----------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS These notes disclose the organizational background of the fund, its significant
accounting policies (including those surrounding security valuation, income
recognition and distributions to shareholders), federal tax information, fees
and compensation paid to affiliates and significant risks and contingencies.
47
INVESTMENT PORTFOLIO____________________________________________________________
FEBRUARY 29, 2004 (UNAUDITED) COLUMBIA COMMON STOCK FUND
SHARES VALUE ($)
----------------------------------------------------------------------
COMMON STOCKS - 96.9%
CONSUMER DISCRETIONARY - 11.2%
AUTO COMPONENTS - 0.5%
Dana Corp. 100,500 2,149,695
-----------
Auto Components Total 2,149,695
HOTELS, RESTAURANTS & LEISURE - 0.7%
Royal Caribbean Cruises Ltd. 69,975 3,096,394
-----------
Hotels, Restaurants & Leisure Total 3,096,394
INTERNET & CATALOG RETAIL - 0.7%
eBay, Inc. (a) 39,240 2,702,066
-----------
Internet & Catalog Retail Total 2,702,066
MEDIA - 5.5%
Comcast Corp., Class A (a) 48,942 1,470,218
Gannett Co., Inc. 48,250 4,162,528
Lamar Advertising Co. (a) 32,700 1,298,190
Time Warner, Inc. (a) 218,800 3,774,300
Tribune Co. 80,850 4,037,649
Viacom, Inc., Class B 96,825 3,723,890
Walt Disney Co. 169,800 4,504,794
-----------
Media Total 22,971,569
MULTILINE RETAIL - 3.0%
Kohl's Corp. (a) 105,725 5,444,838
Target Corp. 156,150 6,864,354
-----------
Multiline Retail Total 12,309,192
TEXTILES, APPAREL & LUXURY GOODS - 0.8%
NIKE, Inc., Class B 44,675 3,272,444
-----------
Textiles, Apparel & Luxury Goods Total 3,272,444
-----------
CONSUMER DISCRETIONARY TOTAL 46,501,360
CONSUMER STAPLES - 9.8%
BEVERAGES - 1.8%
Constellation Brands, Inc., Class A (a) 33,925 1,075,422
PepsiCo, Inc. 121,975 6,330,502
-----------
Beverages Total 7,405,924
FOOD & STAPLES RETAILING - 4.2%
Wal-Mart Stores, Inc. 290,750 17,317,070
-----------
Food & Staples Retailing Total 17,317,070
FOOD PRODUCTS - 0.3%
Hershey Foods Corp. 17,075 1,415,518
-----------
Food Products Total 1,415,518
HOUSEHOLD PRODUCTS - 1.1%
Colgate-Palmolive Co. 38,510 2,135,380
Procter & Gamble Co. 26,080 2,673,461
-----------
Household Products Total 4,808,841
SHARES VALUE ($)
----------------------------------------------------------------------
PERSONAL PRODUCTS - 0.9%
Alberto-Culver Co., Class B 38,710 1,590,207
Avon Products, Inc. 14,075 993,695
Estee Lauder Companies, Inc., Class A 23,510 1,001,526
-----------
Personal Products Total 3,585,428
TOBACCO - 1.5%
Altria Group, Inc. 108,975 6,271,511
-----------
Tobacco Total 6,271,511
-----------
CONSUMER STAPLES TOTAL 40,804,292
ENERGY - 3.8%
ENERGY EQUIPMENT & SERVICES - 0.6%
National-Oilwell, Inc. (a) 40,450 1,201,770
Schlumberger Ltd. 9,790 631,357
Smith International, Inc. (a) 12,675 642,242
-----------
Energy Equipment & Services Total 2,475,369
OIL & GAS - 3.2%
Apache Corp. 19,518 803,556
ConocoPhillips 37,175 2,560,242
Exxon Mobil Corp. 226,457 9,549,692
Pioneer Natural Resources Co. (a) 13,020 418,202
-----------
Oil & Gas Total 13,331,692
-----------
ENERGY TOTAL 15,807,061
FINANCIALS - 19.6%
CAPITAL MARKETS - 5.4%
A.G. Edwards, Inc. 47,750 1,826,438
Bank of New York Co., Inc. 117,025 3,861,825
Goldman Sachs Group, Inc. 50,550 5,351,728
J.P. Morgan Chase & Co. 102,035 4,185,476
Merrill Lynch & Co., Inc. 103,700 6,347,477
Morgan Stanley 14,100 842,616
-----------
Capital Markets Total 22,415,560
COMMERCIAL BANKS - 2.4%
Bank of America Corp. (b) 15,005 1,229,210
Bank One Corp. 132,575 7,156,398
Wachovia Corp. 34,075 1,634,578
-----------
Commercial Banks Total 10,020,186
CONSUMER FINANCE - 2.6%
American Express Co. 151,250 8,079,775
MBNA Corp. 103,375 2,825,239
-----------
Consumer Finance Total 10,905,014
DIVERSIFIED FINANCIAL SERVICES - 4.3%
Ameritrade Holding Corp. (a) 53,625 873,015
CIT Group, Inc. 28,875 1,139,696
Citigroup, Inc. 311,089 15,635,333
-----------
Diversified Financial Services Total 17,648,044
See Accompanying Notes to Financial Statements.
48
________________________________________________________________________________
FEBRUARY 29, 2004 (UNAUDITED) COLUMBIA COMMON STOCK FUND
SHARES VALUE ($)
----------------------------------------------------------------------
COMMON STOCKS - (CONTINUED)
FINANCIALS - (CONTINUED)
INSURANCE - 4.3%
Allstate Corp. (a) 67,055 3,059,720
American International Group, Inc. 97,537 7,217,738
Assurant, Inc. (a) 66,325 1,707,206
Chubb Corp. 41,200 2,924,376
Prudential Financial, Inc. 68,275 3,167,277
-----------
Insurance Total 18,076,317
THRIFTS & MORTGAGE FINANCE - 0.6%
Fannie Mae 31,225 2,338,752
-----------
Thrifts & Mortgage Finance Total 2,338,752
-----------
FINANCIALS TOTAL 81,403,873
HEALTH CARE - 10.2%
BIOTECHNOLOGY - 1.3%
Amgen, Inc. (a) 58,582 3,721,714
Gilead Sciences, Inc. (a) 28,675 1,554,472
-----------
Biotechnology Total 5,276,186
HEALTH CARE EQUIPMENT & SUPPLIES - 0.5%
Boston Scientific Corp. (a) 54,625 2,231,431
-----------
Health Care Equipment & Supplies Total 2,231,431
HEALTH CARE PROVIDERS & SERVICES - 1.7%
Aetna, Inc. 43,050 3,478,010
Cardinal Health, Inc. 38,575 2,516,247
Henry Schein, Inc. (a) 15,050 1,076,075
-----------
Health Care Providers & Services Total 7,070,332
PHARMACEUTICALS - 6.7%
Eli Lilly and Co. 19,850 1,467,709
Johnson & Johnson 122,425 6,599,932
Pfizer, Inc. 368,064 13,489,546
Shire Pharmaceuticals
Group PLC, ADR (a) 68,900 2,130,388
Teva Pharmaceutical Industries
Ltd., ADR 61,305 3,984,825
-----------
Pharmaceuticals Total 27,672,400
-----------
HEALTH CARE TOTAL 42,250,349
INDUSTRIALS - 14.0%
AEROSPACE & DEFENSE - 0.5%
Boeing Co. 50,200 2,177,174
-----------
Aerospace & Defense Total 2,177,174
AIR FREIGHT & LOGISTICS - 1.7%
United Parcel Service, Inc., Class B 101,025 7,135,396
-----------
Air Freight & Logistics Total 7,135,396
SHARES VALUE ($)
----------------------------------------------------------------------
AIRLINES - 0.2%
AMR Corp. (a) 61,225 930,620
-----------
Airlines Total 930,620
COMMERCIAL SERVICES & SUPPLIES - 3.4%
Allied Waste Industries, Inc. (a) 136,950 1,729,678
Avery Dennison Corp. 32,725 2,073,783
Manpower, Inc. 62,650 2,803,588
Republic Services, Inc. 82,350 2,160,864
Waste Management, Inc. 190,675 5,434,238
-----------
Commercial Services & Supplies Total 14,202,151
ELECTRICAL EQUIPMENT - 0.5%
Emerson Electric Co. 34,200 2,136,816
-----------
Electrical Equipment Total 2,136,816
INDUSTRIAL CONGLOMERATES - 4.4%
3M Co. 53,425 4,168,218
General Electric Co. 439,900 14,305,548
-----------
Industrial Conglomerates Total 18,473,766
MACHINERY - 2.3%
Caterpillar, Inc. 39,200 2,969,400
Dover Corp. 150 5,879
ITT Industries, Inc. 57,250 4,322,375
Pall Corp. 77,075 2,017,053
-----------
Machinery Total 9,314,707
ROAD & RAIL - 1.0%
Canadian National Railway Co. 67,475 3,995,870
-----------
Road & Rail Total 3,995,870
-----------
INDUSTRIALS TOTAL 58,366,500
INFORMATION TECHNOLOGY - 20.8%
COMMUNICATIONS EQUIPMENT - 4.0%
Avaya, Inc. (a) 49,000 840,350
Cisco Systems, Inc. (a) 186,990 4,319,469
Emulex Corp. (a) 62,710 1,453,618
Motorola, Inc. 116,000 2,140,200
Nortel Networks Corp. (a) 186,750 1,490,265
QLogic Corp. (a) 62,575 2,615,635
QUALCOMM, Inc. 55,350 3,511,958
-----------
Communications Equipment Total 16,371,495
COMPUTERS & PERIPHERALS - 2.0%
Dell, Inc. (a) 47,050 1,536,182
International Business Machines Corp. 45,125 4,354,562
Seagate Technology (a) 143,925 2,489,902
-----------
Computers & Peripherals Total 8,380,646
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.3%
Flextronics International Ltd. (a) 76,725 1,388,722
-----------
Electronic Equipment & Instruments Total 1,388,722
See Accompanying Notes to Financial Statements.
49
________________________________________________________________________________
FEBRUARY 29, 2004 (UNAUDITED) COLUMBIA COMMON STOCK FUND
SHARES VALUE ($)
---------------------------------------------------------------------
COMMON STOCKS - (CONTINUED)
INFORMATION TECHNOLOGY - (CONTINUED)
INTERNET SOFTWARE & SERVICES - 1.2%
Check Point Software Technologies
Ltd. (a) 105,050 2,418,251
Yahoo!, Inc. (a) 58,125 2,580,750
-----------
Internet Software & Services Total 4,999,001
IT SERVICES - 0.4%
Cognizant Technology Solutions
Corp.(a) 33,375 1,583,310
-----------
IT Services Total 1,583,310
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 7.0%
Advanced Micro Devices, Inc. (a) 108,500 1,627,500
Applied Micro Circuits Corp. (a) 288,150 1,861,449
Broadcom Corp., Class A 55,125 2,236,972
Intel Corp. 149,150 4,359,654
Linear Technology Corp. 85,900 3,435,141
Marvell Technology Group Ltd. (a) 37,550 1,709,652
Microchip Technology, Inc. 64,075 1,826,138
National Semiconductor Corp. (a) 55,075 2,167,752
NVIDIA Corp. (a) 66,450 1,478,512
Silicon Laboratories, Inc. (a) 46,925 2,645,162
Taiwan Semiconductor Manufacturing
Co., Ltd., ADR (a) 272,596 2,832,272
Texas Instruments, Inc. 52,950 1,622,918
Xilinx, Inc. (a) 30,550 1,284,322
-----------
Semiconductors & Semiconductor Equipment Total 29,087,444
SOFTWARE - 5.9%
Citrix Systems, Inc. (a) 75,675 1,602,796
Computer Associates International, Inc. 64,825 1,721,752
Mercury Interactive Corp. (a) 54,950 2,667,273
Microsoft Corp. 434,200 11,506,300
Oracle Corp. (a) 315,440 4,062,867
Symantec Corp. (a) 46,125 1,897,582
VERITAS Software Corp. (a) 40,125 1,220,602
-----------
Software Total 24,679,172
-----------
INFORMATION TECHNOLOGY TOTAL 86,489,790
MATERIALS - 7.5%
CHEMICALS - 3.2%
Dow Chemical Co. 220,600 9,589,482
Praxair, Inc. 105,175 3,819,956
-----------
Chemicals Total 13,409,438
CONTAINERS & PACKAGING - 0.6%
Smurfit-Stone Container Corp. (a) 135,200 2,509,312
-----------
Containers & Packaging Total 2,509,312
SHARES VALUE ($)
----------------------------------------------------------------------
METALS & MINING - 2.7%
Alcan, Inc. 117,675 5,604,860
Alcoa, Inc. 148,625 5,568,979
-----------
Metals & Mining Total 11,173,839
PAPER & FOREST PRODUCTS - 1.0%
International Paper Co. 90,800 4,018,808
-----------
Paper & Forest Products Total 4,018,808
-----------
MATERIALS TOTAL 31,111,397
TOTAL COMMON STOCKS
(Cost of $323,565,260) 402,734,622
PREFERRED STOCK - 1.5%
CONSUMER DISCRETIONARY - 1.5%
MEDIA - 1.5%
News Corp., Ltd., ADR
(Cost of $5,277,680) 190,850 6,246,520
-----------
TOTAL INVESTMENTS - 98.4%
(COST OF $328,842,940) (C) 408,981,142
OTHER ASSETS & LIABILITIES, NET - 1.6% 6,601,626
NET ASSETS - 100.0% 415,582,768
NOTES TO INVESTMENT PORTFOLIO:
(a) Non-income producing.
(b) Investments in affiliates during the six months ended February 29, 2004:
Security Name: Bank of America Corp. (As a result of a merger effective
April 1, 2004, Bank of America Corp. became the parent company of the
Investment Advisor.)
Shares as of 08/31/03: 114,005
Shares sold: (99,000)
Shares as of 02/29/04: 15,005
Net realized gain or loss: $3,150,135
Dividend income earned: $ 121,328
Value at end of period: $1,229,210
(c) Cost for both financial statement and federal income tax purposes is the
same.
ACRONYM NAME
------- ----
ADR American Depositary Receipt
See Accompanying Notes to Financial Statements.
50
INVESTMENT PORTFOLIO____________________________________________________________
FEBRUARY 29, 2004 (UNAUDITED) COLUMBIA GROWTH FUND
SHARES VALUE ($)
----------------------------------------------------------------------
COMMON STOCKS - 99.2%
CONSUMER DISCRETIONARY - 15.1%
HOTELS, RESTAURANTS & LEISURE - 0.5%
Yum! Brands, Inc. (a) 139,280 5,157,538
-----------
Hotels, Restaurants & Leisure Total 5,157,538
INTERNET & CATALOG RETAIL - 1.1%
eBay, Inc. (a) 155,500 10,707,730
-----------
Internet & Catalog Retail Total 10,707,730
MEDIA - 4.4%
Clear Channel Communications, Inc. 90,031 3,874,934
Omnicom Group, Inc. 111,700 9,137,060
Viacom, Inc., Class B 492,590 18,945,011
Walt Disney Co. 238,600 6,330,058
XM Satellite Radio Holdings, Inc.,
Class A (a) 160,800 3,936,384
-----------
Media Total 42,223,447
MULTILINE RETAIL - 2.1%
Kohl's Corp. (a) 190,800 9,826,200
Target Corp. 234,900 10,326,204
-----------
Multiline Retail Total 20,152,404
SPECIALTY RETAIL - 6.3%
Bed Bath & Beyond, Inc. (a) 273,060 11,162,693
Best Buy Co., Inc. 204,100 10,868,325
Chico's FAS, Inc. (a) 195,700 8,366,175
Home Depot, Inc. 326,000 11,837,060
Lowe's Companies, Inc. 320,300 17,936,800
-----------
Specialty Retail Total 60,171,053
TEXTILES, APPAREL & LUXURY GOODS - 0.7%
Coach, Inc. (a) 174,600 6,919,398
-----------
Textiles, Apparel & Luxury Goods Total 6,919,398
-----------
CONSUMER DISCRETIONARY TOTAL 145,331,570
CONSUMER STAPLES - 9.8%
BEVERAGES - 1.1%
PepsiCo, Inc. 208,340 10,812,846
-----------
Beverages Total 10,812,846
FOOD & STAPLES RETAILING - 4.8%
Costco Wholesale Corp. (a) 342,900 13,349,097
Sysco Corp. 204,110 8,092,962
Wal-Mart Stores, Inc. 413,190 24,609,596
-----------
Food & Staples Retailing Total 46,051,655
FOOD PRODUCTS - 0.7%
Bunge Ltd. 177,500 6,931,375
-----------
Food Products Total 6,931,375
SHARES VALUE ($)
----------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 1.3%
Procter & Gamble Co. 118,060 12,102,331
-----------
Household Products Total 12,102,331
PERSONAL PRODUCTS - 0.8%
Alberto-Culver Co., Class B 182,745 7,507,165
-----------
Personal Products Total 7,507,165
TOBACCO - 1.1%
Altria Group, Inc. 182,800 10,520,140
-----------
Tobacco Total 10,520,140
-----------
CONSUMER STAPLES TOTAL 93,925,512
ENERGY - 1.4%
ENERGY EQUIPMENT & SERVICES - 1.4%
Noble Corp. (a) 98,250 3,988,950
Schlumberger Ltd. 147,500 9,512,275
-----------
Energy Equipment & Services Total 13,501,225
-----------
ENERGY TOTAL 13,501,225
FINANCIALS - 4.5%
CAPITAL MARKETS - 0.8%
Merrill Lynch & Co., Inc. 132,200 8,091,962
-----------
Capital Markets Total 8,091,962
COMMERCIAL BANKS - 0.8%
Charter One Financial, Inc. 202,000 7,316,440
-----------
Commercial Banks Total 7,316,440
CONSUMER FINANCE - 1.3%
American Express Co. 94,900 5,069,558
MBNA Corp. 286,500 7,830,045
-----------
Consumer Finance Total 12,899,603
DIVERSIFIED FINANCIAL SERVICES - 1.6%
Citigroup, Inc. 296,626 14,908,423
-----------
Diversified Financial Services Total 14,908,423
-----------
FINANCIALS TOTAL 43,216,428
HEALTH CARE - 19.7%
BIOTECHNOLOGY - 4.3%
Amgen, Inc. (a) 385,100 24,465,403
Gilead Sciences, Inc. (a) 223,900 12,137,619
Martek Biosciences Corp. (a) 79,200 4,709,232
-----------
Biotechnology Total 41,312,254
HEALTH CARE EQUIPMENT & SUPPLIES - 6.1%
Alcon, Inc. 165,100 10,378,186
Boston Scientific Corp. (a) 350,840 14,331,814
St. Jude Medical, Inc. (a) 166,700 12,110,755
See Accompanying Notes to Financial Statements.
51
________________________________________________________________________________
FEBRUARY 29, 2004 (UNAUDITED) COLUMBIA GROWTH FUND
SHARES VALUE ($)
----------------------------------------------------------------------
COMMON STOCKS - (CONTINUED)
HEALTH CARE - (CONTINUED)
HEALTH CARE EQUIPMENT & SUPPLIES - (CONTINUED)
Varian Medical Systems, Inc. (a) 125,500 10,509,370
Zimmer Holdings, Inc. (a) 147,300 11,141,772
-----------
Health Care Equipment & Supplies Total 58,471,897
HEALTH CARE PROVIDERS & SERVICES - 2.0%
Caremark Rx, Inc. (a) 596,900 19,255,994
-----------
Health Care Providers & Services Total 19,255,994
PHARMACEUTICALS - 7.3%
Pfizer, Inc. 1,290,233 47,287,040
Teva Pharmaceutical Industries
Ltd., ADR 356,023 23,141,495
-----------
Pharmaceuticals Total 70,428,535
-----------
HEALTH CARE TOTAL 189,468,680
INDUSTRIALS - 12.8%
AEROSPACE & DEFENSE - 1.0%
United Technologies Corp. 105,400 9,708,394
-----------
Aerospace & Defense Total 9,708,394
COMMERCIAL SERVICES & SUPPLIES - 1.3%
Cendant Corp. 543,400 12,335,180
-----------
Commercial Services & Supplies Total 12,335,180
INDUSTRIAL CONGLOMERATES - 9.4%
3M Co. 162,500 12,678,250
General Electric Co. 1,875,985 61,007,032
Tyco International Ltd. 580,350 16,580,600
-----------
Industrial Conglomerates Total 90,265,882
MACHINERY - 1.1%
ITT Industries, Inc. 139,800 10,554,900
-----------
Machinery Total 10,554,900
-----------
INDUSTRIALS TOTAL 122,864,356
INFORMATION TECHNOLOGY - 31.7%
COMMUNICATIONS EQUIPMENT - 5.7%
Avaya, Inc. (a) 39,000 668,850
Cisco Systems, Inc. (a) 1,469,675 33,949,492
QLogic Corp. (a) 86,700 3,624,060
QUALCOMM, Inc. 264,900 16,807,905
-----------
Communications Equipment Total 55,050,307
COMPUTERS & PERIPHERALS - 2.3%
Dell, Inc. (a) 379,490 12,390,348
EMC Corp. (a) 638,900 9,149,048
-----------
Computers & Peripherals Total 21,539,396
SHARES VALUE ($)
----------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.5%
Agilent Technologies, Inc. (a) 234,200 8,007,298
Flextronics International Ltd. (a) 326,400 5,907,840
-----------
Electronic Equipment & Instruments Total 13,915,138
INTERNET SOFTWARE & SERVICES - 0.6%
Yahoo!, Inc. (a) 129,800 5,763,120
-----------
Internet Software & Services Total 5,763,120
IT SERVICES - 1.5%
Cognizant Technology Solutions
Corp. (a) 126,600 6,005,904
Paychex, Inc. 257,100 8,270,907
-----------
IT Services Total 14,276,811
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 11.1%
ASML Holding NV, N.Y. Registered
Shares (a) 364,200 6,650,292
Broadcom Corp., Class A (a) 82,918 3,364,812
Intel Corp. 1,331,570 38,921,791
Linear Technology Corp. 113,700 4,546,863
Marvell Technology Group Ltd. (a) 92,400 4,206,972
Microchip Technology, Inc. 333,800 9,513,300
PMC-Sierra, Inc. (a) 163,500 3,253,650
Samsung Electronics Co., Ltd., GDR (b) 50,200 11,721,700
Silicon Laboratories, Inc. (a) 88,200 4,971,834
Taiwan Semiconductor Manufacturing
Co., Ltd., ADR (a) 675,366 7,017,053
Texas Instruments, Inc. 290,500 8,903,825
Xilinx, Inc. (a) 87,000 3,657,480
-----------
Semiconductors & Semiconductor Equipment Total 106,729,572
SOFTWARE - 9.0%
Amdocs Ltd. (a) 188,100 5,244,228
Electronic Arts, Inc. (a) 263,300 12,417,228
Mercury Interactive Corp. (a) 46,400 2,252,256
Microsoft Corp. 1,388,900 36,805,850
Oracle Corp. (a) 435,690 5,611,687
SAP AG, ADR 329,900 13,064,040
Symantec Corp. (a) 144,600 5,948,844
VERITAS Software Corp. (a) 176,800 5,378,256
-----------
Software Total 86,722,389
-----------
INFORMATION TECHNOLOGY TOTAL 303,996,733
MATERIALS - 3.1%
CHEMICALS - 1.5%
Praxair, Inc. 393,100 14,277,392
-----------
Chemicals Total 14,277,392
METALS & MINING - 1.6%
Alcoa, Inc. 413,300 15,486,351
-----------
Metals & Mining Total 15,486,351
-----------
MATERIALS TOTAL 29,763,743
See Accompanying Notes to Financial Statements.
52
________________________________________________________________________________
FEBRUARY 29, 2004 (UNAUDITED) COLUMBIA GROWTH FUND
SHARES VALUE ($)
----------------------------------------------------------------------
COMMON STOCKS - (CONTINUED)
TELECOMMUNICATION SERVICES - 1.1%
WIRELESS TELECOMMUNICATION SERVICES - 1.1%
American Tower Corp., Class A (a) 237,900 2,628,795
Crown Castle International Corp. (a) 268,060 3,230,123
Mobile Telesystems, ADR 20,600 2,209,350
VimpelCom, ADR (a) 25,300 2,147,717
-----------
Wireless Telecommunication Services Total 10,215,985
-----------
TELECOMMUNICATION SERVICES TOTAL 10,215,985
TOTAL COMMON STOCKS
(Cost of $749,255,950) 952,284,232
PREFERRED STOCK - 0.7%
CONSUMER DISCRETIONARY - 0.7%
MEDIA - 0.7%
News Corp., Ltd., ADR
(Cost of $6,912,438) 208,600 6,827,478
-----------
TOTAL INVESTMENTS - 99.9%
(COST OF $756,168,388) (C) 959,111,710
OTHER ASSETS & LIABILITIES, NET - 0.1% 1,080,635
NET ASSETS - 100.0% 960,192,345
NOTES TO INVESTMENT PORTFOLIO:
(a) Non-income producing.
(b) This security is exempt from registration under Rule 144A of the Securities
Act of 1933 and may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At February 29, 2004, the value
of this security amounted to $11,721,700, which represents 1.2% of net
assets.
(c) Cost for both financial statement and federal income tax purposes is the
same.
ACRONYM NAME
------- ----
ADR American Depositary Receipt
GDR Global Depositary Receipt
See Accompanying Notes to Financial Statements.
53
INVESTMENT PORTFOLIO____________________________________________________________
FEBRUARY 29, 2004 (UNAUDITED) COLUMBIA INTERNATIONAL STOCK FUND
SHARES VALUE ($)
----------------------------------------------------------------------
COMMON STOCKS - 95.2%
CONSUMER DISCRETIONARY - 16.5%
AUTO COMPONENTS - 0.7%
Continental AG 87,000 3,579,608
-----------
Auto Components Total 3,579,608
AUTOMOBILES - 1.4%
Nissan Motor Co., Ltd. 212,000 2,354,908
Toyota Motor Corp. 155,300 5,361,548
-----------
Automobiles Total 7,716,456
HOTELS, RESTAURANTS & LEISURE - 2.1%
Accor SA 93,980 4,141,240
Compass Group PLC 605,360 4,139,988
InterContinental Hotels Group PLC 294,200 2,854,680
-----------
Hotels, Restaurants & Leisure Total 11,135,908
HOUSEHOLD DURABLES - 3.7%
Koninklijke (Royal) Philips
Electronics NV 230,300 7,027,002
Matsushita Electronic Industrial
Co., Ltd. 606,000 8,840,275
Sony Corp. 97,000 3,961,722
-----------
Household Durables Total 19,828,999
MEDIA - 4.8%
Dentsu, Inc. 670 3,405,220
JC Decaux SA (a) 116,700 2,347,649
News Corp., Ltd. 281,900 2,653,493
Pearson PLC 338,200 3,912,701
ProSiebenSat.1 Media AG 121,000 2,567,034
Reuters Group PLC 642,821 4,690,058
United Business Media PLC 260,600 2,691,556
WPP Group PLC 349,000 3,920,426
-----------
Media Total 26,188,137
MULTILINE RETAIL - 1.5%
Big C Supercenter Public Co., Ltd. 4,186,700 1,886,813
Next PLC 160,558 4,167,451
Seiyu Ltd. (a) 691,000 2,278,022
-----------
Multiline Retail Total 8,332,286
SPECIALTY RETAIL - 0.7%
Aoyama Trading Co., Ltd. 101,400 2,038,214
USS Co., Ltd. 24,370 1,792,043
-----------
Specialty Retail Total 3,830,257
TEXTILES, APPAREL & LUXURY GOODS - 1.6%
Burberry Group PLC 544,846 3,586,346
Puma AG 16,400 3,375,316
Sanyo Shokai Ltd. 319,000 1,808,251
-----------
Textiles, Apparel & Luxury Goods Total 8,769,913
-----------
CONSUMER DISCRETIONARY TOTAL 89,381,564
SHARES VALUE ($)
----------------------------------------------------------------------
CONSUMER STAPLES - 5.8%
BEVERAGES - 1.8%
Diageo PLC 400,638 5,569,546
Pernod-Ricard SA 32,150 3,962,008
-----------
Beverages Total 9,531,554
FOOD & STAPLES RETAILING - 0.9%
C.P. 7-Eleven Public Co., Ltd. (a) 750,000 1,288,988
Casino Guichard-Perrachon SA 36,470 3,631,917
-----------
Food & Staples Retailing Total 4,920,905
FOOD PRODUCTS - 1.1%
Nestle SA, Registered Shares 20,600 5,461,596
Thai Union Frozen Products Public
Co., Ltd. 930,400 639,613
-----------
Food Products Total 6,101,209
HOUSEHOLD PRODUCTS - 1.6%
Reckitt Benckiser PLC 322,760 8,467,913
-----------
Household Products Total 8,467,913
TOBACCO - 0.4%
Imperial Tobacco Group PLC 113,800 2,461,144
-----------
Tobacco Total 2,461,144
-----------
CONSUMER STAPLES TOTAL 31,482,725
ENERGY - 7.1%
OIL & GAS - 7.1%
BP PLC 110,318 890,830
BP PLC, ADR 244,230 12,016,116
EnCana Corp. 118,200 5,109,250
ENI S.p.A. 601,750 11,842,546
PTT Public Co., Ltd. 788,100 3,009,930
Total SA 31,375 5,755,703
-----------
Oil & Gas Total 38,624,375
-----------
ENERGY TOTAL 38,624,375
FINANCIALS - 23.8%
BANKS - 0.0%
Fortis Bank Nederland
Holding NV (a)(b)(c) 4,100 0
-----------
Banks Total 0
COMMERCIAL BANKS - 13.3%
Alpha Bank A.E. 117,780 3,577,580
Anglo Irish Bank Corp. PLC 206,000 3,527,107
Banca Intesa S.p.A. 810,900 3,025,769
Banco Popolare di Verona e Novara 211,600 3,670,521
Banco Santander Central Hispano SA 333,800 3,882,393
Barclays PLC 653,850 5,902,153
Credit Agricole SA 186,569 4,819,557
Credit Suisse Group 261,940 9,577,482
Erste Bank der oesterreichischen
Sparkassen AG 36,700 5,147,895
See Accompanying Notes to Financial Statements.
54
________________________________________________________________________________
FEBRUARY 29, 2004 (UNAUDITED) COLUMBIA INTERNATIONAL STOCK FUND
SHARES VALUE ($)
----------------------------------------------------------------------
COMMON STOCKS - (CONTINUED)
FINANCIALS - (CONTINUED)
COMMERCIAL BANKS - (CONTINUED)
Hansabank Ltd. 88,149 2,601,632
Kookmin Bank (a) 97,500 4,062,155
Royal Bank of Scotland Group PLC 255,071 8,110,396
Siam Commercial Bank Public Co.,
Ltd. (a) 3,333,600 3,989,286
Societe Generale 41,900 3,736,057
Standard Chartered PLC 147,322 2,551,097
UFJ Holdings, Inc. (a) 943 4,231,410
-----------
Commercial Banks Total 72,412,490
DIVERSIFIED FINANCIAL SERVICES - 2.5%
ING Groep NV 353,140 8,672,999
Nomura Holdings, Inc. 292,000 4,639,377
-----------
Diversified Financial Services Total 13,312,376
INSURANCE - 4.4%
Allianz AG (a) 74,200 9,283,866
Daido Life Insurance 650 2,023,809
Irish Life & Permanent PLC 127,100 2,069,919
Millea Holdings, Inc. 603 7,730,769
Mitsui Sumitomo Insurance Co. 322,000 2,830,769
-----------
Insurance Total 23,939,132
REAL ESTATE - 3.6%
Land and Houses Public Co.,
Ltd., NVDR 8,362,600 2,533,799
Mitsubishi Estate Co., Ltd. 658,000 7,664,615
Sumitomo Realty & Development
Co., Ltd. 158,000 1,538,040
Sun Hung Kai Properties Ltd. 798,000 7,842,424
-----------
Real Estate Total 19,578,878
-----------
FINANCIALS TOTAL 129,242,876
HEALTH CARE - 6.8%
HEALTH CARE EQUIPMENT & SUPPLIES - 2.5%
Olympus Corp. 73,000 1,520,833
Phonak Holding AG 63,100 1,687,927
ResMed, Inc. (a) 44,900 2,112,994
Smith & Nephew PLC 887,110 8,496,065
-----------
Health Care Equipment & Supplies Total 13,817,819
PHARMACEUTICALS - 4.3%
Chugai Pharmaceutical Co., Ltd. 399,500 5,893,722
Dr. Reddy's Laboratories Ltd., ADR 58,000 1,476,100
GlaxoSmithKline PLC 321,426 6,723,540
Novartis AG 112,480 4,980,615
Takeda Chemical Industries Ltd. 44,100 1,817,308
Teva Pharmaceutical Industries
Ltd., ADR 35,200 2,288,000
-----------
Pharmaceuticals Total 23,179,285
-----------
HEALTH CARE TOTAL 36,997,104
SHARES VALUE ($)
----------------------------------------------------------------------
INDUSTRIALS - 9.6%
BUILDING PRODUCTS - 0.8%
Wienerberger AG 128,332 4,067,860
-----------
Building Products Total 4,067,860
COMMERCIAL SERVICES & SUPPLIES - 2.2%
Capita Group PLC 1,205,597 6,152,773
Randstad Holding NV 205,218 6,026,077
-----------
Commercial Services & Supplies Total 12,178,850
CONSTRUCTION & ENGINEERING - 0.9%
Shimizu Corp. 586,000 2,618,755
Taisei Corp. 688,000 2,394,139
-----------
Construction & Engineering Total 5,012,894
ELECTRICAL EQUIPMENT - 2.4%
Nitto Denko Corp. 61,200 3,026,374
Siemens AG 131,700 10,198,231
-----------
Electrical Equipment Total 13,224,605
MACHINERY - 1.4%
Atlas Copco AB, Class B 151,700 4,979,481
Linde AG 49,400 2,607,125
-----------
Machinery Total 7,586,606
ROAD & RAIL - 0.5%
Tokyu Corp. 486,000 2,612,472
-----------
Road & Rail Total 2,612,472
TRADING COMPANIES & DISTRIBUTORS - 0.8%
Mitsubishi Corp. 413,000 4,077,051
-----------
Trading Companies & Distributors Total 4,077,051
TRANSPORTATION INFRASTRUCTURE - 0.6%
BAA PLC 334,720 3,279,083
-----------
Transportation Infrastructure Total 3,279,083
-----------
INDUSTRIALS TOTAL 52,039,421
INFORMATION TECHNOLOGY - 11.7%
COMMUNICATIONS EQUIPMENT - 0.5%
Nortel Networks Corp. (a) 355,190 2,840,246
-----------
Communications Equipment Total 2,840,246
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.9%
Celestica, Inc. (a) 131,400 2,258,576
Epcos AG (a) 91,000 2,179,283
Flextronics International Ltd. (a) 135,000 2,443,500
Hoya Corp. 25,700 2,412,317
Keyence Corp. 10,500 2,166,346
TDK Corp. 64,200 4,479,890
-----------
Electronic Equipment & Instruments Total 15,939,912
INTERNET SOFTWARE & SERVICES - 1.0%
Index Corp. 394 1,659,707
T-Online International AG (a) 257,500 3,525,179
-----------
Internet Software & Services Total 5,184,886
See Accompanying Notes to Financial Statements.
55
________________________________________________________________________________
FEBRUARY 29, 2004 (UNAUDITED) COLUMBIA INTERNATIONAL STOCK FUND
SHARES VALUE ($)
----------------------------------------------------------------------
COMMON STOCKS - (CONTINUED)
INFORMATION TECHNOLOGY - (CONTINUED)
IT SERVICES - 0.6%
Indra Sistemas SA 220,500 3,024,152
-----------
IT Services Total 3,024,152
OFFICE ELECTRONICS - 1.0%
Canon, Inc. 110,000 5,369,048
-----------
Office Electronics Total 5,369,048
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 5.2%
ARM Holdings PLC (a) 2,262,400 5,108,179
Nikon Corp. 259,000 3,194,808
Samsung Electronics Co., Ltd. 20,600 9,526,517
STMicroelectronics NV,
N.Y. Registered Shares 158,100 4,086,885
Taiwan Semiconductor
Manufacturing Co., Ltd., ADR (a) 245,200 2,547,628
Tokyo Electron Ltd. 67,300 4,061,419
-----------
Semiconductors & Semiconductor Equipment Total 28,525,436
SOFTWARE - 0.5%
Dassault Systemes SA 64,291 2,816,142
-----------
Software Total 2,816,142
-----------
INFORMATION TECHNOLOGY TOTAL 63,699,822
MATERIALS - 4.7%
CHEMICALS - 1.8%
BASF AG 56,900 3,039,158
MG Technologies AG 193,500 2,938,792
Shin-Etsu Chemical Co., Ltd. 32,800 1,276,557
Syngenta AG 37,300 2,599,236
-----------
Chemicals Total 9,853,743
CONSTRUCTION MATERIALS - 1.3%
Siam Cement Public Co., Ltd,
NVDR (a) 1,164,750 7,117,505
-----------
Construction Materials Total 7,117,505
METALS & MINING - 0.5%
BHP Billiton Ltd. 293,800 2,785,958
-----------
Metals & Mining Total 2,785,958
PAPER & FOREST PRODUCTS - 1.1%
Stora Enso Oyj, Class R 280,500 3,742,035
UPM-Kymmene Oyj 112,100 2,217,339
-----------
Paper & Forest Products Total 5,959,374
-----------
MATERIALS TOTAL 25,716,580
SHARES VALUE ($)
----------------------------------------------------------------------
TELECOMMUNICATION SERVICES - 7.2%
DIVERSIFIED TELECOMMUNICATION SERVICES - 5.1%
France Telecom SA (a) 120,000 3,320,047
Nippon Telegraph & Telephone 