-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OJgZRxGrKbQzxxZDAurbFy9f+ZttCsU8ZM30chHW14NIARB0iZtQ38mqmwP4DKnG 0Atp6pjTVZUGHaitdF0QLg== 0001193125-03-075421.txt : 20031110 0001193125-03-075421.hdr.sgml : 20031110 20031107182324 ACCESSION NUMBER: 0001193125-03-075421 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030831 FILED AS OF DATE: 20031110 EFFECTIVENESS DATE: 20031110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLUMBIA INSTITUTIONAL FLOATING RATE INCOME FUND CENTRAL INDEX KEY: 0001068202 IRS NUMBER: 364251183 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-08955 FILM NUMBER: 03986462 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CENTER CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 8003382550 MAIL ADDRESS: STREET 1: ONE FINANCIAL CENTER CITY: BOSTON STATE: MA ZIP: 02111 FORMER COMPANY: FORMER CONFORMED NAME: LIBERTY STEIN ROE INSTITUTIONAL FLOATING RATE INCOME FUND DATE OF NAME CHANGE: 19991025 FORMER COMPANY: FORMER CONFORMED NAME: STEIN ROE INSTITUTIONAL FLOATING RATE INCOME TRUST DATE OF NAME CHANGE: 19980929 FORMER COMPANY: FORMER CONFORMED NAME: STEIN ROE INSTITUTIONAL FLOATING RATE TRUST DATE OF NAME CHANGE: 19980813 N-CSR 1 dncsr.txt COLUMBIA INSTITUTIONAL FLOATING RATE INCOME FUND N-CSR COLUMBIA INSTITUTIONAL FLOATING RATE INCOME FUND 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 811-08955 --------- COLUMBIA INSTITUTIONAL FLOATING RATE INCOME FUND - ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) One Financial Center, Boston, Massachusetts 02111 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Russell Kane, Esq. Columbia Management Group, Inc. One Financial Center Boston, MA 02111 - ------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 1-617-772-3363 -------------- Date of fiscal year end: 08/31/2003 ---------- Date of reporting period: 08/31/2003 ---------- 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 of Stockholders COLUMBIA INSTITUTIONAL FLOATING RATE INCOME FUND ANNUAL REPORT . AUGUST 31, 2003 [LOGO] Columbia Funds A Member of Columbia Management Group From the President 1 Performance Summary 2 Portfolio Managers' Report 3 Portfolio of Investments 5 Financial Statements 16 Notes to Financial Statements 23 Financial Highlights 29 Report of Independent Auditors 31 Trustees 32 Officers and Transfer Agent 34
[LOGO] Not FDIC Insured May Lose Value No Bank Guarantee Must be preceded or accompanied by a prospectus. Contents Dear Shareholder: As you know, the fund you invest in has long been associated with a larger investment management organization. In the 1990s, it was part of Liberty Financial, whose affiliated asset management companies included Colonial, Stein Roe and Newport. In 2001, your fund became part of the asset management division of FleetBoston Financial Corp., which you know as Columbia Management Group (CMG). Earlier this year, six of the asset management firms that were brought together under the CMG umbrella were consolidated and renamed Columbia Management Advisors, Inc. On October 13, 2003, we took the natural next step forward in this process by changing the name of our funds from Liberty to Columbia. For example, Liberty-Stein Roe Institutional Floating Rate Income Fund was changed to Columbia Institutional Floating Rate Income Fund. We have also modified certain fund names that existed under both the Liberty and Columbia brands. As a result of these fund name changes, most fund CUSIP numbers have changed. (A CUSIP is a unique identification number assigned to each class of a mutual fund by the Committee on Uniform Security Identification Procedures.) However, ticker symbols have not changed. A list of new fund names and other information related to these changes are available online at www.columbiafunds.com, our new website address. A consolidated identity The consolidation of our management under a single organization and the renaming of our funds are part of a larger effort to create a consistent identity. Having taken these additional steps, we believe it will be easier for our shareholders to do business with us. All funds will be listed under the "Columbia" name in the mutual fund listings section of your newspaper (as long as they meet the newspaper's listing requirements). All service inquires will be handled by Columbia Funds Services, Inc. the new name of our shareholder service organization. What will not change is our commitment to our shareholders. We remain committed to providing the best possible customer service and to offering a wide variety of mutual funds to help you pursue your long-term financial goals. Should you have questions, please call shareholder services at 800-345-6611 or visit our website at its new address, www.columbiafunds.com. In the report that follows, your portfolio manager talks in depth about investment strategies and other factors that affected your fund's performance during the period. We encourage you to read the report carefully. As always, we thank you for your business and we look forward to continuing to serve your investment needs. Sincerely, /s/ Joseph R. Palumbo Joseph R. Palombo President Economic and market conditions change frequently. There is no assurance that the trends described in this report will continue or commence. [PHOTO] Joseph R. Palumbo From the President 1 Average annual total return, (%) Period ended August 31, 2003
1 Year Life* - ------------------------------------------------------------------- Columbia Institutional Floating Rate Income Fund 11.50% 5.96% - ------------------------------------------------------------------- CSFB Leveraged Loan Index 9.80% 4.46% - -------------------------------------------------------------------
Average annual total return, (%) Period ended June 30, 2003
1 Year Life* - ------------------------------------------------------------------- Columbia Institutional Floating Rate Income Fund 6.55% 5.96% - -------------------------------------------------------------------
* The fund's inception date is 12/17/98. Index performance is from 12/31/98. INVESTMENT COMPARISONS Growth of a $10,000 Investment: December 17, 1998 through August 31, 2003 [CHART] Columbia Institutional Floating Rate CSFB Leveraged Income Fund: Loan Index*: ----------------- -------------- $ 10,000 12/01/1998 - 12/31/1998 $ 10,011 $ 10,000 1/01/1999 - 1/31/1999 $ 10,078 $ 10,026 2/01/1999 - 2/28/1999 $ 10,166 $ 9,982 3/01/1999 - 3/31/1999 $ 10,252 $ 10,043 4/01/1999 - 4/30/1999 $ 10,329 $ 10,117 5/01/1999 - 5/31/1999 $ 10,406 $ 10,246 6/01/1999 - 6/30/1999 $ 10,482 $ 10,338 7/01/1999 - 7/31/1999 $ 10,553 $ 10,407 8/01/1999 - 8/31/1999 $ 10,594 $ 10,369 9/01/1999 - 9/30/1999 $ 10,665 $ 10,344 10/01/1999 - 10/31/1999 $ 10,720 $ 10,330 11/01/1999 - 11/30/1999 $ 10,773 $ 10,397 12/01/1999 - 12/31/1999 $ 10,853 $ 10,468 1/01/2000 - 1/31/2000 $ 10,936 $ 10,569 2/01/2000 - 2/29/2000 $ 11,024 $ 10,604 3/01/2000 - 3/31/2000 $ 11,063 $ 10,520 4/01/2000 - 4/30/2000 $ 11,133 $ 10,558 5/01/2000 - 5/31/2000 $ 11,229 $ 10,647 6/01/2000 - 6/30/2000 $ 11,314 $ 10,712 7/01/2000 - 7/31/2000 $ 11,415 $ 10,789 8/01/2000 - 8/31/2000 $ 11,498 $ 10,844 9/01/2000 - 9/30/2000 $ 11,564 $ 10,879 10/01/2000 - 10/31/2000 $ 11,622 $ 10,884 11/01/2000 - 11/30/2000 $ 11,656 $ 10,908 12/01/2000 - 12/31/2000 $ 11,705 $ 10,984 1/01/2001 - 1/31/2001 $ 11,798 $ 11,050 2/01/2001 - 2/28/2001 $ 11,833 $ 11,145 3/01/2001 - 3/31/2001 $ 11,790 $ 11,159 4/01/2001 - 4/30/2001 $ 11,679 $ 11,112 5/01/2001 - 5/31/2001 $ 11,797 $ 11,244 6/01/2001 - 6/30/2001 $ 11,821 $ 11,258 7/01/2001 - 7/31/2001 $ 11,948 $ 11,286 8/01/2001 - 8/31/2001 $ 12,063 $ 11,376 9/01/2001 - 9/30/2001 $ 11,944 $ 11,159 10/01/2001 - 10/31/2001 $ 11,748 $ 10,985 11/01/2001 - 11/30/2001 $ 11,848 $ 11,157 12/01/2001 - 12/31/2001 $ 11,959 $ 11,273 1/01/2002 - 1/31/2002 $ 12,123 $ 11,335 2/01/2002 - 2/28/2002 $ 12,021 $ 11,292 3/01/2002 - 3/31/2002 $ 12,173 $ 11,423 4/01/2002 - 4/30/2002 $ 12,317 $ 11,545 5/01/2002 - 5/31/2002 $ 12,367 $ 11,537 6/01/2002 - 6/30/2002 $ 12,202 $ 11,363 7/01/2002 - 7/31/2002 $ 11,895 $ 11,190 8/01/2002 - 8/31/2002 $ 11,780 $ 11,158 9/01/2002 - 9/30/2002 $ 11,660 $ 11,182 10/01/2002 - 10/31/2002 $ 11,604 $ 11,032 11/01/2002 - 11/30/2002 $ 11,747 $ 11,222 12/01/2002 - 12/31/2002 $ 11,929 $ 11,398 1/01/2003 - 1/31/2003 $ 12,060 $ 11,552 2/01/2003 - 2/28/2003 $ 12,085 $ 11,612 3/01/2003 - 3/31/2003 $ 12,216 $ 11,651 4/01/2003 - 4/30/2003 $ 12,498 $ 11,815 5/01/2003 - 5/31/2003 $ 12,791 $ 11,973 6/01/2003 - 6/30/2003 $ 13,001 $ 12,142 7/01/2003 - 7/31/2003 $ 13,074 $ 12,225 8/01/2003 - 8/31/2003 $ 13,129 $ 12,256 * Index performance is from 12/31/98. Mutual fund performance changes over time. Please visit www.columbiafunds.com for daily performance updates. Past performance is no guarantee of future investment results. The principal value and investment returns will fluctuate, resulting in a gain or loss on sale. All results shown assume reinvestment of distributions. The CSFB Leveraged Loan Index is an unmanaged index that tracks the performance of senior floating rate bank loans. Unlike the fund, indexes 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 the index. Performance Summary 2 PORTFOLIO MANAGERS' REPORT [GRAPHIC]
For the 12-month period ended August 31, 2003, Columbia Institutional Floating Rate Income Fund returned 11.50%. It outperformed its benchmark, the CSFB Leveraged Loan Index, which returned 9.80%, and also its peer group, the Lipper Loan Participation Funds Category average, which was 9.49% for the same period./1/ These high returns reflect an advantageous environment for all types of credit instruments. We believe the fund was able to outperform its benchmark because of favorable sector allocation and security selection. A strong credit environment Bank loans and other forms of credit were in high demand, especially during the past six months. From investment-grade corporate debt to high-yield bonds, we witnessed a sharp recovery from the weak credit markets of the previous two years. The corporate accounting scandals that dominated the headlines in 2002 had brought new credit issuance to a standstill. During 2003, however, the capital markets were once again open for a wide range of issuers. Corporate balance sheets improved and default rates declined from over 10% at the beginning of 2003 to 5.4% by mid-year. Investment Objective: Columbia Institutional Floating Rate Income Fund seeks high current income consistent with preservation of capital by investing substantially all of its net investable assets in Columbia Floating Rate Limited Liability Company (the "portfolio"). The portfolio invests primarily in adjustable rate senior secured loans made to corporations, partnerships and other borrowers that operate in various industries and geographic regions (including domestic and foreign entities). Fund Inception: December 17, 1998 Net Assets (as of 8/31/03): $89.7 million TOP 5 SECTORS as of 8/31/03
% - Wireless communications 8.6 Cable television 6.2 Healthcare services 4.5 Food manufacturing 4.3 Diversified manufacturing 4.2
Sector breakdowns are calculated as a percentage of net assets. Because the portfolio is actively managed, there can be no guarantee that the portfolio will continue to maintain this breakdown in the future. Cable and wireless_--_a boon to performance The portfolio's overweight position in wireless communications and cable contributed significantly to its strong performance. Wireless communications, which accounted for 8.6% of the portfolio's net assets on August 31, 2003, was hit disproportionately hard in 2002, with many issues trading at discounts of up to 30-45% to par. Since then, the industry has staged a strong recovery. Many wireless companies took advantage of their improved operating performance and prevailing low interest rates by bringing high-yield bonds to market, thereby improving their capital structure. In many cases, - -------- /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. Portfolio Managers' Report 3 they even repaid bank debt at 100 cents on the dollar. Holdings such as Centennial Cellular and Western Wireless (0.3% and 0.4% of net assets, respectively) were especially strong performers./2/ Cable Television, which constituted 6.2% of the portfolio's net assets at period end, also rebounded from difficult times. Following the Adelphia Communications bankruptcy in 2002, mergers and acquisitions activity came to a halt, and subscriber bases became difficult to value. Over the past six to nine months, however, a series of these types of transactions and other asset sales took place. Although the subscriber values implied by these transactions were down from their peak, they were also greater than what the depressed market was suggesting. Century Cable and Olympus Cable, both subsidiaries of Adelphia, and Charter Communications (2.2%, 0.7% and 1.1% of net assets, respectively), bellwethers for an industry on the mend, were important holdings for the portfolio. /s/ Brian Good /s/ Jim Fellows Brian Good and Jim Fellows have been portfolio managers of the Columbia Institutional Floating Rate Income Fund since its inception in December 1998. Just like any other investment, floating rate loan investments present financial risks. Defaults on the loans in the portfolio could reduce the fund's net asset value and its distributions, as could non-payment of scheduled interest and principal. Prepayment of principal by a borrower could mean that the fund managers have to replace the loan with a lower-yielding security, which could affect the valuation of the portfolio's holdings. The portfolio may invest a high percentage of assets in a limited number of loans, so the default of any individual holding can have a greater impact on the fund's net asset value than could a default in a more diversified portfolio. Unlike floating rate loans, some fixed-income investments may be covered by FDIC insurance or other guarantees relating to timely payment of principal and interest. Some may also provide tax benefits. The fund is a continuously offered, closed-end management investment company and provides limited liquidity through a quarterly tender offer for between 5% and 25% of outstanding shares. Each quarter, the fund's trustees must approve the actual tender amount. Please read the prospectus carefully for more details. /2/ Holdings are disclosed as of August 31, 2003, and are subject to change. PORTFOLIO QUALITY BREAKDOWN (dollar-weighted %) as of 8/31/03 Baa2 0.2 Baa3 2.3 Ba1 2.2 Ba2 5.0 Ba3 21.5 B1 18.2 B2 8.5 B3 11.5 Caa1 3.3 Caa2 1.7 Ca 1.7 NR 9.0 Other 14.9
Quality breakdowns are calculated as a percentage of total investments. Because the portfolio is actively managed, there can be no guarantee that the portfolio will continue to maintain these quality breakdowns in the future. 4 Investment Portfolio AUGUST 31, 2003 Variable Rate Senior Loan
Interests (a) - 85.2% PAR VALUE Aerospace/Defense - 2.0% DRS Technologies, Term Loan, 09/30/08.............. $ 975,102 $ 983,699 Integrated Defense Technologies, Term Loan B, 03/04/08.......................................... 2,838,581 2,830,870 Titan Corp., Term Loan B, 06/30/09................. 1,980,000 1,986,850 Vought Aircraft Industries, Inc.: Term Loan B, 06/30/07............................. 1,290,460 1,285,377 Term Loan C, 06/30/08............................. 2,138,265 2,134,235 Term Loan X, 12/31/06............................. 847,637 845,511 ------------ 10,066,542 ------------ Auto Parts - 2.8% 142466 Ontario Ltd., Term Loan B, 08/10/07......... 6,790,479 6,806,272 Federal-Mogul Corp., Term Loan C, 02/24/04......... 485,000 482,561 Key Plastics LLC: (b) Jr. Sec. Sub Notes, 04/30/07...................... 48,970 48,970 Sr. Sec. Sub Notes, 04/30/07...................... 101,433 101,433 Meridian Automotive Systems, Inc., Term Loan B, 03/31/07.......................................... 3,506,549 3,256,840 TRW Automotive Acquisitions Corp., Term Loan C1, 02/28/11.......................................... 3,600,000 3,613,993 ------------ 14,310,069 ------------ Broadcasting - 3.3% Comcorp Broadcasting, Inc., Term Loan A2, 03/31/04. 930,188 925,537 Emmis Communications Corp., Term Loan A, 02/28/09.. 2,055,811 2,060,042 Gray Television, Inc. Incremental Term Loan, 12/31/10.......................................... 2,085,000 2,102,738 Quorum Broadcasting Co., Inc., Revolver, 12/31/04.. 1,392,365 1,343,629 Term Loan B, 12/31/04............................. 1,983,293 1,938,627 Term Loan C, 12/31/04............................. 1,481,752 1,429,860 UPC Financing Partnership, Term Loan C2, 03/31/09.. 7,000,000 6,180,605 White Knight Broadcasting, Inc., Term Loan A2, 09/15/03.......................................... 1,026,745 1,021,612 ------------ 17,002,650 ------------
See notes to investment portfolio. Columbia Floating Rate Limited Liability Company 5
PAR VALUE Building Products - 0.5% Tapco International Corp.: Term Loan B, 06/23/07............................ $ 1,525,964 $ 1,527,686 Term Loan C, 06/23/08............................ 1,047,455 1,048,298 ------------ 2,575,984 ------------ Business Services - 2.0% NATG Holdings LLC: (b) Revolver A, 01/23/05............................. 1,039,746 1,039,875 Term Loan A, 01/23/09............................ 1,011,450 809,116 Term Loan B1, 01/23/10........................... 684,740 547,762 Term Loan B2, 01/23/10........................... 338,491 338,476 Outsourcing Solutions, Inc., (b)(d) Term Loan B, 06/10/06......................................... 5,797,946 3,710,685 Relizon Co., Term Loan B, 12/31/07................ 1,949,367 1,919,264 Transaction Network Services, Inc., Term Loan B, 04/03/07......................................... 2,003,798 1,993,364 ------------ 10,358,542 ------------ Cable Television - 6.2% Century Cable Holdings LLC: Discretionary Term, 12/31/09..................... 3,500,000 2,879,123 Term Loan, 06/30/09.............................. 10,000,000 8,384,648 Charter Communications Operating LLC, Incremental Term Loan, 09/18/08.............................. 1,987,500 1,851,717 Term Loan B, 03/18/08............................ 3,956,344 3,718,235 Comcast Cable Communications, Term Loan, 11/18/06. 10,000,000 9,958,783 CSC Holdings, Inc., (c) Revolver, 06/30/06........ 1,306,667 1,218,540 Olympus Cable Holdings LLC: Term Loan A, 06/30/10............................ 2,000,000 1,720,000 Term Loan B, 09/30/10............................ 2,000,000 1,747,500 ------------ 31,478,546 ------------ Casinos/Gambling - 2.7% Aladdin Gaming LLC: (d) Term Loan A, 02/25/05............................ 6,000,000 4,800,000 Term Loan B, 08/26/06............................ 1,250,000 1,015,625 Alliance Gaming Corp., Term Loan, 09/04/09........ 3,456,250 3,481,598 Ameristar Casinos, Inc., Term Loan B, 12/20/06.... 874,280 877,022 Marina District Finance Co., Inc., Term Loan A, 12/13/07......................................... 3,750,000 3,747,532 ------------ 13,921,777 ------------
See notes to investment portfolio. 6
PAR VALUE Chemicals - 2.0% Huntsman Corp.: Term Loan A, 03/31/07............................ $ 4,730,658 $ 4,206,842 Term Loan B, 03/31/07............................ 2,314,729 2,058,238 Huntsman International, LLC: Term Loan B, 06/30/07............................ 369,058 370,466 Term Loan C, 06/30/08............................ 989,297 992,836 Messer Griesheim Industries: Term Loan B, 04/27/09............................ 877,032 883,587 Term Loan C, 04/27/10............................ 1,262,308 1,271,664 Noveon, Inc., (c) Term Loan B, 12/31/09........... 338,213 341,518 ------------ 10,125,151 ------------ Consumer Services - 1.0% Alderwoods Group, Inc.: Note 5 Year, 01/02/07............................ 428,133 434,520 Note 7 Year, 01/02/09............................ 880,100 941,707 DIMAC Holdings.: (d) Term Loan A, 12/31/05............................ 246,193 923 Term Loan B, 01/01/05............................ 65,687 1,971 DIMAC Marketing Partners, Inc.: (d) Revolver, 07/01/03............................... 27,444 -- Term Loan B, 01/01/05............................ 160,714 4,821 Knowledge Learning Corp., Term Loan B, 05/15/10... 3,940,000 3,926,841 ------------ 5,310,783 ------------ Consumer Specialties - 2.9% Church & Dwight Co., Inc., Term Loan B, 09/30/07.. 544,666 548,569 Fisher Scientific International, Inc. Term Loan, 03/31/10......................................... 2,992,500 3,011,845 Johnson Diversey, Inc., Term Loan B, 11/03/09..... 2,310,000 2,323,900 Neptune Technology Group, Inc., Term Loan B, 03/31/10......................................... 1,947,368 1,977,613 Playtex Products, Inc. Term Loan C, 05/31/09...... 2,984,848 2,987,951 Reddy Ice Group, Inc. Term Loan, 08/17/09......... 750,000 758,434 United Industries Corp., Term Loan B, 01/20/06.... 3,062,666 3,070,794 ------------ 14,679,106 ------------ Containers/Packaging - 0.9% Graphic Packaging International, Inc. Term Loan B, 08/09/10...................................... 3,000,000 3,015,902 Kerr Group, Inc., Term Loan, 08/13/10............. 1,500,000 1,514,044 ------------ 4,529,946 ------------
See notes to investment portfolio. 7
PAR VALUE Diversified Commercial Services - 0.5% Transcore Holdings, Inc., Term Loan B, 10/01/06... $ 2,666,955 $ 2,680,961 ------------ Diversified Manufacturing - 4.2% Amsted Industries, Inc., Term Loan, 10/15/10...... 3,750,000 3,801,383 Enersys, Inc., Term Loan B, 11/09/08.............. 4,899,840 4,911,463 Flowserve Corp., Term Loan C, 06/30/09............ 743,532 748,071 General Cable Corp., Term Loan B, 05/28/07........ 1,608,856 1,484,147 Gentek, Inc., Term Loan C, 10/31/07............... 339,226 211,283 Jason, Inc., Term Loan B, 06/30/07................ 2,226,931 2,120,630 Polymer Group, Inc., Term Loan, 12/31/06.......... 5,530,360 5,316,058 Polypore, Inc., Term Loan B, 12/31/06............. 1,856,070 1,868,239 Superior Telecom, Inc., (d) Term Loan B, 05/27/04. 2,384,316 822,589 ------------ 21,283,863 ------------ Electric Utilities - 3.2% Calpine Corp., Second Lien, 07/16/07.............. 5,700,000 5,400,527 Michigan Electric Transmission Co., Term Loan, 05/01/07......................................... 990,000 993,265 Mission Energy Holding Co.: Term Loan A, 07/02/06. 3,506,494 1,954,821 Term Loan B, 07/02/06............................ 9,993,506 5,512,946 Northwestern Corp., Term Loan, 12/01/06........... 2,487,500 2,482,281 ------------ 16,343,840 ------------ Electronic Components - 1.3% IPC Acquisition Corp., Term Loan, 12/31/06........ 1,123,842 1,116,620 Viasystems, Inc., Term Loan B, 09/30/08........... 6,404,195 5,491,960 ------------ 6,608,580 ------------ Engineering & Construction - 1.8% URS Corp., Term Loan B, 08/22/08.................. 1,589,462 1,600,273 Washington Group International, (c) Revolver B, 07/23/04......................................... 7,500,000 7,577,874 ------------ 9,178,147 ------------
See notes to investment portfolio. 8
PAR VALUE Environmental Services - 1.9% Allied Waste North America, Inc.: Term Loan A, 01/15/10.......................................... $ 571,429 $ 575,554 Term Loan B, 01/15/10............................. 3,428,571 3,454,088 Term Loan C, 01/15/10............................. 600,000 604,123 Environmental Systems Products Holdings, Inc.: Tranche 1, 12/31/04......................... 3,017,072 3,017,024 Tranche 2, 12/31/04............................... 674,213 664,091 Synagro Technologies, Inc., Term Loan, 05/07/07.... 1,626,059 1,634,516 ------------ 9,949,396 ------------ Farming/Agriculture - 0.0% Quality Stores, Inc., (b)(d) Term Loan B, 04/30/06. 1,501,616 33,937 ------------ Finance Companies - 0.2% Finova Group, Inc., Note, 05/15/09................. 2,250,000 888,750 ------------ Food Chains - 0.5% Carrols Corp., Term Loan B, 12/31/07............... 1,414,683 1,412,108 Domino's, Inc., Term Loan, 06/25/10................ 1,377,049 1,389,619 ------------ 2,801,727 ------------ Food Manufacturing - 4.3% American Seafoods Group LLC, Term Loan B, 03/31/09. 3,115,455 3,122,411 Burns Philp, Inc., Term Loan, 02/26/09............. 1,995,000 2,009,777 Commonwealth Brands, Inc., Term Loan, 08/28/07..... 1,388,750 1,396,342 Constellation Brands, Inc., Term Loan B, 11/30/08.. 1,973,983 1,994,473 Interstate Bakeries, Tranche A, 07/19/06........... 3,000,000 2,992,445 Interstate Brands Corp., Term Loan C, 07/19/07..... 2,000,000 2,000,581 Merisant Corp., Term Loan B, 01/11/10.............. 1,330,000 1,342,433 Michael Foods, Inc., Term Loan B, 04/10/08......... 835,915 840,161 Otis Spunkmeyer, Inc., Term Loan B, 02/20/09....... 2,895,247 2,899,451 Pinnacle Foods Holding Corp., Term Loan, 05/22/08.. 460,526 460,719 Southern Wine & Spirits of America, Inc., Term Loan B, 07/02/08.................................. 2,970,000 2,984,744 ------------ 22,043,537 ------------
See notes to investment portfolio. 9
PAR VALUE Healthcare Services - 4.3% Alliance Imaging, Inc., Term Loan A, 11/02/06..... $ 2,595,420 $ 2,465,621 Ameripath, Inc., Term Loan, 03/27/10.............. 3,491,250 3,527,758 Concentra Operating Corp., Term Loan, 06/30/09.... 3,267,000 3,282,218 Davita, Inc., Term Loan B, 03/31/09............... 2,000,000 2,007,607 Fresenius Medical Care, Inc., Term Loan B, 02/21/10......................................... 1,300,000 1,305,680 Insight Health Services Corp., Delayed Draw Term Loan, 10/17/08................................... 1,000,000 999,860 Term Loan B, 10/17/08............................ 3,395,273 3,413,343 Kinetic Concepts, Inc., Term Loan B, 08/11/10..... 1,250,000 1,259,371 Pacificare Health Systems, Inc., Term Loan, 06/03/08......................................... 1,250,000 1,258,836 VCA Antech, Inc. Term Loan D, 06/30/09............ 2,177,600 2,188,488 ------------ 21,708,782 ------------ Home Furnishings - 0.0% Simmons Co., Term Loan B, 10/29/05................ 214,917 215,696 ------------ Hospital Management - 1.7% Community Health Systems, Inc., Incremental Term Loan, 01/16/11................................... 2,000,000 2,007,500 Term Loan B, 07/16/10............................ 1,985,000 1,992,444 Iasis Healthcare Corp., Term Loan B, 02/09/09..... 2,312,500 2,337,722 Vanguard Health Systems, Incremental Term Loan, 01/03/10......................................... 2,388,000 2,408,079 ------------ 8,745,745 ------------ Hotels/Resorts - 0.6% Wyndham International, Inc., Term Loan, 06/30/06.. 3,583,122 2,993,705 ------------ Industrial Machinery/Components - 1.0% Terex Corp., Term Loan, 07/03/09.................. 5,022,017 4,988,538 ------------ Insurance Brokers/Service - 0.4% Infinity Property & Casualty, Term Loan, 06/30/10. 2,000,000 2,014,983 ------------ Media Conglomerates - 0.0% Bridge Information Systems: (d) Multi-Draw Term Loan, 09/07/03................... 533,287 58,662 ------------
See notes to investment portfolio. 10
PAR VALUE Medical Specialties - 0.4% Dade Behring, Inc., Term Loan A1, 10/03/08........ $ 1,755,588 $ 1,785,776 ------------ Metal Fabrications - 0.2% Copperweld Corp. Welded Tube Holdings, Term Loan, 12/16/03......................................... 2,154,167 1,023,225 ------------ Metals/Mining - 1.1% Dresser, Inc. Term Loan B, 04/10/09............... 2,000,000 2,012,427 Stillwater Mining Co., Term Loan B, 12/31/07...... 3,825,976 3,864,693 ------------ 5,877,120 ------------ Movies/Entertainment - 4.0% AMF Bowling Worldwide, Inc., Term Loan, 02/28/08.. 4,084,042 4,094,027 Carmike Cinemas, Inc., Term Loan, 01/31/07........ 3,090,625 3,117,642 GT Brands LLC, Term Loan, 09/30/07................ 3,251,420 3,158,614 Loews Cineplex Entertainment Corp., Term Loan, 02/29/08......................................... 5,627,981 5,611,314 Metro-Goldwyn-Mayer Studios, Inc., Term Loan B, 06/30/08......................................... 2,500,000 2,508,506 Vivendi Universal Entertainment LLP, Term Loan B, 06/30/08......................................... 2,000,000 2,011,798 ------------ 20,501,901 ------------ Oil Refining/Marketing - 0.6% Magellan Mainstream Holdings LP, Term Loan, 06/17/08......................................... 1,875,000 1,893,099 Tesoro Petroleum Corp., Sr. Sec. Inst. Term Loan, 04/15/08......................................... 1,197,000 1,209,132 ------------ 3,102,231 ------------ Paper - 0.8% Appleton Papers, Inc., Term Loan C, 11/08/06...... 1,824,628 1,832,633 Bear Island Paper Co., Term Loan, 12/31/05........ 271,038 271,716 Port Townsend Paper Corp., Term Loan B, 03/16/07.. 1,955,000 1,818,450 ------------ 3,922,799 ------------
See notes to investment portfolio. 11
PAR VALUE Pharmaceuticals - 1.3% Medco Health, Term Loan, 06/30/10................. $ 3,430,000 $ 3,451,422 Medpointe, Inc., Term Loan B, 09/30/08............ 3,147,075 2,982,324 ------------ 6,433,746 ------------ Printing/Publishing - 2.0% Readers Digest Association, Inc., Term Loan B, 05/20/08......................................... 1,388,129 1,378,919 Sun Media Corp., Term Loan B, 02/07/09............ 1,440,326 1,444,976 TV Guide, Inc.: Revolver A (c), 02/28/05.......... 1,522,932 1,454,397 Tranche B, 02/28/05.............................. 473,000 451,711 Weekly Reader Corp., Term Loan B, 11/17/06........ 5,783,725 5,614,782 ------------ 10,344,785 ------------ Rail/Shipping - 2.5% American Commercial Lines: (d) Term Loan B, 06/30/06......................................... 956,424 800,766 Term Loan C, 06/30/07............................ 1,342,969 1,124,400 Dakota Minnesota Eastern Rail Corp., Term Loan, 07/25/07......................................... 2,900,000 2,934,323 Helm Financial Corp., Term Loan B, 10/18/06....... 5,247,372 5,030,443 Kansas City Southern Railway Co., Term Loan B, 06/12/08......................................... 1,183,025 1,187,114 RailAmerica Transportation Corp.: Term Loan, 05/22/09......................................... 508,200 509,800 Term Loan B, 05/22/09............................ 1,224,300 1,228,151 ------------ 12,814,997 ------------ Real Estate Investment Trusts - 0.8% AIMCO Properties LP, Term Loan, 05/30/08.......... 1,850,000 1,857,545 Macerich Partnership LP, Term Loan, 07/26/05...... 1,968,000 1,975,418 ------------ 3,832,963 ------------ Rental/Leasing Companies - 0.5% Rent-A-Center, Inc., Term Loan, 05/28/09.......... 2,400,000 2,418,976 ------------ Retail Stores - 0.3% CH Operating LLC, Term Loan, 06/21/07............. 1,758,621 1,760,799 ------------
See notes to investment portfolio. 12
PAR VALUE Semiconductors - 0.6% Semiconductor Components Industries LLC: Term Loan B, 08/04/06................................. $ 1,196,965 $ 1,186,102 Term Loan C, 08/04/07............................ 1,289,018 1,277,319 Term Loan D, 08/04/07............................ 631,777 622,640 ------------ 3,086,061 ------------ Steel/Iron Ore - 2.3% Ispat Inland LP.: Term Loan B, 07/16/05........... 3,885,675 2,714,739 Term Loan C, 07/16/06............................ 3,885,675 2,714,739 Steel Dynamics, Inc., Term Loan B, 03/26/08....... 1,809,894 1,823,174 UCAR Finance, Inc., Term Loan B, 12/31/07......... 4,443,135 4,454,714 ------------ 11,707,366 ------------ Telecommunications Infrastructure Equipment - 0.4% Spectrasite Communications, Inc., Term Loan B, 12/31/07......................................... 1,834,223 1,837,755 ------------ Telecommunications Services - 1.9% Alaska Communications Systems Holdings, Inc., Term Loan, 02/14/09........................ 1,750,000 1,754,832 ICG Communications, Inc., Term Loan, 03/31/06..... 329,799 277,090 Time Warner Telecom, Term Loan B, 03/31/08........ 2,786,000 2,774,174 Valor Telecommunications Enterprises LLC, Term Loan B, 06/30/08................................. 4,709,827 4,696,616 ------------ 9,502,712 ------------ Textiles - 0.8% Springs Industries, Inc., Term Loan B, 09/05/08... 2,345,490 2,351,323 St. John Knits International, Inc., Incremental Term Loan B, 07/31/07............................ 1,496,659 1,499,426 ------------ 3,850,749 ------------ Transportation - 3.9% Laidlaw Investments Ltd., Term Loan B, 06/19/09... 4,554,000 4,671,966 Motor Coach Industries, Inc., Term Loan, 06/16/05. 5,803,248 4,758,498 Pacer International, Inc., Term Loan, 06/10/10.... 929,412 938,201 TTIndustries, Inc., Term Loan B, 03/31/07......... 6,409,454 5,981,157 United Airlines, Term Loan B, 07/01/04............ 3,784,000 3,757,013 ------------ 20,106,835 ------------
See notes to investment portfolio. 13
PAR VALUE Wireless Communications - 8.6% Centennial Cellular Operating Co., LLC, Term Loan A, 11/30/06...................................... $ 1,637,192 $ 1,573,093 Centennial Puerto Rico Operations Corp.: Term Loan B, 05/31/07................................. 695,627 673,273 Term Loan C, 11/30/07............................ 651,169 630,058 Cricket Communications, Inc., (d) Vendor Term Loan, 06/30/07................................... 20,500,000 8,661,250 Nextel Finance Co.: Term Loan A, 12/31/07......... 1,947,368 1,884,031 Term Loan B, 06/30/08............................ 3,738,109 3,735,337 Term Loan C, 12/31/08............................ 4,820,158 4,817,305 Term Loan D, 03/31/09............................ 1,492,500 1,484,675 Nextel Partners, Inc., Term Loan B, 01/29/08...... 5,970,000 5,903,222 Rural Cellular Corp.: Term Loan B, 10/03/08....... 781,710 759,020 Term Loan C, 04/03/09............................ 781,710 760,039 Sygnet Wireless, Inc.: Revolver (c), 09/30/06..... 81,567 76,877 Term Loan A, 09/23/06............................ 1,642,843 1,610,166 Term Loan B, 03/23/07............................ 1,484,857 1,469,165 Term Loan C, 12/23/07............................ 3,995,106 3,946,198 Ubiquitel Operating Co.: Term Loan A, 09/30/07.... 938,776 748,064 Term Loan B, 11/17/08............................ 4,224,490 3,353,804 Western Wireless Corp., Term Loan A, 03/31/08..... 1,300,000 1,241,499 Term Loan B, 09/30/08............................ 830,409 803,481 ------------ 44,130,557 ------------ Total Variable Rate Senior Loan Interests (cost of $451,230,723)..................................... 434,939,298 ------------ Common Stocks (e) - 2.0% SHARES Business Services - 0.1% NATG Holdings LLC (b)............................. 322,876 571,491 ------------ Engineering & Construction - 1.6% Washington Group International, Inc............... 320,332 8,072,366 ------------ Environmental Services - 0.0% Environmental Systems (b)......................... 3,445 -- ------------ Healthcare Services - 0.2% Sun Healthcare Group.............................. 186,353 829,270 ------------ Movies/Entertainment - 0.1% AMF Bowling Worldwide, Inc........................ 19,918 537,786 ------------ Total Common Stocks (cost of $13,018,429)........... 10,010,913 ------------
See notes to investment portfolio. 14
Preferred Stocks (b)(e) - 0.1% SHARES VALUE Auto Parts - 0.0% Key Plastics LLC, Series A........................ 13 $ -- ------------ Consumer Services - 0.0% DIMAC Holdings, Series C.......................... 483 -- ------------ Environmental Services - 0.1% Environmental Systems, Series A................... 637,928 637,928 ------------ Total Preferred Stocks (cost of $697,301)........... 637,928 ------------ Warrants (b)(e) - 0.0% Auto Parts - 0.0% Key Plastics LLC, expires 04/26/11................ 7 -- ------------ Consumer Services - 0.0% DIMAC Holdings, expires 04/04/25.................. 483 -- ------------ Total Warrants (cost of $0)......................... -- ------------ Short-Term Obligation - 12.1% PAR Repurchase agreement with State Street Bank & Trust Co., dated 08/29/03, due 09/02/03 at 0.940%, collateralized by U.S. Treasury Bonds with various maturities to 02/12/04 market value of $63,020,410 (repurchase proceeds $61,785,452) (cost of $61,779,000)............... $61,779,000 61,779,000 ------------ Total Investments - 99.4% (cost of $526,725,453)(f). 507,367,139 ------------ Other Assets & Liabilities, Net - 0.6%.............. 3,294,292 ------------ Net Assets - 100.0%................................. $510,661,431 ============
Notes to Investment Portfolio: - -------------------------------------------------------------------------------- (a) Senior Loans in which the Portfolio invests generally pay interest at rates which are periodically predetermined by reference to a base lending rate plus a premium. These base lending rates are generally (i) the prime rate offered by one or more major United States banks, (ii) the lending rate offered by one or more European banks such as the London Inter-Bank Offered Rate ('LIBOR') and (iii) the certificate of deposit rate. Senior loans are generally considered to be restricted in that the Portfolio ordinarily is contractually obligated to receive approval from the Agent Bank and/or borrower prior to the disposition of a Senior Loan. (b) Represents fair value as determined in good faith under procedures approved by the Trustees. (c) Unfunded commitments, See Note 8. (d) These issuers are in default of certain debt covenants. Income is not being accrued. (e) Non-income producing. (f) Cost for federal income tax purposes is $526,975,870. See notes to financial statements. 15 Statement of Assets and Liabilities AUGUST 31, 2003 Assets: Investments, at cost (including repurchase agreement) $526,725,453 ------------ Investments, at value................................ $445,588,139 Repurchase agreement................................. 61,779,000 Receivable for: Investments sold................................... 1,277,823 Interest and fees.................................. 2,731,704 Deferred Trustees' compensation plan................. 324 Other assets......................................... 5,518 ------------ Total Assets....................................... 511,382,508 ------------ Liabilities: Deferred facility fees............................... 210,544 Payable to custodian bank............................ 856 Payable for: Investments purchased.............................. 18,333 Management fee..................................... 180,937 Transfer agent fee................................. 500 Pricing and bookkeeping fees....................... 43,783 Audit fee.......................................... 63,670 Legal fee.......................................... 35,882 Deferred Trustees' fee............................... 324 Other liabilities.................................... 166,248 ------------ Total Liabilities.................................. 721,077 ------------ Net Assets........................................... $510,661,431 ============
See notes to financial statements. Columbia Floating Rate Limited Liability Company 16 Statement of Operations FOR THE YEAR ENDED AUGUST 31, 2003 Investment Income: Interest................................................................................................. $ 29,371,999 Facility and other fees.................................................................................. 671,142 ------------ Total Investment Income................................................................................ 30,043,141 ------------ Expenses: Management fee........................................................................................... 2,072,250 Transfer agent fee....................................................................................... 6,000 Pricing and bookkeeping fees............................................................................. 268,155 Trustees' fee............................................................................................ 5,557 Custody fee.............................................................................................. 24,020 Legal fee................................................................................................ 159,904 Other expenses........................................................................................... 93,138 ------------ Total Operating Expenses............................................................................... 2,629,024 Custody earnings credit.................................................................................. (2,274) ------------ Net Operating Expenses................................................................................. 2,626,750 Interest expense......................................................................................... 5,047 ------------ Net Expenses........................................................................................... 2,631,797 ------------ Net Investment Income.................................................................................... 27,411,344 ------------ Net Realized and Unrealized Gain (Loss) on Portfolio Positions: Net realized loss on investments......................................................................... (11,578,981) Net realized loss on the disposal of investments in violation of restrictions and subsequently reimbursed by affiliate........................................................................................... -- Net change in unrealized appreciation/depreciation on investments........................................ 33,906,354 ------------ Net Gain............................................................................................... 22,327,373 ------------ Net Increase in Net Assets from Operations............................................................... $ 49,738,717 ============
See notes to financial statements. 17 Statement of Changes in Net Assets
YEAR ENDED AUGUST 31, ---------------------------- 2003 2002 Increase (Decrease) in Net Assets: ------------- ------------- Operations: Net investment income........................................................ $ 27,411,344 $ 38,015,994 Net realized loss on investments............................................. (11,578,981) (12,166,254) Net realized loss on the disposal of investments in violation of restrictions and subsequently reimbursed by affiliate................................... -- -- Net change in unrealized appreciation/depreciation on investments............ 33,906,354 (37,403,502) ------------- ------------- Net Increase (Decrease) from Operations.................................... 49,738,717 (11,553,762) ------------- ------------- Transactions in Investors' Beneficial Interest: Contributions.............................................................. 93,827,932 80,963,660 Withdrawals................................................................ (169,392,880) (200,374,089) ------------- ------------- Net Decrease from Transactions in Investors' Beneficial Interest......... (75,564,948) (119,410,429) ------------- ------------- Total Decrease in Net Assets................................................. (25,826,231) (130,964,191) Net Assets: Beginning of period.......................................................... 536,487,662 667,451,853 ------------- ------------- End of period................................................................ $ 510,661,431 $ 536,487,662 ============= =============
See notes to financial statements. 18 Statement of Cash Flows FOR THE YEAR ENDED AUGUST 31, 2003 Increase (Decrease) in Cash - ----------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net Investment Income....................................................................... $ 27,411,344 Adjustments to reconcile net investment income to net cash provided by operating activities: Purchase of investment securities........................................................... (309,671,229) Proceeds from disposition of investment securities.......................................... 348,176,487 Disposition of short-term portfolio investments, net........................................ 10,712,649 Decrease in interest and fees receivable.................................................... 191,993 Increase in receivable for investments sold................................................. (1,139,733) Decrease in other assets.................................................................... 5,732 Decrease in deferred facility fees.......................................................... (314,235) Increase in payable for accrued expenses.................................................... 122,119 Net amortization of premium (discount)...................................................... (2,240,748) Decrease in payable for investments purchased............................................... (141,383) Increase in other liabilities............................................................... 130,791 ------------- Net cash provided by operating activities................................................... 73,243,787 Cash flows from financing activities: Proceeds from capital contributions......................................................... 93,827,932 Payment of capital withdrawals.............................................................. (169,392,880) ------------- Net cash flows used for financing activities................................................ (75,564,948) ------------- Net decrease in cash........................................................................ (2,321,161) Cash: Beginning of year........................................................................... 2,320,305 ------------- End of year................................................................................. $ (856) =============
See notes to financial statements. 19 Statement of Assets and Liabilities AUGUST 31, 2003 Assets: Investments in Portfolio, at cost.................................. $ 93,596,290 ------------ Investments in Portfolio, at value................................. $ 89,819,454 Receivable for: Expense reimbursement due from Advisor........................... 878 Deferred Trustees' compensation plan............................... 1,806 Prepaid expense.................................................... 413 ------------ Total Assets..................................................... 89,822,551 ------------ Liabilities: Payable for: Distributions.................................................... 55,314 Administration fee............................................... 15,072 Transfer agent fee............................................... 10,453 Pricing and bookkeeping fees..................................... 3,132 Audit fee........................................................ 16,260 Reports to shareholders.......................................... 7,500 Deferred Trustees' fee............................................. 1,806 Other liabilities.................................................. 7,303 ------------ Total Liabilities................................................ 116,840 ------------ Net Assets......................................................... $ 89,705,711 ============ Composition of Net Assets: Paid-in capital.................................................... $101,748,840 Overdistributed net investment income.............................. (28,666) Accumulated net realized loss allocated from Portfolio............. (8,237,627) Net unrealized depreciation on investments allocated from Portfolio (3,776,836) ------------ Net Assets......................................................... $ 89,705,711 ============ Shares outstanding (unlimited number authorized)................... 9,671,833 ------------ Net asset value per share.......................................... $ 9.27 ============
See notes to financial statements. Columbia Institutional Floating Rate Income Fund 20 Statement of Operations FOR THE YEAR ENDED AUGUST 31, 2003 Investment Income: Interest and fees allocated from Portfolio.................................................................. $ 6,079,608 Expenses: Net operating expenses allocated from Portfolio............................................................. 530,078 Administration fee.......................................................................................... 185,271 Transfer agent fee.......................................................................................... 86,711 Pricing and bookkeeping fees................................................................................ 33,373 Trustees' fee............................................................................................... 8,207 Custody fee................................................................................................. 1,461 Other expenses.............................................................................................. 72,915 ----------- Total Operating Expenses.................................................................................. 918,016 Fees and expenses waived or reimbursed by Advisor........................................................... (224,986) ----------- Net Operating Expenses.................................................................................... 693,030 Interest expense allocated from Portfolio................................................................... 1,011 ----------- Net Expenses.............................................................................................. 694,041 ----------- Net Investment Income....................................................................................... 5,385,567 ----------- Net Realized and Unrealized Gain (Loss) on Investments Allocated from Portfolio: Net realized loss on investments allocated from Portfolio................................................... (2,409,848) Net realized loss on the disposal of investments in violation of restrictions and subsequently reimbursed by affiliate allocated from Portfolio........................................................................ -- Net change in unrealized appreciation/depreciation on investments allocated from Portfolio.................. 6,893,031 ----------- Net Gain.................................................................................................. 4,483,183 ----------- Net Increase in Net Assets from Operations.................................................................. $ 9,868,750 ===========
See notes to financial statements. 21 Statement of Changes in Net Assets
YEAR ENDED AUGUST 31, -------------------------- 2003 2002 Increase (Decrease) in Net Assets: ------------ ------------ Operations: Net investment income............................................................ $ 5,385,567 $ 7,091,790 Net realized loss on investments allocated from Portfolio........................ (2,409,848) (3,258,621) Net realized loss on the disposal of investments in violation of restrictions and subsequently reimbursed by affiliate allocated from Portfolio.................. -- -- Net change in unrealized appreciation/depreciation on investments allocated from Portfolio................................................................. 6,893,031 (6,519,650) ------------ ------------ Net Increase (Decrease) from Operations.......................................... 9,868,750 (2,686,481) ------------ ------------ Distributions Declared to Shareholders: From net investment income:...................................................... (5,397,399) (7,252,059) ------------ ------------ Share Transactions: Subscriptions.................................................................. -- 5,206,897 Distributions reinvested....................................................... 5,469,970 7,000,576 Redemptions.................................................................... (21,147,179) (37,321,400) ------------ ------------ Net Decrease from Share Transactions............................................. (15,677,209) (25,113,927) ------------ ------------ Total Decrease in Net Assets..................................................... (11,205,858) (35,052,467) Net Assets: Beginning of period.............................................................. 100,911,569 135,964,036 ------------ ------------ End of period (overdistributed net investment income of $(28,666) and $(12,056), respectively)....................................................... $ 89,705,711 $100,911,569 ============ ============ Changes in Shares: Subscriptions.................................................................. -- 556,223 Issued for distributions reinvested............................................ 616,460 749,377 Redemptions.................................................................... (2,392,797) (3,998,992) ------------ ------------ Net Decrease................................................................. (1,776,337) (2,693,392) ============ ============
See notes to financial statements. 22 Notes to Financial Statements AUGUST 31, 2003 Note 1. Accounting Policies Organization: Columbia Institutional Floating Rate Income Fund (the "Fund") (formerly Liberty-Stein Roe Institutional Floating Rate Income Fund) is a non-diversified, closed-end management investment company organized as a Massachusetts business trust. The Fund invests all of its investable assets in Columbia Floating Rate Limited Liability Company (the "Portfolio"), (formerly Stein Roe Floating Rate Limited Liability Company), which seeks to provide a high level of current income, consistent with preservation of capital. The Portfolio is a non-diversified, closed-end management investment company organized as a Delaware limited liability company. The Portfolio allocates income, expenses, realized and unrealized gains and losses to each investor on a daily basis, based on methods in compliance with the Internal Revenue Code. At August 31, 2003, Columbia Institutional Floating Rate Income Fund and Columbia Floating Rate Fund owned 17.6% and 82.4%, respectively, of the Portfolio. On April 1, 2003, Stein Roe & Farnham Incorporated ("Stein Roe"), the investment advisor and pricing and bookkeeping agent to the Portfolio and the Fund, merged into Columbia Management Advisors, Inc. ("Columbia"), formerly known as Columbia Management Co., an indirect, wholly-owned subsidiary of FleetBoston Financial Corporation. At the time of the merger, Columbia assumed the obligations of Stein Roe with respect to the Portfolio and the Fund. The merger did not change the way the Portfolio and the Fund are managed, the investment personnel assigned to manage the Portfolio and the Fund or the fees paid by the Portfolio and the Fund to Columbia. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses for the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Portfolio and the Fund in the preparation of their financial statements. Security Valuations: The value of the Portfolio is determined in accordance with guidelines established, and periodically reviewed, by the Board of Trustees. Senior loans are generally valued using market prices or quotations provided by banks, dealers or pricing services with respect to secondary market transactions. The prices provided by these principal market makers may differ from the value that would be realized if the loans were sold and the differences could be material to the financial statements. In the absence of actual market values, senior loans will be valued by Columbia on behalf of the Portfolio at fair value, which is intended to approximate market value, pursuant to procedures approved by the Board of Trustees. In determining fair value, Columbia will consider on an ongoing basis, among other factors, (i) the creditworthiness of the Borrower; (ii) the current interest rate, the interest rate redetermination period, and maturity of such senior loan interests; and (iii) recent prices in the market for instruments of similar quality, rate and interest rate redetermination period and maturity. Because of uncertainty inherent in the valuation process, the estimated value of a senior loan interest may differ significantly from the value that would have been used had there been market activity for that senior loan interest. Short-term obligations with remaining maturities of 60 days or less are valued at amortized cost. Notes to Financial Statements 23 Equity securities generally are valued at the last sale price or, in the case of unlisted or listed securities for which there were no sales during the last day, at the current quoted bid price. Equity securities for which market quotations are not readily available are valued at fair value as determined in good faith under consistently applied procedures established by and under general supervision of the Board of Trustees. Interest Income, Discount and Premium: Interest income is recorded on the accrual basis and includes accretion of discounts, amortization of premiums and paydown gains and losses. Facility fees received are treated as market discounts. Realized gains and losses from investment transactions are reported on an identified cost basis. Unamortized facility fees are reflected as deferred fees on the Statement of Assets and Liabilities. Federal Income Taxes: No provision is made for federal income taxes since (a) the Fund elects to be taxed as a "regulated investment company" and make distributions to its shareholders to be relieved of all federal income taxes under provisions of current federal tax law; and (b) the Portfolio is treated as a partnership for federal income tax purposes and all of its income is allocated to its owners based on methods in compliance with the Internal Revenue Code. Distributions to Shareholders: Dividends from net investment income are declared by the Fund and recorded each business day and are paid monthly. Capital gains distributions, if any, are declared and paid annually. Dividends and distributions are recorded on the ex-dividend date. Statement of Cash Flows: Information on financial transactions which have been settled through the receipt or disbursement of cash is presented in the Statement of Cash Flows. The cash amount shown in the Statement of Cash Flows is the amount included in the Portfolio's Statement of Assets and Liabilities and represents cash on hand at its custodian bank account and does not include any short-term investments at August 31, 2003. Note 2. Federal Tax Information Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences are primarily due to differing treatments for deferral of losses from wash sales, discount accretion/premium amortization on debt securities, current year distribution payable, capital loss carryforwards, post-October losses and non-deductible expenses. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended August 31, 2003, permanent items identified and reclassified among the components of the Portfolio's net assets are as follows:
Overdistributed Accumulated Net Investment Net Realized Paid-In Income Loss Capital --------------- ------------ --------- $(4,778) $421,076 $(416,298)
Net investment income, net realized gains (losses) and net assets were not affected by this reclassification. 24 The tax character of distributions paid by the Fund during the years ended August 31, 2003 and August 31, 2002 was as follows: August 31, - --------------------- 2003 2002 - ---------- ---------- Ordinary Income $5,397,399 $7,252,059 As of August 31, 2003, the components of the Fund's distributable earnings on a tax basis were as follows: Undistributed Ordinary Unrealized Income Depreciation* ------------- ------------- $56,080 $(3,825,427) * The difference between book-basis and tax-basis unrealized depreciation is attributable primarily to amortization/accretion tax elections and the tax deferral of losses on wash sales. The following capital loss carryforwards are available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code:
Capital Loss Year of Expiration Carryforward ------------------ ------------ 2009 $ 16,991 2010 2,799,382 2011 1,685,798 ---------- $4,502,171 ==========
Under current tax rules, certain capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. As of August 31, 2003 for federal income tax purposes, post-October losses of $3,705,606 attributable to security transactions were deferred to September 1, 2003. Expired capital loss carryforward, if any, are recorded as a reduction of paid-in capital. Note 3. Trustees' Fees and Transactions with Affiliates Management & Administrative fees: Columbia is the investment advisor of the Fund. The management fee for the Portfolio is computed at an annual rate of 0.45% of average daily net assets. The administrative fee for the Fund is computed at an annual rate of 0.20% of average daily net assets. At a special meeting held on October 8, 2003, the Board of Trustees approved a new management fee structure to go into effect on November 1, 2003. Under the new structure, Columbia will receive a monthly fee based on the Portfolio's average daily net assets as follows:
Average Daily Net Assets Annual Fee Rate ------------------------ --------------- First $1 billion 0.45% Next $1 billion 0.40% Over $2 billion 0.35%
25 Pricing and Bookkeeping Fees: Columbia is responsible for providing pricing and bookkeeping services to the Portfolio and the Fund under a Pricing and Bookkeeping Agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Bank and Trust Company ("State Street"). Columbia pays fees to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Portfolio and the Fund, Columbia receives from the Portfolio and the Fund annual flat fees of $10,000 and $5,000, respectively, paid monthly, and in any month that the Fund's average daily net assets are more than $50 million, a monthly fee equal to the average daily net assets for that month multiplied by a fee rate that is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. For the year ended August 31, 2003, the net asset based fee rate was 0.030%. The Portfolio also pays out-of-pocket costs for pricing services. Transfer agent fee: Liberty Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for a monthly fee comprised of 0.06% annually of the Fund's average daily net assets plus charges based on the number of shareholder accounts and transactions. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. Effective October 13, 2003, Liberty Funds Services, Inc. changed its name to Columbia Funds Services, Inc. The Portfolio pays the Transfer Agent a monthly fee equal to $6,000 annually. At a special meeting held on October 8, 2003, the Board of Trustees approved the change of transfer agent fees structure of the Fund. Effective November 1, 2003, the Fund will be charged an annual $34.00 charge per open account for the transfer agent fees. Expense limits: Columbia has voluntarily agreed, until further notice, to waive fees and bear certain Fund expenses to the extent that total expenses (inclusive of allocated Portfolio expenses but exclusive of brokerage commissions, interest, taxes and extraordinary expenses, if any) exceed 0.75% of average daily net assets. Other: The Portfolio and Fund pay no compensation to their officers, all of whom are employees of Columbia. The Portfolio has an agreement with its custodian bank under which $2,274 of custody fees were reduced by balance credits for the year ended August 31, 2003. The Portfolio could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. Note 4. Portfolio Information Investment Activity: The Portfolio's aggregate cost of purchases and proceeds from sales, other than short-term obligations, for the year ended August 31, 2003 were $309,671,229 and $348,176,487, respectively. Unrealized appreciation (depreciation) at August 31, 2003, based on cost for federal tax purposes, was: Gross unrealized appreciation $ 7,867,581 Gross unrealized depreciation (27,476,312) ------------ Net unrealized depreciation $(19,608,731) ============ 26 Other: The Portfolio may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. Note 5. Tender of Shares The Board of Trustees has adopted a policy of making tender offers on a quarterly basis. The Board has designated the 15th day of March, June, September and December, each year, or the next business day if the 15th is not a business day, as the Repurchase Request Deadline. Tender offers are made for a portion of the Fund's then outstanding shares at the net asset value of the shares as of the Repurchase Pricing Date. The tender offer amount, which is determined by the Board of Trustees, will be at least 5% and no more than 25% of the total number of shares outstanding on the Repurchase Request Deadline. The Fund may repurchase an additional amount of shares up to 2% of the shares outstanding on the Repurchase Request Deadline. During the year ended August 31, 2003, there were four tender offers in September, December, March and June. The Fund offered to repurchase 15%, 15%,15% and 12%, respectively, of its shares and 0.31%, 13.48%, 2.26% and 5.50%, respectively, of shares outstanding were tendered. Note 6. Senior Loan Participation Commitments The Portfolio invests primarily in participations and assignments, or acts as a party to the primary lending syndicate of a Variable Rate Senior Loan interest to United States corporations, partnerships, and other entities. If the lead lender in a typical lending syndicate becomes insolvent, enters FDIC receivership or, if not FDIC insured, enters into bankruptcy, the Portfolio may incur certain costs and delays in receiving payment or may suffer a loss of principal and/or interest. When the Portfolio purchases a participation of a Senior Loan interest, the Portfolio typically enters into a contractual agreement with the lender or other third party selling the participation, but not with the borrower directly. As such, the Portfolio assumes the credit risk of the Borrower, Selling Participant or other persons interpositioned between the Portfolio and the Borrower. At August 31, 2003, the following sets forth the selling participants with respect to interests in Senior Loans purchased by the Portfolio on a participation basis.
Principal Selling Participant Amount Value ------------------- ---------- ---------- Citibank: CSC Holdings, Inc., Revolver $1,306,667 $1,218,540 Goldman Sachs Credit Partners LP: Bridge Information Systems, Multi-Draw Term Loan 533,287 58,662 Simmons Co., Term Loan B 214,917 215,696
The ability of borrowers to meet their obligations may be affected by economic developments in a specific industry. 27 Note 7. Line of Credit The Portfolio and other affiliated funds participate in a $350,000,000 credit facility, which is used for temporary or emergency purposes to facilitate portfolio liquidity. Interest is charged to the Portfolio based on its borrowings. In addition, the Portfolio has agreed to pay commitment fees on its pro-rata portion of the line of credit. The commitment fee is included in "Other expenses" on the Statement of Operations. Prior to April 26, 2003, the Portfolio participated in a separate credit agreement with similar terms to its existing agreement. The Portfolio may borrow up to $150,000,000. The average daily loan balance was $19,800,000 at a weighted average interest rate of 1.835%. The Portfolio is required to maintain certain asset coverage with respect to the loans. Note 8. Unfunded Loan Commitments As of August 31, 2003, the Portfolio had unfunded loan commitments of $6,937,959, which could be extended at the option of the Borrower, pursuant to the following loan agreements:
Unfunded Borrower Commitments - -------- ----------- CSC Holdings, Inc. $ 693,333 Noveon, Inc. 625,000 Sygnet Wireless, Inc. 617,558 TV Guide, Inc. 1,502,068 Washington Group International, Inc. 3,500,000 ---------- $6,937,959 ==========
Note 9. Other During the year ended August 31, 2003, the Portfolio held a security in violation of investment restrictions. This position was sold off at a loss of $101,250 and the Portfolio was reimbursed by the Advisor. 28 Columbia Floating Rate Limited Liability Company Selected data for a share outstanding throughout each period is as follows:
PERIOD YEAR ENDED AUGUST 31, ENDED -------------------------------------- AUGUST 31, 2003 2002 2001 2000 1999 (A) ------ ------- ----- ----- ---------- Ratios to Average Net Assets/ Supplemental Data: Total return................. 11.68%(g) (2.20)% 5.15% 8.73% 5.85%(f) Operating expenses........... 0.57%(b) 0.55 %(b) 0.53%(b) 0.55% 0.96%(c) Interest expense............. -- (d) 0.03 % -- -- -- Net investment income........ 5.96%(b) 6.42 %(b)(e) 8.94%(b) 9.26% 7.59%(c) Portfolio turnover rate...... 75% 70 % 63% 21% 17%(f)
(a)From commencement of operations on December 17, 1998. (b)The benefits derived from custody credits, and directed brokerage arrangements, if applicable, had an impact of less than 0.01% (c)Annualized. (d)Rounds to less than 0.01%. (e)Effective September 1, 2001, the Portfolio adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing and accreting premium and discount on debt securities. The effect of this change for the year ended August 31, 2002, was to increase the ratio of net investment income to average net assets from 6.41% to 6.42%. Ratios for the periods prior to August 31, 2002 have not been restated to reflect this change in presentation. (f)Not annualized. (g)Total return consists of a voluntary reimbursement by the Advisor for a realized investment loss on an investment not meeting the Portfolio's investment restrictions. This reimbursement had an impact of less than 0.01% on the Portfolio's return. Financial Highlights 29 - - Columbia Institutional Floating Rate Income Fund Selected data for a share outstanding throughout each period is as follows:
PERIOD YEAR ENDED AUGUST 31, ENDED ---------------------------------------------- AUGUST 31, 2003 2002 2001 2000 1999 (A) ------- -------- -------- -------- ---------- Net Asset Value, Beginning of Period............................ $ 8.81 $ 9.61 $ 10.00 $ 10.07 $ 10.00 ------- -------- -------- -------- -------- Income from Investment Operations: Net investment income............................ 0.52 (b) 0.60 (b)(c) 0.87 (b) 0.88 0.51 Net realized and unrealized gain (loss) allocated from Portfolio................................. 0.46 (0.82)(c) (0.40) (0.07) 0.07 ------- -------- -------- -------- -------- Total from Investment Operations............... 0.98 (0.22) 0.47 0.81 0.58 ------- -------- -------- -------- -------- Less Distributions Declared to Shareholders: From net investment income....................... (0.52) (0.58) (0.85) (0.88) (0.51) In excess of net investment income............... -- -- -- -- --(d) From net realized gains.......................... -- -- (0.01) --(d) -- ------- -------- -------- -------- -------- Total Distributions Declared to Shareholders................................. (0.52) (0.58) (0.86) (0.88) (0.51) ------- -------- -------- -------- -------- Net Asset Value, End of Period................... $ 9.27 $ 8.81 $ 9.61 $ 10.00 $ 10.07 ======= ======== ======== ======== ======== Total return (e)................................. 11.50%(f) (2.39)% 4.93% 8.52% 5.94% (g) ======= ======== ======== ======== ======== Ratios to Average Net Assets: Net operating expenses........................... 0.75% 0.75% 0.75% 0.75% 0.87%(i) Interest expense allocated from Portfolio........ -- (h) 0.03% -- -- -- Net expenses..................................... 0.75% 0.78% 0.75% 0.75% 0.87%(i) Net investment income............................ 5.81% 6.28%(c) 8.90% 8.97% 7.68%(i) Waiver/reimbursement............................. 0.24% 0.21% 0.10% 0.14% 0.85%(i) Net assets, end of period (000's)................ $89,706 $100,912 $135,964 $184,661 $127,195
(a)From commencement of operations on December 17, 1998. (b)Per share data was calculated using average shares outstanding during the period. (c)Effective September 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing and accreting premium and discount on all debt securities. The effect of this change for the year ended August 31, 2002 was to increase net investment income per share by $0.01, and increase net realized and unrealized loss per share by $0.01. The impact to the ratio of net investment income to average net assets increased from 6.27% to 6.28%. Per share data and ratios for periods prior to August 31, 2002 have not been restated to reflect this change in presentation. (d)Rounds to less than $0.01. (e)Had the Advisor not waived or reimbursed a portion of expenses, total return would have been reduced. (f)Total return consists of a voluntary reimbursement by the Advisor for a realized investment loss on an investment not meeting the Portfolio's investment restrictions. This reimbursement had an impact of less than 0.01% on the Fund's return. (g)Not annualized. (h)Rounds to less than 0.01%. (i)Annualized. 30 To the Trustees and the Shareholders of Columbia Institutional Floating Rate Income Fund and the Trustees of Columbia Floating Rate Limited Liability Company In our opinion, the accompanying statements of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and cash flows and the financial highlights present fairly, in all material respects, the financial position of Columbia Institutional Floating Rate Income Fund (the "Fund") (formerly Liberty Stein-Roe Institutional Floating Rate Income Fund) and Columbia Floating Rate Limited Liability Company (the "Portfolio") (formerly Stein Roe Floating Rate Limited Liability Company), at August 31, 2003, and the results of each of their operations, the changes in each of their net assets, the Portfolio's cash flows and each of their financial highlights for the periods indicated in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Portfolio's and Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of portfolio positions at August 31, 2003, by correspondence with the custodian and lending or agent banks, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts October 21, 2003 Report of Independent Auditors 31 Effective October 8, 2003, Patrick J. Simpson and Richard L. Woolworth were appointed to the Board of Trustees of the Fund. Messrs. Simpson and Woolworth had been directors of 15 Columbia Funds and 12 funds in the CMG Fund Trust. Also effective October 8, 2003, the incumbent trustees of the Fund were elected as directors of the 15 Columbia Funds and as trustees of the 12 funds in the CMG Fund Trust. The new combined Board of Trustees of the Fund now oversees 124 funds in the Columbia Funds Complex (including the former Liberty Funds, former Stein Roe Funds, Columbia Funds and CMG Funds). Several of those trustees also serve on the Boards of other funds in the Columbia Funds Complex. The Trustees serve terms of indefinite duration. The names, addresses and ages of the Trustees and officers of the Funds in the Columbia Funds Complex, the year each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios overseen by each Trustee and other directorships they hold are shown below. Each officer listed below serves as an officer of each Fund in the Columbia Funds Complex. The Statement of Additional Information (SAI) contains additional information about the Trustees and is available without charge upon request by calling the fund's distributor at 800-345-6611.
Number of Year First Portfolios in Position Elected or Columbia Funds with Appointed Principal Occupation(s) Complex Overseen Name, Address and Age Funds to Office/1/ During Past Five Years by Trustee - -------------------------------------------------------------------------------------------------------------- Disinterested Trustees Douglas A. Hacker (Age 48) Trustee 1996 Executive Vice President - Strategy of 124 P.O. Box 66100 United Airlines (airline) since Chicago, IL 60666 December, 2002 (formerly President of UAL Loyalty Services (airline) from September, 2001 to December, 2002; Executive Vice President and Chief Financial Officer of United Airlines from March, 1993 to September, 2001; Senior Vice President and Chief Financial Officer of UAL, Inc. prior thereto). Janet Langford Kelly (Age 45) Trustee 1996 Chief Administrative Officer and Senior 124 3100 West Beaver Road Vice President, Kmart Holding Troy, MI 48084-3163 Corporation since September, 2003 (formerly Executive Vice President-Corporate Development and Administration, General Counsel and Secretary, Kellogg Company (food manufacturer), from September, 1999 to August, 2003; Senior Vice President, Secretary and General Counsel, Sara Lee Corporation (branded, packaged, consumer-products manufacturer) from January, 1995 to September, 1999). Richard W. Lowry (Age 67) Trustee 1995 Private Investor since August, 1987 126/3/ 10701 Charleston Drive (formerly Chairman and Chief Executive Vero Beach, FL 32963 Officer, U.S. Plywood Corporation (building products manufacturer)). Charles R. Nelson (Age 61) Trustee 1981 Professor of Economics, University of 124 Department of Economics Washington, since January, 1976; Ford University of Washington and Louisa Van Voorhis Professor of Seattle, WA 98195 Political Economy, University of Washington, since September, 1993; Director, Institute for Economic Research, University of Washington, since September, 2001; Adjunct Professor of Statistics, University of Washington, since September, 1980; Associate Editor, Journal of Money Credit and Banking, since September, 1993; consultant on econometric and statistical matters. John J. Neuhauser (Age 60) Trustee 1985 Academic Vice President and Dean of 127/3,4/ 84 College Road Faculties since August, 1999, Boston Chestnut Hill, MA 02467-3838 College (formerly Dean, Boston College School of Management from September, 1977 to September, 1999. Patrick J. Simpson (Age 58) Trustee 2000 Partner, Perkins Coie L.L.P. (formerly 124 1211 S.W. 5th Avenue Partner, Stoel Rives Boley Jones & Suite 1500 Grey). Portland, OR 97204 Thomas E. Stitzel (Age 67) Trustee 1998 Business Consultant since 1999 124 2208 Tawny Woods Place (formerly Professor of Finance from Boise, ID 83706 1975 to 1999 and Dean from 1977 to 1991, College of Business, Boise State University); Chartered Financial Analyst.
Other Principal Occupation(s) Directorships During Past Five Years Held - --------------------------------------------------------------------------- Executive Vice President - Strategy of None United Airlines (airline) since December, 2002 (formerly President of UAL Loyalty Services (airline) from September, 2001 to December, 2002; Executive Vice President and Chief Financial Officer of United Airlines from March, 1993 to September, 2001; Senior Vice President and Chief Financial Officer of UAL, Inc. prior thereto). Chief Administrative Officer and Senior None Vice President, Kmart Holding Corporation since September, 2003 (formerly Executive Vice President-Corporate Development and Administration, General Counsel and Secretary, Kellogg Company (food manufacturer), from September, 1999 to August, 2003; Senior Vice President, Secretary and General Counsel, Sara Lee Corporation (branded, packaged, consumer-products manufacturer) from January, 1995 to September, 1999). Private Investor since August, 1987 None (formerly Chairman and Chief Executive Officer, U.S. Plywood Corporation (building products manufacturer)). Professor of Economics, University of None Washington, since January, 1976; Ford and Louisa Van Voorhis Professor of Political Economy, University of Washington, since September, 1993; Director, Institute for Economic Research, University of Washington, since September, 2001; Adjunct Professor of Statistics, University of Washington, since September, 1980; Associate Editor, Journal of Money Credit and Banking, since September, 1993; consultant on econometric and statistical matters. Academic Vice President and Dean of Saucony, Inc. (athletic footwear); Faculties since August, 1999, Boston SkillSoft Corp. College (formerly Dean, Boston College (E-Learning) School of Management from September, 1977 to September, 1999. Partner, Perkins Coie L.L.P. (formerly None Partner, Stoel Rives Boley Jones & Grey). Business Consultant since 1999 None (formerly Professor of Finance from 1975 to 1999 and Dean from 1977 to 1991, College of Business, Boise State University); Chartered Financial Analyst.
Trustees 32
Number of Year First Portfolios in Position Elected or Columbia Funds with Appointed Principal Occupation(s) Complex Overseen Name, Address and Age Funds to Office/1/ During Past Five Years by Trustee - --------------------------------------------------------------------------------------------------------------- Disinterested Trustees Thomas C. Theobald (Age 66) Trustee 1996 Managing Director, William Blair 124 27 West Monroe Street, Capital Partners (private equity Suite 3500 investing) since September, 1994 Chicago, IL 60606 (formerly Chief Executive Officer and Chairman of the Board of Directors, Continental Bank Corporation prior thereto). Anne-Lee Verville (Age 58) Trustee 1998 Author and speaker on educational 125/4/ 359 Stickney Hill Road systems needs (formerly General Hopkinton, NH 03229 Manager, Global Education Industry from 1994 to 1997, and President, Applications Solutions Division from 1991 to 1994, IBM Corporation (global education and global applications)). Richard L. Woolworth (Age 62) Trustee 1991 Chairman and Chief Executive Officer, 124 100 S.W. Market Street The Regence Group (healthcare #1500 maintenance organization) (formerly Portland, OR 97207 Chairman and Chief Executive Officer, BlueCross BlueShield of Oregon; Certified Public Accountant, Arthur Young & Company). Interested Trustees William E. Mayer/2/ (Age 63) Trustee 1994 Managing Partner, Park Avenue Equity 126/3/ 399 Park Avenue Partners (private equity) since Suite 3204 February, 1999 (formerly Founding New York, NY 10022 Partner, Development Capital LLC from November 1996 to February, 1999; Dean and Professor, College of Business and Management, University of Maryland from October, 1992 to November, 1996). Joseph R. Palombo/2/ (Age 50) Trustee, 2000 Executive Vice President and Chief 125/5/ One Financial Center Chairman Operating Officer of Columbia Boston, MA 02111 of the Management Group, Inc. (Columbia Board Management) since December, 2001 and and Director, Executive Vice President and President Chief Operating Officer of the Advisor since April, 2003 (formerly Chief Operations Officer of Mutual Funds, Liberty Financial Companies, Inc. from August, 2000 to November, 2001; Executive Vice President of Stein Roe & Farnham Incorporated (Stein Roe) from April, 1999 to April, 2003; Director of Colonial Management Associates, Inc. (Colonial) from April, 1999 to April, 2003; Director of Stein Roe from September, 2000 to April, 2003) President of Columbia Funds and Galaxy Funds since February, 2003 (formerly Vice President from September 2002 to February 2003); Manager of Stein Roe Floating Rate Limited Liability Company since October, 2000; (formerly Vice President of the Columbia Funds from April, 1999 to August, 2000; Chief Operating Officer and Chief Compliance Officer, Putnam Mutual Funds from December, 1993 to March, 1999).
Other Principal Occupation(s) Directorships During Past Five Years Held - ------------------------------------------------------------------------------ Managing Director, William Blair Anixter International (network Capital Partners (private equity support equipment distributor), Jones investing) since September, 1994 Lang LaSalle (real estate (formerly Chief Executive Officer and management services) and MONY Chairman of the Board of Directors, Group (life insurance). Continental Bank Corporation prior thereto). Author and speaker on educational Chairman of the Board of Directors, systems needs (formerly General Enesco Group, Inc. (designer, Manager, Global Education Industry from importer and distributor of giftware 1994 to 1997, and President, and collectibles). Applications Solutions Division from 1991 to 1994, IBM Corporation (global education and global applications)). Chairman and Chief Executive Officer, NW Natural, a natural gas service The Regence Group (healthcare provider maintenance organization) (formerly Chairman and Chief Executive Officer, BlueCross BlueShield of Oregon; Certified Public Accountant, Arthur Young & Company). Managing Partner, Park Avenue Equity Lee Enterprises (print media), WR Partners (private equity) since Hambrecht + Co. (financial service February, 1999 (formerly Founding provider) and First Health Partner, Development Capital LLC from (healthcare). November 1996 to February, 1999; Dean and Professor, College of Business and Management, University of Maryland from October, 1992 to November, 1996). Executive Vice President and Chief None Operating Officer of Columbia Management Group, Inc. (Columbia Management) since December, 2001 and Director, Executive Vice President and Chief Operating Officer of the Advisor since April, 2003 (formerly Chief Operations Officer of Mutual Funds, Liberty Financial Companies, Inc. from August, 2000 to November, 2001; Executive Vice President of Stein Roe & Farnham Incorporated (Stein Roe) from April, 1999 to April, 2003; Director of Colonial Management Associates, Inc. (Colonial) from April, 1999 to April, 2003; Director of Stein Roe from September, 2000 to April, 2003) President of Columbia Funds and Galaxy Funds since February, 2003 (formerly Vice President from September 2002 to February 2003); Manager of Stein Roe Floating Rate Limited Liability Company since October, 2000; (formerly Vice President of the Columbia Funds from April, 1999 to August, 2000; Chief Operating Officer and Chief Compliance Officer, Putnam Mutual Funds from December, 1993 to March, 1999).
/1/ In December 2000, the boards of each of the former Liberty Funds and former Stein Roe Funds were combined into one board of trustees responsible for the oversight of both fund groups (collectively, the "Liberty Board"). In October 2003, the trustees on the Liberty Board were elected to the boards of the Columbia Funds (the "Columbia Board") and of the CMG Funds (the "CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and Richard L. Woolworth, who had been directors on the Columbia Board and trustees on the CMG Funds Board, were appointed to serve as trustees of the Liberty Board. The date shown is the earliest date on which a trustee/director was elected or appointed to the board of a Fund in the Columbia Funds Complex). /2/ Mr. Mayer is an "interested person" (as defined in the Investment Company Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht + Co. Mr. Palombo is an interested person as an employee of the Advisor. /3/ Messrs. Lowry, Neuhauser and Mayer each also serve as a director/trustee of the All-Star Funds, currently consisting of 2 funds, which are advised by an affiliate of the Advisor. /4/ Mr. Neuhauser and Ms. Verville also serve as disinterested directors of Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the Advisor. /5/ Mr. Palombo also serves as an interested director of Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the Advisor. 33
Position Year First with Elected or Columbia Appointed Name, Address and Age Funds to Office - ----------------------------------------------------- Officers Vicki L. Benjamin (Age 42) Chief 2001 One Financial Center Accounting Boston, MA 02111 Officer and Controller J. Kevin Connaughton (Age 39) Treasurer 2000 One Financial Center Boston, MA 02111
Name, Address and Age Principal Occupation(s) During Past Five Years - ----------------------------------------------------------------------------------------------------------------------- Officers Vicki L. Benjamin (Age 42) Controller of the Columbia Funds and of the Liberty All-Star Funds since May, 2002; Chief One Financial Center Accounting Officer of the Columbia Funds and Liberty All-Star Funds since June, 2001; Boston, MA 02111 Controller and Chief Accounting Officer of the Galaxy Funds since September, 2002 (formerly Vice President, Corporate Audit, State Street Bank and Trust Company from May, 1998 to April, 2001; Audit Manager from July, 1994 to June, 1997; Senior Audit Manager from July, 1997 to May, 1998, Coopers & Lybrand, LLP). J. Kevin Connaughton (Age 39) Treasurer of the Columbia Funds and of the Liberty All-Star Funds since December, 2000; One Financial Center Vice President of the Advisor since April, 2003 (formerly Controller of the Liberty Funds Boston, MA 02111 and of the Liberty All-Star Funds from February, 1998 to October, 2000); Treasurer of the Galaxy Funds since September, 2002; Treasurer, Columbia Management Multi-Strategy Hedge Fund, LLC since December, 2002 (formerly Vice President of Colonial from February, 1998 to October, 2000 and Senior Tax Manager, Coopers & Lybrand, LLP from April, 1996 to January, 1998).
Important Information About This Report The Transfer Agent for Columbia Institutional Floating Rate Income Fund is: Columbia Funds Services, Inc. P.O. Box 8081 Boston, MA 02266-8081 Please note our new name as of October 13, 2003 The fund mails one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800-345-6611 and additional reports will be sent to you. This report has been prepared for shareholders of Columbia Institutional Floating Rate Income Fund. This report may also be used as sales literature when preceded or accompanied by the current prospectus which provides details of sales charges, investment objectives and operating policies of the fund and with the most recent copy of the Columbia Funds Performance Update. Annual Report: Columbia Institutional Floating Rate Income Fund Officers and Transfer Agent 34 This page intentionally left blank. 35 This page intentionally left blank. 36 This page intentionally left blank. 37 [LOGO] (R) ColumbiaFunds A Member of Columbia Management Group (c)2003 Columbia Funds Distributor, Inc. One Financial Center, Boston, MA 02111-2621 800.345.6611 WWW.columbiafunds.com S87-02/210P-0803 (10/03) 03/2925 Item 2. Code of Ethics. (a) The registrant has, as of the end of the period covered by this report, adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party. (b) During the period covered by this report, there were not any amendments to a provision of the code of ethics adopted in 2(a) above. (c) During the period covered by this report, there were not any waivers or implicit waivers to a provision of the code of ethics adopted in 2(a) above. Item 3. Audit Committee Financial Expert. The registrant's Board of Trustees has determined that Douglas A. Hacker and Anne-Lee Verville, each of whom are members of the registrant's Board of Trustees and Audit Committee, each qualify as an audit committee financial expert. Mr. Hacker and Ms. Verville are each independent trustees, as defined in paragraph (a)(2) of this item's instructions. Item 4. Principal Accountant Fees and Services. Not applicable at this time. Item 5. Audit Committee of Listed Registrants. Not applicable at this time. Item 6. Reserved. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Columbia Management Advisors, Inc. ("CMA") VOTING CLIENT AND FUND PROXIES POLICY: All proxies for client securities for which Columbia Management Advisors, Inc. ("CMA") has been granted authority to vote shall be voted in a manner considered to be in the best interests of CMA's clients, including the CMA Managed Funds(1) and their shareholders without regard to any benefit to CMA or its affiliates. CMA shall examine each proposal and vote against the proposal, if, in its judgment, approval or adoption of the proposal would be expected to impact adversely the current or potential market value of the issuer's securities. In addition, CMA shall examine each proposal and vote the securities held on behalf of a client against the proposal, if, in its judgment, the proposal would be expected to effect adversely the best interest of the client. References to the best interest of a client refer to the interest of the client in terms of the potential economic return on the client's investment. In the event a client believes that its other interests require a different vote, CMA shall vote as the client instructs. CMA addresses potential material conflicts of interest by having a predetermined voting policy. For those proposals that require special consideration or in instances where special circumstances may require varying from the predetermined policy, the Proxy Committee will determine the vote in the best interest of CMA's clients, without consideration of any benefit to CMA, its affiliates or its other clients. OVERVIEW: CMA's policy is based upon its fiduciary obligation to act in its clients' best interests. In addition, the SEC recently adopted rules under the Investment Company Act of 1940 and the Investment Advisers Act of 1940. These rules impose obligations with respect to proxy voting on investment advisers and investment companies. PROCEDURE: I. Account Policies Except as otherwise directed by the client, CMA shall vote as follows: Separately Managed Accounts CMA shall vote proxies on securities held in its separately managed accounts. CMA Trust Company Trust Pools CMA Trust Company shall vote proxies on securities held in the trust pools. CMG Funds/CMA Fund Trust CMA shall vote proxies on securities held in the Funds, including multi-managed and subadvised Funds. CMA Private Portfolio CMA shall vote proxies on securities held in its separately managed accounts. Private Management Accounts The authority to vote proxies on securities held in such accounts shall be reserved to the client. MasterPlan Accounts Where CMA serves as trustee (or custodian) with participant-directed accounts (including 404(c) plans), the proxies on securities held in such accounts shall be forwarded to the participants for voting where permitted by the controlling instrument. This includes ESOP or company stock. II. Proxy Committee CMA shall establish a Proxy Committee, which shall be composed of the heads of equity investments, equity research and compliance, and senior operational and investment representatives of CMA's regional offices, fund administration and legal department and the Sarbanes Oxley specialist. In the event that such persons are unable to participate in a meeting of the Proxy Committee, their designees shall act on their behalf. A vacancy in the Proxy Committee shall be filled by the prior member's successor in position at CMA or a person of equivalent experience. Each portfolio manager of a fund or account which holds securities of an issuer having a shareholder meeting shall be an ad hoc member of the Proxy Committee in connection with the vote of proxies for the meeting. The Proxy Committee's functions shall include, in part, (a) direction of the vote on proposals where there has been a recommendation to the Committee not to vote according to the predetermined policy provided in the Voting Guidelines in III (A) and (B) below or which proposals require special consideration under III (C) below, (b) annual review of this Proxy Voting Policy and Procedure to ensure consistency with internal policies and regulatory agency policies, (c) annual review of existing Voting Guidelines and development of additional Voting Guidelines to assist in the review of proxy proposals, and (d) development and modification of Voting Procedures as it deems appropriate or necessary. In determining the vote of any proposal for which it has responsibility, the Proxy Committee shall consider whether the proposal would be expected to impact adversely the current or potential market value of the issuer's securities. In addition, the Proxy Committee shall examine the proposal and vote the securities held on behalf of a client against the proposal, if, in its judgment, the proposal would be expected to effect adversely the best interest of the client. References to the best interest of a client refer to the interest of the client in terms of the potential economic return on the client's investment. In the event a client believes that its other interests require a different vote, CMA shall vote as the client instructs. In determining the vote on any proposal, the Proxy Committee shall not consider any benefit to CMA, any of its affiliates, any of its or its affiliates' clients, or of its customers or service providers, other than benefits to the owner of the securities to be voted. The Proxy Committee shall create a charter, which shall be consistent with this policy and procedure. The charter shall set forth the Committee's purpose, membership and operation. The charter shall include procedures prohibiting a member from voting on a matter for which he or she has a conflict of interest by reason of a direct relationship with the issuer or other party affected by a given proposal, e.g., is a portfolio manager for an account of the issuer. III. Voting Guidelines In general, proposals which are designed to either dissuade or preclude the acquisition and/or merger of one corporate entity by/with another, or have the effect of diluting the value of the existing shares outstanding, or reduce the shareholders' power over any company actions are rejected. Individual merger and corporate restructuring proposals are reviewed on a case-by-case basis. A. Proposals usually voted for CMA will vote in favor of the following proposals, unless otherwise directed by the Proxy Committee: 1. Auditors. Proposals for the annual appointment or approval of independent corporate auditors. An auditor will usually be thought of as independent unless the auditor receives more than 50% of its revenues from non-audit activities from the company and its affiliates. 2. Directors. Proposals for the election of Directors or an increase or decrease in the number of Directors provided a majority of directors would be independent. However, CMA will vote against proposals that give management the ability to alter the size of the board without shareholder approval. 3. Chairman of the Board / Chief Executive Officer. Proposals for the creation or elimination of positions or titles for senior management personnel. CMA prefers the role of Chairman and CEO to be held by different persons. In evaluating proposals we will consider the size of the company and the nature of its shareholder base. 4. Compensation. Proposals for specific compensation for employees/directors if provisions are consistent with standard business practices, such as bonus plans, incentive plans, stock option plans, pension and retirement benefits, stock purchase plans, or thrift plans. CMA requires management to provide substantial justification for the repricing of options. 5. Debt Limits. Proposals for an increase in debt limit, unless proposed specifically as an anti-takeover action. 6. Indemnification. Proposals to approve indemnification of the Board of Directors through self-insurance plans or purchase of insurance. It is not the intent to eliminate Director Responsibility for negligence and or breaches of fiduciary duty. 7. Meeting. Proposals to approve the minutes of a prior meeting; proposals to change the date or location of the annual meeting. 8. Name of Company. Proposals to approve a change in the company name. 9. Principal Office. Proposals to change the location of the company's principal place of business provided the purpose is not to reduce the scope of adequate regulatory or financial supervision. 10. Report and Accounts. Proposals to approve the annual reports and accounts provided the certifications required by Sarbanes Oxley Act 2002 have been provided. 11. Par Value. Proposals to change the par value of the stock. 12. Shares. Proposals for the elimination of authorized but un-issued shares or retirement of those shares purchased for a sinking fund or treasury stock; proposals to increase the authorized shares for stock dividends, stock splits or general issuance, unless proposed as an anti-takeover action. 13. Share Repurchase Programs. Proposals to institute/ renew open market share repurchase plans in which all shareholders may participate on equal terms. 14. Independent Committees. Proposals that request that the board audit, compensation and/ or nominating committees include independent directors. The Audit Committee must satisfy the independence and experience requirements established by the Securities and Exchange Commission ("SEC") and the New York Stock Exchange. At least one member of the Audit Committee must qualify as a "financial expert" within the definition set forth in rules of the SEC. 15. Equal Opportunity Employment. Proposals that endorse the recruitment, development, and promotion of personnel on a non-discriminatory merit basis, regardless of race, creed, color or gender. B. Proposals Usually Voted Against CMA will vote against the following proposals, unless otherwise determined by the Proxy Committee. 1. Super Majority Voting. Proposals to require a majority vote larger than 51% of outstanding shares to approve any proxy proposal. Such proposals are largely intended to support management positions prior to the occurrence of a particular event. 2. Cumulative Voting. Proposals, which allow more than one vote per share in the election of directors. Directors should represent all shareholders equally as opposed to group influences. 3. Preferred Stock, Warrants, Rights, Poison Pills. Proposals intended largely to avoid acquisition prior to the occurrence of an actual event or to discourage acquisition by creating a cost constraint. 4. Reclassification of Common Stock. Proposals to change voting rights by type of Common stock or for long term holders versus new holders. 5. Written Consent. Proposals to eliminate the right of shareholders to act by written consent without a meeting. C. Ability to Vote Proxies Other than as Provided in A or B Above. A Portfolio Manager, SubAdviser or other party involved with a client's or Fund's account may conclude that the interest of the client or Fund requires that a proxy be voted on a proposal in a manner that differs from the predetermined proxy voting policy. In this situation, he or she shall request that the Proxy Committee consider voting the proxy on the proposal other than according to the predetermined policy provided in III (A) or (B) above. If any person (or entity) requests the Proxy Committee (or any of its members) to vote a proxy other than according to the predetermined policy, that person shall furnish to the Proxy Committee a written explanation of the reasons for the request and a description of the person's (or entity's) relationship with the party proposing the matter to shareholders. The Proxy Committee may vary from the predetermined policy if it determines that voting on the proposal according to the predetermined policy would be expected to impact adversely the current or potential market value of the issuer's securities or to effect adversely the best interest of the client. References to the best interest of a client refer to the interest of the client in terms of the potential economic return on the client's investment. In the event a client believes that its other interests require a different vote, CMA shall vote as the client instructs. In determining the vote on any proposal, the Proxy Committee shall not consider any benefit other than benefits to the owner of the securities to be voted. D. Proposals Requiring Special Consideration The following proposals require individual, special consideration. The Proxy Committee will determine how proxies related to each of these proposals will be voted. The Proxy Committee shall determines to vote against any such proposal which would be expected to impact adversely the current or potential market value of the issuer's securities or to effect adversely the best interest of the client. References to the best interest of a client refer to the interest of the client in terms of the potential economic return on the client's investment. In the event a client believes that its other interests require a different vote, CMA shall vote as the client instructs In determining the vote on any proposal, the Proxy Committee shall not consider any benefit other than benefits to the owner of the securities to be voted. 1. New Proposals. For each new type of proposal that is expected to be proposed to shareholders of multiple companies, the Proxy Committee will develop a Guideline, which will be incorporated into this Proxy Voting Policy and Procedures. 2. Accounts Adhering to Taft Hartley Principles. All proposals for these accounts shall be voted according to the Taft Hartley Guidelines developed by Institutional Shareholder Services, Inc. ("ISS"). 3. Accounts Adhering to Socially Responsible Principles. All proposals for these accounts shall be voted according to the Socially Responsible Guidelines developed by ISS or as specified by the client. 4. Proxies of International Issuers which Block Securities Sales between the Time a Shareholder submits a Proxy and the Vote. Proposals for these securities shall be voted only on the specific instruction of the Proxy Committee and to the extent practicable in accordance with these Proxy Voting Guidelines. 5. Proxies of Investment Company Shares. Proposals on issues other than those specified above under III (A) and (B), e.g., election of directors, selection of accountants. 6. Mergers/Acquisitions. Proposals where a hostile merger/acquisition is apparent or where CMA represents ownership in more than one of the companies involved in a potential merger/acquisition. Proposals for potential mergers/acquisitions, which do not appear to be hostile, shall be voted based on previously stated Guidelines. 7. Shareholder Proposals. Shareholder proposals that are not covered by III (A) and (B) above will be reviewed individually. 8. Executive/Director Compensation. Except as provided in III (A)(4), proposals relating to compensation of any executive or director will be voted as recommended by ISS or as otherwise directed by the Proxy Committee. 9. Annual Evaluation of New Issues. During the first quarter of each year, the Proxy Committee will consider any new controversial issues that are likely to be on the ballots during the upcoming proxy season. The Proxy Committee will also be notified in the unusual instance when an analyst or portfolio manager feels strongly that the best interests of shareholders would be served by deviating from our standard policy on a specific proposal. 10. Pre-Emptive Rights. Proposals to create or eliminate pre-emptive rights. In evaluating proposals the Proxy Committee will consider the size of the company and the nature of its shareholder base. If any person (or entity) requests that the Proxy Committee (or any of its members) vote a proxy in a specific manner, that person shall furnish to the Proxy Committee a written explanation of the reasons for the request and a description of the person's (or entity's) relationship with the party proposing the matter to shareholders. IV. VOTING PROCEDURES The Proxy Committee has developed the following procedures to assist in the voting of proxies according to the Voting Guidelines set forth in Section III above. The Proxy Committee may revise these procedures from time to time, as it deems appropriate or necessary to effect the purposes of this Policy and Procedures. CMA shall use Institutional Shareholder Services ("ISS"), a third party vendor, to implement its proxy voting process. ISS shall provide proxy analysis and record keeping services. On a daily basis CMA shall send to ISS a holdings file detailing each equity holding held in an account advised by CMA. Information on equity holdings for the international portfolio shall be sent weekly. ISS shall receive proxy material information from Proxy Edge or the custodian bank for the account. This shall include issues to be voted upon, together with a breakdown of holdings for CMA accounts. ISS shall then reconcile information it receives from CMA with that it has received from Proxy Edge and custodian banks. Any discrepancies shall be noted and resolved by ISS. Whenever a vote is solicited, ISS shall send CMA a request to vote over a secure website. CMA personnel shall check this website daily. The request shall be accompanied by a recommended vote. The recommended vote shall be based upon CMA's Voting Guidelines previously delivered by CMA to ISS as set forth in Section III. CMA shall promptly provide ISS with any amendments or modifications to the Guidelines. CMA shall return a final instruction to vote to ISS, which ISS shall record with Proxy Edge or the custodian bank as our agent. ISS shall have procedures in place to ensure that a vote is cast on every security holding maintained by CMA on which a vote is solicited unless otherwise directed by the Proxy Committee. On a yearly basis, or as required by our clients CMA shall receive a report from ISS detailing CMA's voting for the previous period. Each time that ISS shall send CMA a request to vote the request shall be accompanied by the recommended vote determined in accordance with CMA's Voting Guidelines. ISS shall vote as indicated in the request unless the client has reserved discretion, the Proxy Committee determines that the best interest of a client requires another vote or the proposal is a matter on which the Proxy Committee has discretion under Section III.D. In such situations ISS shall vote based on the direction of the client or the Proxy Committee, as the case may be. The interests of CMA's Taft Hartley or "Socially Responsible " clients may impact a proposal that normally should be voted in a certain way. ISS shall inform CMA of all proposals having impact on its Taft Hartley and or "Socially Responsible " clients. The Proxy Voting Committee shall be consulted before a vote is placed in cases where Taft Hartley or Socially Responsible issues are presented. (1) CMA Managed Funds or a Fund is a registered investment company or series of a registered investment company managed or advised by Columbia Management Advisors, Inc. Item 8. Reserved. Item 9. Controls and Procedures. (a) The registrant's principal executive officer and principal financial officer, based on their evaluation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing of this report, have concluded that such controls and procedures are adequately designed to ensure that information required to be disclosed by the registrant in Form N-CSR is accumulated and communicated to the registrant's management, including the principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10. Exhibits. (a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR attached hereto as Exhibit 99.CODE ETH (a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT. (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) Columbia Institutional Floating Rate Income Fund ----------------------------------------------------------- By (Signature and Title) /s/ Joseph R. Palombo ------------------------- Joseph R. Palombo, President Date November 7, 2003 ---------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title) /s/ Joseph R. Palombo -------------------------- Joseph R. Palombo, President Date November 7, 2003 ---------------------------------------------- By (Signature and Title) /s/ J. Kevin Connaughton -------------------------- J. Kevin Connaughton, Treasurer Date November 7, 2003 ---------------------------------------------- EX-99.CODEE 3 dex99codee.txt CODE OF ETHICS EX-99.CODE ETH COLUMBIA MANAGEMENT GROUP FAMILY OF FUNDS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS I. Covered Officers/Purpose of the Code This Code of Ethics (the "Code") for the investment companies within the Columbia Management Group fund complex (collectively the "Funds" and each, a "Fund") applies to the Funds' Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, and Director of Trustee Administration (the "Covered Officers") for the purpose of promoting: . honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; . full, fair, accurate, timely and understandable disclosure in reports and documents that a Fund files with, or submits to, the Securities and Exchange Commission ("SEC"), and in other public communications made by a Fund; . compliance with applicable laws and governmental rules and regulations; . the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and . accountability for adherence to the Code. Each Covered Officer shall adhere to a high standard of business ethics and shall be sensitive to situations that may give rise to actual or apparent conflicts of interest. II. Administration of the Code The Boards of Trustees and Boards of Directors of the Funds (collectively, the "Board") shall designate an individual to be primarily responsible for the administration of the Code (the "Code Officer"). The Code shall be administered by the Columbia Management Group Compliance Department. In the absence of the Code Officer, his or her designee shall serve as the Code Officer, but only on a temporary basis. Each Fund has designated a chief legal officer (the "Chief Legal Officer") for purposes of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. The Chief Legal Officer of a Fund shall assist the Fund's Code Officer in administration of this Code. The Chief Legal Officer shall be responsible for applying this Code to specific situations in which questions are presented under it (in consultation with Fund counsel, where appropriate) and has the authority to interpret this Code in any particular situation. However, any waivers sought by a Covered Officer must be approved by each Audit Committee of the Funds (collectively, the "Audit Committee"). III. Managing Conflicts of Interest Overview. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his/her service to, a Fund. For example, a conflict of interest would arise if a Covered Officer, or a family member, receives improper personal benefits as a result of the Covered Officer's position with a Fund. Certain conflicts of interest arise out of the relationships between Covered Officers and a Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940 (the "Company Act") and the Investment Advisers Act of 1940 (the "Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with a Fund because of their status as "affiliated persons" of the Fund. A Fund's and its investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of those provisions. This Code does not, and is not intended to, repeat or replace those programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts may arise from, or as a result of, the contractual relationship between a Fund and its investment adviser, administrator, principal underwriter, pricing and bookkeeping agent and/or transfer agent (each, a "Service Provider") of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for a Fund or for a Service Provider, or for both), be involved in establishing policies and implementing decisions that will have different effects on the Service Provider and a Fund. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the Service Provider and is consistent with the performance by the Covered Officers of their duties as officers of a Fund. In addition, it is recognized by the Board that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions of the Company Act and the Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of a Fund. Each Covered Officer must: . not use personal influence or personal relationships improperly to influence investment decisions or financial reporting by a Fund whereby the Covered Officer or an immediate family member would benefit personally to the detriment of a Fund; and . not cause a Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer or an immediate family member rather than the benefit of the Fund./1/ There are some conflict of interest situations that must be approved by the Code Officer, after consultation with the Chief Legal Officer. Those situations include, but are not limited to,: . service as director on the board of any public or private company; . the receipt of any gifts in excess of $100 in the aggregate from a third party that does or seeks to do business with the Funds during any 12-month period; . the receipt of any entertainment from any company with which a Fund has current or prospective business dealings, unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; . any material ownership interest in, or any consulting or employment relationship with, any Fund service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; . a direct or indirect material financial interest in commissions, transaction charges or spreads paid by a Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. IV. Disclosure and Compliance Each Covered Officer shall: . be familiar with the disclosure requirements generally applicable to the Funds; - ---------- /11/ For purposes of this Code, personal trading activity of the Covered Officers shall be monitored in accordance with the Columbia Management Group Code of Ethics. Each Covered Officer shall be considered an "Access Person" under such Code. The term "immediate family" shall have the same meaning as provided in such Code. . not knowingly misrepresent, or cause others to misrepresent, facts about any Fund to others, whether within or outside the Fund, including to the Fund's trustees and auditors, and to governmental regulators and self-regulatory organizations; . to the extent appropriate within his/her area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and . promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. V. Reporting and Accountability Each Covered Officer must: . upon adoption of the Code (or after becoming a Covered Officer), affirm in writing to the Board that he/she has received, read and understands the Code; . annually affirm to the Board compliance with the requirements of the Code; . not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; . notify the Chief Legal Officer and the Code Officer promptly if he/she knows of any violation of this Code; and . respond to the trustee and officer questionnaires circulated periodically in connection with the preparation of disclosure documents for the Funds. The Code Officer shall maintain records of all activities related to this Code. The Funds will follow the procedures set forth below in investigating and enforcing this Code: . The Chief Legal Officer and/or the Code Officer will take all appropriate action to investigate any potential violation reported to him/her; . If, after such investigation, the Chief Legal Officer and the Code Officer believes that no violation has occurred, the Code Officer will notify the person(s) reporting the potential violation, and no further action is required; . Any matter that the Chief Legal Officer and/or the Code Officer believes is a violation will be reported to the Audit Committee; . If the Audit Committee concurs that a violation has occurred, it will inform and make a recommendation to the Board, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to the Chief Executive Officer of Columbia Management Group; or a recommendation to sanction or dismiss the Covered Officer; . The Audit Committee will be responsible for granting waivers in its sole discretion; . Any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. The Chief Legal Officer shall: . report to the Audit Committee quarterly any approvals provided in accordance with Section III of this Code; and . report to the Audit Committee quarterly any violations of, or material issues arising under, this Code. VI. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Funds for the purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other polices or procedures of the Funds or the Funds' Service Providers govern or purport to govern the behavior or activities (including, but not limited to, personal trading activities) of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Funds' and their investment advisers' and principal underwriter's codes of ethics under Rule 17j-1 under the Company Act and any policies and procedures of the Service Providers are separate requirements applicable to the Covered Officers and are not part of this Code. VII. Amendments All material amendments to this Code must be approved or ratified by the Board, including a majority of independent directors. VIII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Board, the Covered Officers, the Chief Legal Officer, the Code Officer, outside audit firms and legal counsel to the Funds, and senior management of Columbia Management Group. IX. Internal Use The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion. EX-99.CERT 4 dex99cert.txt CERTIFICATION PURSUANT OF SECTION 302 Ex-99.CERT I, Joseph R. Palombo, certify that: 1. I have reviewed this report on Form N-CSR of Columbia Institutional Floating Rate Income Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 7, 2003 /s/ Joseph R. Palombo ------------------------------- Joseph R. Palombo, President I, J. Kevin Connaughton, certify that: 1. I have reviewed this report on Form N-CSR of Columbia Institutional Floating Rate Income Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 7, 2003 /s/ J. Kevin Connaughton ------------------------------- J. Kevin Connaughton, Treasurer EX-99.906CT 5 dex99906ct.txt CERTIFICATION PUSUANT TO SECTION 906 Ex-99.906CERT CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Certified Shareholder Report of Columbia Institutional Floating Rate Income Fund (the "Trust") on Form N-CSR for the period ending August 31, 2003, as filed with the Securities and Exchange Commission on the date hereof ("the Report"), the undersigned hereby certifies that, to his knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust. Date: November 7, 2003 /s/ Joseph R. Palombo ----------------------------------- Joseph R. Palombo, President Date: November 7, 2003 /s/ J. Kevin Connaughton ----------------------------------- J. Kevin Connaughton, Treasurer A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission (the "Commission") or its staff upon request. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. (S)1350 and is not being filed as part of the Form N-CSR with the Commission. -----END PRIVACY-ENHANCED MESSAGE-----