N-CSR 1 file001.txt COLUMBIA ACORN TRUST 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: 811-01829 Columbia Acorn Trust ----------------------------------------------------- (Exact name of registrant as specified in charter) One Financial Center, Boston, Massachusetts 02111 ----------------------------------------------------- (Address of principal executive offices) (Zip code) Vincent Pietropaolo, 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: 1-617-772-3698 Date of fiscal year end: 12/31/04 ------------------ Date of reporting period: 12/31/04 ------------------ 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. Section 3507. ITEM 1. REPORTS TO STOCKHOLDERS. COLUMBIA ACORN FAMILY OF FUNDS CLASS Z SHARES ANNUAL REPORT DECEMBER 31, 2004 MANAGED BY COLUMBIA WANGER ASSET MANAGEMENT, L.P. 4 COLUMBIA ACORN FUND COLUMBIA ACORN INTERNATIONAL COLUMBIA ACORN USA COLUMBIA ACORN INTERNATIONAL SELECT COLUMBIA ACORN SELECT COLUMBIA THERMOSTAT FUND >LETTER TO SHAREHOLDERS FROM THE COLUMBIA ACORN TRUST BOARD OF TRUSTEES The Trustees of the Columbia Acorn Trust are pleased to present this annual report to shareholders of the Columbia Acorn Family of Funds ("Acorn Funds") for 2004. Your Trustees addressed several important shareholder issues during the year. Renewal of Agreements/Expense Reductions Following an in-depth review and analysis, we unanimously approved the renewal of agreements with our investment adviser, Columbia Wanger Asset Management ("CWAM") and two other Columbia Management subsidiaries to manage investments and provide administrative, distribution and transfer agent services. We believe CWAM has consistently provided exceptional value to shareholders and that it will continue to do so under the present agreement, which preserves critical elements of the Firm's autonomy and commits it to focusing on managing the assets of the Acorn Funds. As part of the renewal process, we negotiated a minimum reduction of 25% in transfer agent fees paid by the Acorn Funds effective September 30, 2004. We also negotiated reductions in the advisory fee rates for Columbia Acorn Select and in the administrative fee rates for all Acorn Funds by the establishment of new break points. Further, the 12b-1 plan was changed to reduce annual charges to all Class A shareholders from 35 to 25 basis points and to all Class B shareholders from 100 to 85 basis points representing reductions of 28.6% and 15%, respectively. The administrative fee and 12b-1 plan reductions were effective August 1, 2004. Increase in Minimum Investment for New Shareholders We decided to implement a plan to reduce future cash inflows into Columbia Acorn Fund and Columbia Acorn USA. The minimum investment for new shareholders is now $50,000. This action was taken to protect existing shareholders from the potential impairment of the investment process and performance, which could result if the large amounts of cash inflows experienced by these funds were to continue. Trustee Independence The Securities and Exchange Commission ("SEC") issued new independence requirements in 2004 calling for independent trustees of mutual funds to represent at least 75% of the total number of trustees and also requiring an independent chairperson. Your Trustees have adhered to those hallmarks of governance for several years. We currently have seven independent trustees (including the chairperson) who are not affiliated in any way with entities of Bank of America Corporation ("B of A"), the parent of our investment adviser, distributor and transfer agent. Charles McQuaid and Ralph Wanger of our investment adviser, CWAM, are the only "interested" trustees. New Chief Compliance Officer We recruited and appointed Robert Scales as Chief Compliance Officer ("CCO") of the Acorn Funds in April, 2004. This is a new position reporting directly to the Trustees through our Compliance Committee. Mr. Scales has experience as a lawyer in the securities and financial services industries and five years with the Enforcement Division of the SEC. He reviewed the policies and procedures of the B of A entities serving the Acorn Funds during 2004 and reported his findings to us. Mr. Scales is monitoring the performance of these B of A entities in 2005 under the direction and oversight of our Compliance Committee. He is reporting his findings to us on a regular basis. 1 Columbia Management Market Timing Charges Throughout 2004 we monitored the regulatory proceedings related to frequent trading brought against B of A entities by the SEC and the New York Attorney General. As we told you in our letter to shareholders dated March 23, 2004, complaints were filed against Columbia Management Advisors ("CMA"), which provides administrative services to the Acorn Funds and Columbia Funds Distributors ("CFD"), the distributor for the Acorn Funds. CWAM was not a party to these complaints. On February 9, 2005, the parties in those proceedings finalized settlement agreements that will result in advisory fee reductions for all of the Acorn Funds. In addition, CMA and CFD will pay a substantial amount in penalties. The distribution of that money to the Columbia family of funds and/or its shareholders will be determined by an independent distribution consultant ("IDC") acceptable to the SEC. The IDC will receive recommendations and comments from us before making the final determination regarding payments to any Acorn fund or its shareholders. We are hopeful this will be resolved in 2005. Certain provisions of the settlement agreements call for us to carry out special oversight procedures if we want CMA to provide services to the Acorn Funds in the future. These procedures, which we expect to follow voluntarily, relate to the review, negotiation and determination of management and other fees paid by the Acorn Funds and to the monitoring of compliance. Any incremental cost associated with these special procedures will be paid by Columbia Management. We also focused on the revised practices and control procedures of CFD directed at preventing improper trading activity. Reviews of those practices and controls were conducted by our independent legal counsel, our independent consultants and our CCO. Although there never can be absolute assurance that improper trading activity can always be identified or terminated, we believe that CFD has strengthened its internal practices and controls to identify and discourage such activity. We will continue to monitor CFD's control environment in 2005 through the direct involvement of our CCO and oversight of our Compliance Committee. As we all look forward to Acorn Funds' 35th consecutive year of serving shareholders, your Trustees remain dedicated and focused on the goal of providing exceptional value. We believe such value is delivered to shareholders through a rational investment philosophy and policy consistently applied by qualified investment management with the highest ethical standards. The Acorn Funds have established a record of providing a distinct investment opportunity among mutual funds. We are committed to preserving that opportunity in the years ahead. We thank our fellow shareholders for their continued interest and investment in the Acorn Funds. /s/ Robert E. Nason Robert E. Nason INDEPENDENT CHAIRMAN OF THE BOARD OF TRUSTEES COLUMBIA ACORN TRUST 2 Columbia Acorn Family of Funds Annual Report 2004 Table of Contents Columbia Acorn Family of Funds Performance At A Glance 4 Squirrel Chatter: The Miracle Year 5 Understanding Your Expenses 8 COLUMBIA ACORN FUND In a Nutshell 10 At a Glance 11 Major Portfolio Changes 22 Statement of Investments 24 COLUMBIA ACORN INTERNATIONAL In a Nutshell 12 At a Glance 13 Major Portfolio Changes 36 Statement of Investments 38 Portfolio Diversification 42 COLUMBIA ACORN USA In a Nutshell 14 At a Glance 15 Major Portfolio Changes 43 Statement of Investments 44 COLUMBIA ACORN INTERNATIONAL SELECT In a Nutshell 16 At a Glance 17 Major Portfolio Changes 49 Statement of Investments 50 Portfolio Diversification 52 COLUMBIA ACORN SELECT In a Nutshell 18 At a Glance 19 Major Portfolio Changes 53 Statement of Investments 54 COLUMBIA THERMOSTAT FUND In a Nutshell 20 At a Glance 21 Statement of Investments 75 Statement of Assets and Liabilities 76 Statement of Operations 77 Statement of Changes in Net Assets 78 Financial Highlights 80 Notes to Financial Statements 81 COLUMBIA ACORN FAMILY OF FUNDS Statements of Assets and Liabilities 58 Statements of Operations 59 Statements of Changes in Net Assets 60 Financial Highlights 64 Notes to Financial Statements 68 Report of Independent Registered Public Accounting Firm 85 Unaudited Information 86 Change in Independent Registered Public Accounting Firm 87 Columbia Acorn Family of Funds Information 88 Board of Trustees and Management of Columbia Acorn Funds 90 >2004 Year-End Distributions The following table details the funds' year-end distributions. The record date for Columbia Acorn Fund, Columbia Acorn USA and Columbia Acorn Select was December 9, 2004. The ex-dividend date was December 10, 2004, and the payable date was December 13, 2004. For Columbia Thermostat Fund, the record date was December 23, 2004. The ex-dividend date was December 27, 2004, and the payable date was December 28, 2004.
LONG-TERM SHORT-TERM ORDINARY REINVESTMENT CAPITAL GAINS CAPITAL GAINS INCOME PRICE ------------------------------------------------------------------------------------------------- Columbia Acorn Fund $0.8319 $0.0491 $0.0176 $25.56 ------------------------------------------------------------------------------------------------- Columbia Acorn USA $0.1376 None None $24.43 ------------------------------------------------------------------------------------------------- Columbia Acorn Select $0.4398 None None $20.62 ------------------------------------------------------------------------------------------------- Columbia Thermostat Fund $0.0011 $0.0079 $0.2891 $13.05 -------------------------------------------------------------------------------------------------
THE DISCUSSION IN THIS REPORT OF PORTFOLIO COMPANIES IS FOR ILLUSTRATION ONLY AND IS NOT A RECOMMENDATION OF INDIVIDUAL STOCKS. THE INFORMATION IS BELIEVED TO BE ACCURATE, BUT THE INFORMATION AND THE VIEWS OF THE PORTFOLIO MANAGERS MAY CHANGE AT ANY TIME WITHOUT NOTICE AND THE PORTFOLIO MANAGERS MAY ALTER A FUND'S PORTFOLIO HOLDINGS BASED ON THESE VIEWS AND THE FUND'S CIRCUMSTANCES AT THAT TIME. 3 Columbia Acorn Family of Funds >Performance At A Glance Class Z Average Annual Total Returns through 12/31/04
4TH LIFE QUARTER* 1 YEAR 3 YEARS 5 YEARS 10 YEARS OF FUND ------------------------------------------------------------------------------------------------------------ COLUMBIA ACORN FUND (6/10/70) 12.44% 21.51% 15.34% 12.38% 16.71% 16.45% ------------------------------------------------------------------------------------------------------------ S&P 500 9.23% 10.88% 3.59% -2.30% 12.07% 12.09% ------------------------------------------------------------------------------------------------------------ Russell 2500 14.22% 18.29% 12.27% 8.35% 13.75% NA ------------------------------------------------------------------------------------------------------------ Lipper Small-Cap Core Funds Index 11.44% 18.37% 10.44% 9.06% 12.98% NA ------------------------------------------------------------------------------------------------------------ Lipper Mid-Cap Core Funds Index 11.79% 15.44% 9.22% 5.65% 12.63% NA ------------------------------------------------------------------------------------------------------------ COLUMBIA ACORN INTERNATIONAL (9/23/92) 16.73% 29.47% 17.10% 0.26% 10.68% 12.47% ------------------------------------------------------------------------------------------------------------ Citigroup EMI Global ex-US 16.70% 29.27% 23.11% 6.84% 6.71% 8.16% ------------------------------------------------------------------------------------------------------------ MSCI EAFE 15.32% 20.25% 11.89% -1.13% 5.62% 7.24% ------------------------------------------------------------------------------------------------------------ Lipper Int'l Small- Cap Funds Index 16.27% 29.50% 22.74% 5.36% NA NA ------------------------------------------------------------------------------------------------------------ COLUMBIA ACORN USA (9/4/96) 14.26% 20.62% 13.09% 9.44% -- 14.77% ------------------------------------------------------------------------------------------------------------ Russell 2000 14.09% 18.33% 11.48% 6.61% -- 9.81% ------------------------------------------------------------------------------------------------------------ Lipper Small-Cap Core Funds Index 11.44% 18.37% 10.44% 9.06% -- 10.88% ------------------------------------------------------------------------------------------------------------ S&P 500 9.23% 10.88% 3.59% -2.30% -- 9.33% ------------------------------------------------------------------------------------------------------------ COLUMBIA ACORN INT'L SELECT (11/23/98) 13.26% 24.14% 14.43% -1.63% -- 10.50% ------------------------------------------------------------------------------------------------------------ Citigroup World ex-US Cap Range $2-10B 16.46% 25.22% 19.39% 6.21% -- 9.35% ------------------------------------------------------------------------------------------------------------ MSCI EAFE 15.32% 20.25% 11.89% -1.13% -- 3.70% ------------------------------------------------------------------------------------------------------------ Lipper International Funds Index 14.39% 18.59% 11.60% -0.89% -- 4.99% ------------------------------------------------------------------------------------------------------------ COLUMBIA ACORN SELECT (11/23/98) 13.82% 18.58% 12.60% 11.48% -- 15.29% ------------------------------------------------------------------------------------------------------------ S&P MidCap 400 12.16% 16.48% 10.53% 9.54% -- 12.11% ------------------------------------------------------------------------------------------------------------ Lipper Mid-Cap Growth Index 13.78% 14.03% 3.37% -6.07% -- 6.24% ------------------------------------------------------------------------------------------------------------ S&P 500 9.23% 10.88% 3.59% -2.30% -- 2.17% ------------------------------------------------------------------------------------------------------------ COLUMBIA THERMOSTAT FUND (9/25/02) 5.83% 9.17% -- -- -- 14.57% ------------------------------------------------------------------------------------------------------------ S&P 500 9.23% 10.88% -- -- -- 20.98% ------------------------------------------------------------------------------------------------------------ Lehman U.S. Credit Intermediate Bond Index 0.77% 4.08% -- -- -- 6.23% ------------------------------------------------------------------------------------------------------------ Lipper Flexible Portfolio Funds Index 7.76% 9.50% -- -- -- 16.90% ------------------------------------------------------------------------------------------------------------
* Not annualized. PERFORMANCE SHOWN HERE IS PAST PERFORMANCE WHICH CANNOT GUARANTEE FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN A FUND WILL FLUCTUATE SO THAT FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE CHANGES OVER TIME. VISIT COLUMBIAFUNDS.COM FOR DAILY UPDATES. DESCRIPTION OF INDEXES: S&P 500 is a broad, market-weighted average of U.S. blue-chip company stock performance. S&P MIDCAP 400 is a broad market-weighted index of 400 stocks that are in the next size/tier down from the S&P 500. RUSSELL 2000 is a market-weighted index of 2000 smaller U.S. companies, formed by taking the largest 3,000 companies and eliminating the largest 1,000. RUSSELL 2500 is the smallest 2,500 U.S. companies from this same group. CITIGROUP EMI GLOBAL EX-US is the bottom 20% of institutionally investable capital of developed and emerging countries, selected by index sponsor, outside the U.S. MSCI EAFE is Morgan Stanley's Europe, Australasia and Far East Index, a widely recognized international benchmark that comprises 20 major markets in proportion to world stock market capitalization. CITIGROUP WORLD EX-US CAP RANGE $2-$10B is a subset of the Broad Market Index, representing a mid-cap developed market index excluding the U.S. LIPPER INDEXES include the largest funds tracked by Lipper, Inc. in the named category. LIPPER MID-CAP GROWTH INDEX, 30 mid-cap growth funds; LIPPER MID-CAP CORE FUNDS INDEX, 30 mid-cap core funds; LIPPER INTERNATIONAL FUNDS INDEX, 30 largest non-U.S. funds, not including non-U.S. small-cap funds; LIPPER INTERNATIONAL SMALL-CAP FUNDS INDEX, 10 largest non-U.S. funds investing in small-cap companies, including Columbia Acorn International; LIPPER SMALL-CAP CORE FUNDS INDEX, 30 largest small-cap core funds, including Columbia Acorn Fund. LIPPER FLEXIBLE PORTFOLIO FUNDS INDEX is an equal dollar weighted index of the 30 largest mutual funds within the Flexible Portfolio fund classification, as defined by Lipper. The LEHMAN U.S. CREDIT INTERMEDIATE BOND INDEX is the intermediate component of the U.S. Credit Index. The U.S. Credit Index includes publicly issued U.S. corporate and foreign debentures and secured notes that meet specified maturity, liquidity, and quality requirements. All indexes are unmanaged and returns include reinvested distributions. A more complete description of each index is included in the Funds' statement of additional information. It is not possible to invest directly in an index. 1-800-922-6769 4 >Squirrel Chatter: THE MIRACLE YEAR [Photo of Ralph Wanger] . 1905 was a year of surprises. The first surprise was the victory of the Japanese over the Russians in the Russo-Japanese War. In May 1905, the untested Japanese Navy annihilated the Russian fleet at Tsushima. This was the first time a non-white country had beaten the main force of a European colonial power. The second unexpected event was in physics. 2005 will be celebrated as the centennial of Albert Einstein's "Miracle Year." The journal, Annalen der Physik, volume 17, published three articles in September 1905 all written by Einstein, an obscure clerk in the Swiss patent office in Bern. He had an undergraduate degree in physics but no Ph.D (it was granted a year later). Each of the articles was on a different subject and each one revolutionized its branch of physics. Einstein's papers created 20th century physics almost single-handedly. ATOMS In 1905 there were different theories about the structure of matter. If you take a glass of water and pour nine-tenths of it out, you still have a glass with water in it. What happens if you repeat this process of throwing out 90% of the water in the glass? After you repeat the process a few more times, you have such a small amount of water that you can only see it under a microscope, and in a few more steps the water drop will be too small to be seen even under the microscope. Can you continue the boring job of splitting water forever or do you finally get to a point where it isn't water anymore? Of course we know the answer: Once you get down to a single molecule of water you can't split it and still say that you have water left. Many leading scientists did not accept the atomic theory in 1905. Einstein looked at the process called Brownian Motion in which a grain of pollen or other small object moves around in a random way. (The same mathematical process makes stock prices jiggle.) He deduced that this motion was caused by billions of atoms bumping into the pollen grain in an irregular pattern. He was even able to calculate the size of the atoms involved, thus proving that atoms really existed. PHOTONS In 1905 there was still a basic debate about the nature of light. The greatest achievement of 19th century physics was Maxwell's set of partial differential equations governing electromagnetic fields, including light. Maxwell's equations required that light be a wave. The great Max Planck had introduced the idea of a quantum of energy in 1900 to get an equation that tracked the spectrum of heat radiation, but most scientists doubted that a light quantum was "real." Heinrich Hertz, Philip Lenard and others showed that when a beam of ultraviolet light shines on a piece of metal you produce an electrical current in the metal. There was no way to explain the photoelectric effect according to the Maxwell wave theory of light. The second paper Einstein wrote dealt with the problem of the photoelectric effect. If you cut the amount of energy in a beam of light by 90% and keep reducing it, you still have a beam of light. If you keep slicing the amount of light, does the beam of light keep getting smaller and smaller forever or do you get down to an "atom" of light that can't be split further? Einstein proved that there was a tiny amount of light that could not be further divided. The least amount of light that exists is a single photon (or quantum) of light.1 The photoelectric effect is explained by photons acting as particles, not as a wave. Einstein's discovery of the photon had a number of interesting effects. First, it led to the development of quantum mechanics and thus to most of 20th century physics. Second, it won Einstein his only Nobel Prize. Third, it uncovered a paradox that still puzzles students, the duality of light. If you run an experiment to show that light is a wave, you can prove it's a wave. If you run an experiment to show that it's a particle, you can prove it's a particle. This duality principle contradicts common sense but when you study science you have to get used to it. The fourth effect was that it made Lenard a life-long enemy of Einstein. Philip Lenard, who received the Nobel Prize in 1905 for his own work on cathode rays, was close to the solution but Einstein ended up getting the credit. Lenard became an unrelenting foe of Einstein, and influenced the Nobel committee's decision not to give Einstein the prize for his theory of relativity. Later on, Lenard became an ardent Nazi. 5 RELATIVITY In 1905, there was also a debate in scientific circles about speed. If you were in a really powerful rocket ship in space, and you pushed the throttle forward, you would speed up. If you kept on increasing the power, would you go ever faster, or was there an absolute speed limit in the universe that you could not exceed? The third paper became the best known, Einstein's special theory of relativity. It explained that there was a cosmic speed limit, the speed of light. Very odd things happen when your rocket ship is moving close to the speed of light. Time slows down and you get shorter, under the Lorentz contraction equation, giving rise to the limerick: A sexy young techie named Fisk, Had a motion exceedingly brisk. So fast was his action The Lorentz contraction Shortened his rod to a disk. In a very brief paper published later in 1905, Einstein added in a note that his theory of relativity implied the equation E=mc2. That solved the paradox of radioactivity; Mme. Curie's radium was producing much more energy then could be explained by 19th century physics. Einstein showed that radioactive energy was caused by turning a small amount of mass into a lot of energy. So we had this technical journal containing three papers written by a man unknown in science, a non-Ph.D, a non-academic, writing on a German-dominated field with all the fussiness about rank and reputation that you would expect. Would anyone care? Einstein did not receive any communication from any physicists for the first couple months after he published, but in early 1906 Max Planck read and understood the papers. He wrote to Einstein and sent his assistant, another important physicist, Max von Laue, to visit Einstein in Bern. Planck's subsequent endorsement made Einstein acceptable to the community of physicists, and his papers became required study for all physicists, as they remain. The compelling human question: How the heck did Einstein do it? How could one human being produce three revolutionary papers in one year, on three different subjects, while carrying a full-time job at the patent office to boot? We can admire but not explain. The "Miracle Year" commemorates one of the greatest feats of the human mind ever. 2004 SCARLET A WINNERS Each year we honor those outside analysts who have provided advice and insight to our investment team on some of the top-performing stocks that we held in the Funds. The criteria for domestic stock Scarlet A winners was an annual gain of over 45% and a dollar gain of over $60 million across the Funds. On the international side, the stock needed to increase more than 50% and make more than $20 million for the Funds. Our thanks to Kindra Devaney Tartarsky, formerly with Fulcrum Partners, who suggested we look at teen retailer ABERCROMBIE & FITCH. In 2004, the stock was up 89% and had a dollar gain for the Funds of $66 million. Barry Sahgal, now with Gilford Securities, receives his second Scarlet A for natural gas producer ULTRA PETROLEUM. The stock had an annual gain of 95% and made over $62 million for the Funds. ESCO TECHNOLOGIES, a manufacturer of automatic electric meter readers, increased nearly 76% in 2004 and made over $60 million for the Funds. Richard Eastman of Robert W. Baird & Co. brought Esco to us three years ago and has provided superior coverage on this stock and the filtration industry ever since. PEOPLE'S BANK OF BRIDGEPORT gained 86% in 2004, earning nearly $64 million for the Funds. Our thanks to Sal DiMartino with Bear Stearns for recommending this stock to us 10 years ago. On the international side, ANGLO IRISH BANK made it a three-peat in 2004. The stock first won the Scarlet A for David Smith of Davy Stockbrokers in Dublin in 2002 and it's still going strong. For the year, the stock increased 56% and made $63 million for the Funds. Based in the United Kingdom, oil and gas producer TULLOW OIL had an impressive 94% gain for the year and made $36 million for the Funds. Credit goes to Tony Alves of KBC Peel Securities in 1-800-922-6769 6 London and, making a second appearance on the 2004 Scarlet A list, Barry Sahgal. Marc de Natris of Fortis Bank is back among the Scarlet A winners this year. Marc received the "A" in 2000 and 2001 for different stocks. This year, we credit him for his help on AALBERTS INDUSTRIES, a Netherlands-based, diversified industrial company. Aalberts increased 91% and made nearly $35 million for the Funds. French postage meter machine manufacturer NEOPOST rounds out our international winners. The stock increased 57% in '04 and made $28 million for the Funds. Our thanks to Caroline Cohen of Deutsche Bank for the insight she provided on this stock. COLUMBIA WAM NEWS We are pleased to announce that Zach Egan has been named director of international research for Columbia Wanger Asset Management. In this position, Zach will provide leadership and quality control to Columbia Wanger's international research efforts. Congratulations Zach! /s/ Ralph Wanger Ralph Wanger FOUNDER, ADVISOR AND TRUSTEE COLUMBIA WANGER ASSET MANAGEMENT, L.P. -------------------------------------------------------------------------------- 1 Planck and Einstein had discovered the quantum jump, which was the smallest thing that could possibly exist in the universe. Modern writers, for reasons difficult to explain, now use the phrase quantum jump to mean a big event. When non-scientists start throwing around scientific terms without understanding them, funny things happen. Don't get me started on the Heisenberg uncertainty principle. Incidentally, Albert Einstein's father, Hermann, was born in the Wurttemberg village of Buchau, where his family had lived for generations. Hermann moved 20 miles from Buchau to the city of Ulm, where Albert was born. My great-great grandfather, Joseph Kohn, was also from Buchau and he had many Einsteins in his family tree. I am very proud of the Einstein connection. Sources: "Einstein: A Celebration," seminar at the Aspen Institute, August 8-11, 2004. Einstein, Albert, "Ideas and Opinions," Crown Publishers, 1954. Kaku, Michio, "Einstein Cosmos: How Albert Einstein's Vision Transformed our Understanding of Space and Time," Atlas Books, 2004. "Discover" magazine, "Special Einstein Issue," September 2004. A special thanks to Doug Stone of Yale University for editing this essay. As of 12/31/04, fund positions, as a percent of net assets, in the holdings mentioned were as follows: ABERCROMBIE & FITCH: Columbia Acorn Fund, 0.4%; Columbia Acorn USA, 1.5%; Columbia Acorn Select, 3.6%. ULTRA PETROLEUM: Columbia Acorn Fund, 0.6%. ESCO TECHNOLOGIES: Columbia Acorn Fund, 0.6%; Columbia Acorn USA, 2.5%. PEOPLE'S BANK OF BRIDGEPORT: Columbia Acorn Fund, 0.9%. ANGLO IRISH BANK: Columbia Acorn Fund, 0.6%; Columbia Acorn International, 2.7%; Columbia Acorn International Select, 5.8%. TULLOW OIL: Columbia Acorn Fund, 0.3%; Columbia Acorn International, 1.0%. AALBERTS INDUSTRIES: Columbia Acorn Fund, 0.3%; Columbia Acorn International, 1.3%. NEOPOST: Columbia Acorn Fund, 0.2%; Columbia Acorn International, 1.4%; Columbia Acorn International Select, 4.1%. 7 >UNDERSTANDING YOUR EXPENSES As a fund shareholder, you incur two types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption or exchange fees. There are also continuing costs, which generally include investment advisory fees, Rule 12b-1 fees, and other fund expenses. The information on this page is intended to help you understand your ongoing costs of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. Analyzing your fund's expenses To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in the Class Z shares of the Columbia Acorn Funds for the last six months. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using each fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column assumes that the return each year is 5% before expenses and then applies each fund's actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during the reporting period. See the "Compare with other funds" information for details on using the hypothetical data. >July 1, 2004 - December 31, 2004
ACCOUNT VALUE AT ACCOUNT VALUE AT THE BEGINNING OF THE END OF EXPENSES PAID FUND'S THE PERIOD ($) THE PERIOD ($) DURING THE PERIOD ($) ANNUALIZED --------------------------------------------------------------------------------- EXPENSE CLASS Z SHARES ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL RATIO (%)* ------------------------------------------------------------------------------------------------------------------------------- Columbia Acorn Fund 1,000.00 1,000.00 1,114.82 1,020.96 4.41 4.22 0.83 ------------------------------------------------------------------------------------------------------------------------------- Columbia Acorn International 1,000.00 1,000.00 1,190.18 1,019.46 6.22 5.74 1.13 ------------------------------------------------------------------------------------------------------------------------------- Columbia Acorn USA 1,000.00 1,000.00 1,097.98 1,019.46 5.96 5.74 1.13 ------------------------------------------------------------------------------------------------------------------------------- Columbia Acorn International Select 1,000.00 1,000.00 1,152.88 1,017.85 7.85 7.35 1.45 ------------------------------------------------------------------------------------------------------------------------------- Columbia Acorn Select 1,000.00 1,000.00 1,103.91 1,019.30 6.13 5.89 1.16 ------------------------------------------------------------------------------------------------------------------------------- Columbia Thermostat Fund 1,000.00 1,000.00 1,062.49 1,023.88 1.30 1.27 0.25 -------------------------------------------------------------------------------------------------------------------------------
Expenses paid during the period are equal to each fund's annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the funds' most recent fiscal half-year and divided by 366. Had the Investment Adviser and/or Transfer Agent not waived a portion of expenses, total return would have been reduced. It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the funds and do not reflect any transactional costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical examples provided may not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher. Columbia Thermostat Fund's expenses do not include fees and expenses incurred by the Fund from the underlying portfolio funds. * For the six months ended 12/31/04. COMPARE WITH OTHER FUNDS Since all mutual fund companies are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the funds with other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the continuing cost of investing in a fund and do not reflect any transactional costs, such as sales charges or redemption or exchange fees. 1-800-922-6769 8 Estimating your actual expenses To estimate the expenses that you paid over the period, first you will need your account balance at the end of the period: o For shareholders who receive their account statements from Columbia Funds Services, Inc., your account balance is available online at WWW.COLUMBIAFUNDS.COM or by calling Shareholder Services at 800.922.6769. o For shareholders who receive their account statements from their brokerage firm, contact your brokerage firm to obtain your account balance. 1. Divide your ending account balance by $1,000. For example, if an account balance was $8,600 at the end of the period, the result would be 8.6. 2. In the section of the table on Page 8 titled "Expenses paid during the period," locate the amount for your fund. You will find this number is in the column labeled "actual." Multiply this number by the result from step 1. Your answer is an estimate of the expenses you paid on your account during the period. 9 Columbia Acorn Fund >In a Nutshell [Photo of Charles P. McQuaid] [Photo of Robert A. Mohn] Columbia Acorn Fund rose 21.51% in 2004. As shown on Page 4, the Fund beat all of its small-cap benchmarks and almost doubled the 10.88% return of the large-cap S&P 500. Solid stock picking, plus heavy weightings in energy, industrial and foreign stocks, produced good annual results. During the fourth quarter, Columbia Acorn Fund's 12.44% gain was slightly below the Russell 2500 small-cap benchmark. The Russell was boosted by returns from the smallest caps and more speculative companies. Columbia Acorn Fund was modestly ahead of the Lipper Small- and Mid-Cap Core Funds Indexes for the quarter. Great stock picks included retailer Urban Outfitters, riverboat casino operator Pinnacle Entertainment, and gaming equipment maker Shuffle Master. All more than doubled during the year because their earnings exceeded expectations. People's Bank of Bridgeport cashed out of its credit card business, enabling shareholders to cash in on an 86% gain. Handbag maker Coach bagged a 49% profit. Energy was our best performing group for the year. Quicksilver Resources, Southwestern Energy and Ultra Petroleum all about doubled, while our largest dollar winner, XTO Energy, jumped 57%. All of these stocks benefited from higher prices and higher production. Though we continue to be bullish on the group, during the fourth quarter we believed that oil prices were at a short-term speculative high and subject to a correction. Consequently, we trimmed our energy holdings, and swapped some oil producer stocks based on our valuation judgments. Believing that oil companies will increase capital spending, we also swapped some oil producers into oil service companies. A number of industrial companies also manufactured big profits in 2004. Industrial safety goods maker Mine Safety Appliances and water treatment equipment company Pentair each jumped over 90% while automatic electronic meter reader manufacturer Esco Technologies read nearly a 76% gain. We applaud our industrial goods and services analyst, Rob Chalupnik, for these picks. Due to what we believe to be reasonable valuations, a fairly good economy, and the weak dollar, we added to our domestic industrial holdings. The biggest loser for the year was Novell, a developer of open source software. The stock missed earnings targets and declined nearly 36% for the year. For the fourth quarter, drug company AtheroGenics was the biggest dollar loser. The stock was a big winner in the third quarter but gave back much of that gain in the fourth quarter when questions were raised about missing disclosure in trial results it released in September. The stock was off 29% for the three months. Educational toy manufacturer Leapfrog Enterprises missed its earnings and declined 40% in the quarter. Columbia Acorn's foreign stocks jumped 36.25% in the year. The UK's Tullow Oil rose 94%, rewarded by the market for its opportunistic acquisition of Energy Africa. Other foreign winners were driven by fine earnings gains: Dutch industrial company Aalberts Industries surged 91%, and Austrian brick producer Wienerberger delivered a solid 84% gain. Our largest foreign dollar winner, Anglo Irish Bank, a lender to small businesses, returned 56%. Columbia Acorn's foreign weighting remains at about 15%. /s/ Charles P. McQuaid /s/ Robert A. Mohn Charles P. McQuaid Robert A. Mohn LEAD PORTFOLIO MANAGER CO-PORTFOLIO MANAGER [Sidebar] PEOPLE'S BANK SHOWS ITS CARDS Columbia Acorn Fund co-manager Rob Mohn discovered People's Bank of Bridgeport back in 1994, finding an excellent credit card company inside what was then a troubled thrift. Rob noted that People's credit card operation had fast growth and low credit losses, and calculated that this undiscovered division accounted for nearly half of the value of the company. Since that time the credit card business had its ups and downs, while People's substantially improved its savings and loan business. In 2004 the company sold its credit card business at over a 15% premium to assets. Though additional upside is possible from cost cuts and remaining demutualization, we trimmed Columbia Acorn's position in the fourth quarter. The stock was up seven-fold from our initial purchase. [End Sidebar] SMALL-CAP STOCKS ARE OFTEN MORE VOLATILE AND LESS LIQUID THAN THE STOCKS OF LARGER COMPANIES. SMALL COMPANIES MAY HAVE A SHORTER HISTORY OF OPERATIONS THAN LARGER COMPANIES AND MAY HAVE A LESS DIVERSIFIED PRODUCT LINE, MAKING THEM MORE SUSCEPTIBLE TO MARKET PRESSURE. INVESTMENTS IN FOREIGN SECURITIES HAVE SPECIAL RISKS, INCLUDING POLITICAL OR ECONOMIC INSTABILITY, HIGHER COSTS, DIFFERENT REGULATIONS, ACCOUNTING STANDARDS, TRADING PRACTICES AND LEVELS OF INFORMATION, AND CURRENCY EXCHANGE RATE FLUCTUATIONS. AS OF 12/31/04, THE FUND'S POSITIONS IN THE HOLDINGS MENTIONED WERE: URBAN OUTFITTERS, 0.3%; PINNACLE ENTERTAINMENT, 0.3%; SHUFFLE MASTER, 0.2%; PEOPLE'S BANK OF BRIDGEPORT, 0.9%; COACH, 1.2%; QUICKSILVER RESOURCES, 0.2%; SOUTHWESTERN ENERGY, 0.2%; ULTRA PETROLEUM, 0.6%; XTO ENERGY, 1.8%; MINE SAFETY APPLIANCES, 0.3%; PENTAIR, 0.3%; ESCO TECHNOLOGIES, 0.6%; NOVELL, 0.6%; ATHEROGENICS, 0.2%; LEAPFROG ENTERPRISES, 0.0%; TULLOW OIL, 0.3%; ENERGY AFRICA, 0.0%; AALBERTS INDUSTRIES, 0.3%; WIENERBERGER, 0.3%; ANGLO IRISH BANK, 0.6%. 1-800-922-6769 10 Columbia Acorn Fund >At a Glance Ticker Symbol: ACRNX PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (CLASS Z) >through December 31, 2004 1 YEAR 5 YEARS 10 YEARS ------ ------- -------- Returns before taxes 21.51% 12.38% 16.71% Returns after taxes 20.81 11.35 14.69 on distributions Returns after taxes 14.73 10.33 13.88 on distributions and sale of fund shares S&P 500 (pretax) 10.88 -2.30 12.07 Russell 2500 (pretax) 18.29 8.35 13.75 Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Returns after taxes on distributions and sale of fund shares reflect the additional tax impact of long-term gains or losses realized when fund shares are sold. The returns are taxed at the maximum rate and assume shares were purchased at the beginning of the period. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for class Z shares only; after-tax returns for other share classes will vary. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. COLUMBIA ACORN FUND PORTFOLIO DIVERSIFICATION >as a % of net assets, as of December 31, 2004 [PIE CHART] Consumer Goods/Services 20.7% Industrial Goods/Services 14.6% Other* 8.8% Finance 13.2% Energy/Minerals 9.3% Health Care 8.6% Real Estate 2.2% Information 22.6% Software/Services 10.2% Computer Related Hardware 6.8% Telecommunications 3.2% Media 2.4% *Other includes cash and other assets less liabilities of 7.5%. Foreign equities within the portfolio were 15.0% diversified by country as follows: 9.0% Europe; 0.5% Asia without Japan; 2.1% Canada; 1.2% Japan; 0.5% Australia/New Zealand; 1.7% Emerging Markets. THE VALUE OF A $50,000 INVESTMENT IN COLUMBIA ACORN FUND (CLASS Z) >June 10, 1970 through December 31, 2004 This graph compares the results of $50,000 invested in Columbia Acorn Fund at inception on June 10, 1970 to the S&P 500 Stock Index, a broad, market-weighted average of U.S. blue-chip company stock performance. The index is unmanaged and returns for both the index and the Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. The graph and table do not reflect tax deductions that a shareholder would pay on Fund distributions or the sale of Fund shares. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE CHANGES OVER TIME. VISIT COLUMBIAFUNDS.COM FOR DAILY UPDATES. NAV ON 12/31/04: $26.45 TOTAL NET ASSETS OF THE FUND: $13,841.5 MILLION [MOUNTAIN CHART] AVERAGE ANNUAL TOTAL RETURN ------------------------------------------ 1 YEAR 5 YEARS 10 YEARS LIFE OF FUND 21.51% 12.38% 16.71% 16.45% COLUMBIA CITIGROUP ACORN EMI GLOBAL INTERNATIONAL EX-US ------------- ----------- 6/10/1970 $50000.00 $50000.00 6/30/1970 48474.80 49099.10 52586.20 52874.90 56115.40 55405.40 9/30/1970 60114.10 57405.90 59581.00 56929.00 60847.20 59810.60 12/31/1970 67933.40 63381.00 74766.90 66123.50 79188.60 66891.90 3/31/1971 85102.50 69528.40 91152.40 72231.10 86379.70 69409.10 6/30/1971 86986.60 69641.00 86447.10 66944.90 88200.40 69541.60 9/30/1971 87857.30 69230.30 82581.80 66520.90 78388.50 66534.20 12/31/1971 89142.40 72449.70 93262.50 73940.10 98243.90 75987.00 3/31/1972 100596.00 76616.30 103364.00 77133.00 104125.00 78656.60 6/30/1972 102810.00 77126.40 97607.30 77490.70 95649.50 80352.40 9/30/1972 94810.50 80147.10 94600.70 81094.30 98726.00 85002.60 12/31/1972 96838.20 86208.30 91350.60 84923.20 84417.40 81929.00 3/31/1973 82817.50 81995.20 75274.80 76868.00 68189.20 77576.80 6/30/1973 68189.20 77265.50 76073.00 80405.40 72775.40 77663.00 9/30/1973 84125.00 80981.70 87345.90 81114.20 74385.90 72118.40 12/31/1973 73849.10 73542.70 75553.00 73019.30 75940.50 72966.40 3/31/1974 75088.10 71469.30 69121.30 68905.70 64626.90 66825.60 6/30/1974 62534.70 66063.90 58591.10 61830.90 53107.90 55882.30 9/30/1974 48486.40 49443.60 60079.30 57757.00 57181.10 54935.10 12/31/1974 53421.30 54080.60 61857.50 60956.50 64477.90 64845.00 3/31/1975 65113.10 66494.40 68210.00 69879.40 74641.90 73211.40 6/30/1975 79723.90 76709.10 75530.50 71767.40 71120.50 70502.10 9/30/1975 68234.00 68302.90 70799.80 72767.60 71120.50 74821.10 12/31/1975 69757.40 74211.70 81428.30 83247.20 89854.70 82545.10 3/31/1976 94797.10 85327.20 94716.10 84664.80 97308.90 83724.20 6/30/1976 102494.00 87433.80 98981.30 87016.40 99308.00 86857.40 9/30/1976 103636.00 89096.40 99634.70 87440.40 106086.00 87082.70 12/31/1976 115233.00 91971.40 120456.00 87619.20 116177.00 86022.80 3/31/1977 119551.00 85121.90 122430.00 85473.00 124899.00 83797.00 6/30/1977 133044.00 87937.20 132208.00 86844.20 128890.00 85353.70 9/30/1977 128144.00 85486.20 123333.00 82154.20 133701.00 84750.90 12/31/1977 135857.00 85386.90 127644.00 80484.90 128903.00 78855.30 3/31/1978 133770.00 81173.80 144596.00 88493.60 150470.00 89308.40 6/30/1978 150470.00 88082.90 160750.00 93216.80 177461.00 96018.80 9/30/1978 173728.00 95714.10 142596.00 87367.50 154133.00 89242.20 12/31/1978 158883.00 90997.60 166785.00 95031.80 162919.00 91978.00 3/31/1979 181880.00 97462.90 182525.00 98085.60 185286.00 95945.90 6/30/1979 200658.00 100119.00 207526.00 101464.00 224262.00 107320.00 9/30/1979 226493.00 107777.00 210315.00 100874.00 228074.00 105670.00 12/31/1979 238952.00 107929.00 252391.00 114640.00 253012.00 114633.00 3/31/1980 211292.00 103484.00 222783.00 108274.00 236966.00 113845.00 6/30/1980 245558.00 117448.00 260633.00 125616.00 271164.00 126888.00 9/30/1980 283485.00 130624.00 289382.00 133267.00 308969.00 147463.00 12/31/1980 312971.00 143011.00 307026.00 137030.00 305624.00 139408.00 3/31/1981 325594.00 144985.00 327229.00 142183.00 333185.00 142548.00 6/30/1981 320923.00 141653.00 308440.00 141945.00 289668.00 133751.00 9/30/1981 270658.00 127160.00 288004.00 134022.00 294777.00 139554.00 12/31/1981 290024.00 135976.00 279277.00 134201.00 271986.00 126696.00 3/31/1982 267732.00 126033.00 276239.00 131730.00 271499.00 127239.00 6/30/1982 268461.00 125331.00 263728.00 123099.00 278566.00 138043.00 9/30/1982 282931.00 139766.00 312982.00 155849.00 337796.00 162149.00 12/31/1982 341038.00 165269.00 359996.00 171416.00 377453.00 175344.00 3/31/1983 387901.00 181823.00 402317.00 196145.00 425329.00 194442.00 6/30/1983 438886.00 202007.00 428018.00 196045.00 419431.00 198993.00 9/30/1983 426944.00 201736.00 411783.00 199404.00 426273.00 203610.00 12/31/1983 426944.00 202550.00 414180.00 201418.00 398069.00 194330.00 3/31/1984 401490.00 197695.00 401063.00 199569.00 386520.00 188527.00 6/30/1984 397085.00 192621.00 391319.00 190229.00 437874.00 211241.00 9/30/1984 438595.00 211288.00 439892.00 212103.00 437009.00 209731.00 12/31/1984 445225.00 215256.00 493972.00 232028.00 502261.00 234870.00 3/31/1985 498730.00 235023.00 499191.00 234804.00 528664.00 248370.00 6/30/1985 535535.00 252259.00 543124.00 251895.00 538323.00 249742.00 9/30/1985 515712.00 241932.00 538478.00 253107.00 573942.00 270462.00 12/31/1985 585712.00 283552.00 599240.00 285135.00 632604.00 306445.00 3/31/1986 663338.00 323543.00 674679.00 319899.00 695881.00 336917.00 6/30/1986 707143.00 342614.00 673911.00 323450.00 694908.00 347436.00 9/30/1986 660022.00 318714.00 674572.00 337089.00 682508.00 345482.00 12/31/1986 684215.00 336473.00 737822.00 381783.00 789319.00 396867.00 3/31/1987 801491.00 408320.00 775274.00 404690.00 794563.00 408201.00 6/30/1987 824712.00 428816.00 854899.00 450537.00 899388.00 467349.00 9/30/1987 902593.00 457101.00 675436.00 358658.00 665445.00 329134.00 12/31/1987 714613.00 354140.00 735112.00 369038.00 794406.00 386241.00 3/31/1988 796830.00 374304.00 818212.00 378445.00 806970.00 381717.00 6/30/1988 849732.00 399238.00 855720.00 397721.00 839281.00 384221.00 9/30/1988 867716.00 400590.00 874158.00 411745.00 861718.00 405876.00 12/31/1988 891851.00 412957.00 929625.00 443197.00 948511.00 432154.00 3/31/1989 961266.00 442236.00 1004680.00 465196.00 1040490.00 484016.00 6/30/1989 1021120.00 481273.00 1079720.00 524722.00 1107110.00 534983.00 9/30/1989 1132470.00 532810.00 1066790.00 520442.00 1087840.00 531055.00 12/31/1989 1113410.00 543806.00 1041290.00 507300.00 1054260.00 513831.00 3/31/1990 1086170.00 527451.00 1054780.00 514289.00 1130010.00 564434.00 6/30/1990 1148430.00 560625.00 1131900.00 558830.00 979516.00 508320.00 9/30/1990 875407.00 483578.00 854794.00 481518.00 888714.00 512646.00 12/31/1990 918371.00 526928.00 973073.00 549874.00 1052590.00 589196.00 3/31/1991 1095170.00 603464.00 1130410.00 604895.00 1183700.00 630988.00 6/30/1991 1132670.00 602080.00 1185010.00 630147.00 1229880.00 645072.00 9/30/1991 1231020.00 634281.00 1269930.00 642806.00 1233860.00 616905.00 12/31/1991 1353200.00 687460.00 1425790.00 674649.00 1477750.00 683419.00 3/31/1992 1467300.00 670091.00 1422880.00 689772.00 1428980.00 693150.00 6/30/1992 1394140.00 682837.00 1446560.00 710731.00 1423400.00 696191.00 9/30/1992 1448620.00 704385.00 1525140.00 706803.00 1614190.00 730869.00 12/31/1992 1681050.00 739640.00 1753390.00 746025.00 1748520.00 756194.00 3/31/1993 1843050.00 772145.00 1796850.00 753484.00 1944870.00 773642.00 6/30/1993 1967050.00 775908.00 1957060.00 772781.00 2086230.00 802107.00 9/30/1993 2147140.00 795966.00 2228860.00 812421.00 2144690.00 804677.00 12/31/1993 2224440.00 814408.00 2235610.00 842091.00 2208500.00 819237.00 3/31/1994 2101660.00 783519.00 2119200.00 793568.00 2095280.00 806591.00 6/30/1994 2023530.00 786818.00 2088900.00 812659.00 2185300.00 845972.00 9/30/1994 2157940.00 825285.00 2149890.00 843826.00 2066220.00 813096.00 12/31/1994 2058750.00 825159.00 2020070.00 846555.00 2085660.00 879551.00 3/31/1995 2115940.00 905505.00 2139490.00 932167.00 2205080.00 969422.00 6/30/1995 2294230.00 991938.00 2405710.00 1024830.00 2431220.00 1027410.00 9/30/1995 2480520.00 1070770.00 2376810.00 1066940.00 2444820.00 1113780.00 12/31/1995 2487030.00 1135230.00 2527270.00 1173870.00 2626020.00 1184760.00 3/31/1996 2677220.00 1196160.00 2819860.00 1213800.00 2920440.00 1245100.00 6/30/1996 2863750.00 1249850.00 2716050.00 1194630.00 2819940.00 1219830.00 9/30/1996 2923830.00 1288490.00 2908990.00 1324030.00 2990620.00 1424110.00 12/31/1996 3047850.00 1395890.00 3155250.00 1483090.00 3114720.00 1488760.00 3/31/1997 2972870.00 1433310.00 2989080.00 1518870.00 3226180.00 1611350.00 6/30/1997 3374110.00 1683540.00 3546960.00 1817490.00 3563400.00 1715670.00 9/30/1997 3836720.00 1809630.00 3723690.00 1749200.00 3723690.00 1830170.00 12/31/1997 3809260.00 1861600.00 3742000.00 1882190.00 4015530.00 2017950.00 3/31/1998 4266640.00 2121280.00 4329420.00 2142620.00 4165750.00 2105800.00 6/30/1998 4254890.00 2191330.00 4013830.00 2168000.00 3281560.00 1854550.00 9/30/1998 3424830.00 1973360.00 3597670.00 2133880.00 3745480.00 2263200.00 12/31/1998 4038430.00 2393620.00 4036030.00 2493710.00 3853880.00 2416210.00 3/31/1999 3894620.00 2512880.00 4213380.00 2610190.00 4280490.00 2548560.00 6/30/1999 4509220.00 2690000.00 4574710.00 2606000.00 4441300.00 2593110.00 9/30/1999 4417050.00 2522020.00 4550450.00 2681620.00 4873060.00 2736130.00 12/31/1999 5386280.00 2897280.00 5255470.00 2751710.00 5644980.00 2699620.00 3/31/2000 5409530.00 2963720.00 5223500.00 2874550.00 5113040.00 2815580.00 6/30/2000 5310520.00 2884990.00 5332110.00 2839890.00 5720690.00 3016280.00 9/30/2000 5816290.00 2857040.00 5668260.00 2844960.00 5370030.00 2620670.00 12/31/2000 5928040.00 2633500.00 6038270.00 2726930.00 5886710.00 2478280.00 3/31/2001 5621480.00 2321280.00 6117490.00 2501670.00 6375830.00 2518430.00 6/30/2001 6466180.00 2457140.00 6343650.00 2432950.00 6091580.00 2280640.00 9/30/2001 5265370.00 2096470.00 5489420.00 2136450.00 5913030.00 2300330.00 12/31/2001 6291780.00 2320480.00 6231960.00 2286620.00 6154540.00 2242520.00 3/31/2002 6604960.00 2326860.00 6590890.00 2185790.00 6393830.00 2169690.00 6/30/2002 6070090.00 2015120.00 5352240.00 1858050.00 5397980.00 1870250.00 9/30/2002 5077760.00 1666990.00 5292410.00 1813710.00 5633750.00 1920470.00 12/31/2002 5454280.00 1807640.00 5327600.00 1760290.00 5243150.00 1733880.00 3/31/2003 5310010.00 1750710.00 5770980.00 1894920.00 6182690.00 1994760.00 6/30/2003 6372710.00 2020210.00 6671820.00 2055820.00 7023710.00 2095920.00 9/30/2003 6942780.00 2073660.00 7509320.00 2190970.00 7752120.00 2210240.00 12/31/2003 7945920.00 2326170.00 8234730.00 2368860.00 8393230.00 2401780.00 3/31/2004 8520020.00 2365550.00 8217120.00 2328410.00 8365050.00 2360360.00 6/30/2004 8660600.00 2406260.00 8219810.00 2326620.00 8212760.00 2336030.00 9/30/2004 8586550.00 2361330.00 8801650.00 2397410.00 9355280.00 2494410.00 12/31/2004 9654977.00 2579293.00 COLUMBIA ACORN FUND TOP 10 HOLDINGS (AS A % OF NET ASSETS) 1. XTO ENERGY 1.8% Natural Gas Producer 2. INTERNATIONAL GAME TECHNOLOGY 1.7% Slot Machines & Progressive Jackpots 3. COACH 1.2% Designer & Retailer of Branded Leather Accessories 4. EXPEDITORS INTERNATIONAL OF WASHINGTON 1.1% International Freight Forwarder 5. AMERICREDIT 1.0% Auto Lending 6. PEOPLE'S BANK OF BRIDGEPORT 0.9% Connecticut Savings & Loan 7. CHICO'S FAS 0.8% Women's Specialty Retail 8. TCF FINANCIAL 0.8% Great Lakes Bank 9. ITT EDUCATIONAL SERVICES 0.8% Postsecondary Degree Programs 10. LINCARE HOLDINGS 0.8% Home Health Care Services The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. 11 Columbia Acorn International >In a Nutshell [Photo of P. Zachary Egan] [Photo of Louis J. Mendes III] Columbia Acorn International rose 29.47% in 2004, the Fund's fourth best year in absolute terms since inception. As shown on Page 4, the Fund finished slightly ahead of the Citigroup EMI Global ex-US benchmark Index and substantially outperformed the large-cap MSCI EAFE Index. During the fourth quarter, Columbia Acorn International's 16.73% gain matched the EMI benchmark and slightly outperformed the large-cap MSCI EAFE Index. A weak U.S. dollar, particularly against the euro, aided performance, contributing 6.8 percentage points of 2004's 29.47% return and 7.6 percentage points of the fourth quarter's 16.73% return. Columbia Acorn International did not do any currency hedging during the past year and does not anticipate doing so in the year ahead. As in past years, the Fund's biggest percentage winners in 2004 came from very different industries and regions of the world. Edgars Consolidated Stores, a South African retailer first purchased in 2004, returned 153% for the year and 83% in the fourth quarter alone, on strong earnings growth. Another new 2004 purchase, Natura Cosmeticos, a manufacturer and direct seller of Brazilian cosmetics, rallied 139% for the year and 44% in the fourth quarter. ComfortDelGro, a Singaporean transport company expanding into taxicab franchises in China, was the third best annual performer, returning 107%. Within Europe, Amplifon, an Italian manufacturer of hearing aids, surged 100%. Other winners included Aalberts Industries, discussed separately on this page, which rose over 90%, and Tullow Oil, an UK-based oil exploration company benefiting from the rise in energy prices. Technology-related stocks were among the leading detractors to portfolio performance during the year. ASE Test, a Taiwanese tester of semiconductor devices, was the Fund's largest percentage loser, declining 55% on weak earnings. Ngai Lik Industrial, a Hong Kong-based manufacturer of audio equipment, declined 37% as higher raw material costs squeezed margins. Another loser was Kappa Create, a Japanese sushi chain operator. Rising over 50% from January to June, the stock declined sharply in the second half when increased competition caused reduced sales, ending the year down 31%. International small caps have outperformed large caps for a fifth year in a row and valuations are now close to long-term average valuations relative to large caps, whereas two years ago they traded at a moderate discount. Fortunately, our international small-cap universe is comprised of more than 4,400 potential investment opportunities. With a dedicated team of nine international analysts, we feel we have the resources to sift through this universe and find attractive investments for our shareholders. /s/ P. Zachary Egan /s/ Louis J. Mendes III P. Zachary Egan Louis J. Mendes III CO-PORTFOLIO MANAGER CO-PORTFOLIO MANAGER [Sidebar] AALBERTS BENEFITS FROM EXPANSION -------------------------------------------------------------------------------- Aalberts Industries is a Netherlands-based, diversified industrial company that manufactures valves and fittings for water, energy and gas distribution and heat treats specialty metal components. Aalberts has taken advantage of an industrial slowdown in Western Europe to consolidate its markets, while developing world-class manufacturing facilities in Central and Eastern Europe, where its revenues have grown 30% annually. Given the continued high level of infrastructure investments in countries like Poland and the Czech Republic, we believe Aalberts will continue to outperform. The stock gained 91% in the year, not your typical Dutch treat. [End Sidebar] INVESTMENTS IN FOREIGN SECURITIES HAVE SPECIAL RISKS, INCLUDING POLITICAL OR ECONOMIC INSTABILITY, HIGHER COSTS, DIFFERENT REGULATIONS, ACCOUNTING STANDARDS, TRADING PRACTICES AND LEVELS OF INFORMATION, AND CURRENCY EXCHANGE RATE FLUCTUATIONS. SMALL-CAP STOCKS ARE OFTEN MORE VOLATILE AND LESS LIQUID THAN THE STOCKS OF LARGER COMPANIES. SMALL COMPANIES MAY HAVE A SHORTER HISTORY OF OPERATIONS THAN LARGER COMPANIES AND MAY HAVE A LESS DIVERSIFIED PRODUCT LINE, MAKING THEM MORE SUSCEPTIBLE TO MARKET PRESSURE. AS OF 12/31/04, THE FUND'S POSITIONS IN THE HOLDINGS MENTIONED WERE: EDGARS CONSOLIDATED STORES, 0.9%; NATURA COSMETICOS, 0.9%; COMFORTDELGRO, 0.7%; AMPLIFON, 0.7%; AALBERTS INDUSTRIES, 1.3%; TULLOW OIL,1.0%; ASE TEST, 0.4%; NGAI LIK INDUSTRIAL, 0.2%; KAPPA CREATE, 0.6%. 1-800-922-6769 12 Columbia Acorn International >At a Glance Ticker Symbol: ACINX PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (CLASS Z) >through December 31, 2004 1 YEAR 5 YEARS 10 YEARS ------ ------ -------- Returns before taxes 29.47% 0.26% 10.68% Returns after taxes 29.49 -0.60 9.78 on distributions Returns after taxes 19.57 -0.12 9.11 on distributions and sale of fund shares Citigroup EMI Global 29.27 6.84 6.71 ex-US (pretax) Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Returns after taxes on distributions and sale of fund shares reflect the additional tax impact of long-term gains or losses realized when fund shares are sold. The returns are taxed at the maximum rate and assume shares were purchased at the beginning of the period. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for class Z shares only; after-tax returns for other share classes will vary. The return after taxes on distributions may be higher than the return before taxes due to qualified foreign tax credits. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. COLUMBIA ACORN INTERNATIONAL PORTFOLIO DIVERSIFICATION >as a % of net assets, as of December 31, 2004 [PIE CHART] Consumer Goods/Services 23.0% Finance 13.8% Information 11.4% Other* 6.1% Energy/Minerals 8.1% Health Care 6.8% Transporation 2.6% Real Estate 1.0% Utilities 0.8% Industrial Goods/Services 26.4% *Cash and other assets less liabilities THE VALUE OF A $10,000 INVESTMENT IN COLUMBIA ACORN INTERNATIONAL (CLASS Z) >September 23, 1992 through December 31, 2004 This graph compares the results of $10,000 invested in Columbia Acorn International at inception on September 23, 1992 to the Citigroup EMI Global ex-US, Citigroup's Index of the bottom 20% of institutionally investable capital of developed and emerging countries, as selected by Citigroup, excluding the U.S. The index is unmanaged and returns for both the index and Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. The graph and table do not reflect tax deductions that a shareholder would pay on Fund distributions or the sale of Fund shares. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE CHANGES OVER TIME. VISIT COLUMBIAFUNDS.COM FOR DAILY UPDATES. NAV AS OF 12/31/04: $29.03 TOTAL NET ASSETS OF THE FUND: $2,075.0 MILLION [MOUNTAIN CHART] AVERAGE ANNUAL TOTAL RETURN ------------------------------------------- 1 YEAR 5 YEARS 10 YEARS LIFE OF FUND 29.47% 0.26% 10.68% 12.47% Columbia Acorn Citigroup EMI International Global ex-US -------------- ------------- 9/23/1992 $10000.00 $10000.00 9/30/1992 10010.00 10113.30 10380.00 9490.19 10570.00 9509.53 12/31/1992 10690.00 9646.31 10780.00 9731.97 11460.00 10078.80 3/31/1993 12000.00 11092.80 12450.00 12111.10 12910.00 12753.50 6/30/1993 12920.00 12264.40 12920.00 12641.60 13760.00 13293.70 9/30/1993 13910.00 13016.00 14560.00 12970.40 14620.00 11885.90 12/31/1993 15940.00 12649.90 16630.00 13915.50 16570.00 14012.20 3/31/1994 15850.00 13782.80 15960.00 14195.90 15870.00 13990.00 6/30/1994 15550.00 14283.00 15980.00 14451.50 16481.40 14615.90 9/30/1994 16491.50 14198.70 16521.70 14439.10 15606.00 13606.00 12/31/1994 15334.40 13688.90 14640.10 13132.10 14549.50 12906.90 3/31/1995 14811.10 13416.70 15263.90 13820.10 15505.40 13633.60 6/30/1995 15726.80 13478.90 16582.20 14236.00 16411.00 13886.40 9/30/1995 16823.80 13984.50 16300.30 13581.10 16068.70 13694.40 12/31/1995 16703.00 14223.50 17357.40 14546.80 17881.00 14726.40 3/31/1996 18203.20 15033.20 18787.10 15811.00 19340.90 15688.00 6/30/1996 19592.60 15692.20 18967.90 15074.60 19240.40 15226.60 9/30/1996 19361.50 15309.50 19553.30 15212.80 20088.40 15458.70 12/31/1996 20152.90 15201.70 20636.00 14980.70 20892.90 15284.60 3/31/1997 20584.60 15095.30 20286.50 14893.60 21170.30 15768.20 6/30/1997 21807.50 16173.00 21951.10 16016.90 20788.10 15313.60 9/30/1997 21660.30 15560.90 20487.00 14801.00 20268.90 14111.60 12/31/1997 20190.30 13816.00 20475.70 14249.80 22122.60 15327.40 3/31/1998 23857.20 16068.00 24351.30 16197.80 24768.50 16336.00 6/30/1998 24334.70 15759.90 24491.40 15660.40 21368.40 13601.80 9/30/1998 20428.20 13300.60 21111.00 14216.60 22308.70 14707.10 12/31/1998 23304.90 15019.30 23842.20 14914.30 23125.80 14635.30 3/31/1999 23573.50 15268.00 24983.90 16200.60 25140.60 15801.30 6/30/1999 27222.30 16416.10 28190.90 16946.70 29001.80 17243.70 9/30/1999 29486.10 17166.30 30758.80 17008.80 35365.30 17620.90 12/31/1999 41761.10 18820.10 41607.50 18462.30 48297.80 19172.40 3/31/2000 46808.40 19256.70 41359.20 17992.50 38286.00 17616.80 6/30/2000 40170.90 18686.10 39669.10 18067.20 40562.60 18585.20 9/30/2000 38494.10 17630.60 35630.00 16564.00 32730.10 15834.50 12/31/2000 33402.30 16452.10 34914.90 16758.80 32408.00 16108.00 3/31/2001 29284.80 14860.50 30419.20 15833.10 30223.20 15801.30 6/30/2001 28746.50 15265.30 27591.00 14817.60 27034.60 14777.60 9/30/2001 23353.90 12853.00 24466.60 13375.20 25850.50 13925.10 12/31/2001 26349.80 14039.80 25707.80 13785.60 25636.50 14016.30 3/31/2002 26977.50 14929.50 27862.00 15240.40 27747.90 15728.10 6/30/2002 26646.10 15103.60 23854.00 13822.90 23496.10 13740.00 9/30/2002 21405.60 12471.70 21491.50 12753.50 22150.20 13230.20 12/31/2002 22107.40 13072.70 21561.90 12853.00 20987.70 12623.60 3/31/2003 20686.20 12500.70 22566.80 13679.20 24433.00 14845.30 6/30/2003 25133.50 15399.30 25681.50 15947.80 26835.00 16710.40 9/30/2003 27844.40 17474.40 29978.50 18745.50 30800.50 19086.80 12/31/2003 32675.00 20265.30 33641.10 20993.40 34910.10 21717.30 3/31/2004 34924.50 22249.20 34174.70 21501.80 34290.00 21504.60 6/30/2004 35543.50 22195.40 34625.40 21412.00 34785.70 21642.70 9/30/2004 36243.00 22449.60 37554.50 23137.60 40410.80 24958.50 12/31/2004 42305.30 26197.80 COLUMBIA ACORN INTERNATIONAL TOP 10 HOLDINGS (AS A % OF NET ASSETS) 1. Anglo Irish Bank (Ireland) 2.7% Small Business & Middle Market Banking 2. Rhoen-Klinikum (Germany) 1.8% Hospital Management 3. Neopost (France) 1.4% Postage Meter Machines 4. Grafton Group (Ireland) 1.4% Builders, Wholesalers & DIY Retailing 5. Billabong International (Australia) 1.3% Surfwear Apparel Manufacturer 6. Kerry (Ireland) 1.3% Food Ingredients 7. Aalberts Industries (Netherlands) 1.3% Flow Control & Heat Treatment 8. SES Global (Luxembourg) 1.2% Satellite Broadcasting Services 9. Housing Development Finance (India) 1.2% Premier Mortgage Lender in India 10. Exel (United Kingdom) 1.2% Global Logistics & Freight Forwarding The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. 13 Columbia Acorn USA >In a Nutshell [Photo of Robert A. Mohn] Columbia Acorn USA ended the fourth quarter up 14.26%. For the year, the Fund returned 20.62%. Fund performance topped the benchmark Russell 2000 for both time periods. See Page 4 for more performance information. There was a great deal of pessimism about the market and the political environment going into the quarter and many investors were hanging out on the sidelines. After the elections, the money came back into the markets, fueling a fierce fourth quarter rally. Some of our biggest winners for the quarter were health care stocks. Lincare Holdings, a provider of home health care services, increased 44% in the quarter on news of a higher than expected government dispensing fee for respiratory medication. For the year, Lincare had a 42% gain. Edwards Lifesciences' heart valves were big sellers, pumping the stock up 23% in the fourth quarter and 37% for the year. Technology stocks also had a strong quarter. Micros Systems, a developer of reservation systems used in hotels and restaurants, gained 56% in the quarter and was up 80% for the year. On the telecom side, Western Wireless ended the year up 59%, gaining 13% in the quarter (and even more so far in 2005 on news that Alltel will be buying the company). While slightly cooler in the fourth quarter, energy stocks were strong 2004 performers. Quicksilver Resources, a natural gas producer, was up an impressive 128% for the year and 13% for the quarter. Chicago Bridge & Iron, discussed separately on this page, was added to the Fund in '04 and immediately went to work. For the year the stock was up 55%, gaining 33% in the fourth quarter. The laggards for the year included southeast supermarket chain Winn Dixie Stores, down 58%. The Fund no longer holds the stock. Novell, a developer of open source software, failed to meet earnings targets and declined 36% for the year. Last quarter we mentioned drug company AtheroGenics' strong performance. The stock gave back some of its third quarter gain, falling 29% in the fourth quarter (but up nearly 3% for the year) as questions were raised about missing disclosure in trial results it released in September. Generally speaking, we think companies are operating in a healthy economy that should provide growth going forward. We will continue to search for what we believe are winning small-cap stocks selling at good prices. /s/ Robert A. Mohn Robert A. Mohn Lead Portfolio Manager [Sidebar] WHAT'S IN A NAME -------------------------------------------------------------------------------- Chicago Bridge & Iron is not based in Chicago and does not make bridges. The company is a leading designer and manufacturer of tanks used to convert liquified natural gas (LNG) into the pipeline gas used to heat our homes and generate electricity. The last LNG terminal built in the United States was constructed more than 15 years ago so Chicago Bridge & Iron's conversion expertise has not been considered particularly valuable. As a result of the natural gas shortage that has developed in recent years, however, more than 20 new LNG terminals have been proposed. Chicago Bridge & Iron's specialized skills are now attracting attention. The stock rose 55% in Columbia Acorn USA in 2004. [End Sidebar] SMALL-CAP STOCKS ARE OFTEN MORE VOLATILE AND LESS LIQUID THAN THE STOCKS OF LARGER COMPANIES. SMALL COMPANIES MAY HAVE A SHORTER HISTORY OF OPERATIONS THAN LARGER COMPANIES AND MAY HAVE A LESS DIVERSIFIED PRODUCT LINE, MAKING THEM MORE SUSCEPTIBLE TO MARKET PRESSURE. AS OF 12/31/04, THE FUND'S POSITIONS IN THE HOLDINGS MENTIONED WERE: LINCARE HOLDINGS, 1.2%; EDWARDS LIFESCIENCES, 2.7%; MICROS SYSTEMS, 2.6%; WESTERN WIRELESS, 2.5%; ALLTEL, 0.0%; QUICKSILVER RESOURCES, 2.6%; CHICAGO BRIDGE & Iron, 1.5%; WINN DIXIE STORES, 0.0%; NOVELL, 1.0%; ATHEROGENICS, 0.7%. 1-800-922-6769 14 Columbia Acorn USA >At a Glance Ticker Symbol: AUSAX PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (CLASS Z) >through December 31, 2004 LIFE OF 1 YEAR 5 YEARS FUND ------ ------ --------- Returns before taxes 20.62% 9.44% 14.77% Returns after taxes 20.52 9.23 14.05 on distributions Returns after taxes 13.53 8.10 12.83 on distributions and sale of fund shares Russell 2000 (pretax) 18.33 6.61 9.81 Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Returns after taxes on distributions and sale of fund shares reflect the additional tax impact of long-term gains or losses realized when fund shares are sold. The returns are taxed at the maximum rate and assume shares were purchased at the beginning of the period. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for class Z shares only; after-tax returns for other share classes will vary. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. COLUMBIA ACORN USA PORTFOLIO DIVERSIFICATION >as a % of net assets, as of December 31, 2004 [PIE CHART] Consumer Goods/Services 17.4% Health Care 14.0% Other* 8.9% Energy/Minerals 11.7% Finance 10.0% Industrial Goods/Services 9.2% Information 28.8% Software/Services 13.2% Telecommunications 7.6% Computer Related Hardware 5.4% Media 2.6% *Other includes cash and other assets less liabilities of 8.4%. THE VALUE OF A $50,000 INVESTMENT IN COLUMBIA ACORN USA (CLASS Z) >September 4, 1996 through December 31, 2004 This graph compares the results of $50,000 invested in Columbia Acorn USA at inception on September 4, 1996 to the Russell 2000 Index, a market-weighted index of 2,000 smaller U.S. companies formed by taking the largest 3,000 U.S. companies and eliminating the largest 1,000. The index is unmanaged and returns for both the index and the Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. The graph and table do not reflect tax deductions that a shareholder would pay on Fund distributions or the sale of Fund shares. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE CHANGES OVER TIME. VISIT COLUMBIAFUNDS.COM FOR DAILY UPDATES. NAV AS OF 12/31/04: $25.20 TOTAL NET ASSETS OF THE FUND: $870.7 MILLION [MOUNTAIN CHART] AVERAGE ANNUAL TOTAL RETURN ---------------------------------- 1 YEAR 5 YEARS LIFE OF FUND 20.62% 9.44% 14.77% Columbia Acorn USA Russell 2000 ---------- ------------ 9/4/1996 $50000.00 $50000.00 9/30/1996 53600.00 52040.30 54050.00 51238.30 56300.00 53349.30 12/31/1996 58250.00 54747.60 61050.00 55841.80 59600.00 54487.80 3/31/1997 57400.00 51916.70 57100.00 52061.40 62550.00 57853.20 6/30/1997 66600.00 60332.70 70000.00 63140.00 71750.00 64584.80 9/30/1997 76700.00 69312.00 75700.00 66267.10 75850.00 65838.40 12/31/1997 77065.50 66990.90 75383.50 65933.60 81601.80 70809.10 3/31/1998 87004.50 73729.50 89960.70 74137.20 86138.00 70144.40 6/30/1998 87625.20 70291.90 82959.40 64601.40 69679.80 52057.30 9/30/1998 70756.50 56131.20 73268.90 58420.60 77011.80 61481.20 12/31/1998 81525.30 65285.60 78881.20 66153.20 74474.40 60795.10 3/31/1999 75080.40 61744.20 80478.70 67277.10 83673.60 68259.90 6/30/1999 88251.10 71346.50 90239.20 69389.00 84109.20 66820.70 9/30/1999 84330.10 66835.30 89300.40 67106.10 94049.90 71113.00 12/31/1999 100295.00 79163.00 95265.40 77891.70 99337.10 90754.30 3/31/2000 99097.60 84770.90 87840.60 79669.80 82631.20 75026.50 6/30/2000 84170.10 81566.70 83741.30 78942.40 88825.80 84965.80 9/30/2000 88213.20 82468.60 88274.40 78787.20 83128.70 70699.60 12/31/2000 91276.10 76771.40 97034.50 80768.40 96850.70 75468.90 3/31/2001 94522.90 71777.20 105978.00 77392.30 111920.00 79294.60 6/30/2001 115045.00 82032.60 116270.00 77592.20 113084.00 75086.10 9/30/2001 96728.20 64978.60 96973.20 68781.20 102732.00 74106.00 12/31/2001 108851.00 78680.10 110156.00 77861.70 106428.00 75727.80 3/31/2002 115499.00 81814.20 117239.00 82559.80 110653.00 78895.60 6/30/2002 104005.00 74981.00 89839.40 63656.60 88534.70 63494.50 9/30/2002 81949.00 58934.70 85863.10 60824.30 93318.70 66252.40 12/31/2002 88721.10 62563.60 87416.40 60832.00 86235.90 58993.90 3/31/2003 86422.30 59753.60 94871.90 65419.20 104813.00 72439.60 6/30/2003 106490.00 73750.50 111523.00 78365.10 117674.00 81958.00 9/30/2003 114940.00 80445.20 126744.00 87200.70 129540.00 90295.30 12/31/2003 130534.00 92127.20 137306.00 96129.80 137928.00 96991.50 3/31/2004 136996.00 97895.40 133641.00 92904.30 138984.00 94383.00 6/30/2004 143395.00 98357.80 134635.00 91735.00 132709.00 91263.50 9/30/2004 137804.00 95548.00 141718.00 97428.80 151969.00 105880.00 12/31/2004 157449.00 109014.00 COLUMBIA ACORN USA TOP 10 HOLDINGS (AS A % OF NET ASSETS) 1. AmeriCredit 3.1% Auto Lending 2. Edwards Lifesciences 2.7% Heart Valves 3. Micros Systems 2.6% Information Systems for Restaurants & Hotels 4. Quicksilver Resources 2.6% Natural Gas & Coal Seam Gas Producer 5. Western Wireless 2.5% Rural Cellular Phone Services 6. Esco Technologies 2.5% Automatic Electric Meter Readers 7. ITT Educational Services 2.2% Postsecondary Degree Programs 8. Crown Castle International 1.9% Communication Towers 9. Commonwealth Telephone 1.9% Rural Phone Franchises & CLEC 10. Kronos 1.7% Labor Management Solutions The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. 15 COLUMBIA ACORN INTERNATIONAL SELECT >IN A NUTSHELL [Photo of Todd M. Narter] [Photo of Christopher J. Olson] International markets continued to surge in the fourth quarter. Columbia Acorn International Select increased 13.26% for the three months, underperforming the 16.46% increase in the benchmark Citigroup World ex-US Cap Range $2-10B Index. The relative underperformance was due in large part to holding some cash in a strong market. We opted to take profits in a number of positions in the Fund during the fourth quarter to look for better values elsewhere. We believe that the Fund is well positioned for future growth. The Fund finished 2004 up 24.14%, a solid return but behind the 25.22% return for the Citigroup World ex-US Cap Range $2-10B Index. Letting our winners run was a successful strategy this past year. For the third year in a row, Anglo Irish Bank was the Fund's largest contributor to performance. The stock finished the year up 56% and is the Fund's largest position. Other significant winners include large holdings with great franchises. Neopost, a maker of franking machines in France, the Fund's second largest position, had another strong year, up 58%. Tenaris, a maker of steel pipes for the oil and gas industry jumped 49%. Lion Nathan, the major beer brewer and distributor in Australia and New Zealand, rose 54% and Daito Trust Construction (discussed separately on this page), a major apartment builder and manager in Japan, finished the year up 62%. Several stocks in the portfolio reduced the Fund's gains. Topping the list of poor performers in the Fund this year was Sugi Pharmacy, a drugstore chain in Japan. Shares were down 13% as the company reported higher costs than expected during its expansion program. Funai Electric, a maker of consumer electronic products in Japan, was down 11% as the retail environment in the United States was weaker than expected. Other weak performers included Venture, an electronic manufacturing services company in Singapore, down 15% and Compass Group, a catering services provider in the UK, which fell 29% on an earnings downgrade driven by a weak dollar and issues with a supplier. Share prices have risen strongly in the past two years. While stocks are not as cheap as they once were, we continue to find well-run companies with good strategies and strong balance sheets that we believe will be good investments. /s/ Todd M. Narter /s/ Christopher J. Olson Todd M. Narter Christopher J. Olson CO-PORTFOLIO MANAGER CO-PORTFOLIO MANAGER [Sidebar] A DAITO YOU CAN TRUST -------------------------------------------------------------------------------- Daito Trust Construction builds and manages residential property in Japan. The company's unique business model encompasses construction of lease apartments for landowners, as well as tenant recruitment and property management. The real estate market during the past year has improved in metropolitan areas, with prices firming and vacancy rates improving. While the average Japanese consumer remains frugal, demand for rental housing has strengthened and contributed to a recovery in residential property. This shift has been a boon to Daito, not only from construction, but from leasing and management of rental units as well. The stock achieved stellar performance, appreciating 62% during the past 12-month period. [End Sidebar] MID-CAP STOCKS TEND TO BE MORE VOLATILE AND MAY BE LESS LIQUID THAN THE STOCKS OF LARGER COMPANIES. INVESTMENTS IN FOREIGN SECURITIES HAVE SPECIAL RISKS, INCLUDING POLITICAL OR ECONOMIC INSTABILITY, HIGHER COSTS, DIFFERENT REGULATIONS, ACCOUNTING STANDARDS, TRADING PRACTICES AND LEVELS OF INFORMATION, AND CURRENCY EXCHANGE RATE FLUCTUATIONS. AS OF 12/31/04, THE FUND'S POSITIONS IN THE HOLDINGS MENTIONED WERE: ANGLO IRISH BANK, 5.8%; NEOPOST, 4.1%; TENARIS, 2.4%; LION NATHAN, 3.4%; DAITO TRUST CONSTRUCTION, 3.1%; SUGI PHARMACY, 1.9%; FUNAI ELECTRIC, 2.1%; VENTURE, 0.8%; COMPASS GROUP, 1.8%. 1-800-922-6769 16 COLUMBIA ACORN INTERNATIONAL SELECT >AT A GLANCE TICKER SYMBOL: ACFFX PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (CLASS Z) >through December 31, 2004 LIFE OF 1 YEAR 5 YEARS FUND ------ ------- ------- Returns before taxes 24.14% -1.63% 10.50% Returns after taxes 24.23 -1.68 10.44 on distributions Returns after taxes 15.95 -1.38 9.21 on distributions and sale of fund shares Citigroup World 25.22 6.21 9.35 ex-US Cap Range $2-10B (pretax) Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Returns after taxes on distributions and sale of fund shares reflect the additional tax impact of long-term gains or losses realized when fund shares are sold. The returns are taxed at the maximum rate and assume shares were purchased at the beginning of the period. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for class Z shares only; after-tax returns for other share classes will vary. The return after taxes on distributions may be higher than the return before taxes due to qualified foreign tax credits. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. COLUMBIA ACORN INTERNATIONAL SELECT PORTFOLIO DIVERSIFICATION >as a % of net assets, as of December 31, 2004 [PIE CHART] Consumer Goods/Services 19.4% Finance 17.4% Other* 11.7% Information 12.3% Energy/Minerals 6.6% Health Care 5.0% Transportation 1.0% Industrial Goods/Services 26.6% * Other includes cash and other assets less liabilities of 10.1%. THE VALUE OF A $10,000 INVESTMENT IN COLUMBIA ACORN INTERNATIONAL SELECT (CLASS Z) >November 23, 1998 through December 31, 2004 This graph compares the results of $10,000 invested in Columbia Acorn International Select at inception on November 23, 1998 to the Citigroup World ex-US Cap Range $2-10B Index, a subset of Citigroup's Broad Market Index, representing a mid-cap developed market index excluding the U.S. The index and Fund returns include reinvested dividends and capital gains. It is not possible to invest directly in an index. The graph and table do not reflect tax deductions that a shareholder would pay on Fund distributions or the sale of Fund shares. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE CHANGES OVER TIME. VISIT COLUMBIAFUNDS.COM FOR DAILY UPDATES. NAV ON 12/31/04: $18.02 TOTAL NET ASSETS OF THE FUND: $58.3 MILLION [MOUNTAIN CHART] AVERAGE ANNUAL TOTAL RETURN ------------------------------------ 1 YEAR 5 YEARS LIFE OF FUND 24.14% -1.63% 10.50% CITIGROUP WORLD COLUMBIA ACORN EX-US CAP INTERNATIONAL SELECT RANGE $2-10B -------------------- ------------ 11/23/1998 10000.00 10000.00 11/30/1998 10140.00 10045.10 12/31/1998 11000.00 10338.80 11790.00 10309.80 11590.00 10051.80 3/31/1999 11980.00 10449.20 12240.00 11032.40 12170.00 10566.60 6/30/1999 13109.80 10952.70 13510.80 11362.00 13771.40 11489.60 9/30/1999 13621.00 11529.70 14132.20 11535.10 16998.70 11864.40 12/31/1999 19975.50 12771.70 19664.80 12154.30 24245.20 12310.70 3/31/2000 23092.60 12679.70 21258.40 12171.70 18923.10 11975.80 6/30/2000 19852.50 12610.80 19469.00 12203.10 20266.30 12586.30 9/30/2000 19236.90 12168.00 18479.90 11791.00 16128.30 11439.80 12/31/2000 17309.20 11998.20 17874.30 11938.60 15825.50 11505.00 3/31/2001 13706.00 10607.50 14412.50 11390.60 14382.20 11293.20 6/30/2001 13763.20 10999.40 13062.40 10723.40 12778.00 10626.20 9/30/2001 10624.60 9391.94 11305.10 9769.16 11924.70 10118.30 12/31/2001 12280.20 10140.10 11650.50 9840.78 11508.30 9990.63 3/31/2002 11914.60 10562.20 12290.40 10755.60 12432.60 11097.30 6/30/2002 12046.60 10712.10 10746.50 9752.72 10949.60 9729.61 9/30/2002 10147.20 8859.06 10126.90 9017.25 10380.80 9476.41 12/31/2002 10451.90 9209.34 9944.05 8978.22 9527.60 8810.27 3/31/2003 9629.18 8659.79 10533.20 9425.05 11447.30 10100.90 6/30/2003 11526.70 10389.10 11709.60 10806.10 12217.90 11429.10 9/30/2003 12675.30 11900.10 13620.60 12818.90 13905.20 12926.80 12/31/2003 14820.00 13781.40 15094.50 14071.10 15745.00 14409.50 3/31/2004 15846.60 14969.90 15531.50 14460.40 15551.90 14420.30 6/30/2004 15958.10 14786.00 15590.60 14225.70 15590.60 14356.60 9/30/2004 16244.00 14817.80 16723.90 15317.00 17775.50 16527.60 12/31/2004 18398.30 17257.40 COLUMBIA ACORN INTERNATIONAL SELECT TOP 10 HOLDINGS (AS A % OF NET ASSETS) 1. Anglo Irish Bank (Ireland) 5.8% Small Business & Middle Market Banking 2. Neopost (France) 4.1% Postage Meter Machines 3. Komercni Banka (Czech Republic) 3.7% Leading Czech Universal Bank 4. Exel (United Kingdom) 3.7% Global Logistics & Freight Forwarding 5. Lion Nathan (Australia) 3.4% Beer Brewer/Distributor 6. Depfa Bank (Ireland) 3.3% International Public Sector Finance 7. Daito Trust Construction (Japan) 3.1% Apartment Builder 8. Hoya (Japan) 2.9% Opto-electrical Components & Eyeglass Lenses 9. Shimano (Japan) 2.9% Bicycle Components & Fishing Tackle 10. SES Global (Luxembourg) 2.7% Satellite Broadcasting Services The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. 17 COLUMBIA ACORN SELECT >IN A NUTSHELL [Photo of Ben Andrews] It was a good quarter and year for Columbia Acorn Select. The Fund gained 13.82% during the fourth quarter, outperforming the S&P MidCap 400's 12.16% return and the S&P 500's 9.23% gain. For the year, Columbia Acorn Select was up 18.58% vs. a 16.48% gain for the S&P MidCap 400 and a 10.88% return for the S&P 500. McAfee, ITT Educational Services and Abercrombie & Fitch all did well for the Fund in the quarter and in the year. McAfee was up 83% for the 12 months while ITT Educational Services increased 66%. Together these two stocks made up a third of the Fund's return for the year. Abercrombie & Fitch, up an impressive 90% in the year, was another big contributor to Fund performance. On the downside, Skillsoft Publishing cost the Fund one half of a percent of performance in the quarter as the stock slid due to continued pricing pressure from its largest competitor, Netg. For the year, the largest detractors to performance were Synopsys, down 42%, and Interpublic Group, down 32%. We are evaluating whether or not Synopsys has turn around potential. Interpublic Group was sold in the quarter. During the fourth quarter, Oracle purchased one of the Fund's holdings, PeopleSoft, after a lengthy and much publicized takeover battle. During the 17-month negotiation process for PeopleSoft, its board of directors received a lot of bad press for not having the shareholders' best interests in mind. Our Firm's due diligence refuted this and we backed the board. In the end, the board's moves did put its customer and shareholder interests first when trying to negotiate with a very adversarial suitor. We received the cash proceeds from the PeopleSoft transaction two days before the end of the quarter, which increased the Fund's cash at quarter end to an unusually high level. We feel comfortable operating Columbia Acorn Select with a cash position of between 4% and 10%. We added six new names to the portfolio during the quarter while deleting one (PeopleSoft). New ideas include an investment in the cable industry with UnitedGlobalCom and Liberty Media International. Both stocks focus on serving foreign markets. The Fund also purchased IAC/InterActiveCorp, one of the five big Internet companies in the industry, as its stock price reached a two-year low. FMC Technologies was added as we believe offshore deep-water oil drilling will increase over the next several years. The Fund also purchased Aspect Communications and AnswerThink. /s/ Ben Andrews Ben Andrews LEAD PORTFOLIO MANAGER [Sidebar] TCF FINANCIAL'S INNOVATIVE APPROACH -------------------------------------------------------------------------------- TCF Financial was one of Columbia Acorn Select's big winners, rising 29% in 2004. TCF does banking a little bit different than other banks. More retailer than banker, TCF stresses convenience banking, with branches open seven days a week, coin-counting machines available in every branch, and a large presence in local supermarket chains. Most other banks are obsessed with keeping their expenses down. TCF focuses instead on wisely spending money to grow its highly profitable, low-cost deposit base. Proving the adage that "you must spend money to make money," TCF's 26% return on equity ranked #2 out of the other 50 largest banks in the country.* [End Sidebar] COLUMBIA ACORN SELECT IS A NON-DIVERSIFIED FUND. THE PERFORMANCE OF EACH OF ITS HOLDINGS WILL HAVE A GREATER IMPACT ON THE FUND'S TOTAL RETURN, AND MAY MAKE THE FUND'S RETURNS MORE VOLATILE THAN A MORE DIVERSIFIED FUND. MID-CAP STOCKS TEND TO BE MORE VOLATILE AND MAY BE LESS LIQUID THAN THE STOCKS OF LARGER COMPANIES. AS OF 12/31/04, THE FUND'S POSITIONS IN THE HOLDINGS MENTIONED WERE: MCAFEE, 7.2%; ITT EDUCATIONAL SERVICES, 5.3%; ABERCROMBIE & FITCH, 3.6%; SKILLSOFT PUBLISHING, 3.9%; NETG, 0.0%; SYNOPSYS, 1.3%; INTERPUBLIC GROUP, 0.0%; ORACLE, 0.0%; PEOPLESOFT, 0.0%; UNITEDGLOBALCOM, 0.8%; LIBERTY MEDIA INTERNATIONAL, 0.9%; IAC/INTERACTIVECORP, 1.6%; FMC TECHNOLOGIES, 1.0%; ASPECT COMMUNICATIONS, 0.1%; ANSWERTHINK, 0.2%; TCF FINANCIAL, 5.0%. * SOURCE: CITIGATE FINANCIAL INTELLIGENCE. RANKING BASED ON THE 50 LARGEST BANK HOLDING COMPANIES IN THE U.S. BASED ON ASSET SIZE AT 9/30/04. 1-800-922-6769 18 COLUMBIA ACORN SELECT >AT A GLANCE TICKER SYMBOL: ACTWX PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (CLASS Z) >through December 31, 2004 LIFE OF 1 YEAR 5 YEARS FUND ------ ------- ------- Returns before taxes 18.58% 11.48% 15.29% Returns after taxes 18.20 10.94 14.76 on distributions Returns after taxes on 12.55 9.77 13.28 distributions and sale of fund shares S&P MidCap 400 16.48 9.54 12.11 (pretax) Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Returns after taxes on distributions and sale of fund shares reflect the additional tax impact of long-term gains or losses realized when fund shares are sold. The returns are taxed at the maximum rate and assume shares were purchased at the beginning of the period. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for class Z shares only; after-tax returns for other share classes will vary. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. COLUMBIA ACORN SELECT PORTFOLIO DIVERSIFICATION >as a % of net assets, as of December 31, 2004 [PIE CHART] Consumer Goods/Services 30.4% Finance 14.6% Health Care 7.3% Industrial Goods/Services 2.7% Energy/Minerals 1.0% Other* 13.4% Information 30.6% * Cash and other assets less liabilities. THE VALUE OF A $10,000 INVESTMENT IN COLUMBIA ACORN SELECT (CLASS Z) >November 23, 1998 through December 31, 2004 This graph compares the results of $10,000 invested in Columbia Acorn Select at inception on November 23, 1998 to the S&P MidCap 400, a broad, market-weighted index of 400 stocks that are in the next size/tier down from the S&P 500. The Index is unmanaged and returns for both the index and the Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. The graph and table do not reflect tax deductions that a shareholder would pay on Fund distributions or the sale of Fund shares. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE CHANGES OVER TIME. VISIT COLUMBIAFUNDS.COM FOR DAILY UPDATES. NAV ON 12/31/04: $21.13 TOTAL NET ASSETS OF THE FUND: $1,257.1 MILLION [MOUNTAIN CHART] AVERAGE ANNUAL TOTAL RETURN ------------------------------------ 1 YEAR 5 YEARS LIFE OF FUND 18.58% 11.48% 15.29% COLUMBIA S&P ACORN SELECT MIDCAP 400 ------------ ---------- 11/23/1998 $10000.00 $10000.00 11/30/1998 10030.00 9911.29 12/31/1998 10710.00 11108.90 11000.00 10676.20 10710.00 10117.20 3/31/1999 11480.00 10399.90 12710.00 11220.20 12730.00 11268.80 6/30/1999 13040.00 11872.20 13190.00 11619.90 12060.00 11221.70 9/30/1999 12110.00 10875.10 12970.00 11429.30 13250.00 12029.10 12/31/1999 13848.00 12744.10 13474.00 12385.10 13554.90 13252.00 3/31/2000 14171.50 14361.10 13463.90 13859.60 13100.00 13686.70 6/30/2000 14319.80 13887.70 13931.30 14107.10 15431.30 15682.20 9/30/2000 15798.20 15574.80 15927.70 15046.70 14381.60 13910.90 12/31/2000 15465.20 14975.10 15913.90 15308.60 14983.60 14435.00 3/31/2001 14403.50 13361.80 15454.20 14835.80 16297.00 15181.30 6/30/2001 16023.40 15120.00 15870.10 14894.80 15125.90 14407.60 9/30/2001 14206.50 12615.50 14513.00 13173.50 16023.40 14153.50 12/31/2001 16702.50 14884.70 16373.50 14807.30 16022.60 14825.60 3/31/2002 16581.90 15885.40 15682.60 15811.10 16143.20 15544.40 6/30/2002 15869.00 14406.70 14860.10 13011.20 15222.00 13076.60 9/30/2002 14520.10 12023.10 15320.70 12544.10 16088.40 13269.80 12/31/2002 15397.50 12724.50 15331.70 12352.60 15375.50 12058.50 3/31/2003 15682.60 12160.10 16581.90 13043.00 17481.20 14123.90 6/30/2003 17941.80 14303.90 18808.20 14811.50 19586.80 15483.40 9/30/2003 19159.10 15246.30 19861.00 16399.10 19718.40 16970.50 12/31/2003 20110.90 17256.80 20663.40 17630.80 21204.90 18054.20 3/31/2004 21193.80 18130.80 20586.10 17535.70 20917.60 17899.50 6/30/2004 21602.70 18306.80 20663.40 17452.60 20497.70 17406.90 9/30/2004 20950.70 17922.40 21768.40 18209.20 23105.50 19293.60 12/31/2004 23846.50 20101.40 COLUMBIA ACORN SELECT TOP 10 HOLDINGS (AS A % OF NET ASSETS) 1. McAfee 7.2% Security Software & Services 2. ITT Educational Services 5.3% Postsecondary Degree Programs 3. TCF Financial 5.0% Great Lakes Bank 4. Harley-Davidson 4.8% Motorcycles & Related Merchandise 5. First Health Group 4.2% Ppo Network 6. Safeway 4.0% Retail Food & Drug Stores 7. Skillsoft Publishing 3.9% Provider of Web-based Learning Solutions (E-learning) 8. Abercrombie & Fitch 3.6% Teen Apparel Retailer 9. Tellabs 3.5% Telecommunications Equipment 10. Markel 3.5% Specialty Insurance The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. 19 COLUMBIA THERMOSTAT FUND >IN A NUTSHELL Columbia Thermostat Fund ended the quarter up 5.83% and the year up 9.17%. Fund returns were between the S&P 500 and the Lehman Brothers U.S. Credit Intermediate Bond Index, which is the expected result for Columbia Thermostat. See Page 4 for additional data. The strong equity market in the fourth quarter allowed the Lipper Flexible Portfolio Funds Index to beat the Fund's performance for the quarter and the year. The weighted average return for the equity portion of the Thermostat portfolio was 12.05% for the year. The standout equity fund in the group was Columbia Acorn Fund, up 21.51% for the annual period. Columbia Growth Stock Fund was the annual laggard, down 2.17%. The weighted average annual return for the bond portion of the Fund was 5.16% with portfolio bond fund returns ranging from 7.42% to 4.11%. Thermostat hit three reallocation triggers in the fourth quarter. Stock exposure was increased in October while bond exposure was increased in both November and December as the equity market rallied following the U.S. election. Assets in Columbia Thermostat Fund at year-end were $207 million. Thank you for your investment in the Fund. As we move into 2005, we continue to believe that Thermostat will provide a satisfactory, low-risk result for a portion of your invested dollars. /s/ Ralph Wanger /s/ Charles P. McQuaid Ralph Wanger Charles P. McQuaid CO-PORTFOLIO MANAGER CO-PORTFOLIO MANAGER THE VALUE OF AN INVESTMENT IN THE FUND IS BASED PRIMARILY ON THE PERFORMANCE OF THE UNDERLYING PORTFOLIO FUNDS AND THE ALLOCATION OF THE FUND'S ASSETS AMONG THEM. AN INVESTMENT IN THE UNDERLYING FUNDS MAY PRESENT CERTAIN RISKS, INCLUDING STOCK MARKET FLUCTUATIONS THAT OCCUR IN RESPONSE TO ECONOMIC AND BUSINESS DEVELOPMENTS; AND A GREATER DEGREE OF SOCIAL, POLITICAL AND ECONOMIC VOLATILITY ASSOCIATED WITH INTERNATIONAL INVESTING. INVESTING IN SMALL- AND MID-CAP STOCKS MAY PRESENT SPECIAL RISKS INCLUDING POSSIBLE ILLIQUIDITY AND GREATER PRICE VOLATILITY THAN STOCKS OF LARGER, MORE ESTABLISHED COMPANIES. CHANGES IN INTEREST RATES AND CHANGES IN THE FINANCIAL STRENGTH OF ISSUERS OF LOWER-RATED BONDS MAY ALSO AFFECT UNDERLYING FUND PERFORMANCE. THE FUND IS ALSO SUBJECT TO THE RISK THAT THE INVESTMENT ADVISER'S DECISIONS REGARDING ASSET CLASSES AND PORTFOLIO FUNDS WILL NOT ANTICIPATE MARKET TRENDS SUCCESSFULLY, RESULTING IN A FAILURE TO PRESERVE CAPITAL OR LOWER TOTAL RETURN. IN ADDITION, THE FUND MAY BUY AND SELL SHARES OF THE PORTFOLIO FUNDS FREQUENTLY. THIS MAY RESULT IN HIGHER TRANSACTION COSTS AND ADDITIONAL TAX LIABILITY. THIS IS NOT AN OFFER OF THE SHARES OF ANY OTHER MUTUAL FUND MENTIONED HEREIN. RESULTS OF THE FUNDS OWNED IN COLUMBIA THERMOSTAT FUND Equities 4TH QUARTER 1-YEAR WEIGHTING TOTAL TOTAL FUND IN FUND RETURN RETURN -------------------------------------------------------- Columbia 20% 12.44% 21.51% Acorn Fund -------------------------------------------------------- Columbia 15% 13.82% 18.58% Acorn Select -------------------------------------------------------- Columbia Growth 25% 8.14% -2.17% Stock Fund -------------------------------------------------------- Columbia Growth 25% 8.17% 13.71% & Income Fund -------------------------------------------------------- Columbia Mid Cap 15% 9.55% 15.58% Value Fund -------------------------------------------------------- WEIGHTED AVERAGE EQUITY RETURN 100% 10.06% 12.05% -------------------------------------------------------- Fixed Income 4TH QUARTER 1-YEAR WEIGHTING TOTAL TOTAL FUND IN FUND RETURN RETURN -------------------------------------------------------- Columbia Federal 30% 0.76% 4.11% Securities Fund -------------------------------------------------------- Columbia Intermediate 50% 1.42% 4.88% Bond Fund -------------------------------------------------------- Columbia High 20% 1.88% 7.42% Yield Fund -------------------------------------------------------- WEIGHTED AVERAGE INCOME RETURN 100% 1.32% 5.16% -------------------------------------------------------- COLUMBIA THERMOSTAT FUND REBALANCING IN THE QUARTER -------------------------------------------------------- OCTOBER 22, 2004: 55% stock, 45% bond NOVEMBER 24, 2004: 45% stock, 55% bond DECEMBER 14, 2004: 40% stock, 60% bond 1-800-922-6769 20 COLUMBIA THERMOSTAT FUND >AT A GLANCE TICKER SYMBOL: COTZX PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (CLASS Z) >through December 31, 2004 LIFE OF 1 YEAR FUND ------ ------- Returns before taxes 9.17% 14.57% Returns after taxes 8.32 13.99 on distributions Returns after taxes on distribu- 6.02 12.21 tions and sale of fund shares S&P 500 (pretax) 10.88 20.98 Lehman U.S. Credit Intermediate 4.08 6.23 Bond Index (pretax) Lipper Flexible Portfolio Funds 9.50 16.90 Index (pretax)*~ Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Returns after taxes on distributions and sale of fund shares reflect the additional tax impact of long-term gains or losses realized when fund shares are sold. The returns are taxed at the maximum rate and assume shares were purchased at the beginning of the period. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for class Z shares only; after-tax returns for other share classes will vary. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. * The Lipper Flexible Portfolio Funds Index is an equal dollar weighted index of the 30 largest mutual funds within the flexible portfolio fund classification, as defined by Lipper. COLUMBIA THERMOSTAT FUND PORTFOLIO WEIGHTINGS >as a % of assets in each investment category, as of December 31, 2004 [PIE CHART] STOCK MUTUAL FUNDS Columbia Acorn Fund 20% Columbia Acorn Select 15% Columbia Growth Stock Fund 25% Columbia Growth & Income Fund 25% Columbia Mid Cap Value Fund 15% [PIE CHART] BOND MUTUAL FUNDS Columbia Federal Securities Fund 30% Columbia Intermediate Bond Fund 50% Columbia High Yield Fund 20% THE VALUE OF A $10,000 INVESTMENT IN COLUMBIA THERMOSTAT FUND (CLASS Z) >September 25, 2002 through December 31, 2004 This graph compares the results of $10,000 invested in Columbia Thermostat Fund at inception on September 25, 2002 to two indexes. The S&P 500 is a broad, market-weighted average of U.S. blue-chip company stock performance. The Lehman U.S. Credit Intermediate Bond Index is the intermediate component of the U.S. Credit Index. The U.S. Credit Index includes publicly issued U.S. corporate and foreign debentures and secured notes that meet specified maturity, liquidity, and quality requirements. The Indexes are unmanaged and returns for the indexes and the Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. The graph and table do not reflect tax deductions that a shareholder would pay on Fund distributions or the sale of Fund shares. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE CHANGES OVER TIME. VISIT COLUMBIAFUNDS.COM FOR DAILY UPDATES. NAV ON 12/31/04: $13.12 TOTAL NET ASSETS OF THE FUND: $207.3 MILLION [MOUNTAIN CHART] AVERAGE ANNUAL TOTAL RETURN ------------------------------- 1 YEAR LIFE OF FUND 9.17% 14.57% COLUMBIA THERMOSTAT LEHMAN U.S. CREDIT FUND S&P 500 INTERMEDIATE BOND ----------- -------- ------------------ 9/25/2002 10000.00 10000.00 10000.00 9/30/2002 9850.00 9955.60 10042.80 10220.00 10831.90 9962.09 10700.00 11469.40 10044.60 12/31/2002 10410.00 10795.60 10306.70 10260.00 10512.80 10335.10 10100.00 10355.10 10517.50 3/31/2003 10190.00 10455.60 10539.30 10710.00 11316.80 10683.90 11200.00 11913.10 10956.80 6/30/2003 11348.00 12065.10 10962.60 11418.00 12277.80 10626.40 11648.20 12517.20 10658.60 9/30/2003 11618.20 12384.30 10976.00 12018.50 13084.90 10878.00 12148.50 13200.00 10910.80 12/31/2003 12470.50 13892.30 11019.00 12642.80 14147.30 11107.70 12784.60 14343.90 11230.90 3/31/2004 12835.20 14127.50 11330.20 12571.90 13905.70 11041.00 12612.40 14096.60 10971.10 6/30/2004 12812.50 14370.70 11010.70 12619.80 13895.00 11123.00 12700.90 13951.20 11338.90 9/30/2004 12863.20 14102.40 11381.40 13076.30 14317.80 11468.40 13390.70 14897.10 11367.10 12/31/2004 13613.60 15404.00 11468.80 COLUMBIA THERMOSTAT FUND ASSET ALLOCATION >as a % of net assets, as of December 31, 2004 [PIE CHART] Stock Mutual Funds 40.0% Bond Mutual Funds 59.4% Cash and other Assets less Liabilities 0.6% 21 Columbia Acorn Fund >Major Portfolio Changes in the Fourth Quarter (Unaudited) NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 ADDITIONS ---------------------------------------------------------------------------- INFORMATION Advantech (Taiwan) 0 986,000 American Tower 2,250,000 2,750,000 Avnet 1,695,000 2,075,000 Avocent 945,000 1,070,000 Bearing Point 3,350,000 4,000,000 CDW 0 230,000 Ceridian 1,090,000 1,395,000 Entravision Communications 1,000,000 1,200,000 Fair Isaac 530,000 990,000 FTI Consulting 0 302,000 Gray Television 1,400,000 1,452,000 Hong Kong Exchanges & Clearing (Hong Kong) 7,000,000 9,000,000 Liberty Media International 864,000 1,000,000 Maximus 0 300,000 McAfee 1,600,000 1,658,000 Pinnacle Systems 2,000,000 2,500,000 Rogers 445,000 660,000 Salem Communications 770,000 1,291,000 Semtech 850,000 1,425,000 SES Global (Luxembourg) 2,537,000 2,907,000 Symbol Technologies 1,235,000 1,810,000 Symmetricom 1,225,000 1,510,000 Wincor Nixdorf (Germany) 0 130,000 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Brookstone 600,000 819,000 Central Parking 1,140,000 1,514,000 Edgars Consolidated Stores (South Africa) 0 350,000 Fast Retailing (Japan) 200,000 300,000 HNI 1,750,000 2,200,000 International Speedway Motors 805,000 905,000 Jurys Doyle Hotel (Ireland) 720,000 880,000 Knoll 0 650,000 Nobia (Sweden) 1,700,000 2,130,000 Oxford Industries 664,000 836,000 Park 24 (Japan) 0 700,000 Petco Animal Supplies 1,015,000 1,245,000 Princeton Review 1,750,000 1,850,000 RC2 545,000 845,000 Sports Authority 873,000 1,400,000 NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES Bilfinger Berger (Germany) 525,000 635,000 Carbone Lorraine (France) 0 93,000 Clarcor 1,400,000 1,600,000 Dominion Homes 290,000 490,000 Donaldson 1,700,000 2,000,000 Genlyte Group 430,000 700,000 Imtech (Netherlands) 0 46,000 Meitec (Japan) 280,000 447,000 M/I Homes 141,000 218,000 Oshkosh Truck 0 106,000 Quanta Services 1,450,000 1,548,000 Sika (Switzerland) 25,000 35,000 Spartech 2,550,000 2,947,000 Watsco 1,525,000 2,276,000 ---------------------------------------------------------------------------- FINANCE Associated Banc-Corp 2,412,000 2,712,000 Cascade Financial 188,000 358,000 CityBank Lynnwood 455,000 500,000 First Financial BankShares 82,000 111,000 Great Southern Bancorp 465,000 479,000 Intermediate Capital (United Kingdom) 500,000 620,000 Komercni Banka (Czech Republic) 172,000 195,000 Nuveen Investments 524,000 782,000 Provident Bancorp 0 160,000 Scottish Re Group 650,000 1,174,000 Selective Insurance Group 600,000 710,000 Sterling Bancorp 0 123,000 (INCLUDES THE EFFECT OF A 6 FOR 5 STOCK SPLIT) Washington Federal 869,000 1,059,000 West Bancorporation 251,000 493,000 ---------------------------------------------------------------------------- ENERGY/MINERALS Atmos Energy 1,076,000 1,206,000 Ivanhoe Mines (Canada) 0 1,000,000 Pride International 0 1,500,000 Range Resources 950,000 1,000,000 Western Gas 2,900,000 3,000,000 ---------------------------------------------------------------------------- HEALTH CARE AtheroGenics 789,000 1,179,000 Charles River Laboratories 640,000 840,000 Neurocrine Biosciences 360,000 500,000 Pozen 2,200,000 2,400,000 United Drug (Ireland) 2,000,000 2,106,000 ---------------------------------------------------------------------------- OTHER INDUSTRIES Allied Waste Industries 1,500,000 2,500,000 Heartland Express 0 371,000 Highland Hospitality 1,240,000 1,552,000 1-800-922-6769 22 NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 SALES ---------------------------------------------------------------------------- INFORMATION Activision 1,125,000 1,000,000 Asyst Technologies 664,000 0 Autobytel 500,000 0 Avid Technology 1,469,000 1,300,000 Euronet Worldwide 249,000 0 Information Holdings 600,000 0 Mediacom Communications 2,500,000 1,250,000 Netegrity 973,000 0 PeopleSoft 3,450,000 0 Shuffle Master 940,000 700,000 SPSS 385,000 222,000 THQ 1,260,000 800,000 Trimble Navigation 1,350,000 1,200,000 Zebra Technologies 591,000 400,000 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Leapfrog Enterprises 1,275,000 0 Lion Nathan (Australia) 4,000,000 2,500,000 Monarch Casino & Resort 805,000 0 Orbitz 1,050,000 0 Otsuke Kagu (Japan) 280,000 0 Rank Group (United Kingdom) 2,500,000 0 Uni-Charm (Japan) 255,000 0 Urban Outfitters 1,026,000 826,000 Whole Foods Market 350,000 230,000 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES G&K Services 550,000 300,000 Givaudan (Switzerland) 37,000 20,000 Hub Group 469,000 424,000 Sembcorp Logistics (Singapore) 7,500,000 0 SYMYX 347,000 0 Tenaris (Argentina) 700,000 600,000 ---------------------------------------------------------------------------- FINANCE Bank of the Ozarks 436,000 0 First Federal Capital 700,000 0 HCC Insurance Holdings 1,320,000 1,020,000 Jardine Lloyd Thompson (United Kingdom) 1,992,000 0 People's Bank of Bridgeport 3,276,000 3,196,000 Philadelphia Consolidated Holding 720,000 575,000 RLI 800,000 570,000 Texas Regional Bancshares 1,980,000 1,830,000 NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 ---------------------------------------------------------------------------- ENERGY/MINERALS Clayton Williams Energy 440,000 0 Gamesa (Spain) 670,000 0 Nexen (Canada) 925,000 0 Southwestern Energy 1,100,000 500,000 Ultra Petroleum 2,195,000 1,700,000 XTO Energy 7,275,000 7,000,000 ---------------------------------------------------------------------------- HEALTH CARE Bioveris 194,000 0 First Health Group 5,586,000 4,586,000 Omega Pharma (Belgium) 276,000 236,000 Protein Design Labs 608,000 0 Sangamo Biosciences 1,698,000 0 Smith & Nephew (United Kingdom) 2,910,000 0 Yuhan (South Korea) 138,000 10,992 ---------------------------------------------------------------------------- OTHER INDUSTRIES Am NV (Netherlands) 687,000 106,000 The Rouse Company 825,000 0 23 Columbia Acorn Fund >Statement of Investments, December 31, 2004 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- SECURITIES: 92.5% ---------------------------------------------------------------------------- INFORMATION: 22.6% SOFTWARE/SERVICES >BUSINESS SOFTWARE: 4.6% 1,625,000 Kronos (b)(c) $ 83,086 LABOR MANAGEMENT SOLUTIONS 1,300,000 Avid Technology (b) 80,275 DIGITAL NONLINEAR EDITING SOFTWARE & SYSTEMS 11,500,000 Novell (b) 77,625 DIRECTORY, OPERATING SYSTEM & IDENTITY MANAGEMENT SOFTWARE 950,000 Micros Systems (b)(c) 74,157 INFORMATION SYSTEMS FOR RESTAURANTS & HOTELS 1,658,000 McAfee (b) 47,966 SECURITY SOFTWARE & SERVICES 3,448,000 Aspect Communications (b)(c) 38,411 CALL CENTER SOFTWARE 6,700,000 E.Piphany (b)(c) 32,361 CRM SOFTWARE 1,521,000 Sybase (b) 30,344 DATABASE SOFTWARE 2,200,000 JDA Software Group (b)(c) 29,964 APPLICATIONS/SOFTWARE & SERVICES FOR RETAILERS 2,000,000 MRO Software (b)(c) 26,040 ENTERPRISE MAINTENANCE SOFTWARE 2,200,000 MAPICS (b)(c) 23,210 MID MARKET ERP SOFTWARE 1,300,000 Witness Systems (b)(c) 22,698 CUSTOMER EXPERIENCE MANAGEMENT SOFTWARE 3,000,000 Lawson Software (b) 20,610 ENTERPRISE RESOURCE PLANNING (ERP) SOFTWARE 6,000,000 Actuate (b)(c) 15,300 INFORMATION DELIVERY SOFTWARE & SOLUTIONS 5,000,000 Indus International (b)(c) 10,695 600,000 Indus International (b)(c) 1,283 ENTERPRISE ASSET MANAGEMENT SOFTWARE 1,575,000 Radiant Systems (b)(c) 10,253 POINT OF SALE SYSTEMS FOR CONVENIENCE STORES 300,000 Maximus (b) 9,336 OUTSOURCER FOR GOVERNMENT 1,250,000 ClickSoftware Technologies (b) 3,588 SERVICE CHAIN OPTIMIZATION SOFTWARE 222,000 SPSS (b) 3,472 STATISTICAL/BUSINESS ANALYSIS SOFTWARE ---------------------------------------------------------------------------- 640,674 >-BUSINESS INFORMATION/BUSINESS SERVICES/ PUBLISHING: 1.7% 1,200,000 Getty Images (b) 82,620 PHOTOGRAPHS FOR PUBLICATIONS & ELECTRONIC MEDIA 990,000 Fair Isaac 36,313 CREDIT SCORING & DECISION ANALYTIC SOFTWARE 1,336,000 Navigant Consulting (b) 35,538 FINANCIAL CONSULTING FIRM 2,685,000 InfoUSA (b)(c) 30,045 BUSINESS DATA FOR SALES LEADS 1,395,000 Ceridian (b) 25,501 HR SERVICES & PAYMENT PROCESSING NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 350,000 Dex Media $ 8,736 YELLOW PAGES PUBLISHER 1,700,000 PRIMEDIA (b) 6,460 SPECIALTY MAGAZINES & OTHER PUBLICATIONS 302,000 FTI Consulting (b) 6,363 FINANCIAL CONSULTING FIRM ---------------------------------------------------------------------------- 231,576 >TRANSACTION PROCESSORS: 1.0% 1,457,000 Global Payments 85,293 CREDIT CARD PROCESSOR 9,000,000 Hong Kong Exchanges & Clearing (Hong Kong) 24,141 HONG KONG EQUITY & DERIVATIVES OPERATOR 1,250,000 Pegasus Systems (b)(c) 15,750 TRANSACTION PROCESSOR FOR HOTEL INDUSTRY 600,000 Cubic 15,102 REVENUE COLLECTION & DEFENSE SYSTEMS ---------------------------------------------------------------------------- 140,286 >INTERNET: 1.0% 9,500,000 Skillsoft Publishing (b)(c) 53,675 PROVIDER OF WEB-BASED LEARNING SOLUTIONS (E-LEARNING) 2,000,000 RSA Security (b) 40,120 ENTERPRISE SECURITY SOFTWARE 2,000,000 ValueClick (b) 26,660 INTERNET ADVERTISING 1,400,000 DoubleClick (b) 10,892 INTERNET ADVERTISING & DIRECT MARKETING STATISTICAL DATA 1,879,808 Vital Stream, Cl. C (b) 1,560 STREAMING SERVICES FOR THE INTERNET ---------------------------------------------------------------------------- 132,907 >COMPUTER SERVICES: 0.8% 4,000,000 Bearing Point (b) 32,120 BUSINESS CONSULTING & TECHNOLOGY STRATEGY 4,600,000 AnswerThink (b)(c) 21,436 IT INTEGRATOR FOR FORTUNE 2000 2,000,000 Ciber (b) 19,280 SOFTWARE SERVICES & STAFFING 4,656,000 Igate Capital (b)(c) 18,857 TECHNOLOGY STAFFING SERVICES 2,300,000 Analysts International (b)(c) 9,200 TECHNOLOGY STAFFING SERVICES 1,025,000 New Horizons Worldwide (b)(c) 5,750 COMPUTER TRAINING SERVICES ---------------------------------------------------------------------------- 106,643 >ELECTRONICS DISTRIBUTION: 0.7% 2,075,000 Avnet (b) 37,848 ELECTRONIC COMPONENTS DISTRIBUTION 680,000 Tech Data (b) 30,872 I/T DISTRIBUTOR 230,000 CDW 15,260 TECH RETAILER 710,000 Agilysys 12,169 I/T DISTRIBUTOR ---------------------------------------------------------------------------- 96,149 1-800-922-6769 24 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >CONSUMER SOFTWARE: 0.4% 1,000,000 Activision (b) $ 20,180 ENTERTAINMENT SOFTWARE 800,000 THQ (b) 18,352 ENTERTAINMENT SOFTWARE 2,500,000 Pinnacle Systems (b) 15,250 VIDEO EDITING SOFTWARE & HARDWARE ---------------------------------------------------------------------------- 53,782 COMPUTER RELATED HARDWARE >COMPUTER HARDWARE/RELATED SYSTEMS: 2.6% 2,500,000 Seachange International (b)(c) 43,600 SYSTEMS FOR VIDEO ON DEMAND & AD INSERTION 1,070,000 Avocent (b) 43,356 COMPUTER CONTROL SWITCHES 1,525,000 Unova (b) 38,567 BARCODE & WIRELESS LAN SYSTEMS 1,810,000 Symbol Technologies 31,313 MOBILE COMPUTERS & BARCODE SCANNERS 371,900 Neopost (France) 28,814 POSTAGE METER MACHINES 660,000 Rogers (b) 28,446 PCB LAMINATES & HIGH PERFORMANCE FOAMS 535,000 II VI (b) 22,732 LASER COMPONENTS 400,000 Zebra Technologies (b) 22,512 BAR CODE PRINTERS 1,500,000 CTS 19,935 ELECTRONIC COMPONENTS, SENSORS & EMS 788,000 Belden CDT 18,282 SPECIALTY CABLE 625,000 Excel Technologies (b)(c) 16,250 LASER SYSTEMS & ELECTRO-OPTICAL COMPONENTS 5,000,000 Concurrent Computer (b)(c) 14,300 VIDEO ON DEMAND SYSTEMS & SERVICES 2,900,000 3Com (b) 12,093 NETWORKING EQUIPMENT 130,000 Wincor Nixdorf (Germany) (b)(f) 10,432 RETAIL POS SYSTEMS & ATM MACHINES 6,800,000 Phoenixtec Power (Taiwan) 8,193 UNINTERRUPTABLE POWER SUPPLIES 230,000 Applied Films (b) 4,959 THIN-FILM GLASS COATING EQUIPMENT 986,000 Advantech (Tawain) 2,388 EMBEDED COMPUTERS ---------------------------------------------------------------------------- 366,172 >GAMING EQUIPMENT: 1.9% 6,700,000 International Game Technology 230,346 SLOT MACHINES & PROGRESSIVE JACKPOTS 700,000 Shuffle Master (b) 32,970 CARD SHUFFLERS, CASINO GAMES & SLOT MACHINES ---------------------------------------------------------------------------- 263,316 >INSTRUMENTATION: 1.0% 1,200,000 Trimble Navigation (b) 39,648 GPS-BASED INSTRUMENTS 600,000 Mettler Toledo (b) 30,786 LABORATORY EQUIPMENT NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 536,000 Dionex (b) $ 30,375 ION & LIQUID CHROMATOGRAPHY 428,000 Varian (b) 17,552 ANALYTICAL INSTRUMENTS 2,300,000 Spectris (United Kingdom) 16,839 ELECTRONIC INSTRUMENTATION & CONTROLS ---------------------------------------------------------------------------- 135,200 >SEMICONDUCTORS/RELATED EQUIPMENT: 0.9% 1,425,000 Semtech (b) 31,165 ANALOG SEMICONDUCTORS 1,315,000 Integrated Circuit Systems (b) 27,510 SILICON TIMING DEVICES 685,000 Littelfuse (b) 23,400 LITTLE FUSES 1,250,000 IXYS (b) 12,900 POWER SEMICONDUCTORS 565,000 Supertex (b) 12,261 MIXED-SIGNAL SEMICONDUCTORS 1,380,000 Ase Test (Taiwan) (b) 9,329 SEMICONDUCTOR PACKAGING & TEST SERVICES 361,000 Actel (b) 6,332 FIELD PROGRAMMABLE GATE ARRAYS 604,000 Pericom Semiconductor (b) 5,696 SEMICONDUCTORS: INTERFACE INTEGRATED CIRCUITS ---------------------------------------------------------------------------- 128,593 >CONTRACT MANUFACTURING: 0.4% 1,500,000 Jabil Circuit (b) 38,370 ELECTRONIC MANUFACTURING SERVICES 1,600,000 Plexus (b) 20,816 ELECTRONIC MANUFACTURING SERVICES ---------------------------------------------------------------------------- 59,186 TELECOMMUNICATIONS >MOBILE COMMUNICATIONS: 1.8% 3,000,000 Western Wireless (b) 87,900 RURAL CELLULAR PHONE SERVICES 4,000,000 Crown Castle International (b) 66,560 COMMUNICATION TOWERS 2,750,000 American Tower (b) 50,600 COMMUNICATION TOWERS IN USA & MEXICO 520,000 Telephone & Data Systems 40,014 CELLULAR & TELEPHONE SERVICES ---------------------------------------------------------------------------- 245,074 >TELECOMMUNICATIONS EQUIPMENT: 1.1% 8,700,000 Tellabs (b) 74,733 TELECOMMUNICATIONS EQUIPMENT 830,000 Plantronics 34,420 COMMUNICATION HEADSETS 2,000,000 Andrew (b) 27,260 WIRELESS INFRASTRUCTURE EQUIPMENT 1,510,000 Symmetricom (b) 14,662 NETWORK TIMING & SYNCHRONIZATION DEVICES ---------------------------------------------------------------------------- 151,075 >-TELECOMMUNICATIONS/WIRELINE COMMUNICATIONS: 0.3% 800,000 Commonwealth Telephone (b) 39,728 RURAL PHONE FRANCHISES & CLEC 25 Columbia Acorn Fund >Statement of Investments, continued NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- MEDIA >TELEVISION PROGRAMMING/CATV: 1.1% 1,000,000 Liberty Media International (b) $ 46,230 CATV HOLDING COMPANY 3,000,000 UnitedGlobalCom (b) 28,980 VIDEO, VOICE & DATA SERVICES OUTSIDE THE USA 2,605,000 Liberty Media 28,603 CATV PROGRAMMING & MEDIA COMPANY HOLDINGS 2,700,000 Insight Communications (b) 25,029 CATV FRANCHISES IN MIDWEST 1,100,000 Corus Entertainment (Canada) 22,914 TELEVISION PROGRAMMING & RADIO STATIONS 1,250,000 Mediacom Communications (b) 7,813 CABLE TELEVISION FRANCHISES ---------------------------------------------------------------------------- 159,569 >TV/SATELLITE BROADCASTING: 0.7% 2,907,000 SES Global (Luxembourg) 37,800 SATELLITE BROADCASTING SERVICES 1,452,000 Gray Television 22,506 MID MARKET AFFILIATED TV STATIONS 450,000 Alliance Atlantis Communication (Canada) (b) 12,265 CATV CHANNELS, TV/MOVIE PRODUCTION/DISTRIBUTION 1,200,000 Entravision Communications (b) 10,020 SPANISH LANGUAGE TV, RADIO & OUTDOOR 270,000 Metropole TV (France) 7,643 TELEVISION BROADCASTER 200,000 Young Broadcasting (b) 2,112 TELEVISION STATIONS ---------------------------------------------------------------------------- 92,346 >RADIO BROADCASTING: 0.6% 1,291,000 Salem Communications (b) 32,210 RADIO STATIONS FOR RELIGIOUS PROGRAMMING 1,200,000 Cumulus Media, Cl. A (b) 18,096 RADIO STATIONS IN SMALL CITIES 992,000 Saga Communications (b) 16,715 RADIO STATIONS IN SMALL & MID-SIZED CITIES 1,200,000 Spanish Broadcasting (b) 12,672 SPANISH LANGUAGE RADIO STATIONS ---------------------------------------------------------------------------- 79,693 ------------ INFORMATION: TOTAL 3,121,969 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES: 20.7% SERVICES >RETAIL: 6.0% 2,495,000 Chico's FAS (b) 113,597 WOMEN'S SPECIALTY RETAIL 3,200,000 Michaels Stores 95,904 CRAFT & HOBBY SPECIALTY RETAILER 3,743,000 Christopher & Banks (c) 69,058 WOMEN'S APPAREL RETAILER 2,265,000 Aeropostale (b) 66,659 MALL BASED TEEN RETAILER 1,245,000 Abercrombie & Fitch 58,453 TEEN APPAREL RETAILER NUMBER OF SHARES OR PRINCIPAL AMOUNT (000) VALUE (000) ---------------------------------------------------------------------------- 1,245,000 Petco Animal Supplies (b) $ 49,153 PET SUPPLIES & SERVICES 1,400,000 Williams Sonoma (b) 49,056 HOME GOODS & FURNISHING RETAILER 826,000 Urban Outfitters (b) 36,674 ECLECTIC HOME & APPAREL RETAILER 1,400,000 Sports Authority (b)(c) 36,050 SPORTING GOODS STORES 1,300,000 Borders Group 33,020 BOOKSTORES 1,072,000 Zale (b) 32,021 SPECIALTY RETAILER OF JEWELRY 955,000 West Marine (b) 23,636 LARGEST RETAILER OF BOATING SUPPLIES 1,370,000 Hot Topic (b) 23,550 MUSIC INSPIRED RETAILER OF APPAREL, ACCESSORIES & GIFTS 1,093,000 Ann Taylor (b) 23,532 WOMEN'S APPAREL RETAILER 300,000 Fast Retailing (Japan) (f) 22,755 APPAREL RETAILER 230,000 Whole Foods Market 21,931 NATURAL FOOD SUPERMARKETS 700,000 Genesco (b) 21,798 MULTI-CONCEPT BRANDED FOOTWEAR RETAILER 350,000 Edgars Consolidated Stores (South Africa) 18,740 LEADING RETAIL CONGLOMERATE 819,000 Brookstone (b) 16,011 SPECIALTY CONSUMER PRODUCT RETAILER 2,250,000 Esprit Holdings (Hong Kong) 13,605 GLOBAL APPAREL BRAND MANAGER 1,062,000 Gaiam (b)(c) 6,531 HEALTHY LIVING CATALOG & E-COMMERCE $ 6,000 Gadzooks 5% Convertible 10/07/08 (e)(g) 600 TEEN APPAREL RETAILER ---------------------------------------------------------------------------- 832,334 >CONSUMER SERVICES: 1.6% 2,250,000 ITT Educational Services (b) 106,988 POSTSECONDARY DEGREE PROGRAMS 1,290,000 Coinstar (b)(c) 34,611 OWNER/OPERATOR OF COIN COUNTING MACHINES 775,000 Weight Watchers (b) 31,829 WEIGHT LOSS PROGRAMS 1,514,000 Central Parking 22,937 OWNER, OPERATOR & MANAGER OF PARKING LOTS & GARAGES 700,000 Park 24 (Japan) (f) 12,518 PARKING LOT OPERATOR 1,850,000 Princeton Review (b)(c) 11,378 COLLEGE PREPARATION COURSES 2,350,000 Bally Total Fitness (b)(c) 9,964 NATIONAL CHAIN OF FITNESS CENTERS ---------------------------------------------------------------------------- 230,225 >CASINOS: 1.3% 890,000 Station Casinos 48,665 CASINOS & RIVERBOATS 875,000 Argosy Gaming (b) 40,862 REGIONAL RIVERBOAT CASINOS 1-800-922-6769 26 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >CASINOS--CONTINUED 1,925,000 Pinnacle Entertainment (b) $ 38,077 REGIONAL RIVERBOAT CASINOS 2,750,000 Alliance Gaming (b)(c) 37,977 DIVERSIFIED GAMING COMPANY 4,130,000 Sky City Entertainment (New Zealand) 15,959 CASINO/ENTERTAINMENT COMPLEX 226,000 Lakes Entertainment (b) 3,682 NATIVE AMERICAN CASINO DEVELOPMENT ---------------------------------------------------------------------------- 185,222 >TRAVEL: 1.0% 2,314,500 Intrawest (Canada) 53,130 OWNER/OPERATOR OF SKI RESORTS 3,380,000 LaQuinta (b) 30,724 OWNER/FRANCHISER OF MID-PRICED HOTELS 1,115,000 Vail Resorts (b) 24,998 OWNER/OPERATOR OF SKI RESORTS 880,000 Jurys Doyle Hotel (Ireland) 14,685 OWNER/OPERATOR OF MID-PRICED HOTELS 1,045,000 Navigant International (b)(c) 12,718 CORPORATE TRAVEL AGENCY ---------------------------------------------------------------------------- 136,255 >ENTERTAINMENT/LEISURE PRODUCTS: 0.9% 905,000 International Speedway Motors 47,784 LARGEST MOTORSPORT RACETRACK OWNER & OPERATOR 845,000 RC2 (b) 27,547 COLLECTIBLES & TOYS 1,110,000 Amer Group (Finland) (f) 19,327 BRANDED SPORTING GOODS 363,000 Speedway Motorsports 14,222 MOTORSPORT RACETRACK OWNER & OPERATOR 345,000 Intralot (Greece) 8,421 LOTTERY & GAMING SYSTEMS & SERVICES 500,000 Callaway Golf 6,750 PREMIUM GOLF CLUBS & BALLS ---------------------------------------------------------------------------- 124,051 >RESTAURANTS: 0.7% 2,000,000 AFC Enterprises (b)(c) 47,300 POPEYES CHICKEN 1,447,000 Autogrill (Italy) (b)(f) 24,078 TOLLWAY RESTAURANTS 364,000 Cheesecake Factory (b) 11,819 CASUAL DINING RESTAURANTS 388,000 Kappa Create (Japan) (f) 11,584 SUSHI CHAIN RESTAURANT OPERATOR ---------------------------------------------------------------------------- 94,781 >CRUISE LINES: 0.2% 400,000 Carnival 23,052 LARGEST CRUISE LINE ---------------------------------------------------------------------------- GOODS >FURNITURE/TEXTILES: 2.3% 2,200,000 HNI 94,710 OFFICE FURNITURE & FIREPLACES 740,000 Mohawk Industries (b) 67,525 CARPET & FLOORING NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 1,900,000 Herman Miller $ 52,497 OFFICE FURNITURE 844,000 American Woodmark (c) 36,866 KITCHEN CABINET MANUFACTURER 2,130,000 Nobia (Sweden) (f) 35,171 KITCHEN CABINET MANUFACTURING & DISTRIBUTION 550,000 Masonite International (Canada) (b) 18,918 DOOR MANUFACTURER 650,000 Knoll (b) 11,375 OFFICE FURNITURE ---------------------------------------------------------------------------- 317,062 >APPAREL: 2.2% 2,990,000 Coach (b) 168,636 DESIGNER & RETAILER OF BRANDED LEATHER ACCESSORIES 836,000 Oxford Industries 34,527 BRANDED & PRIVATE LABEL APPAREL 3,000,000 Billabong International (Australia) 26,843 SURFWEAR APPAREL MANUFACTURER 400,000 Columbia Sportswear (b) 23,844 ACTIVE OUTDOOR APPAREL, FOOTWEAR & ACCESSORIES 469,000 Carter's (b) 15,941 CHILDREN'S BRANDED APPAREL 728,000 Steven Madden (b)(c) 13,730 WHOLESALER/RETAILER OF FASHION FOOTWEAR 5,000,000 Pacific Brands (Australia) 12,464 AUSTRALIAN BRANDED APPAREL 1,000,000 Wacoal (Japan) (f) 12,015 WOMEN'S SPECIALTY APPAREL ---------------------------------------------------------------------------- 308,000 >LEISURE VEHICLES: 1.3% 1,745,000 Harley-Davidson 106,009 MOTORCYCLES & RELATED MERCHANDISE 550,000 Polaris Industries 37,411 MANUFACTURER OF LEISURE VEHICLES & RELATED PRODUCTS 1,495,000 Monaco Coach (c) 30,752 RECREATIONAL VEHICLES 2,850,000 Ducati Motor (Italy) (b)(f) 3,394 MOTORCYCLES & RELATED MERCHANDISE ---------------------------------------------------------------------------- 177,566 >DURABLE GOODS: 1.1% 1,316,000 Helen of Troy (b) 44,231 HAIRDRYERS & CURLING IRONS 465,000 Hyundai Mobis (South Korea) (b)(f) 29,344 AUTO PARTS 478,000 Hunter Douglas (Netherlands) 25,412 WINDOW SHADES & VENETIAN BLINDS 10,000,000 Techtronic Industries (Hong Kong) 21,871 MANUFACTURER OF POWER TOOLS & MOTORIZED APPLIANCES 610,000 Shimano (Japan) (f) 17,383 BICYCLE COMPONENTS & FISHING TACKLE 133,000 Funai Electric (Japan) (f) 16,499 CONSUMER ELECTRONICS ---------------------------------------------------------------------------- 154,740 27 Columbia Acorn Fund >Statement of Investments, continued NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >NONDURABLES: 1.1% 895,000 Scotts Company (b) $ 65,800 CONSUMER LAWN & GARDEN PRODUCTS 1,989,000 SCP Pool 63,449 DISTRIBUTOR OF SWIMMING POOL SUPPLIES 630,000 Natura Cosmeticos (Brazil) 18,383 DIRECT RETAILER OF COSMETICS ---------------------------------------------------------------------------- 147,632 >FOOD & BEVERAGES: 1.0% 1,600,000 Kerry (Ireland) 38,251 FOOD INGREDIENTS 725,000 Orkla (Norway) (f) 23,699 FOOD & DIVERSIFIED CONSUMER GOODS 850,000 NBTY (b) 20,409 VITAMINS & SUPPLEMENTS 30,000,000 Global Bio-Chem Technology Group (China) 19,876 1,841,250 Global Bio-Chem Technology Group Warrants (China) (b) 88 CHINESE REFINER OF CORN-BASED COMMODITIES 2,500,000 Lion Nathan (Australia) 16,801 BEER BREWER/DISTRIBUTOR 180,000 Davide Campari (Italy) (f) 11,578 SPIRITS & WINE ---------------------------------------------------------------------------- 130,702 ------------ CONSUMER GOODS/SERVICES: TOTAL 2,861,622 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES: 14.6% >LOGISTICS: 2.3% 2,750,000 Expeditors International of Washington 153,670 INTERNATIONAL FREIGHT FORWARDER 900,000 UTI Worldwide 61,218 INTERNATIONAL FREIGHT FORWARDER 1,000,000 Forward Air (b) 44,700 FREIGHT TRANSPORTATION BETWEEN AIRPORTS 2,600,000 Exel (United Kingdom) 36,028 GLOBAL LOGISTICS & FREIGHT FORWARDING 424,000 Hub Group (b) 22,141 TRUCK & RAIL FREIGHT FORWARDER ---------------------------------------------------------------------------- 317,757 >INDUSTRIAL GOODS: 1.9% 1,600,000 Clarcor (c) 87,632 MOBILE & INDUSTRIAL FILTERS 2,000,000 Donaldson 65,160 INDUSTRIAL AIR FILTRATION 700,000 Genlyte Group (b)(c) 59,976 COMMERCIAL LIGHTING FIXTURES 804,000 Mine Safety Appliances 40,763 SAFETY EQUIPMENT 100,000 Bacou Dalloz (France) 7,992 SAFETY EQUIPMENT 2,500,000 Electric City (b)(c) 3,075 ELECTRICITY CONSERVATION DEVICES ---------------------------------------------------------------------------- 264,598 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >MACHINERY: 1.8% 1,050,000 Esco Technologies (b)(c) $ 80,483 AUTOMATIC ELECTRIC METER READERS 2,250,000 Ametek 80,258 AEROSPACE/INDUSTRIAL INSTRUMENTS 840,000 Pentair 36,590 PUMPS, WATER TREATMENT & TOOLS 785,000 Gardner Denver (b) 28,488 AIR COMPRESSORS, BLOWERS & PUMPS 500,000 Cobham (United Kingdom) 11,854 AEROSPACE COMPONENTS 106,000 Oshkosh Truck 7,248 SPECIALTY TRUCK MANUFACTURER 150,000 Tennant 5,948 NON-RESIDENTIAL FLOOR CLEANING EQUIPMENT ---------------------------------------------------------------------------- 250,869 >INDUSTRIAL DISTRIBUTION: 1.7% 2,276,000 Watsco (c) 80,161 HVAC DISTRIBUTION 3,800,000 Grafton Group (Ireland) (b) 41,177 BUILDERS, WHOLESALERS & DIY RETAILING 1,200,000 Hughes Supply 38,820 INDUSTRIAL DISTRIBUTION 1,375,000 Airgas 36,451 INDUSTRIAL GAS DISTRIBUTOR 900,000 Nuco2 (b)(c) 19,971 BULK CO2 GAS DISTRIBUTION TO RESTAURANTS 600,000 Aviall (b) 13,782 AIRCRAFT REPLACEMENT PARTS DISTRIBUTOR ---------------------------------------------------------------------------- 230,362 >-SPECIALTY CHEMICALS & INDUSTRIAL MATERIALS: 1.5% 2,947,000 Spartech (c) 79,834 PLASTICS DISTRIBUTION & COMPOUNDING 42,500 Geberit International (Switzerland) (f) 30,991 PLUMBING SUPPLIES 450,000 Novozymes (Denmark) (f) 22,773 INDUSTRIAL ENZYMES 1,000,000 Schulman 21,410 PLASTICS DISTRIBUTION & COMPOUNDING 35,000 Sika (Switzerland) (f) 20,910 CHEMICALS FOR CONSTRUCTION & INDUSTRIAL APPLICATION 200,000 Imerys (France) 16,728 INDUSTRIAL MINERALS PRODUCER 20,000 Givaudan (Switzerland) (f) 13,150 INDUSTRIAL FRAGRANCES & FLAVORS 93,000 Carbone Lorraine (France) (b) 4,913 ADVANCED INDUSTRIAL MATERIALS 337,000 National Patent Development (b) 775 PLASTIC SHIELDS FOR RECREATIONAL USE ---------------------------------------------------------------------------- 211,484 >CONSTRUCTION: 1.2% 738,000 Florida Rock Industries 43,933 CONCRETE & AGGREGATES 1,134,000 Simpson 39,577 WALL JOINT MAKER 1-800-922-6769 28 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >CONSTRUCTION--CONTINUED 787,500 Wienerberger (Austria) (f) $ 37,531 BRICKS & CLAY ROOFING TILES 380,000 Daito Trust Construction (Japan) (f) 18,032 APARTMENT BUILDER 490,000 Dominion Homes (b)(c) 12,359 OHIO/KENTUCKY HOME BUILDER 218,000 M/I Homes 12,014 OHIO HOME BUILDER 3,000,000 Consorcio (Mexico) (b) 9,016 AFFORDABLE HOUSING BUILDER ---------------------------------------------------------------------------- 172,462 >WATER: 1.1% 856,000 Cuno (b) 50,846 FILTRATION & FLUIDS CLARIFICATION 3,000,000 Tetra Tech (b)(c) 50,220 RESOURCE MANAGEMENT & INFRASTRUCTURE CONSULTING 1,080,000 Pall 31,266 FILTRATION & FLUIDS CLARIFICATION 554,000 Watts Water Technologies 17,861 WATER, VALVES, REGULATORS & FILTRATION ---------------------------------------------------------------------------- 150,193 >STEEL: 1.0% 2,850,000 Gibraltar Steel (c) 67,317 STEEL PROCESSING 600,000 Tenaris (Argentina) 29,340 STEEL PIPE FOR OIL WELLS & PIPELINES 158,000 Vallourec (France) 23,541 SEAMLESS TUBES 1,050,000 Worthington Industries 20,559 STEEL PROCESSING ---------------------------------------------------------------------------- 140,757 >OUTSOURCING SERVICES & TRAINING: 0.8% 1,800,000 Labor Ready (b) 30,456 TEMPORARY MANUAL LABOR 635,000 Bilfinger Berger (Germany) (f) 26,019 CONSTRUCTION & RELATED SERVICES 447,000 Meitec (Japan) (f) 16,627 STAFFING COMPANY SPECIALIZING IN RD ENGINEERS 640,000 United Services Group (Netherlands) 14,910 TEMPORARY STAFFING SERVICES 1,548,000 Quanta Services (b) 12,384 ELECTRICAL & TELECOM CONSTRUCTION SERVICES 950,000 Administaff (b) 11,979 PROFESSIONAL EMPLOYER ORGANIZATION 600,000 GP Strategies (b) 4,470 TRAINING PROGRAMS ---------------------------------------------------------------------------- 116,845 >OTHER INDUSTRIAL SERVICES: 0.7% 825,000 Mobile Mini (b)(c) 27,258 LEASES PORTABLE STORAGE UNITS 60,000 Schindler (Switzerland) (f) 23,699 ELEVATOR MANUFACTURER & SERVICE PROVIDER 1,500,000 Clark (b)(c) 23,280 EXECUTIVE COMPENSATION & BENEFITS CONSULTING NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 300,000 G&K Services $ 13,026 UNIFORM RENTAL 185,000 Jaakko Poyry (Finland) (f) 5,563 ENGINEERING CONSULTANTS IN FORESTRY, ENERGY 46,000 Imtech (Netherlands) 1,617 TECHNICAL ENGINEERING ---------------------------------------------------------------------------- 94,443 >CONGLOMERATES: 0.4% 740,000 Aalberts Industries (Netherlands) 35,783 FLOW CONTROL & HEAT TREATMENT 5,550 Pargesa (Switzerland) (f) 19,450 INDUSTRIAL & MEDIA HOLDINGS ---------------------------------------------------------------------------- 55,233 >ELECTRICAL COMPONENTS: 0.2% 1,125,000 Ushio (Japan) (f) 20,937 INDUSTRIAL LIGHT SOURCES ---------------------------------------------------------------------------- ------------ INDUSTRIAL GOODS/SERVICES: TOTAL 2,025,940 ---------------------------------------------------------------------------- FINANCE: 13.2% >BANKS: 5.6% 3,502,000 TCF Financial 112,554 GREAT LAKES BANK 2,712,000 Associated Banc-Corp 90,066 MIDWEST BANK 3,300,000 Anglo Irish Bank (Ireland) 80,010 SMALL BUSINESS & MIDDLE MARKET BANKING 1,638,000 BOK Financial (b) 79,869 OKLAHOMA BANK 2,187,000 Glacier Bancorp (c) 74,445 MOUNTAIN STATES BANK 1,830,000 Texas Regional Bancshares 59,804 SOUTH TEXAS BANK 1,320,000 West Coast Bancorp (c) 33,541 PORTLAND SMALL BUSINESS LENDER 1,850,000 Depfa Bank (Ireland) (f) 30,941 INTERNATIONAL PUBLIC SECTOR FINANCE 195,000 Komercni Banka (Czech Republic) (f) 28,372 LEADING CZECH UNIVERSAL BANK 1,758,000 Republic 26,862 MICHIGAN BANK 756,000 Chittenden 21,720 VERMONT & WESTERN MASSACHUSETTS BANK 2,150,000 Den Norske Bank (Norway) (f) 21,094 LARGEST NORWEGIAN BANK 500,000 CityBank Lynnwood (c) 18,075 SEATTLE REAL ESTATE LENDER 370,000 Cullen Frost Bankers 17,982 SAN ANTONIO BANK 479,000 Great Southern Bancorp 16,765 MISSOURI REAL ESTATE LENDER 400,000 CorpBanca (Chile) (b) 11,500 CHILEAN LOCAL BANK 1,000,000 Credito Emiliano (Italy) (f) 9,899 ITALIAN REGIONAL BANK 29 Columbia Acorn Fund >Statement of Investments, continued NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >BANKS--CONTINUED 493,000 West Bancorporation $ 8,682 DES MOINES SMALL BUSINESS BANK 358,000 Cascade Financial 6,730 SEATTLE COMMUNITY BANK 82,000 BankFirst 6,476 OKLAHOMA COMMUNITY BANK 111,000 First Financial BankShares 4,974 WEST TEXAS COMMUNITY BANK 169,000 First Mutual Bancshares 4,279 SEATTLE COMMUNITY BANK6 170,000 Midwest Bank 3,718 CHICAGO BANK 123,000 Sterling Bancorp 3,475 NEW YORK CITY SMALL BIZ BANK 15,000 S Y Bancorp 362 LOUISVILLE BANK ---------------------------------------------------------------------------- 772,195 >INSURANCE: 2.5% 826,000 Leucadia National 57,390 INSURANCE HOLDING COMPANY 138,000 Markel (b) 50,232 SPECIALTY INSURANCE 995,000 Protective Life 42,477 LIFE INSURANCE 575,000 Philadelphia Consolidated Holding (b) 38,031 SPECIALTY INSURANCE 1,020,000 HCC Insurance Holdings 33,782 SPECIALTY INSURANCE 710,000 Selective Insurance Group 31,410 COMMERCIAL & PERSONAL LINES INSURANCE 1,174,000 Scottish Re Group 30,407 LIFE REINSURANCE 570,000 RLI 23,695 SPECIALTY INSURANCE 210,000 StanCorp Financial 17,325 GROUP LIFE & DISABILITY INSURANCE 340,000 Stewart Information Services 14,161 TITLE COMPANY 700,000 United National Group (b) 13,034 SPECIALTY INSURANCE ---------------------------------------------------------------------------- 351,944 >SAVINGS & LOANS: 1.9% 3,196,000 People's Bank of Bridgeport 124,292 CONNECTICUT SAVINGS & LOAN 1,178,000 Anchor Bancorp Wisconsin (c) 34,339 WISCONSIN THRIFT 1,700,000 Housing Development Finance (India) 30,113 PREMIER MORTGAGE LENDER IN INDIA 1,059,000 Washington Federal 28,106 MORTGAGE LENDER 487,000 Downey Financial 27,759 CALIFORNIA HOME LENDER 226,000 FirstFed Financial (b) 11,723 SANTA MONICA SAVINGS & LOAN 200,000 Bankinter (Spain) (f) 10,615 MORTGAGE LENDER NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 160,000 Provident Bancorp $ 2,110 NEW YORK STATE THRIFT ---------------------------------------------------------------------------- 269,057 >FINANCE COMPANIES: 1.6% 5,831,000 AmeriCredit (b) 142,568 AUTO LENDING 1,820,000 World Acceptance (b)(c) 50,068 PERSONAL LOANS 1,000,000 Northgate (United Kingdom) 16,368 LIGHT COMMERCIAL VEHICLE RENTAL SPECIALIST 620,000 Intermediate Capital (United Kingdom) 12,952 EUROPEAN PROVIDER OF MEZZANINE CAPITAL ---------------------------------------------------------------------------- 221,956 >MONEY MANAGEMENT: 1.4% 2,390,000 SEI Investments 100,213 MUTUAL FUND ADMINISTRATION & INVESTMENT MANAGEMENT 1,195,000 Eaton Vance 62,319 SPECIALTY MUTUAL FUNDS 782,000 Nuveen Investments 30,866 SPECIALTY MUTUAL FUNDS ---------------------------------------------------------------------------- 193,398 >BROKERAGE: 0.2% 1,215,000 Investment Technology Group (b) 24,300 ELECTRONIC TRADING ---------------------------------------------------------------------------- ------------ FINANCE: TOTAL 1,832,850 ---------------------------------------------------------------------------- ENERGY/MINERALS: 9.3% >OIL/GAS PRODUCERS: 5.2% 7,000,000 XTO Energy 247,660 NATURAL GAS PRODUCER 3,000,000 Western Gas 87,750 OIL PRODUCER & COAL SEAM GAS PRODUCER 1,700,000 Ultra Petroleum (b) 81,821 NATURAL GAS PRODUCER 3,000,000 Talisman Energy (Canada) 80,865 OIL & GAS PRODUCER 15,400,000 Tullow Oil (United Kingdom) 45,011 OIL & GAS PRODUCER 930,000 Petrokazakhstan (Canada) 34,503 70,000 Petrokazakhstan (Canada) 2,597 OIL PRODUCER & REFINER IN KAZAKHSTAN 830,000 Quicksilver Resources (b) 30,527 NATURAL GAS & COAL SEAM GAS PRODUCER 500,000 Southwestern Energy (b) 25,345 NATURAL GAS PRODUCER 814,000 Denbury Resources (b) 22,344 OIL PRODUCER USING CO2 INJECTION 1,100,000 McMoran Exploration (b) 20,570 NATURAL GAS PRODUCERS & LNG DEVELOPER 1,000,000 Range Resources 20,460 OIL & GAS PRODUCER 2,265,000 Tipperary (b)(c) 11,257 COAL SEAM GAS PRODUCER 1,000,000 Fairbourne Energy (Canada) (b) 10,040 OIL & GAS PRODUCER ---------------------------------------------------------------------------- 720,750 1-800-922-6769 30 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >OIL SERVICES: 2.4% 2,300,000 FMC Technologies (b) $ 74,060 OIL & GAS WELL HEAD MANUFACTURER 710,000 Carbo Ceramics 48,990 NATURAL GAS WELL STIMULANTS 800,000 Chicago Bridge & Iron 32,000 ENGINEERING & CONSTRUCTION FOR PETROCHEMICALS & LNG 1,500,000 Pride International (b) 30,810 OFFSHORE DRILLING CONTRACTOR 2,400,000 Key Energy Services (b) 28,320 OIL & GAS WELL WORKOVER SERVICES 333,000 Fugro (Netherlands) 27,694 SURVEY & GPS SERVICES 1,250,000 Enerflex Systems (Canada) (c) 24,539 NATURAL GAS COMPRESSOR 4,750,000 Newpark Resources (b)(c) 24,463 DRILLING FLUID SERVICES TO OIL & GAS INDUSTRY 2,000,000 Saipem (Italy) (f) 23,963 OFFSHORE CONSTRUCTION & DRILLING 1,200,000 Hanover Compressor (b) 16,956 NATURAL GAS COMPRESSOR RENTAL ---------------------------------------------------------------------------- 331,795 >DISTRIBUTION/MARKETING/REFINING: 1.3% 1,600,000 Equitable Resources 97,056 NATURAL GAS UTILITY & PRODUCER 1,900,000 Oneok 53,998 NATURAL GAS UTILITY, MARKETING & PROCESSING 1,206,000 Atmos Energy 32,984 NATURAL GAS UTILITY ---------------------------------------------------------------------------- 184,038 >MINING: 0.4% 1,800,000 Xstrata (United Kingdom) 32,153 DIVERSIFIED MINING HOLDING COMPANY 900,000 Noranda (Canada) 15,793 DIVERSIFIED MINING HOLDING COMPANY 1,000,000 Ivanhoe Mines (Canada) (b) 7,207 COPPER MINING IN MONGOLIA ---------------------------------------------------------------------------- 55,153 ------------ ENERGY/MINERALS: TOTAL 1,291,736 ---------------------------------------------------------------------------- HEALTH CARE: 8.6% >SERVICES: 3.2% 2,491,000 Lincare Holdings (b) 106,241 HOME HEALTH CARE SERVICES 4,586,000 First Health Group (b) 85,805 PPO NETWORK 3,470,000 Gambro (Sweden) (f) 49,451 PRODUCTS/SERVICES FOR RENAL CARE 2,592,000 NDCHealth Group (c) 48,185 HEALTH CLAIMS PROCESSING & DRUG MARKETING SERVICES 840,000 Charles River Laboratories (b) 38,648 PHARMACEUTICAL RESEARCH 510,000 OPG Groep (Netherlands) 29,704 HEALTCARE SUPPLIES & PHARMACIES 1,333,000 Dendrite International (b) 25,860 SOFTWARE FOR PHARMACEUTICAL SALES FORCE 700,000 Accredo Health (b) 19,404 SPECIALTY PHARMACY NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 550,000 Serologicals (b) $ 12,166 BLOOD COLLECTION & ANTIBODY PRODUCTION 236,000 Omega Pharma (Belgium) 11,268 OTC PRODUCTS, PHARMACY & DENTAL SUPPLIES 440,000 Medquist (b) 6,512 MEDICAL TRANSCRIPTION SERVICES ---------------------------------------------------------------------------- 433,244 >-MEDICAL EQUIPMENT/LABORATORY SUPPLIES: 2.7% 1,629,000 Edwards Lifesciences (b) 67,213 HEART VALVES 1,240,000 Diagnostic Products (b) 68,262 IMMUNODIAGNOSTIC KITS 365,000 Essilor International (France) 28,502 EYEGLASS LENSES 1,000,000 Sola International (b) 27,540 SPECIALTY EYEGLASS LENSES 1,900,000 CTI Molecular Imaging (b) 26,961 MEDICAL DIAGNOSTIC DEVICES 1,000,000 VISX (b) 25,870 LASER EYE SURGERY EQUIPMENT 583,000 Orthofix International (b) 23,016 BONE FIXATION & STIMULATION DEVICES 200,000 Synthes-Stratec (Switzerland) (b)(f) 22,326 PRODUCTS FOR ORTHOPEDIC SURGERY 714,000 ICU Medical (b)(c) 19,521 INTRAVENOUS THERAPY PRODUCTS 750,000 Intermagnetics General (b) 19,058 MRI EQUIPMENT 390,000 Hogy Medical (Japan) (f) 18,325 DISPOSABLE SURGICAL PRODUCTS 875,000 Viasys Healthcare (b) 16,625 RESPIRATORY & NEUROLOGY MEDICAL EQUIPMENT 350,000 Haemonetics (b) 12,674 BLOOD & PLASMA COLLECTION EQUIPMENT 48,000 Diagnosticos (Brazil) 432 LARGEST PRIVATE DIAGNOSTIC SERVICES COMPANY IN BRAZIL ---------------------------------------------------------------------------- 376,325 >BIOTECHNOLOGY/DRUG DELIVERY: 1.9% 1,179,000 AtheroGenics (b) 27,777 DRUGS FOR ATHEROSCLEROSIS 519,000 Martek Biosciences (b) 26,573 FATTY ACIDS FOR BABY FORMULA & OTHER FOODS 500,000 Neurocrine Biosciences (b) 24,650 DRUGS FOR SLEEP, DIABETES, MS & ENDOMETRIOSIS 1,350,000 DOV Pharmaceutical (b)(c) 24,368 DRUGS FOR INSOMNIA, ANXIETY, PAIN & DEPRESSION 2,000,000 Medarex (b) 21,560 HUMANIZED ANTIBODIES 1,055,000 Nektar Therapeutics (b) 21,353 DRUG DELIVERY TECHNOLOGIES 1,600,000 Ligand Pharmaceuticals (b) 18,624 DRUGS FOR PAIN, CANCER, OSTEOPOROSIS, & DIABETES 2,400,000 Pozen (b)(c) 17,448 DRUGS FOR MIGRAINES 2,000,000 Lexicon Genetics (b) 15,510 DRUG DISCOVERY 776,000 NPS Pharmaceuticals (b) 14,185 DRUGS FOR OSTEOPOROSIS & HYPERPARATHYROIDISM 31 Columbia Acorn Fund >Statement of Investments, continued NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >BIOTECHNOLOGY/DRUG DELIVERY--CONTINUED 460,000 Myriad Genetics (b) $ 10,355 GENE DISCOVERY & DIAGNOSTIC PRODUCTS 635,000 Maxygen (b) 8,122 MOLECULAR BREEDING 1,708,000 Ciphergen Biosystems (b)(c) 7,344 PROTEIN CHIPS USED FOR DRUG TARGET DISCOVERY 3,500,000 La Jolla Pharmaceutical (b)(c) 5,845 LUPUS TREATMENT 865,000 Arena Pharmaceuticals (b) 5,787 NOVEL DRUG TARGETING TECHNOLOGY 638,000 Diversa (b) 5,576 MOLECULAR BREEDING 1,875,000 Locus Discovery, Series D, Pfd. (b)(e)(g) 3,750 HIGH THROUGHPUT RATIONAL DRUG DESIGN 461,000 SYRRX, Series C (b)(e)(g) 2,305 X-RAY CRYSTALLOGRAPHY 1,249,999 Perlegen Sciences (b)(e)(g) 2,237 LARGE SCALE GENE SEQUENCING 359,944 Microdose (b)(e)(g) 270 DRUG INHALERS ---------------------------------------------------------------------------- 263,639 >MEDICAL SUPPLIES: 0.3% 686,000 Techne (b) 26,685 CYTOKINES, ANTIBODIES, OTHER REAGENTS FOR LIFE SCIENCES 650,000 Owens & Minor 18,310 DISTRIBUTION OF MEDICAL SUPPLIES ---------------------------------------------------------------------------- 44,995 >PHARMACEUTICALS: 0.3% 775,000 Par Pharmaceuticals (b) 32,070 GENERICS 2,106,000 United Drug (Ireland) 9,927 IRISH PHARMACEUTICAL WHOLESALER & OUTSOURCER 10,992 Yuhan (South Korea) (b)(f) 924 OTC & PRESCRIPTION DRUG MANUFACTURER ---------------------------------------------------------------------------- 42,921 >HOSPITAL MANAGEMENT: 0.2% 500,000 Rhoen-Klinikum (Germany) (f) 30,537 HOSPITAL MANAGEMENT ---------------------------------------------------------------------------- ------------ HEALTH CARE: TOTAL 1,191,661 ---------------------------------------------------------------------------- OTHER INDUSTRIES: 3.5% >REAL ESTATE: 2.2% 1,320,000 General Growth Properties 47,731 REGIONAL SHOPPING MALLS 699,000 Forest City Enterprises, Cl. B 40,402 COMMERCIAL & RESIDENTIAL PROPERTY DEVELOPER 635,000 Macerich Company 39,878 REGIONAL SHOPPING MALLS 620,000 Mills 39,531 REGIONAL SHOPPING MALLS 650,000 SL Green Realty 39,358 MANHATTAN OFFICE BUILDINGS 575,000 Federal Realty Investment Trust 29,699 SHOPPING CENTERS NUMBER OF SHARES OR PRINCIPAL AMOUNT VALUE (000) ---------------------------------------------------------------------------- 1,375,000 Crescent Real Estate Equities $ 25,108 CLASS A OFFICE BUILDINGS 1,552,000 Highland Hospitality 17,444 HOTEL REAL ESTATE INVESTMENT TRUST 1,355,000 Sponda (Finland) (f) 13,175 OFFICE & WAREHOUSE PROPERTY COMPANY 1,000,000 Diamondrock Hospitality (b)(e) 10,200 HOTEL REAL ESTATE INVESTMENT TRUST 157,420 Security Capital European Realty (Luxembourg) (b)(e)(g) 2,692 37,407 Security Capital European Realty (Luxembourg) (b)(e)(g) 613 SELF STORAGE PROPERTIES 106,000 Am NV (Netherlands) 1,025 PROPERTY DEVELOPER ---------------------------------------------------------------------------- 306,856 >WASTE MANAGEMENT: 0.5% 1,275,000 Waste Connections (b) 43,669 SOLID WASTE MANAGEMENT 2,500,000 Allied Waste Industries (b) 23,200 SOLID WASTE MANAGEMENT ---------------------------------------------------------------------------- 66,869 >TRANSPORTATION: 0.4% 620,000 Grupo Aeroportaurio Del Sureste (Mexico) 16,957 CANCUN & COZUMEL AIRPORT OPERATOR 70,000 Kobenhavns Lufthavne (Denmark) (f) 14,824 COPENHAGEN AIRPORT AUTHORITY 15,000,000 ComfortDelGro (Singapore) 14,239 TAXI & MASS TRANSIT SERVICE 371,000 Heartland Express 8,336 TOP PERFORMING TRUCKER ---------------------------------------------------------------------------- 54,356 >REGULATED UTILITIES: 0.4% 1,650,000 Northeast Utilities 31,103 REGULATED ELECTRIC UTILITY 799,800 Red Electrica (Spain) (f) 17,901 SPANISH POWER GRID ---------------------------------------------------------------------------- 49,004 ------------ OTHER INDUSTRIES TOTAL 477,085 ---------------------------------------------------------------------------- TOTAL COMMON STOCKS AND OTHER ------------ EQUITY-LIKE SECURITIES: 92.5% 12,802,863 (COST: $7,276,617) ---------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS: 7.5% $ 100,000 -Bayer (h) 2.25% - 2.378% 1/20/05 - 2/14/05 99,774 82,000 -Pfizer (h) 2.20% - 2.28% 1/27/05 - 2/09/05 81,840 81,000 -Campbell Soup 2.07% - 2.10% 1/03/05 - 1/07/05 80,983 80,000 -Toyota Credit 2.30% -2.306% 2/10/05 -2/11/05 79,793 75,000 -Prudential Funding 2.12% - 2.23% 1/19/05 - 2/17/05 74,846 1-800-922-6769 32 PRINCIPAL AMOUNT VALUE (000) ---------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS--CONTINUED $ 70,000 Household Finance $ 69,904 2.12% - 2.26% 1/11/05 - 2/01/05 66,000 General Electric Capital 2.21% - 2.28% 1/21/05 - 2/16/05 65,887 65,000 SBC Communications (h) 2.26% - 2.31% 2/03/05 - 2/07/05 64,856 60,000 American Express Credit 2.00% 1/05/05 - 1/06/05 59,985 60,000 United Parcel Service 1.95% 1/13/05 - 1/14/05 59,960 58,000 John Hancock (h) 2.27% - 2.32% 1/11/05 - 2/02/05 57,884 55,000 Siemens Capital 2.14% - 2.18% 1/18/05 - 1/24/05 54,935 35,000 General Electric Capital 2.28% 2/15/05 34,900 30,000 Citicorp 2.14% 1/10/05 29,984 30,000 American General Finance 2.29% 2/04/05 29,935 27,000 Coca Cola 2.15% 1/26/05 26,960 25,000 Marshall + Ilsley 2.11% -2.33% 1/12/05 - 2/16/05 24,949 38,346 Repurchase Agreement with State Street Bank & Trust Co. dated 12/31/04, due 1/03/05 at 1.90% collateralized by a Federal National Mortgage Association Note, maturing 1/05/05, market value $39,115 (repurchase proceeds: $38,352) 38,346 ---------------------------------------------------------------------------- (AMORTIZED COST: $1,035,721) 1,035,721 ------------ TOTAL INVESTMENTS: 100.0% 13,838,584 (COST: $8,312,338) (A) ------------ CASH AND OTHER ASSETS LESS LIABILITIES: 0.0% 2,875 ------------ TOTAL NET ASSETS: 100% $13,841,459 ============================================================================ 33 Columbia Acorn Fund >Statement of Investments, continued -------------------------------------------------------------------------------- >Notes to Statement of Investments (in thousands) (a) At December 31, 2004, for federal income tax purposes cost of investments was $8,334,204 and net unrealized appreciation was $5,504,380 consisting of gross unrealized appreciation of $5,793,358 and gross unrealized depreciation of $288,978. (b) Non-income producing security. (c) An affiliate may include any company in which the Fund owns five percent or more of its outstanding voting shares. On December 31, 2004, the Fund held five percent or more of the outstanding voting securities of the following companies: AnswerThink 10.60% Christopher & Banks 10.47 New Horizons Worldwide 9.81 Indus International 9.78 Actuate 9.74 World Acceptance 9.71 Gibraltar Steel 9.61 Analysts International 9.50 Spartech 9.17 Skillsoft Publishing 8.95 Glacier Bancorp 8.92 Seachange International 8.90 West Coast Bancorp 8.88 Igate Capital 8.87 E.Piphany 8.75 MAPICS 8.54 Watsco 8.50 Pozen 8.32 Esco Technologies 8.21 Clark 8.02 Concurrent Computer 7.95 MRO Software 7.93 Nuco2 7.68 JDA Software Group 7.56 Gaiam 7.22 NDCHealth Group 7.20 AFC Enterprises 7.08 Bally Total Fitness 6.90 Navigant International 6.75 Princeton Review 6.71 DOV Pharmaceutical 6.30 Clarcor 6.26 Electric City 6.01 Dominion Homes 5.97 Ciphergen Biosystems 5.82 Aspect Communications 5.76 Pegasus Systems 5.75 La Jolla Pharmaceutical 5.70 Newpark Resources 5.66 Mobile Mini 5.65 Enerflex Systems 5.60 Steve Madden 5.58 Tipperary 5.48 Radiant Systems 5.46 Sports Authority 5.42 Alliance Gaming 5.39 Witness Systems 5.35 Tetra Tech 5.33 ICU Medical 5.26 Excel Technologies 5.19 Anchor Bancorp Wisconsin 5.13 Micros Systems 5.13 American Woodmark 5.13 Kronos 5.12 Coinstar 5.11 Genlyte Group 5.09 Monaco Coach 5.08 InfoUSA 5.02 CityBank Lynnwood 5.02 The aggregate cost and value of these companies at December 31, 2004, was $562,929 and $1,928,260, respectively. Investments in affiliate companies represent 13.9% of total net assets at December 31, 2004. Investment activity and income amounts relating to affiliates during the twelve months ended December 31, 2004 were as follows: Dividend Income $ 7,758 Net realized gain or loss $ 36,513 Change in unrealized gain or loss $ 59,516 Purchases $ 395,993 Proceeds from sales $ 271,683 1-800-922-6769 34 (d) On December 31, 2004, the market value of foreign securities (in thousands) represents 14.96% of total net assets. The Fund's foreign portfolio was diversified as follows: VALUE PERCENT ================================================================================ Canada $ 282,771 2.04% Ireland 214,991 1.55 United Kingdom 171,205 1.24 Japan 166,675 1.20 Netherlands 136,145 0.98 Switzerland 130,526 0.94 France 118,133 0.85 Sweden 84,622 0.61 Italy 72,912 0.53 Germany 66,988 0.48 Hong Kong 59,617 0.43 Australia 56,108 0.41 Norway 44,793 0.32 Luxembourg 41,105 0.30 Finland 38,065 0.28 Denmark 37,597 0.27 VALUE PERCENT ================================================================================ Austria $ 37,531 0.27% South Korea 30,268 0.22 India 30,113 0.22 Argentina 29,340 0.21 Spain 28,516 0.21 Czech Republic 28,372 0.21 Mexico 25,973 0.19 China 19,964 0.14 Taiwan 19,910 0.14 Brazil 18,815 0.14 South Africa 18,740 0.14 New Zealand 15,959 0.12 Singapore 14,239 0.10 Chile 11,500 0.08 Belgium 11,268 0.08 Greece 8,421 0.06 ---------- ------- Total Foreign Portfolio $2,071,182 14.96% ========== ======= (e) Denotes a restricted security, which is subject to restrictions on resale under federal securities laws. At December 31, 2004, these securities were illiquid. At December 31, 2004, these securities (in thousands) amounted to $22,667, which represents 0.16% of total net assets. Additional information on these securities is as follows:
ACQUISITION SHARES/ SECURITY DATES PAR (000) COST (000) VALUE (000) ---------------------------------------------------------------------------------------------- Diamondrock Hospitality 06/29/04 1,000 $10,000 $10,200 Locus Discovery, Series D, Pfd. 09/05/01 1,875 7,500 3,750 Gadzooks 5% Convertible 10/07/08 10/08/03 $6,000 6,000 600 Microdose 11/24/00 360 2,005 270 Perlegen Sciences 03/30/01 1,250 4,500 2,237 Security Capital European Realty 08/20/98-11/12/99 195 3,897 3,305 SYRRX, Series C 01/08/01 461 2,997 2,305 -------- -------- $36,899 $22,667 ======== ========
(f) Represents a security valued by an independent statistical fair value pricing service at 12/31/04. Foreign securities which had a market holiday on 12/31/04 were valued under this method. See Security Valuation in Note 2 for further information. (g) Represents fair value as determined in good faith under procedures approved by the Board of Trustees. (h) Security exempt from registration under Section 4(2) of the Securities Act of 1933. These securities may only be resold in exempt transactions to qualified buyers. Private resales of these securities to qualified institutional buyers are also exempt from registration pursuant to Rule 144A under the Securities Act of 1933. At December 31, 2004, these securities amounted to $304,354, which represents 2.2% of net assets. 35 Columbia Acorn International >Major Portfolio Changes in the Fourth Quarter (Unaudited) NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 Additions ---------------------------------------------------------------------------- EUROPE >UNITED KINGDOM/IRELAND BBA Group 1,200,000 2,200,000 Business Post 1,050,000 1,070,000 IAWS (Ireland) 297,100 900,000 Intermediate Capital 500,000 701,000 Jurys Doyle Hotel (Ireland) 810,000 890,000 Northgate 600,000 700,000 United Drug (Ireland) 2,950,000 3,056,000 >NETHERLANDS Kon Ten Cate 158,000 237,000 Unit 4 Agresso 0 178,000 >FRANCE Camaieu 54,000 114,000 Carbone Lorraine 0 47,000 Iliad 0 250,000 Imerys 160,000 182,000 Norbert Dentressangle 0 110,000 >GERMANY Deutsche Boerse 120,000 175,000 GFK 300,000 350,000 Grenkeleasing 0 115,000 Wincor Nixdorf 100,000 175,000 >SWITZERLAND Kuehne & Nagel 0 70,000 >SWEDEN Nobia 860,000 1,075,000 Sweco 0 80,000 >NORWAY Ekornes 220,000 462,000 >CZECH REPUBLIC Komercni Banka 118,000 141,000 >RUSSIAN FEDERATION Mechel Steel Group 0 102,000 NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 ---------------------------------------------------------------------------- ASIA >JAPAN Meitec 200,000 385,000 Park 24 170,000 750,000 >TAIWAN Advantech 0 747,000 Chicony Electronics 4,000,000 6,464,000 ---------------------------------------------------------------------------- OTHER COUNTRIES >CANADA Ivanhoe Mines 0 850,000 ---------------------------------------------------------------------------- LATIN AMERICA >BRAZIL Diagnosticos 0 156,250 1-800-922-6769 36 NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 Sales ---------------------------------------------------------------------------- EUROPE >UNITED KINGDOM/IRELAND Grafton Group (Ireland) 2,750,000 2,630,000 Jardine Lloyd Thompson 1,593,000 0 Rank Group 2,250,000 0 Smith & Nephew 1,450,000 0 Tullow Oil 7,500,000 7,245,000 >NETHERLANDS Am NV 467,000 72,000 >FRANCE/BELGIUM Bonduelle 15,000 0 Omega Pharma (Belgium) 224,000 184,000 >GERMANY Beru 75,000 0 Kali & Salz 225,000 0 >ITALY Autogrill 1,130,000 830,000 >SWEDEN Intrum Justitia 2,280,000 0 >SPAIN Gamesa 600,000 300,000 NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 ---------------------------------------------------------------------------- ASIA >JAPAN Chiyoda Integre 411,200 205,000 Otsuka Kagu 326,900 0 Uni-Charm 172,000 0 >HONG KONG/CHINA Jiangsu Expressway (China) 5,694,000 0 >SOUTH KOREA Yuhan 165,000 104,940 >INDIA Housing Development Finance 1,500,000 1,372,330 >SINGAPORE Sembcorp Logisitics 6,000,000 0 ---------------------------------------------------------------------------- OTHER COUNTRIES >CANADA Talisman Energy 795,000 635,000 ---------------------------------------------------------------------------- LATIN AMERICA >ARGENTINA Tenaris 440,000 340,000 37 Columbia Acorn International >Statement of Investments, December 31, 2004 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- COMMON STOCKS AND OTHER EQUITY-LIKE SECURITIES: 93.9% ---------------------------------------------------------------------------- EUROPE: 57.1% >UNITED KINGDOM/IRELAND: 17.5% 2,350,000 Anglo Irish Bank (Ireland) $56,977 SMALL BUSINESS & MIDDLE MARKET BANKING 2,630,000 Grafton Group (Ireland) (b) 28,499 BUILDERS, WHOLESALERS & DIY RETAILING 1,100,000 Kerry (Ireland) 26,298 FOOD INGREDIENTS 1,750,000 Exel 24,250 GLOBAL LOGISTICS & FREIGHT FORWARDING 1,275,000 Depfa Bank (Ireland) (e) 21,324 INTERNATIONAL PUBLIC SECTOR FINANCE 7,245,000 Tullow Oil 21,176 OIL & GAS PRODUCER 2,600,000 Expro International 17,889 OFFSHORE OIL FIELD SERVICES 5,494,000 RPS Group 16,032 ENVIRONMENTAL CONSULTING 900,000 IAWS (Ireland) 14,872 MANUFACTURER OF BAKED GOODS 890,000 Jurys Doyle Hotel (Ireland) 14,852 OWNER/OPERATOR OF MID-PRICED HOTELS 701,000 Intermediate Capital 14,645 EUROPEAN PROVIDER OF MEZZANINE CAPITAL 3,056,000 United Drug (Ireland) 14,405 IRISH PHARMACEUTICAL WHOLESALER & OUTSOURCER 600,000 Cobham 14,225 AEROSPACE COMPONENTS 750,000 Xstrata 13,397 DIVERSIFIED MINING HOLDING COMPANY 1,070,000 Business Post 12,766 PARCEL & EXPRESS MAIL SERVICE 2,200,000 BBA Group 12,049 AVIATION SUPPORT SERVICES & NON-WOVEN MATERIALS 1,300,000 Kensington 11,872 NON-CONFORMING MORTGAGE COMPANY 700,000 Northgate 11,457 LIGHT COMMERCIAL VEHICLE RENTAL SPECIALIST 1,200,000 Spectris 8,786 ELECTRONIC INSTRUMENTS & CONTROLS 500,000 Viridian 6,996 NORTHERN IRELAND ELECTRIC UTILITY ---------------------------------------------------------------------------- 362,767 >NETHERLANDS: 7.5% 540,000 Aalberts Industries 26,112 FLOW CONTROL & HEAT TREATMENT 278,800 Fugro 23,187 SURVEY & GPS SERVICES 327,000 OPG Groep 19,046 HEALTHCARE SUPPLIES & PHARMACIES 237,000 Kon Ten Cate 17,399 ADVANCED TEXTILES & INDUSTRIAL FABRICS 340,000 Sligro Food Group 16,717 FOOD SERVICE & WHOLESALING 400,000 Imtech 14,060 TECHNICAL ENGINEERING NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 584,000 United Services Group $13,606 TEMPORARY STAFFING SERVICES 248,000 Hunter Douglas 13,185 WINDOW SHADES & VENETIAN BLINDS 420,000 Vopak 8,915 OIL & CHEMICAL STORAGE 178,000 Unit 4 Aggresso (b) 2,749 BUSINESS & SECURITY SOFTWARE 72,000 Am NV 696 PROPERTY DEVELOPER ---------------------------------------------------------------------------- 155,672 >FRANCE/BELGIUM: 7.4% 377,500 Neopost 29,248 POSTAGE METER MACHINES 117,000 Vallourec 17,432 SEAMLESS TUBES 182,000 Imerys 15,223 INDUSTRIAL MINERALS PRODUCER 404,000 Fininfo 12,455 DATA FEEDS FOR FRENCH BANKS & BROKERS 150,000 Bacou Dalloz 11,987 SAFETY EQUIPMENT 114,000 Camaieu 11,303 WOMEN'S APPAREL RETAILER 140,000 Essilor International 10,932 EYEGLASS LENSES 360,000 Metropole TV 10,191 TELEVISION BROADCASTER 250,000 Iliad 9,441 HIGH SPEED INTERNET SERVICE PROVIDER 184,000 Omega Pharma (Belgium) 8,785 OTC PRODUCTS, PHARMACY & DENTAL SUPPLIES 60,000 Pierre & Vacances 6,863 VACATION APARTMENT LETS 110,000 Norbert Dentressangle 6,079 TRANSPORT 47,000 Carbone Lorraine (b) 2,483 ADVANCED INDUSTRIAL MATERIALS 10,000 April Group 257 INSURANCE POLICY CONSTRUCTION ---------------------------------------------------------------------------- 152,679 >GERMANY/AUSTRIA: 7.1% 315,000 Rhoen-Klinikum Pfd. (e) 19,314 300,000 Rhoen-Klinikum (e) 18,322 HOSPITAL MANAGEMENT 375,000 Wienerberger (Austria) (e) 17,872 BRICKS & CLAY ROOFING TILES 450,000 Hugo Boss Designs (e) 14,926 FASHION APPAREL 175,000 Wincor Nixdorf (b)(e) 14,043 RETAIL POS SYSTEMS & ATM MACHINES 350,000 GFK (e) 13,576 MARKET RESEARCH SERVICES 300,000 Bilfinger Berger (e) 12,292 CONSTRUCTION & RELATED SERVICES 175,000 Deutsche Boerse (e) 10,491 TRADING, CLEARING & SETTLEMENT SERVICES FOR FINANCIAL MARKETS 1-800-922-6769 38 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >GERMANY/AUSTRIA--CONTINUED 200,000 Vossloh (e) $ 9,847 RAIL INFRASTRUCTURE & DIESEL LOCOMOTIVES 800,000 Takkt (e) 8,397 MAIL ORDER RETAILER OF OFFICE & WAREHOUSE DURABLES 115,000 Grenkeleasing (e) 5,430 FINANCING FOR IT EQUIPMENT 260,000 Deutsche Beteiligungs (b)(e) 3,715 PRIVATE EQUITY INVESTMENT MANAGEMENT ---------------------------------------------------------------------------- 148,225 >SWITZERLAND: 4.6% 25,000 Geberit International (e) 18,230 PLUMBING SUPPLIES 40,000 Schindler (e) 15,799 ELEVATOR MANUFACTURER & SERVICE PROVIDER 70,000 Kuehne & Nagel (e) 15,017 FREIGHT FORWARDING/LOGISTICS 24,000 Sika (b)(e) 14,338 CHEMICALS FOR CONSTRUCTION & INDUSTRIAL APPLICATION 3,000 Pargesa (e) 10,514 INDUSTRIAL & MEDIA CONGLOMERATE 85,000 Synthes-Stratec (b)(e) 9,489 PRODUCTS FOR ORTHOPEDIC SURGERY 10,000 Givaudan (e) 6,575 INDUSTRIAL FRAGRANCES & FLAVORS 110,000 Bachem (e) 6,311 PEPTIDES ---------------------------------------------------------------------------- 96,273 >ITALY: 2.7% 270,000 Amplifon (e) 14,924 HEARING AID RETAILER 830,000 Autogrill (b)(e) 13,811 TOLLWAY RESTAURANTS 212,000 Davide Campari (e) 13,636 SPIRITS & WINE 1,000,000 Credit Emiliano (e) 9,899 ITALIAN REGIONAL BANK 3,300,000 Ducati Motor (b)(e) 3,930 MOTORCYCLES & RELATED MERCHANDISE ---------------------------------------------------------------------------- 56,200 >SWEDEN: 2.2% 394,200 Hexagon (e) 18,725 DIVERSIFIED ENGINEERING 1,075,000 Nobia (e) 17,751 KITCHEN CABINET MANUFACTURING & DISTRIBUTION 470,000 Gambro (e) 6,698 PRODUCTS/SERVICES FOR RENAL CARE 80,000 Sweco (b)(e) 1,525 NORDIC INFRASTRUCTURE/ENVIRONMENT CONSULTING ---------------------------------------------------------------------------- 44,699 >SPAIN: 1.9% 2,000,000 Abengoa (e) 19,686 ENGINEERING & CONSTRUCTION 420,000 Red Electrica (e) 9,400 SPANISH POWER GRID 120,000 Bankinter (e) 6,369 MORTGAGE LENDER NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 300,000 Gamesa (e) $ 4,182 WIND TURBINES ---------------------------------------------------------------------------- 39,637 >FINLAND: 1.5% 439,000 Jaakko Poyry (e) 13,201 ENGINEERING CONSULTANTS IN FORESTRY, ENERGY 555,000 Amer Group (e) 9,663 BRANDED SPORTING GOODS 950,000 Sponda (e) 9,237 OFFICE & WAREHOUSE PROPERTY COMPANY ---------------------------------------------------------------------------- 32,101 >NORWAY: 1.3% 462,000 Ekornes (e) 10,019 NICHE FURNITURE MANUFACTURER 910,000 Den Norske Bank (e) 8,928 LARGEST NORWEGIAN BANK 221,000 Orkla (e) 7,224 FOOD & DIVERSIFIED CONSUMER GOODS ---------------------------------------------------------------------------- 26,171 >LUXEMBOURG: 1.2% 1,880,000 SES Global 24,446 SATELLITE BROADCASTING SERVICES ---------------------------------------------------------------------------- >CZECH REPUBLIC: 1.0% 141,000 Komercni Banka (e) 20,515 LEADING CZECH UNIVERSAL BANK ---------------------------------------------------------------------------- >GREECE: 0.5% 465,000 Intralot 11,350 LOTTERY & GAMING SYSTEMS/SERVICES ---------------------------------------------------------------------------- >DENMARK: 0.4% 35,000 Kobenhavns Lufthavne (e) 7,412 COPENHAGEN AIRPORT AUTHORITY ---------------------------------------------------------------------------- >POLAND: 0.2% 167,000 Central European Distribution (b) 4,933 SPIRITS & WINE DISTRIBUTION ---------------------------------------------------------------------------- >RUSSIAN FEDERATION: 0.1% 102,000 Mechel Steel Group (b) 2,280 INTEGRATED STEEL & METALLURGICAL COAL PRODUCER ---------------------------------------------------------------------------- ------------ EUROPE: TOTAL 1,185,360 ---------------------------------------------------------------------------- ASIA: 24.2% >JAPAN: 12.9% 480,100 Daito Trust Construction (e) 22,781 APARTMENT BUILDER 2,900,000 Bank of Yokohama (e) 18,218 REGIONAL BANK 1,500,000 Wacoal (e) 18,023 WOMEN'S SPECIALTY APPAREL 220,000 Fast Retailing (e) 16,687 APPAREL RETAILER 39 Columbia Acorn International >Statement of Investments, continued NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >JAPAN--CONTINUED 385,000 Meitec (e) $ 14,321 STAFFING COMPANY SPECIALIZING IN RD ENGINEERS 5,200 Dentsu (e) 13,985 ADVERTISING AGENCY 818,000 NIFCO (e) 13,668 MOLDED PLASTIC COMPONENTS 110,000 Funai Electric (e) 13,646 CONSUMER ELECTRONICS 750,000 Park 24 (e) 13,413 PARKING LOT OPERATOR 358,000 Eneserve (e) 12,976 POWER GENERATORS 402,000 Kappa Create (e) 12,002 SUSHI CHAIN RESTAURANT OPERATOR 2,248,000 Hiroshima Bank (e) 11,876 REGIONAL BANK 330,000 Sugi Pharmacy (e) 11,192 DRUGSTORE OPERATOR 226,000 Hogy Medical (e) 10,619 DISPOSABLE SURGICAL PRODUCTS 906,000 Toyo Technica (e) 10,458 VALUE ADDED RESELLER OF IMPORTED INSTRUMENTATION 255,000 ARRK (e) 10,431 PROTOTYPES & MOLDS FOR NEW PRODUCT DEVELOPMENT 550,000 Ushio (e) 10,236 INDUSTRIAL LIGHT SOURCES 1,500,000 Fukuoka Bank (e) 9,858 REGIONAL BANK 1,400,000 Chiba Bank (e) 9,345 REGIONAL BANK 325,000 Olympus Optical (e) 6,925 MEDICAL EQUIPMENT & CAMERAS 205,000 Chiyoda Integre (e) 4,131 PLASTIC COMPONENTS FOR CONSUMER ELECTRONICS 155,200 Ain Pharmaciez (e) 3,095 DISPENSING PHARMACY/DRUGSTORE OPERATOR ---------------------------------------------------------------------------- 267,886 >HONG KONG/CHINA: 3.9% 25,000,000 Global Bio-Chem Technology Group (China) 16,564 1,875,000 Global Bio-Chem Technology Group Warrants (China) (b) 89 CHINESE REFINER OF CORN-BASED COMMODITIES 6,000,000 Hong Kong Exchanges & Clearing 16,094 HONG KONG EQUITY & DERIVATIVES OPERATOR 6,000,000 Techtronic Industries 13,122 MANUFACTURER OF POWER TOOLS & MOTORIZED APPLIANCES 2,000,000 Esprit Holdings 12,093 GLOBAL APPAREL BRAND MANAGER 9,800,000 Hainan Meilan Airport (China) 8,258 CHINESE AIRPORT OPERATOR 17,700,000 Linmark 6,376 SOURCING OF CONSUMER GOODS 28,000,000 Lerado Group 4,179 BABY STROLLERS & INFANT CAR SEATS MANUFACTURER 14,500,000 Ngai Lik Industrial 3,656 CONSUMER ELECTRONICS MANUFACTURER ---------------------------------------------------------------------------- 80,431 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >TAIWAN: 2.9% 15,740,000 Phoenixtec Power $ 18,963 UNINTERRUPTABLE POWER SUPPLIES 1,230,000 ASE Test (b) 8,315 SEMICONDUCTOR PACKAGING & TEST SERVICES 3,683,000 Springsoft Systems 7,878 ELECTRONIC DESIGN AUTOMATION SOFTWARE 5,302,590 Wah Lee Industrial 6,922 DISTRIBUTOR OF CHEMICALS, MATERIALS & EQUIPMENT 8,470,000 Bank of Kaohsiung 6,741 COMMERICAL BANKING 6,464,000 Chicony Eletronic 6,568 PC POWER SUPPLIES & KEYBOARDS 3,010,000 Taiwan Fu Hsing 3,276 DOOR LOCK MANUFACTURER 747,000 Advantech 1,809 EMBEDDED COMPUTERS ---------------------------------------------------------------------------- 60,472 >SOUTH KOREA: 1.7% 250,000 Hyundai Mobis (b)(e) 15,776 AUTO PARTS 104,940 Yuhan (b)(e) 8,820 OTC & PRESCRIPTION DRUG MANUFACTURER 100,000 Samsung Fire & Marine (e) 7,890 NON-LIFE INSURANCE 200,000 Samyoung Heat Exchange (e) 2,051 POWER PLANT RELATED MACHINERY ---------------------------------------------------------------------------- 34,537 >INDIA: 1.2% 1,372,330 Housing Development Finance 24,308 PREMIER MORTGAGE LENDER IN INDIA ---------------------------------------------------------------------------- >SINGAPORE: 1.1% 15,000,000 ComfortDelGro 14,239 TAXI & MASS TRANSIT SERVICE 1,000,000 Venture 9,738 ELECTRONIC CONTRACT MANUFACTURER ---------------------------------------------------------------------------- 23,977 >INDONESIA: 0.5% 55,000,000 PT Perusahaan Gas Negara (e) 11,256 GAS PIPELINE OPERATOR ---------------------------------------------------------------------------- ------------ ASIA: TOTAL 502,867 ---------------------------------------------------------------------------- OTHER COUNTRIES: 8.9% >AUSTRALIA/NEW ZEALAND: 4.1% 3,000,000 Billabong International 26,843 SURFWEAR APPAREL MANUFACTURER 350,000 Perpetual Trustees 17,204 AUSTRALIAN MUTUAL FUND MANAGER 2,500,000 Lion Nathan 16,801 BEER BREWER/DISTRIBUTOR 5,000,000 Pacific Brands 12,464 AUSTRALIAN BRANDED APPAREL 3,000,000 Sky City Entertainment (New Zealand) 11,593 CASINO/ENTERTAINMENT COMPLEX ---------------------------------------------------------------------------- 84,905 1-800-922-6769 40 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >CANADA: 3.9% 635,000 Talisman Energy $ 17,116 OIL & GAS PRODUCER 340,000 Masonite International (b) 11,694 DOOR MANUFACTURER 500,000 Corus Entertainment 10,415 TELEVISION PROGRAMMING & RADIO STATIONS 450,000 Intrawest 10,330 OWNER/OPERATOR OF SKI RESORTS 1,000,000 Fairbourne Energy (b) 10,040 OIL & GAS PRODUCER 235,000 Petrokazakhstan 8,719 OIL PRODUCER & REFINER IN KAZAKHSTAN 400,000 Noranda 7,019 DIVERSIFIED MINING HOLDING COMPANY 850,000 Ivanhoe Mines (b) 6,126 COPPER MINING IN MONGOLIA ---------------------------------------------------------------------------- 81,459 >SOUTH AFRICA: 0.9% 350,000 Edgars Consolidated Stores 18,740 LEADING RETAIL CONGLOMERATE ---------------------------------------------------------------------------- ------------ OTHER COUNTRIES: TOTAL 185,104 ---------------------------------------------------------------------------- LATIN AMERICA: 3.7% >MEXICO: 1.5% 660,000 Grupo Aeroportaurio Del Sureste 18,051 CANCUN & COZUMEL AIRPORT OPERATOR 3,000,000 Consorcio ARA (b) 9,016 AFFORDABLE HOUSING BUILDER 700,000 URBI Desarrollo (b) 3,058 AFFORDABLE HOUSING BUILDER ---------------------------------------------------------------------------- 30,125 >BRAZIL: 1.0% 640,000 Natura Cosmeticos 18,675 DIRECT RETAILER OF COSMETICS 156,250 Diagnosticos (b) 1,406 LARGEST PRIVATE DIAGNOSTIC SERVICES COMPANY IN BRAZIL ---------------------------------------------------------------------------- 20,081 NUMBER OF SHARES OR PRINCIPAL AMOUNT (000) VALUE (000) ---------------------------------------------------------------------------- >ARGENTINA: 0.8% 340,000 Tenaris $ 16,626 STEEL PIPE FOR OIL WELLS & PIPELINES ---------------------------------------------------------------------------- >CHILE: 0.4% 300,000 CorpBanca (b) 8,625 CHILEAN LOCAL BANK ---------------------------------------------------------------------------- ------------ LATIN AMERICA: TOTAL 75,457 Total Common Stocks and Other ------------ EQUITY-LIKE SECURITIES: 93.9% 1,948,788 (COST: $1,233,203) ---------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS: 5.1% $ 35,000 Colgate Palmolive 2.17% 1/07/05 (c) 34,988 32,000 American Express Credit 2.26% 1/04/05 31,994 30,000 American General Finance 2.27% 1/03/05 29,996 9,076 Repurchase Agreement with State Street Bank & Trust Co. dated 12/31/04, due 1/03/05 at 1.90% collateralized by a Federal National Mortgage Association Note, maturing 1/05/05, market value $9,260 (repurchase proceeds: $9,077) 9,076 ---------------------------------------------------------------------------- (AMORTIZED COST: $106,054) 106,054 ------------ TOTAL INVESTMENTS: 99.0% 2,054,842 (COST: $1,339,257) (A) CASH AND OTHER ASSETS LESS LIABILITIES: 1.0% 20,170 ------------ TOTAL NET ASSETS: 100% $ 2,075,012 ============================================================================ -------------------------------------------------------------------------------- >Notes to Statement of Investments (in thousands) (a) At December 31, 2004, for federal income tax purposes cost of investments was $1,354,913 and net unrealized appreciation was $699,929 consisting of gross unrealized appreciation of $721,173 and gross unrealized depreciation of $21,244. (b) Non-income producing security. (c) Security exempt from registration under Section 4(2) of the Securities Act of 1933. This security may only be resold in exempt transactions to qualified buyers. Private resales of this security to qualified institutional buyers are also exempt from registration pursuant to Rule 144A under the Securities Act of 1933. At December 31, 2004, the value of this security represents 1.7% of net assets. (d) On December 31, 2004, the Fund's total investments were denominated in currencies as follows: CURRENCY VALUE % OF NET ASSETS ================================================================ Euro $ 797,536 38.4% Japanese Yen 267,886 12.9 British Pounds 185,539 8.9 US Dollar 173,602 8.4 Other currencies less than 5% of total net assets 630,279 30.4 ---------- ------- $2,054,842 99.0% ========== ======= (e) Represents a security valued by an independent statistical fair value pricing service at 12/31/04. Foreign securities which had a market holiday on 12/31/04 were valued under this method. See Security Valuation in Note 2 for further information. 41 Columbia Acorn International >Portfolio Diversification At December 31, 2004, the Fund's portfolio investments as a percent of net assets were diversified as follows: VALUE (000) PERCENT ---------------------------------------------------------------------------- >INDUSTRIAL GOODS/SERVICES Other Industrial Services $127,951 6.2% Industrial Materials 91,176 4.4 Conglomerates 75,037 3.6 Construction 56,221 2.7 Machinery 41,146 2.0 Outsourcing & Training Services 39,976 1.9 Steel 34,058 1.6 Electrical Components 32,774 1.6 Industrial Distribution 28,499 1.4 Speciality Chemicals 20,913 1.0 ---------------------------------------------------------------------------- 547,751 26.4 >CONSUMER GOODS/SERVICES Retail 88,034 4.2 Apparels 78,632 3.8 Food 65,111 3.1 Furniture & Textiles 52,649 2.5 Beverage 30,437 1.5 Restaurants 25,813 1.2 Travel 25,182 1.2 Other Consumer Services 24,455 1.2 Nondurables 18,675 0.9 Durables Goods 17,052 0.8 Consumer Electronics 13,646 0.7 Casinos 11,593 0.6 Gaming 11,350 0.6 Leisure Products 9,663 0.5 Consumer Goods Distribution 4,933 0.2 ---------------------------------------------------------------------------- 477,225 23.0 >FINANCE Banks 182,306 8.8 Other Finance Companies 43,404 2.1 Savings & Loans 30,677 1.5 Money Management 20,919 1.0 Insurance 8,147 0.4 ---------------------------------------------------------------------------- 285,453 13.8 VALUE (000) PERCENT ---------------------------------------------------------------------------- >INFORMATION Business Information & Marketing Services $42,063 2.0% Computer Hardware & Related Equipment 41,383 2.0 Financial Processors 26,585 1.3 Satellite Broadcasting 24,446 1.2 Instrumentation 19,244 0.9 Advertising 13,985 0.7 Contract Manufacturing 13,394 0.6 Business Software 10,627 0.5 Television Programming 10,415 0.5 Television Broadcasting 10,191 0.5 Internet Related 9,441 0.5 Semiconductors & Related Equipment 8,315 0.4 Electronics Distribution 6,922 0.3 ---------------------------------------------------------------------------- 237,011 11.4 >ENERGY/MINERALS Oil/Gas Producers 57,051 2.8 Oil Services 41,076 2.0 Agricultural Commodities 16,653 0.8 Mining 15,425 0.7 Non-Ferrous Metals 13,397 0.7 Independent Power 12,976 0.6 Distribution/Marketing/ Refining 11,256 0.5 ---------------------------------------------------------------------------- 167,834 8.1 >HEALTH CARE Hospital Management 37,636 1.8 Pharmaceuticals 32,010 1.6 Medical Equipment 27,346 1.3 Services 25,744 1.2 Hospital/Laboratory Supplies 12,025 0.6 Biotechnology/Drug Delivery 6,311 0.3 ---------------------------------------------------------------------------- 141,072 6.8 >OTHER INDUSTRIES Transportation 54,039 2.6 Real Estate 22,007 1.0 Regulated Utilities 16,396 0.8 ---------------------------------------------------------------------------- 92,442 4.4 Total Common Stocks and ------------------------------- OTHER EQUITY-LIKE SECURITIES 1,948,788 93.9 SHORT-TERM OBLIGATIONS 106,054 5.1 ------------------------------- TOTAL INVESTMENTS 2,054,842 99.0 CASH AND OTHER ASSETS LESS LIABILITIES 20,170 1.0 ------------------------------- NET ASSETS $2,075,012 100.0% ---------------------------------------------------------------------------- 1-800-922-6769 42 Columbia Acorn USA >Major Portfolio Changes in the Fourth Quarter (Unaudited) NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 Additions ---------------------------------------------------------------------------- INFORMATION Ceridian 0 90,000 Maximus 0 60,000 Symbol Technologies 450,000 520,000 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Central Parking 321,700 364,400 International Speedway Motors 91,300 121,300 Petco Animal Supplies 95,000 220,000 ----------------------------------------------------------------------------- ENERGY/MINERALS Pride International 0 120,000 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES Florida Rock Industries 97,700 112,700 NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 Sales ---------------------------------------------------------------------------- INFORMATION Avocent 50,000 0 Euronet Worldwide 70,500 0 Mediacom Communications 600,000 300,000 PeopleSoft 304,991 0 THQ 64,000 0 Western Wireless 927,000 742,000 Zebra Technologies 204,000 99,000 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Leapfrog Enterprises 50,000 0 Urban Outfitters 138,200 48,200 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES Hub Group 246,000 221,000 ---------------------------------------------------------------------------- OTHER INDUSTRIES The Rouse Company 47,000 0 43 Columbia Acorn USA >Statement of Investments, December 31, 2004 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- COMMON STOCKS: 91.6% ---------------------------------------------------------------------------- INFORMATION: 28.8% >BUSINESS/CONSUMER SOFTWARE: 8.6% 287,600 Micros Systems (b) $ 22,450 INFORMATION SYSTEMS FOR RESTAURANTS & HOTELS 296,650 Kronos (b) 15,168 LABOR MANAGEMENT SOLUTIONS 974,000 JDA Software (b) 13,266 APPLICATIONS/SOFTWARE & SERVICES FOR RETAILERS 1,330,000 Novell (b) 8,977 DIRECTORY, OPERATING SYSTEM & IDENTITY MANAGEMENT SOFTWARE 473,500 MRO Software (b) 6,165 ENTERPRISE MAINTENANCE SOFTWARE 653,200 E.Piphany (b) 3,155 CRM SOFTWARE 60,000 Maximus (b) 1,867 OUTSOURCER FOR GOVERNMENT 104,200 SPSS (b) 1,630 STATISTICAL/BUSINESS ANALYSIS SOFTWARE 100,000 Aspect Communications (b) 1,114 CALL CENTER SOFTWARE 65,000 MAPICS (b) 686 MID MARKET ERP SOFTWARE ---------------------------------------------------------------------------- 74,478 >COMPUTER HARDWARE/SEMICONDUCTORS/ RELATED EQUIPMENT: 4.9% 520,000 Symbol Technologies 8,996 MOBILE COMPUTERS & BARCODE SCANNERS 365,300 Integrated Circuit Systems (b) 7,642 SILICON TIMING DEVICES 424,100 Seachange International (b) 7,396 SYSTEMS FOR VIDEO ON DEMAND & AD INSERTION 260,000 Unova (b) 6,575 BARCODE & WIRELESS LAN SYSTEMS 99,000 Zebra Technologies (b) 5,572 BAR CODE PRINTERS 70,000 Littelfuse (b) 2,391 LITTLE FUSES 100,000 Belden CDT 2,320 SPECIALTY CABLE 40,000 Rogers (b) 1,724 PCB LAMINATES & HIGH PERFORMANCE FOAMS --------------------------------------------------------------------------- 42,616 >MOBILE COMMUNICATIONS: 4.6% 742,000 Western Wireless (b) 21,741 RURAL CELLULAR PHONE SERVICES 1,005,000 Crown Castle International (b) 16,723 COMMUNICATION TOWERS 10,000 Telephone & Data Systems 769 CELLULAR & TELEPHONE SERVICES 40,000 American Tower (b) 736 COMMUNICATION TOWERS IN USA & MEXICO ---------------------------------------------------------------------------- 39,969 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >TELECOMMUNICATIONS/WIRELINE COMMUNICATIONS: 2.7% 333,800 Commonwealth Telephone (b) $ 16,576 RURAL PHONE FRANCHISES & CLEC 480,000 Andrew (b) 6,542 WIRELESS INFRASTRUCTURE EQUIPMENT --------------------------------------------------------------------------- 23,118 >BROADCASTING: 2.4% 695,000 Spanish Broadcasting (b) 7,339 SPANISH LANGUAGE RADIO STATIONS 293,100 Salem Communications (b) 7,313 RADIO STATIONS FOR RELIGIOUS PROGRAMMING 510,000 Entravision Communications (b) 4,258 SPANISH LANGUAGE TV, RADIO & OUTDOOR 138,500 Gray Television 2,147 MID MARKET AFFILIATED TV STATIONS ---------------------------------------------------------------------------- 21,057 >TRANSACTION PROCESSORS: 1.6% 211,640 Global Payments 12,389 CREDIT CARD PROCESSOR 143,100 Pegasus Systems (b) 1,803 TRANSACTION PROCESSOR FOR HOTEL INDUSTRY ---------------------------------------------------------------------------- 14,192 >COMPUTER SERVICES: 1.1% 1,005,500 AnswerThink (b) 4,685 IT INTEGRATOR FOR FORTUNE 2000 786,000 RCM Technologies (b)(c) 3,954 TECHNOLOGY ENGINEERING SERVICES 200,000 Igate Capital (b) 810 TECHNOLOGY STAFFING SERVICES ---------------------------------------------------------------------------- 9,449 >BUSINESS INFORMATION/BUSINESS SERVICES/PUBLISHING: 1.0% 102,800 Getty Images (b) 7,078 PHOTOGRAPHS FOR PUBLICATIONS & ELECTRONIC MEDIA 90,000 Ceridian (b) 1,645 HR SERVICES & PAYMENT PROCESSING --------------------------------------------------------------------------- 8,723 >INTERNET: 0.9% 285,000 ValueClick (b) 3,799 INTERNET ADVERTISING 460,600 DoubleClick (b) 3,583 INTERNET ADVERTISING & DIRECT MARKETING STATISTICAL DATA ---------------------------------------------------------------------------- 7,382 >INSTRUMENTATION: 0.3% 90,000 Trimble Navigation (b) 2,974 GPS-BASED INSTRUMENTS ---------------------------------------------------------------------------- >TELECOMMUNICATION EQUIPMENT: 0.3% 300,000 Symmetricom (b) 2,913 NETWORK TIMING & SYNCHRONIZATION DEVICES ---------------------------------------------------------------------------- >TELEVISION PROGRAMMING: 0.2% 300,000 Mediacom Communications (b) 1,875 CABLE TELEVISION FRANCHISES ---------------------------------------------------------------------------- 1-800-922-6769 44 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >CONTRACT MANUFACTURING: 0.2% 140,000 Plexus (b) $ 1,841 ELECTRONIC MANUFACTURING SERVICES ---------------------------------------------------------------------------- INFORMATION: TOTAL 250,587 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES: 17.4% >RETAIL: 7.7% 285,000 Abercrombie & Fitch 13,381 TEEN APPAREL RETAILER 435,750 Aeropostale (b) 12,824 MALL BASED TEEN RETAILER 220,000 Petco Animal Supplies (b) 8,686 PET SUPPLIES & SERVICES 393,750 Christopher & Banks 7,264 WOMEN'S APPAREL RETAILER 115,000 Chico's FAS (b) 5,236 WOMEN'S SPECIALTY RETAIL 212,500 Ann Taylor (b) 4,575 WOMEN'S APPAREL RETAILER 100,000 Michaels Stores 2,997 CRAFT & HOBBY SPECIALTY RETAILER 95,000 Genesco (b) 2,958 MULTI-CONCEPT BRANDED FOOTWEAR RETAILER 100,000 Sports Authority (b) 2,575 SPORTING GOODS STORES 129,900 Brookstone (b) 2,539 SPECIALTY CONSUMER PRODUCT RETAILER 48,200 Urban Outfitters (b) 2,140 ECLECTIC HOME & APPAREL RETAILER 60,000 West Marine (b) 1,485 LARGEST RETAILER OF BOATING SUPPLIES ---------------------------------------------------------------------------- 66,660 >CONSUMER SERVICES: 4.4% 396,000 ITT Educational Services (b) 18,830 POSTSECONDARY DEGREE PROGRAM 435,000 Coinstar (b) 11,671 OWNER/OPERATOR OF COIN COUNTING MACHINES 364,400 Central Parking 5,520 OWNER, OPERATOR & MANAGER OF PARKING LOTS & GARAGES 60,000 Weight Watchers (b) 2,464 WEIGHT LOSS PROGRAMS ---------------------------------------------------------------------------- 38,485 >APPAREL: 1.8% 194,200 Oxford Industries 8,020 BRANDED & PRIVATE LABEL APPAREL 84,000 Coach (b) 4,737 DESIGNER & RETAILER OF BRANDED LEATHER ACCESSORIES 134,000 Steven Madden (b) 2,527 WHOLESALER/RETAILER OF FASHION FOOTWEAR ---------------------------------------------------------------------------- 15,284 >NONDURABLES: 1.4% 167,200 Scotts Company (b) 12,292 CONSUMER LAWN & GARDEN PRODUCTS ---------------------------------------------------------------------------- NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >ENTERTAINMENT/LEISURE PRODUCTS: 1.0% 121,300 International Speedway Motors $ 6,404 LARGEST MOTORSPORT RACETRACK OWNER & OPERATOR 195,000 Callaway Golf 2,632 PREMIUM GOLF CLUBS & BALLS ---------------------------------------------------------------------------- 9,036 >FURNITURE: 1.0% 60,000 American Woodmark 2,621 KITCHEN CABINET MANUFACTURER 85,000 Herman Miller 2,348 OFFICE FURNITURE 20,000 Mohawk Industries (b) 1,825 CARPET & FLOORING 40,000 HNI 1,722 OFFICE FURNITURE & FIREPLACES ---------------------------------------------------------------------------- 8,516 >FOOD & BEVERAGES: 0.1% 37,000 NBTY (b) 888 VITAMINS & SUPPLEMENTS ---------------------------------------------------------------------------- ------------ CONSUMER GOODS/SERVICES: TOTAL 151,161 ---------------------------------------------------------------------------- HEALTH CARE: 14.0% >MEDICAL EQUIPMENT: 5.4% 573,000 Edwards Lifesciences (b) 23,642 HEART VALVES 141,300 Diagnostic Products 7,778 IMMUNODIAGNOSTIC KITS 170,600 VISX (b) 4,413 LASER EYE SURGERY 220,000 Viasys Healthcare (b) 4,180 RESPIRATORY & NEUROLOGY MEDICAL EQUIPMENT 245,000 CTI Molecular Imaging (b) 3,476 MEDICAL DIAGNOSTIC DEVICES 115,700 ICU Medical (b) 3,163 INTRAVENOUS THERAPY PRODUCTS ---------------------------------------------------------------------------- 46,652 >SERVICES: 4.1% 744,000 First Health Group (b) 13,920 PPO NETWORK 246,800 Lincare Holdings (b) 10,526 HOME HEALTH CARE SERVICES 423,800 NDCHealth Group 7,878 HEALTH CLAIMS PROCESSING & DRUG MARKETING SERVICES 100,000 Dendrite International (b) 1,940 SOFTWARE FOR PHARMACEUTICAL SALES FORCE 40,000 Charles River Laboratories (b) 1,840 PHARMACEUTICAL RESEARCH ---------------------------------------------------------------------------- 36,104 >BIOTECHNOLOGY/DRUG DELIVERY: 2.6% 360,000 Nektar Therapeutics (b) 7,286 DRUG DELIVERY TECHNOLOGIES 260,000 AtheroGenics (b) 6,125 DRUGS FOR ATHEROSCLEROSIS, RHEUMATOID ARTHRITIS, ASTHMA 45 Columbia Acorn USA >Statement of Investments, continued NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >BIOTECHNOLOGY/DRUG DELIVERY--CONTINUED 415,000 Ligand Pharmaceuticals (b) $ 4,831 DRUGS FOR PAIN, CANCER, OSTEOPOROSIS, & DIABETES 300,000 Lexicon Genetics (b) 2,326 DRUG DISCOVERY 154,000 SYRRX, Series C (b)(d)(e) 770 X-RAY CRYSTALLOGRAPHY 375,000 Locus Discovery, Series D, Pfd. (b)(d)(e) 750 HIGH THROUGHPUT RATIONAL DRUG DESIGN 15,000 Neurocrine Biosciences (b) 739 DRUGS FOR SLEEP, DIABETES, MS & ENDOMETRIOSIS 363,636 Metabolex, Series F (b)(d)(e) 53 DRUGS FOR DIABETES ---------------------------------------------------------------------------- 22,880 >MEDICAL SUPPLIES: 1.0% 222,800 Techne (b) 8,667 CYTOKINES, ANTIBODIES, OTHER REAGENTS FOR LIFE SCIENCES ---------------------------------------------------------------------------- >PHARMACEUTICALS: 0.9% 192,000 Par Pharmaceuticals (b) 7,945 GENERICS ---------------------------------------------------------------------------- ------------ HEALTH CARE: TOTAL 122,248 ---------------------------------------------------------------------------- ENERGY/MINERALS: 11.7% >OIL SERVICES: 5.4% 335,000 Chicago Bridge & Iron 13,400 ENGINEERING & CONSTRUCTION FOR PETROCHEMICALS & LNG 401,700 FMC Technologies (b) 12,935 OIL & GAS WELL HEAD MANUFACTURER 355,000 Hanover Compressor (b) 5,016 NATURAL GAS COMPRESSOR RENTAL 941,000 Newpark Resources (b) 4,846 DRILLING FLUID SERVICES TO OIL & GAS INDUSTRY 61,000 Carbo Ceramics 4,209 NATURAL GAS WELL STIMULANTS 120,000 Pride International (b) 2,465 OFFSHORE DRILLING CONTRACTOR 215,000 Pioneer Drilling (b) 2,169 OIL & GAS WELL DRILLER 135,000 Key Energy Services (b) 1,593 OIL & GAS WELL WORKOVER SERVICES ---------------------------------------------------------------------------- 46,633 >OIL & GAS PRODUCERS: 4.1% 610,000 Quicksilver Resources (b) 22,436 NATURAL GAS & COAL SEAM GAS PRODUCER 272,000 Western Gas 7,956 OIL & COAL SEAM GAS PRODUCER 52,100 Southwestern Energy (b) 2,641 NATURAL GAS PRODUCER 75,000 Range Resources 1,534 OIL & GAS PRODUCER 70,000 McMoran Exploration (b) 1,309 NATURAL GAS PRODUCERS & LNG DEVELOPER ---------------------------------------------------------------------------- 35,876 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >DISTRIBUTION/MARKETING/REFINING: 2.2% 115,600 Equitable Resources $ 7,012 NATURAL GAS UTILITY & PRODUCER 245,000 Oneok 6,963 NATURAL GAS UTILITY, MARKETING & PROCESSING 193,000 Atmos Energy 5,278 NATURAL GAS UTILITY ---------------------------------------------------------------------------- 19,253 ------------ ENERGY/MINERALS: TOTAL 101,762 ---------------------------------------------------------------------------- FINANCE: 10.0% >FINANCE COMPANIES: 4.7% 1,091,500 AmeriCredit (b) 26,687 AUTO LENDING 520,200 World Acceptance (b) 14,311 PERSONAL LOANS ---------------------------------------------------------------------------- 40,998 >INSURANCE: 2.8% 430,000 HCC Insurance Holdings 14,241 SPECIALTY INSURANCE 16,500 Markel (b) 6,006 SPECIALTY INSURANCE 35,000 Philadelphia Consolidated Holding (b) 2,315 SPECIALTY INSURANCE 91,000 United National Group (b) 1,694 SPECIALTY INSURANCE ---------------------------------------------------------------------------- 24,256 >BANKS: 1.7% 263,000 TCF Financial 8,453 GREAT LAKES BANK 197,656 Chittenden 5,678 VERMONT & WESTERN MASSACHUSETTS BANK 10,000 West Bancorporation 176 DES MOINES SMALL BUSINESS BANK 2,900 First Financial BankShares 130 WEST TEXAS COMMUNITY BANK ---------------------------------------------------------------------------- 14,437 >SAVINGS & LOAN: 0.8% 69,000 Downey Financial 3,933 CALIFORNIA HOME LENDER 116,400 Anchor Bancorp Wisconsin 3,393 WISCONSIN THRIFT ---------------------------------------------------------------------------- 7,326 ------------ FINANCE: TOTAL 87,017 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES: 9.2% >MACHINERY: 3.9% 282,000 Esco Technologies (b) 21,615 AUTOMATIC ELECTRIC METER READERS 194,000 Pentair 8,451 PUMPS, WATER TREATMENT & TOOLS 110,000 Ametek 3,924 AEROSPACE/INDUSTRIAL INSTRUMENTS ---------------------------------------------------------------------------- 33,990 1-800-922-6769 46 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >LOGISTICS: 1.3% 221,000 Hub Group (b) $ 11,540 TRUCK & RAIL FREIGHT FORWARDER ---------------------------------------------------------------------------- >INDUSTRIAL GOODS: 1.2% 112,000 Genlyte Group (b) 9,596 COMMERCIAL LIGHTING FIXTURES 25,000 Donaldson 814 INDUSTRIAL AIR FILTRATION ---------------------------------------------------------------------------- 10,410 >WATER: 0.9% 134,000 Cuno (b) 7,959 FILTRATION & FLUIDS CLARIFICATION ---------------------------------------------------------------------------- >CONSTRUCTION: 0.8% 112,700 Florida Rock Industries 6,709 CONCRETE & AGGREGATES ---------------------------------------------------------------------------- >SPECIALTY CHEMICALS/INDUSTRIAL MATERIALS: 0.4% 114,400 Spartech 3,099 PLASTICS DISTRIBUTION & COMPOUNDING ---------------------------------------------------------------------------- >INDUSTRIAL SERVICES: 0.3% 95,000 Clark (b) 1,474 EXECUTIVE COMPENSATION & BENEFITS CONSULTING 41,900 Insurance Auto Auctions (b) 939 AUTO SALVAGE SERVICES ---------------------------------------------------------------------------- 2,413 >INDUSTRIAL DISTRIBUTION: 0.2% 100,000 Nuco2 (b) 2,219 BULK CO2 GAS DISTRIBUTION TO RESTAURANTS ---------------------------------------------------------------------------- >OUTSOURCING SERVICES: 0.2% 269,500 Quanta Services (b) 2,156 ELECTRICAL & TELECOM CONSTRUCTION SERVICES ---------------------------------------------------------------------------- ------------ INDUSTRIAL GOODS/SERVICES: TOTAL 80,495 ---------------------------------------------------------------------------- OTHER INDUSTRIES: 0.5% >REAL ESTATE: 0.3% 100,000 Crescent Real Estate Equities 1,826 CLASS A OFFICE BUILDINGS 35,000 Highland Hospitality 393 HOTEL REAL ESTATE INVESTMENT TRUST ---------------------------------------------------------------------------- 2,219 >REGULATED UTILITIES: 0.2% 90,000 Northeast Utilities 1,696 REGULATED ELECTRIC UTILITY ---------------------------------------------------------------------------- ------------ OTHER INDUSTRIES: TOTAL 3,915 ------------ TOTAL COMMON STOCKS: 91.6% 797,185 (COST: $516,601) PRINCIPAL AMOUNT (000) VALUE (000) ---------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS: 8.3% $ 23,000 BellSouth 2.29% 1/07/05 (f) $ 22,991 23,000 Chevron/Texaco Funding 2.26% 1/04/05 22,996 26,603 Repurchase Agreement with State Street Bank & Trust Co. dated 12/31/04, due 1/03/05 at 1.90% collateralized by a Federal National Mortgage Association Note, maturing 1/05/05, market value $27,136 (repurchase proceeds: $26,607) 26,603 ---------------------------------------------------------------------------- (AMORTIZED COST: $72,590) 72,590 ------------ TOTAL INVESTMENTS: 99.9% 869,775 (COST: $589,191) (A) CASH AND OTHER ASSETS LESS LIABILITIES: 0.1% 907 ------------ TOTAL NET ASSETS: 100% $ 870,682 ============================================================================ 47 Columbia Acorn USA >Statement of Investments, December 31, 2004 -------------------------------------------------------------------------------- >Notes to Statement of Investments (in thousands) (a) At December 31, 2004, for federal income tax purposes cost of investments was $589,444 and net unrealized appreciation was $280,331 consisting of gross unrealized appreciation of $302,917 and gross unrealized depreciation of $22,586. (b) Non-income producing security. (c) An affiliate may include any company in which the Fund owns five percent or more of its outstanding voting shares. On December 31, 2004, the Fund held five percent or more of the outstanding voting securities of the following company: RCM Technologies 6.92% The aggregate cost and value of this company at December 31 , 2004, was $5,636 and $3,954, respectively. Investments in affiliate companies represent 0.5% of total net assets at December 31, 2004. Investment activity and income amounts relating to affiliates during the twelve months ended December 31, 2004, were as follows: Dividend Income $ -- Net realized gain or loss $(3,800) Change in unrealized gain or loss $(1,838) Purchases $ -- Proceeds from sales $ 562 (d) Denotes a restricted security, which is subject to restrictions on resale under federal securities laws. At December 31, 2004, these securities were illiquid. At December 31, 2004, these securities (in thousands) amounted to $1,573 which represents 0.2% of total net assets. Additional information on these securities is as follows:
Acquisition Security Dates Shares (000) Cost (000) Value (000) --------------------------------------------------------------------------------------------- Locus Discovery, Series D, Pfd. 09/05/01 375 $1,500 $ 750 Metabolex, Series F 05/11/00 364 2,000 53 SYRRX, Series C 01/08/01 154 1,001 770 ------- ------- $4,501 $1,573 ======= =======
(e) Represents fair value as determined in good faith under procedures approved by the Board of Trustees. (f) Security exempt from registration under Section 4(2) of the Securities Act of 1933. This security may only be resold in exempt transactions to qualified buyers. Private resales of this security to qualified institutional buyers are also exempt from registration pursuant to Rule 144A under the Securities Act of 1933. At December 31, 2004, the value of this security represents 2.6% of net assets. 1-800-922-6769 48 Columbia Acorn International Select >Major Portfolio Changes in the Fourth Quarter (Unaudited) NUMBER OF SHARES -------------------------------- 09/30/04 12/31/04 Additions ----------------------------------------------------------------------------- EUROPE >UNITED KINGDOM/IRELAND Compass Group 120,000 220,000 Depfa Bank (Ireland) 98,000 114,000 Exel 135,000 155,000 >SWITZERLAND Kuehne & Nagel 0 5,500 Synthes-Stratec 5,000 10,000 >FRANCE Neopost 25,100 31,000 >NORWAY Orkla 0 26,000 >CZECH REPUBLIC Komercni Banka 12,000 15,000 >GERMANY Deutsche Boerse 0 13,000 ----------------------------------------------------------------------------- ASIA >JAPAN Hoya 12,400 15,000 Shimano 35,000 59,000 >HONG KONG/CHINA Global Bio-Chem Technology Group (China) 0 800,000 Hong Kong Exchanges & Clearing 0 425,000 >SINGAPORE ComfortDelGro 0 600,000 ----------------------------------------------------------------------------- OTHER COUNTRIES >CANADA Kinross Gold 80,000 164,400 >AUSTRALIA Lion Nathan 260,000 300,000 NUMBER OF SHARES -------------------------------- 09/30/04 12/31/04 SALES ----------------------------------------------------------------------------- EUROPE >UNITED KINGDOM Anglo Irish Bank (Ireland) 160,000 140,000 BG Group 240,000 0 Jardine Lloyd Thompson 100,000 0 Rank Group 200,000 0 Smith & Nephew 46,000 0 ----------------------------------------------------------------------------- ASIA >JAPAN Uni-Charm 25,100 0 ----------------------------------------------------------------------------- LATIN AMERICA >ARGENTINA Tenaris 39,200 29,200 49 Columbia Acorn International Select >Statement of Investments, December 31, 2004 NUMBER OF SHARES VALUE (000) ----------------------------------------------------------------------------- COMMON STOCKS: 89.9% ----------------------------------------------------------------------------- EUROPE: 53.5% >UNITED KINGDOM/IRELAND: 20.3% 140,000 Anglo Irish Bank (Ireland) $ 3,394 SMALL BUSINESS & MIDDLE MARKET BANKING 155,000 Exel 2,148 GLOBAL LOGISTICS & FREIGHT FORWARDING 114,000 Depfa Bank (Ireland) (d) 1,907 INTERNATIONAL PUBLIC SECTOR FINANCE 104,000 Grafton Group (Ireland) (b) 1,127 BUILDERS, WHOLESALERS & DIY RETAILING 220,000 Compass Group 1,038 INTERNATIONAL CONCESSION & CONTRACT CATERER 40,000 Kerry (Ireland) 956 FOOD INGREDIENTS 70,000 British Sky Broadcasting 754 DIGITAL SATELLITE BROADCASTING 17,000 Cobham 403 AEROSPACE COMPONENTS 6,000 Intermediate Capital 125 EUROPEAN PROVIDER OF MEZZANINE CAPITAL ----------------------------------------------------------------------------- 11,852 >SWITZERLAND: 10.3% 1,900 Geberit International (d) 1,386 PLUMBING SUPPLIES 5,500 Kuehne & Nagel (d) 1,180 FREIGHT FORWARDING/LOGISTICS 10,000 Synthes-Stratec (b)(d) 1,116 PRODUCTS FOR ORTHOPEDIC SURGERY 7,000 Swatch Group (d) 1,026 WATCH & ELECTRONICS MANUFACTURER 2,300 Schindler (d) 909 ELEVATOR MANUFACTURER & SERVICE PROVIDER 600 Givaudan (d) 395 INDUSTRIAL FRAGRANCES & FLAVORS ----------------------------------------------------------------------------- 6,012 >FRANCE/BELGIUM: 7.1% 31,000 Neopost 2,402 POSTAGE METER MACHINES 14,000 Imerys 1,171 INDUSTRIAL MINERALS PRODUCER 7,000 Essilor International 547 EYEGLASS LENSES ----------------------------------------------------------------------------- 4,120 >NORWAY: 4.1% 157,500 Den Norske Bank (d) 1,545 LARGEST NORWEGIAN BANK 26,000 Orkla (d) 850 FOOD & DIVERSIFIED CONSUMER GOODS ----------------------------------------------------------------------------- 2,395 >CZECH REPUBLIC: 3.7% 15,000 Komercni Banka (d) 2,183 LEADING CZECH UNIVERSAL BANK ----------------------------------------------------------------------------- >LUXEMBOURG: 2.7% 120,000 SES Global 1,560 SATELLITE BROADCASTING SERVICES ----------------------------------------------------------------------------- NUMBER OF SHARES VALUE (000) ----------------------------------------------------------------------------- >GERMANY: 2.6% 13,000 Deutsche Boerse (d) $ 779 TRADING, CLEARING & SETTLEMENT SERVICES FOR FINANCIAL MARKETS 12,000 Rhoen-Klinikum (d) 736 HOSPITAL MANAGEMENT ----------------------------------------------------------------------------- 1,515 >SPAIN: 1.7% 43,000 Red Electrica (d) 962 SPANISH POWER GRID ----------------------------------------------------------------------------- >ITALY: 1.0% 34,000 Autogrill (b)(d) 566 TOLLWAY RESTAURANTS ----------- EUROPE: TOTAL 31,165 ----------------------------------------------------------------------------- ASIA: 24.9% >JAPAN: 20.3% 38,000 Daito Trust Construction (d) 1,803 APARTMENT BUILDER 15,000 Hoya (d) 1,694 OPTO-ELECTRICAL COMPONENTS & EYEGLASS LENSES 59,000 Shimano (d) 1,681 BICYCLE COMPONENTS & FISHING TACKLE 9,700 Funai Electric (d) 1,203 CONSUMER ELECTRONICS 64,000 Ushio (d) 1,191 INDUSTRIAL LIGHT SOURCES 32,300 Sugi Pharmacy (d) 1,095 DRUGSTORE OPERATOR 181,800 Hiroshima Bank (d) 960 REGIONAL BANK 11,500 Fast Retailing (d) 872 APPAREL RETAILER 310 Dentsu (d) 834 ADVERTISING AGENCY 23,000 Olympus Optical (d) 490 MEDICAL EQUIPMENT & CAMERAS ----------------------------------------------------------------------------- 11,823 >HONG KONG/CHINA: 2.9% 425,000 Hong Kong Exchanges & Clearing 1,140 HONG KONG EQUITY & DERIVATIVES OPERATOR 800,000 Global Bio-Chem Technology Group (China) 530 CHINESE REFINER OF CORN-BASED COMMODITIES ----------------------------------------------------------------------------- 1,670 >SINGAPORE: 1.7% 600,000 ComfortDelGro 570 TAXI & MASS TRANSIT SERVICE 45,000 Venture 438 ELECTRONIC CONTRACT MANUFACTURER ----------------------------------------------------------------------------- 1,008 ----------- ASIA: TOTAL 14,501 ----------------------------------------------------------------------------- 1-800-922-6769 50 NUMBER OF SHARES VALUE (000) ----------------------------------------------------------------------------- OTHER COUNTRIES: 9.1% >CANADA: 5.7% 47,000 Talisman Energy $ 1,267 OIL & GAS PRODUCER 164,400 Kinross Gold (b) 1,158 GOLD MINING 50,000 Noranda 877 DIVERSIFIED MINING HOLDING COMPANY ----------------------------------------------------------------------------- 3,302 >AUSTRALIA: 3.4% 300,000 Lion Nathan 2,016 BEER BREWER/DISTRIBUTOR ----------------------------------------------------------------------------- ----------- OTHER: TOTAL 5,318 ----------------------------------------------------------------------------- LATIN AMERICA: 2.4% >ARGENTINA: 2.4% 29,200 Tenaris 1,428 STEEL PIPE FOR OIL WELLS & PIPELINES ----------------------------------------------------------------------------- ----------- LATIN AMERICA: TOTAL 1,428 ----------- TOTAL COMMON STOCKS: 89.9% 52,412 (COST: $36,884) PRINCIPAL AMOUNT (000) VALUE (000) ----------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS: 10.6% $ 6,163 Repurchase Agreement with State Street Bank & Trust Co. dated 12/31/04, due 1/03/05 at 1.90% collateralized by a Federal Home Loan Bank Note, maturing 4/02/18, market value $6,286 (repurchase proceeds: $6,164) $ 6,163 ----------------------------------------------------------------------------- (COST: $6,163) 6,163 TOTAL INVESTMENTS: 100.5% 58,575 (COST: $43,047) (A) ----------- CASH AND OTHER ASSETS LESS LIABILITIES: (0.5%) (287) ----------- TOTAL NET ASSETS: 100% $58,288 ============================================================================= >Notes to Statement of Investments (in thousands) (a) -At December 31, 2004, for federal income tax purpose cost of investments was $44,012 and net unrealized appreciation was $14,563 consisting of gross unrealized appreciation of $15,223 and gross unrealized depreciation of $660. (b) Non-income producing security. (c) On December 31, 2004, the Fund's total investments were denominated in currencies as follows: CURRENCY VALUE % OF NET ASSETS ================================================== Euro $16,107 27.6% Japanese Yen 11,823 20.3 US Dollar 7,591 13.0 Swiss Franc 6,012 10.3 British Pounds 4,469 7.7 Canadian Dollar 3,302 5.7 Other currencies less than 5% of total net assets 9,271 15.9 ------- ------ $58,575 100.5% ======= ====== (d) Represents a security valued by an independent statistical fair value pricing service at 12/31/04. Foreign securities which had a market holiday on 12/31/04 were valued under this method. See Security Valuation in Note 2 for further information. 51 Columbia Acorn International Select >Portfolio Diversification At December 31, 2004, the Fund's portfolio investments as a percent of net assets were diversified as follows: VALUE (000) PERCENT ----------------------------------------------------------------------------- >INDUSTRIAL GOODS/SERVICES Other Industrial Services $ 4,237 7.3% Industrial Materials 2,557 4.4 Machinery 2,402 4.1 Construction 1,803 3.1 Electrical Components 1,594 2.7 Steel 1,428 2.4 Industrial Distribution 1,127 1.9 Speciality Chemicals 395 0.7 ----------------------------------------------------------------------------- 15,543 26.6 >CONSUMER GOODS/SERVICES Durable Goods 2,707 4.6 Beverage 2,016 3.5 Retail 1,967 3.4 Food 1,806 3.1 Restaurants 1,604 2.7 Consumer Electronics 1,203 2.1 ----------------------------------------------------------------------------- 11,303 19.4 >FINANCE Banks 9,989 17.2 Other Finance Companies 125 0.2 ----------------------------------------------------------------------------- 10,114 17.4 VALUE (000) PERCENT ----------------------------------------------------------------------------- >INFORMATION Financial Processors $ 1,919 3.3% Semiconductors and Related Equipment 1,694 2.9 Satellite Broadcasting and Services 1,560 2.7 Advertising 834 1.4 Television Broadcasting 754 1.3 Contract Manufacturing 438 0.7 ----------------------------------------------------------------------------- 7,199 12.3 >ENERGY/MINERALS Oil/Gas Producers 1,267 2.2 Non-Ferrous Metals 1,158 2.0 Mining 877 1.5 Agricultural Commodities (includes Forestry) 530 0.9 ----------------------------------------------------------------------------- 3,832 6.6 >HEALTH CARE Medical Equipment 2,153 3.7 Hospital Management 736 1.3 ----------------------------------------------------------------------------- 2,889 5.0 >OTHER INDUSTRIES Regulated Utilities 962 1.6 Transportation 570 1.0 ----------------------------------------------------------------------------- 1,532 2.6 Total Common Stocks and -------------------------------- OTHER EQUITY-LIKE SECURITIES 52,412 89.9 SHORT-TERM OBLIGATIONS 6,163 10.6 -------------------------------- TOTAL INVESTMENTS 58,575 100.5 CASH AND OTHER ASSETS LESS LIABILITIES (287) (0.5) -------------------------------- NET ASSETS $ 58,288 100.0% ============================================================================= 1-800-922-6769 52 Columbia Acorn Select >Major Portfolio Changes in the Fourth Quarter (Unaudited) NUMBER OF SHARES -------------------------------- 09/30/04 12/31/04 Additions ----------------------------------------------------------------------------- INFORMATION AnswerThink 0 647,660 Aspect Communications 0 80,200 IAC/InterActiveCorp 0 720,000 Liberty Media International 0 235,000 McAfee 2,750,000 3,150,000 Skillsoft Publishing 4,188,100 8,625,900 Tellabs 4,100,000 5,100,000 UnitedGlobalCom 0 1,100,000 ----------------------------------------------------------------------------- CONSUMER GOODS/SERVICES ITT Educational Services 1,350,000 1,395,000 International Speedway Motors 460,000 485,000 Safeway 1,550,000 2,540,000 ----------------------------------------------------------------------------- FINANCE Janus Capital 360,000 1,220,000 ----------------------------------------------------------------------------- ENERGY/MINERALS FMC Technologies 0 380,000 NUMBER OF SHARES -------------------------------- 09/30/04 12/31/04 Sales ----------------------------------------------------------------------------- INFORMATION Fair Isaac 1,000,000 537,800 PeopleSoft 2,135,000 0 Synopsys 1,040,000 860,000 ----------------------------------------------------------------------------- HEALTH CARE First Health Group 3,350,000 2,836,500 53 Columbia Acorn Select >Statement of Investments, December 31, 2004 NUMBER OF SHARES VALUE (000) ----------------------------------------------------------------------------- COMMON STOCKS: 86.6% ----------------------------------------------------------------------------- INFORMATION: 30.6% >BUSINESS SOFTWARE: 9.5% 3,150,000 McAfee (b) $ 91,130 SECURITY SOFTWARE & SERVICES 860,000 Synopsys (b) 16,873 SOFTWARE FOR DESIGNING SEMICONDUCTOR CHIPS 1,600,000 Novell (b) 10,800 DIRECTORY, OPERATING SYSTEM & IDENTITY MANAGEMENT SOFTWARE 80,200 Aspect Communications (b) 893 CALL CENTER SOFTWARE ----------------------------------------------------------------------------- 119,696 >INTERNET: 5.5% 8,625,900 Skillsoft Publishing (b)(c) 48,736 PROVIDER OF WEB-BASED LEARNING SOLUTIONS (E-LEARNING) 720,000 IAC/InterActiveCorp (b) 19,886 ----------------------------------------------------------------------------- DOMINATE INTERNET MIDDLEMAN 68,622 >BUSINESS INFORMATION: 4.8% 470,000 Moody's 40,820 CREDIT RATING SERVICE 537,800 Fair Isaac 19,727 CREDIT SCORING & DECISION ANALYTIC SOFTWARE ----------------------------------------------------------------------------- 60,547 >TELECOMMUNICATIONS EQUIPMENT: 3.5% 5,100,000 Tellabs (b) 43,809 ----------------------------------------------------------------------------- TELECOMMUNICATIONS EQUIPMENT >MOBILE COMMUNICATIONS: 3.0% 2,050,000 American Tower (b) 37,720 ----------------------------------------------------------------------------- COMMUNICATION TOWERS IN USA & MEXICO >INSTRUMENTATION: 2.4% 1,000,000 Tektronix 30,210 ANALYTICAL INSTRUMENTS ----------------------------------------------------------------------------- >TELEVISION PROGRAMMING/CATV: 1.7% 235,000 Liberty Media International (b) 10,864 CATV HOLDING COMPANY 1,100,000 UnitedGlobalCom (b) 10,626 VIDEO, VOICE & DATA SERVICES OUTSIDE THE USA ----------------------------------------------------------------------------- 21,490 >COMPUTER SERVICES: 0.2% 647,660 AnswerThink (b) 3,018 IT INTEGRATOR FOR FORTUNE 2000 -------------- INFORMATION: TOTAL 385,112 ----------------------------------------------------------------------------- CONSUMER GOODS/SERVICES: 30.4% >RETAIL: 10.5% 2,540,000 Safeway (b) 50,140 RETAIL FOOD & DRUG STORES 975,000 Abercrombie & Fitch 45,776 TEEN APPAREL RETAILER 750,000 Costco 36,307 WAREHOUSE SUPERSTORES ----------------------------------------------------------------------------- 132,223 NUMBER OF SHARES VALUE (000) ----------------------------------------------------------------------------- >CONSUMER SERVICES: 7.7% 1,395,000 ITT Educational Services (b) $ 66,332 POSTSECONDARY DEGREE PROGRAMS 728,000 Weight Watchers (b) 29,899 WEIGHT LOSS PROGRAM ----------------------------------------------------------------------------- 96,231 >FURNITURE & MANUFACTURERS: 5.4% 630,000 Coach (b) 35,532 DESIGNER & RETAILER OF BRANDED LEATHER ACCESSORIES 1,160,000 Herman Miller 32,051 OFFICE FURNITURE ----------------------------------------------------------------------------- 67,583 >LEISURE VEHICLES: 4.8% 1,000,000 Harley-Davidson 60,750 MOTORCYCLES & RELATED MERCHANDISE >ENTERTAINMENT: 2.0% 485,000 International Speedway Motors 25,608 LARGEST MOTORSPORT RACETRACK OWNER & OPERATOR ----------------------------------------------------------------------------- ----------- CONSUMER GOODS/SERVICES: TOTAL 382,395 ----------------------------------------------------------------------------- FINANCE: 14.6% >BANKS: 7.0% 1,970,000 TCF Financial 63,316 GREAT LAKES BANK 750,000 Associated Banc-Corp 24,908 MIDWEST BANK ----------------------------------------------------------------------------- 88,224 >MONEY MANAGEMENT: 4.1% 729,500 SEI Investments 30,588 MUTUAL FUND ADMINISTRATION & INVESTMENT MANAGEMENT 1,220,000 Janus Capital 20,508 MANAGES MUTUAL FUNDS ----------------------------------------------------------------------------- 51,096 >INSURANCE: 3.5% 120,000 Markel (b) 43,680 SPECIALTY INSURANCE ----------------------------------------------------------------------------- ----------- FINANCE: TOTAL 183,000 ----------------------------------------------------------------------------- HEALTH CARE: 7.3% >SERVICES: 7.3% 2,836,500 First Health Group (b) 53,071 PPO NETWORK 910,000 Lincare Holdings (b) 38,811 HOME HEALTH CARE SERVICES ----------------------------------------------------------------------------- 91,882 ----------- HEALTH CARE: TOTAL 91,882 ----------------------------------------------------------------------------- 1-800-922-6769 54 NUMBER OF SHARES VALUE (000) ----------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES: 2.7% >LOGISTICS: 2.7% 620,000 Expeditors International of Washington $ 34,646 INTERNATIONAL FREIGHT FORWARDER ----------------------------------------------------------------------------- ----------- INDUSTRIAL GOODS/SERVICES: TOTAL 34,646 ----------------------------------------------------------------------------- ENERGY/MINERALS: 1.0% >OIL SERVICES: 1.0% 380,000 FMC Technologies (b) 12,236 OIL & GAS WELL HEAD MANUFACTURER ----------------------------------------------------------------------------- ----------- ENERGY/MINERALS: TOTAL 12,236 ----------- TOTAL COMMON STOCKS: 86.6% 1,089,271 (COST: $845,268) PRINCIPAL AMOUNT (000) VALUE (000) ----------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS: 12.6% $ 30,000 American General Finance 2.27% 1/03/05 $ 29,996 29,994 Toyota Credit 2.23% 1/04/05 29,994 27,000 American Express Finance 2.23% 1/03/05 26,992 27,000 BellSouth 2.29% 1/7/05 (d) 26,990 16,000 Colgate Palmolive 2.17% 1/10/05 15,991 28,072 Repurchase Agreement with State Street Bank & Trust Co. dated 12/31/04, due 1/03/05 at 1.90% collateralized by a Federal National Mortgage Association Note, maturing 1/05/05, market value $28,636 (repurchase proceeds: $28,076) 28,072 ----------------------------------------------------------------------------- (AMORTIZED COST: $158,035) 158,035 ----------- TOTAL INVESTMENTS: 99.2% 1,247,306 (COST: $1,003,303) (A) CASH AND OTHER ASSETS LESS LIABILITIES: 0.8% 9,781 ----------- TOTAL NET ASSETS: 100% $ 1,257,087 ============================================================================= >Notes to Statement of Investments (in thousands) (a) At December 31, 2004, for federal income tax purposes cost of investments was $1,003,540 and net unrealized appreciation was $243,766 consisting of gross unrealized appreciation of $271,003 and gross unrealized depreciation of $27,237. (b) Non-income producing security. (c) An affiliate may include any company in which the Fund owns five percent or more of its outstanding voting shares. On December 31, 2004, the Fund held five percent or more of the outstanding voting securities of the following company: Skillsoft Publishing 8.12% The aggregate cost and value of this company at December 31, 2004, was $55,490 and $48,736, respectively. Investments in affiliate companies represent 3.9% of total net assets at December 31, 2004. Investment activity and income amounts relating to affiliates during the twelve months ended December 31, 2004, were as follows: Dividend Income $ -- Net realized gain or loss $ -- Change in unrealized gain or loss $ (6,754) Purchases $ 55,490 Proceeds from sales $ -- (d) Security exempt from registration under Section 4(2) of the Securities Act of 1933. This security may only be resold in exempt transactions to qualified buyers. Private resales of this security to qualified institutional buyers are also exempt from registration pursuant to Rule 144A under the Securities Act of 1933. At December 31, 2004, the value of this security represents 2.1% of net assets. 55 This page intentionally left blank. 1-800-922-6769 56 COLUMBIA ACORN FAMILY OF FUNDS > STATEMENTS OF ASSETS AND LIABILITIES > STATEMENTS OF OPERATIONS > STATEMENTS OF CHANGES IN NET ASSETS > FINANCIAL HIGHLIGHTS > NOTES TO FINANCIAL STATEMENTS 57 Columbia Acorn Family of Funds >Statements of Assets and Liabilities
COLUMBIA COLUMBIA COLUMBIA ACORN ACORN ACORN DECEMBER 31, 2004 FUND INTERNATIONAL USA -------------------- -------------------- -------------------- (in thousands) ASSETS Unaffiliated investments (including repurchase agreement), at cost $ 7,749,409 $ 1,339,257 $ 583,555 Affiliated investments, at cost (See Note 4) 562,929 -- 5,636 -------------------- -------------------- -------------------- Unaffiliated investments, at value $ 11,871,978 $ 2,045,766 $ 839,218 Affiliated investments, at value (See Note 4) 1,928,260 -- 3,954 Repurchase agreement, at value 38,346 9,076 26,603 Cash -- 57 1 Foreign currency (cost: Columbia Acorn Fund $14,854; Columbia Acorn International $16,352; Columbia Acorn International Select $50) 15,138 16,664 -- Receivable for: Investments sold 4,178 4,172 -- Fund shares sold 23,692 3,551 2,223 Dividends and interest 6,121 1,598 142 Foreign tax reclaims 872 826 1 Expense reimbursement due from Advisor -- -- -- Deferred Trustees' Compensation Investments 1,498 524 102 Other assets -- -- -- -------------------- -------------------- -------------------- Total Assets 13,890,083 2,082,234 872,244 LIABILITIES Payable to custodian bank 89 -- -- Payable for: Investments purchased 7,118 4,458 449 Fund shares redeemed 34,382 1,502 635 12b-1 Service & Distribution fees 2,594 76 109 Legal & audit fees 267 77 45 Reports to shareholders 1,759 382 171 Deferred Trustees' fees 1,498 524 102 Transfer agent fees 558 95 37 Trustees' fees 11 -- -- Custody fees 113 101 2 Other liabilities 235 7 12 -------------------- -------------------- -------------------- Total Liabilities 48,624 7,222 1,562 -------------------- -------------------- -------------------- NET ASSETS $ 13,841,459 $ 2,075,012 $ 870,682 ==================== ==================== ==================== COMPOSITION OF NET ASSETS Paid in capital $ 8,128,938 $ 1,406,584 $ 580,054 Undistributed net investment income (Accumulated net investment loss) (20,921) 16,151 (103) Accumulated net realized gain (loss) 206,806 (63,744) 10,147 Net unrealized appreciation on: Investments 5,526,246 715,585 280,584 Foreign currency translations 390 436 -- -------------------- -------------------- -------------------- NET ASSETS $ 13,841,459 $ 2,075,012 $ 870,682 ==================== ==================== ==================== Net asset value per share -- Class A (a) $ 25.93 $ 28.75 $ 24.77 (Net assets/shares) ($2,669,936/102,978) ($70,582/2,455) ($112,509/4,542) Maximum offering price per share -- Class A (b) $ 27.51 $ 30.50 $ 26.28 (Net asset value per share/ front-end sales charge) ($25.93/0.9425) ($28.75/0.9425) ($24.77/0.9425) Net asset value and offering price per share -- Class B (a) $ 25.19 $ 28.18 $ 24.14 (Net assets/shares) ($1,399,135/55,544) ($54,752/1,943) ($72,643/3,010) Net asset value and offering price per share -- Class C (a) $ 25.18 $ 28.19 $ 24.14 (Net assets/shares) ($1,083,006/43,004) ($30,547/1,084) ($39,643/1,642) Net asset value and offering price per share -- Class Z (c) $ 26.45 $ 29.03 $ 25.20 (Net assets/shares) ($8,689,382/328,514) ($1,919,131/66,102) ($645,887/25,635) COLUMBIA COLUMBIA DECEMBER 31, 2004 ACORN ACORN INTERNATIONAL SELECT SELECT (in thousands) -------------------- -------------------- ASSETS Unaffiliated investments (including repurchase agreement), at cost $ 43,047 $ 947,813 Affiliated investments, at cost (See Note 4) -- 55,490 -------------------- -------------------- Unaffiliated investments, at value $ 52,412 $ 1,170,498 Affiliated investments, at value (See Note 4) -- 48,736 Repurchase agreement, at value 6,163 28,072 Cash --* 1 Foreign currency (cost: Columbia Acorn Fund $14,854; Columbia Acorn International $16,352; Columbia Acorn International Select $50) 50 -- Receivable for: Investments sold 11 -- Fund shares sold 408 12,610 Dividends and interest 72 158 Foreign tax reclaims 13 -- Expense reimbursement due from Advisor 3 -- Deferred Trustees' Compensation Investments -- -- -------------------- -------------------- Other assets 11 16 Total Assets 59,143 1,260,091 LIABILITIES Payable to custodian bank -- -- Payable for: Investments purchased 674 681 Fund shares redeemed 78 1,508 12b-1 Service & Distribution fees 5 344 Legal & audit fees 24 42 Reports to shareholders 48 273 Deferred Trustees' fees 16 57 Transfer agent fees 6 97 Trustees' fees -- --* Custody fees 4 2 Other liabilities -- -- -------------------- -------------------- Total Liabilities 855 3,004 -------------------- -------------------- NET ASSETS $ 58,288 $ 1,257,087 ==================== ==================== COMPOSITION OF NET ASSETS Paid in capital $ 73,860 $ 1,005,933 Undistributed net investment income (Accumulated net investment loss) 49 (57) Accumulated net realized gain (loss) (31,151) 7,208 Net unrealized appreciation on: Investments 15,528 244,003 Foreign currency translations 2 -- -------------------- -------------------- NET ASSETS $ 58,288 $ 1,257,087 ==================== ==================== Net asset value per share -- Class A (a) $ 17.85 $ 20.83 (Net assets/shares) ($4,357/244) ($515,842/24,767) Maximum offering price per share -- Class A (b) $ 18.94 $ 22.10 (Net asset value per share/ front-end sales charge) ($17.85/0.9425) ($20.83/0.9425) Net asset value and offering price per share -- Class B (a) $ 17.36 $ 20.23 (Net assets/shares) ($5,097/294) ($185,545/9,172) Net asset value and offering price per share -- Class C (a) $ 17.38 $ 20.23 (Net assets/shares) ($2,543/146) ($110,435/5,459) Net asset value and offering price per share -- Class Z (c) $ 18.02 $ 21.13 (Net assets/shares) ($46,291/2,569) ($445,265/21,073)
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. (c) Redemption price per share is equal to net asset value less any applicable redemption fee. * Rounds to less than $500. See accompanying notes to financial statements. 1-800-922-6769 58 Columbia Acorn Family of Funds >Statements of Operations For the Year Ended December 31, 2004
COLUMBIA COLUMBIA COLUMBIA ACORN ACORN ACORN (in thousands) FUND INTERNATIONAL USA -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividend income $ 104,281 $ 39,926 $ 2,493 Dividend income from affiliates (See Note 4) 7,758 -- -- Interest income 11,206 777 730 -------------------- -------------------- -------------------- 123,245 40,703 3,223 Foreign taxes withheld (4,147) (3,906) (5) -------------------- -------------------- -------------------- Total Investment Income 119,098 36,797 3,218 EXPENSES: Management fee 79,884 14,433 6,825 Administration fee 5,759 838 356 12b-1 Service and Distribution fees: Class A 6,960 178 306 Class B 11,958 422 637 Class C 9,641 253 373 Transfer agent fees: Class A 3,024 102 156 Class B 3,149 154 173 Class C 1,843 60 72 Class Z 3,399 1,333 286 Custody fees 1,516 1,320 30 Trustees' fees 656 95 41 Registration & blue sky fees 593 87 111 Reports to shareholders 4,347 899 394 Legal & audit fees 1,091 145 119 Compliance fees 172 25 11 Non-recurring costs (See Note 8) 1,116 162 69 Other expenses 285 56 22 -------------------- -------------------- -------------------- Total expenses 135,393 20,562 9,981 Less custody fees paid indirectly (27) (1) (1) Less reimbursement of expenses by Advisor -- -- -- Less reimbursement of expenses by Transfer Agent (2,101) (305) (122) Non-recurring costs reimbursed (See Note 8) (1,116) (162) (69) -------------------- -------------------- -------------------- Net Expenses 132,149 20,094 9,789 -------------------- -------------------- -------------------- Net Investment Income (Loss) (13,051) 16,703 (6,571) NET REALIZED AND UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS: Net realized gain (loss) on: Unaffiliated investments 656,773 175,318 32,045 Affiliated investments (See Note 4) 36,513 -- (3,800) Foreign currency transactions (102) 563 -- -------------------- -------------------- -------------------- Net realized gain 693,184 175,881 28,245 ==================== ==================== ==================== Net change in net unrealized appreciation/ depreciation on: Unaffiliated investments 1,640,564 276,024 123,786 Affiliated investments (See Note 4) 59,516 -- (1,838) Foreign currency translations 1,919 911 -- -------------------- -------------------- -------------------- Net change in unrealized appreciation/ depreciation 1,701,999 276,935 121,948 ==================== ==================== ==================== Net realized and unrealized gain 2,395,183 452,816 150,193 -------------------- -------------------- -------------------- Net Increase in Net Assets resulting from Operations $ 2,382,132 $ 469,519 $ 143,622 ==================== ==================== ==================== COLUMBIA COLUMBIA ACORN ACORN (in thousands) INTERNATIONAL SELECT SELECT -------------------- -------------------- INVESTMENT INCOME: Dividend income $ 838 $ 4,481 Dividend income from affiliates (See Note 4) -- -- Interest income 31 1,485 -------------------- -------------------- 869 5,966 Foreign taxes withheld (87) -- -------------------- -------------------- Total Investment Income 782 5,966 EXPENSES: Management fee 431 8,663 Administration fee 22 461 12b-1 Service and Distribution fees: Class A 10 1,140 Class B 36 1,407 Class C 27 869 Transfer agent fees: Class A 9 550 Class B 19 466 Class C 7 203 Class Z 69 401 Custody fees 51 30 Trustees' fees 2 23 Registration & blue sky fees 60 220 Reports to shareholders 92 630 Legal & audit fees 32 78 Compliance fees 1 14 Non-recurring costs (See Note 8) 4 90 Other expenses 9 28 -------------------- -------------------- Total expenses 881 15,273 Less custody fees paid indirectly --* (1) Less reimbursement of expenses by Advisor (131) -- Less reimbursement of expenses by Transfer Agent (15) (222) Non-recurring costs reimbursed (See Note 8) (4) (90) -------------------- -------------------- Net Expenses 731 14,960 -------------------- -------------------- Net Investment Income (Loss) 51 (8,994) NET REALIZED AND UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS: Net realized gain (loss) on: Unaffiliated investments 7,210 47,420 Affiliated investments (See Note 4) -- -- Foreign currency transactions (2) -- -------------------- -------------------- Net realized gain 7,208 47,420 ==================== ==================== Net change in net unrealized appreciation/ depreciation on: Unaffiliated investments 2,774 140,545 Affiliated investments (See Note 4) -- (6,754) Foreign currency translations (12) -- -------------------- -------------------- Net change in unrealized appreciation/ depreciation 2,762 133,791 ==================== ==================== Net realized and unrealized gain 9,970 181,211 -------------------- -------------------- Net Increase in Net Assets resulting from Operations $ 10,021 $ 172,217 ==================== ====================
* Rounds to less than $500. See accompanying notes to financial statements. 59 Columbia Acorn Family of Funds >Statements of Changes in Net Assets
COLUMBIA COLUMBIA ACORN ACORN FUND INTERNATIONAL Year ended Year ended Year ended Year ended INCREASE (DECREASE) IN NET ASSETS December 31, December 31, December 31, December 31, ------------- ------------- ------------- ------------- (in thousands) 2004 2003 2004 2003 OPERATIONS: Net investment income (loss) $ (13,051) $ (9,911) $ 16,703 $ 15,934 Net realized gain (loss) on investments and foreign currency transactions 693,184 90,682 175,881 (7,144) Net change in net unrealized appreciation/ depreciation on investments and foreign currency translations 1,701,999 2,974,675 276,935 561,990 ------------- ------------- ------------- ------------- Net Increase from Operations 2,382,132 3,055,446 469,519 570,780 DISTRIBUTION TO SHAREHOLDERS FROM: Net investment income -- Class A -- -- (374) (106) Net realized gain -- Class A (89,952) (1,752) -- -- Net investment income -- Class B -- -- (75) -- Net realized gain -- Class B (49,011) (1,116) -- -- Net investment income -- Class C -- -- (42) -- Net realized gain -- Class C (37,671) (813) -- -- Net investment income -- Class Z (5,620) -- (16,439) (5,829) Net realized gain -- Class Z (290,184) (6,236) -- -- ------------- ------------- ------------- ------------- Total Distribution to Shareholders (472,438) (9,917) (16,930) (5,935) SHARE TRANSACTIONS: Subscriptions -- Class A 703,271 1,041,782 19,736 45,279 Distributions reinvested -- Class A 81,405 1,584 306 80 Redemptions -- Class A (453,387) (259,438) (17,531) (42,948) ------------- ------------- ------------- ------------- Net Increase (Decrease) -- Class A 331,289 783,928 2,511 2,411 Subscriptions -- Class B 90,732 364,144 10,422 11,463 Distributions reinvested -- Class B 44,616 1,018 66 -- Redemptions -- Class B (146,696) (88,744) (7,152) (5,639) ------------- ------------- ------------- ------------- Net Increase (Decrease) -- Class B (11,348) 276,418 3,336 5,824 Subscriptions -- Class C 145,878 375,513 8,030 14,870 Distributions reinvested -- Class C 30,636 673 35 -- Redemptions -- Class C (136,434) (73,548) (6,936) (13,396) ------------- ------------- ------------- ------------- Net Increase (Decrease) -- Class C 40,080 302,638 1,129 1,474 Subscriptions -- Class Z 1,596,519 1,682,204 206,434 220,802 Distributions reinvested -- Class Z 254,191 5,443 14,669 5,336 Redemptions -- Class Z (1,447,781) (667,986) (284,074) (434,204) ------------- ------------- ------------- ------------- Net Increase (Decrease) -- Class Z 402,929 1,019,661 (62,971) (208,066) ------------- ------------- ------------- ------------- Net Increase (Decrease) from Share Transactions 762,950 2,382,645 (55,995) (198,357) ------------- ------------- ------------- ------------- Redemption Fees -- -- 86 400 ------------- ------------- ------------- ------------- Total Increase in Net Assets 2,672,644 5,428,174 396,680 366,888 NET ASSETS: Beginning of period 11,168,815 5,740,641 1,678,332 1,311,444 ------------- ------------- ------------- ------------- End of period $ 13,841,459 $ 11,168,815 $ 2,075,012 $ 1,678,332 ============= ============= ============= ============= UNDISTRIBUTED NET INVESTMENT INCOME OR (ACCUMULATED NET INVESTMENT LOSS) $ (20,921) $ 6,955 $ 16,151 $ 16,493 ============= ============= ============= =============
See accompanying notes to financial statements. 1-800-922-6769 60
COLUMBIA COLUMBIA ACORN ACORN USA INTERNATIONAL SELECT Year ended Year ended Year ended Year ended INCREASE (DECREASE) IN NET ASSETS December 31, December 31, December 31, December 31, ------------- ------------- ------------- ------------- (in thousands) 2004 2003 2004 2003 OPERATIONS: Net investment income (loss) $ (6,571) $ (4,408) $ 51 $ 136 Net realized gain (loss) on investments and foreign currency transactions 28,245 7,301 7,208 (425) Net change in net unrealized appreciation/ depreciation on investments and foreign currency translations 121,948 172,313 2,762 12,936 ------------- ------------- ------------- ------------- Net Increase from Operations 143,622 175,206 10,021 12,647 DISTRIBUTION TO SHAREHOLDERS FROM: Net investment income -- Class A -- -- (6) -- Net realized gain -- Class A (622) -- -- -- Net investment income -- Class B -- -- -- -- Net realized gain -- Class B (415) -- -- -- Net investment income -- Class C -- -- -- -- Net realized gain -- Class C (224) -- -- -- Net investment income -- Class Z -- -- (151) (19) Net realized gain -- Class Z (3,487) -- -- -- ------------- ------------- ------------- ------------- Total Distribution to Shareholders (4,748) -- (157) (19) SHARE TRANSACTIONS: Subscriptions -- Class A 27,362 60,457 1,860 2,350 Distributions reinvested -- Class A 572 -- 5 -- Redemptions -- Class A (22,954) (23,188) (763) (3,212) ------------- ------------- ------------- ------------- Net Increase (Decrease) -- Class A 4,980 37,269 1,102 (862) Subscriptions -- Class B 4,936 19,327 1,664 1,577 Distributions reinvested -- Class B 375 -- -- -- Redemptions -- Class B (10,452) (8,053) (586) (989) ------------- ------------- ------------- ------------- Net Increase (Decrease) -- Class B (5,141) 11,274 1,078 588 Subscriptions -- Class C 5,707 13,056 786 3,211 Distributions reinvested -- Class C 187 -- -- -- Redemptions -- Class C (8,114) (4,575) (2,429) (3,564) ------------- ------------- ------------- ------------- Net Increase (Decrease) -- Class C (2,220) 8,481 (1,643) (353) Subscriptions -- Class Z 199,048 221,496 11,787 23,389 Distributions reinvested -- Class Z 3,134 -- 146 18 Redemptions -- Class Z (161,267) (83,975) (7,456) (25,393) ------------- ------------- ------------- ------------- Net Increase (Decrease) -- Class Z 40,915 137,521 4,477 (1,986) ------------- ------------- ------------- ------------- Net Increase (Decrease) from Share Transactions 38,534 194,545 5,014 (2,613) ------------- ------------- ------------- ------------- Redemption Fees -- -- 4 39 ------------- ------------- ------------- ------------- Total Increase in Net Assets 177,408 369,751 14,882 10,054 NET ASSETS: Beginning of period 693,274 323,523 43,406 33,352 ------------- ------------- ------------- ------------- End of period $ 870,682 $ 693,274 $ 58,288 $ 43,406 ============= ============= ============= ============= UNDISTRIBUTED NET INVESTMENT INCOME OR (ACCUMULATED NET INVESTMENT LOSS) $ (103) $ 92 $ 49 $ 142 ============= ============= ============= =============
COLUMBIA ACORN SELECT Year ended Year ended INCREASE (DECREASE) IN NET ASSETS December 31, December 31, ------------- ------------- (in thousands) 2004 2003 OPERATIONS: Net investment income (loss) $ (8,994) $ (4,419) Net realized gain (loss) on investments and foreign currency transactions 47,420 8,643 Net change in net unrealized appreciation/ depreciation on investments and foreign currency translations 133,791 95,023 ------------- ------------- Net Increase from Operations 172,217 99,247 DISTRIBUTION TO SHAREHOLDERS FROM: Net investment income -- Class A -- -- Net realized gain -- Class A (10,300) (1,172) Net investment income -- Class B -- -- Net realized gain -- Class B (3,895) (563) Net investment income -- Class C -- -- Net realized gain -- Class C (2,321) (301) Net investment income -- Class Z -- -- Net realized gain -- Class Z (8,700) (2,145) ------------- ------------- Total Distribution to Shareholders (25,216) (4,181) SHARE TRANSACTIONS: Subscriptions -- Class A 274,350 237,520 Distributions reinvested -- Class A 9,614 1,096 Redemptions -- Class A (91,343) (30,378) ------------- ------------- Net Increase (Decrease) -- Class A 192,621 208,238 Subscriptions -- Class B 61,755 78,641 Distributions reinvested -- Class B 3,496 507 Redemptions -- Class B (19,113) (9,321) ------------- ------------- Net Increase (Decrease) -- Class B 46,138 69,827 Subscriptions -- Class C 49,173 50,838 Distributions reinvested -- Class C 1,934 257 Redemptions -- Class C (17,236) (4,391) ------------- ------------- Net Increase (Decrease) -- Class C 33,871 46,704 Subscriptions -- Class Z 204,740 301,467 Distributions reinvested -- Class Z 6,716 1,920 Redemptions -- Class Z (114,619) (150,913) ------------- ------------- Net Increase (Decrease) -- Class Z 96,837 152,474 ------------- ------------- Net Increase (Decrease) from Share Transactions 369,467 477,243 ------------- ------------- Redemption Fees -- -- ------------- ------------- Total Increase in Net Assets 516,468 572,309 NET ASSETS: Beginning of period 740,619 168,310 ------------- ------------- End of period $ 1,257,087 $ 740,619 ============= ============= UNDISTRIBUTED NET INVESTMENT INCOME OR (ACCUMULATED NET INVESTMENT LOSS) $ (57) $ (21) ============= ============= 61 Columbia Acorn Family of Funds >Statements of Changes in Net Assets, continued
COLUMBIA COLUMBIA ACORN ACORN FUND INTERNATIONAL Year ended Year ended Year ended Year ended CHANGES IN SHARES OF BENEFICIAL INTEREST: December 31, December 31, December 31, December 31, ------------- ------------- ------------- ------------- (in thousands) 2004 2003 2004 2003 Subscriptions -- Class A 29,671 56,202 809 2,734 Shares issued in reinvestment and capital gains -- Class A 3,255 73 13 5 Less shares redeemed -- Class A (19,230) (14,204) (722) (2,590) ------------- ------------- ------------- ------------- Net Increase (Decrease) -- Class A 13,696 42,071 100 149 Subscriptions -- Class B 3,928 20,371 438 653 Shares issued in reinvestment and capital gains -- Class B 1,836 48 3 -- Less shares redeemed -- Class B (6,388) (5,154) (301) (343) ------------- ------------- ------------- ------------- Net Increase (Decrease) -- Class B (624) 15,265 140 310 Subscriptions -- Class C 6,282 20,690 333 911 Shares issued in reinvestment and capital gains -- Class C 1,261 32 2 -- Less shares redeemed -- Class C (5,916) (4,207) (293) (833) ------------- ------------- ------------- ------------- Net Increase (Decrease) -- Class C 1,627 16,515 42 78 Subscriptions -- Class Z 66,041 89,984 8,246 13,104 Shares issued in reinvestment and capital gains -- Class Z 9,967 249 624 313 Less shares redeemed -- Class Z (60,621) (36,502) (11,723) (25,027) ------------- ------------- ------------- ------------- Net Increase (Decrease) -- Class Z 15,387 53,731 (2,853) (11,610) ------------- ------------- ------------- ------------- Net Increase (Decrease) in Shares of Beneficial Interest 30,086 127,582 (2,571) (11,073) ------------- ------------- ------------- -------------
* Rounds to less than 500 shares. See accompanying notes to financial statements. 1-800-922-6769 62
COLUMBIA COLUMBIA ACORN ACORN USA INTERNATIONAL SELECT Year ended Year ended Year ended Year ended CHANGES IN SHARES OF BENEFICIAL INTEREST: December 31, December 31, December 31, December 31, ------------- ------------- ------------- ------------- (in thousands) 2004 2003 2004 2003 Subscriptions -- Class A 1,239 3,345 116 216 Shares issued in reinvestment and capital gains -- Class A 24 -- --* -- Less shares redeemed -- Class A (1,043) (1,309) (49) (294) ------------- ------------- ------------- ------------- Net Increase (Decrease) -- Class A 220 2,036 67 (78) Subscriptions -- Class B 229 1,087 108 137 Shares issued in reinvestment and capital gains -- Class B 16 -- -- -- Less shares redeemed -- Class B (485) (512) (38) (95) ------------- ------------- ------------- ------------- Net Increase (Decrease) -- Class B (240) 575 70 42 Subscriptions -- Class C 261 724 52 311 Shares issued in reinvestment and capital gains -- Class C 8 -- -- -- Less shares redeemed -- Class C (379) (279) (167) (339) ------------- ------------- ------------- ------------- Net Increase (Decrease) -- Class C (110) 445 (115) (28) Subscriptions -- Class Z 8,912 12,184 707 2,239 Shares issued in reinvestment and capital gains -- Class Z 128 -- 10 2 Less shares redeemed -- Class Z (7,291) (4,772) (479) (2,435) ------------- ------------- ------------- ------------- Net Increase (Decrease) -- Class Z 1,749 7,412 238 (194) ------------- ------------- ------------- ------------- Net Increase (Decrease) in Shares of Beneficial Interest 1,619 10,468 260 (258) ------------- ------------- ------------- -------------
COLUMBIA ACORN SELECT -------------------------------- Year ended Year ended CHANGES IN SHARES OF BENEFICIAL INTEREST: December 31, December 31, ------------- ------------- (in thousands) 2004 2003 Subscriptions -- Class A 14,418 14,227 Shares issued in reinvestment and capital gains -- Class A 473 63 Less shares redeemed -- Class A (4,824) (1,869) ------------- ------------- Net Increase (Decrease) -- Class A 10,067 12,421 Subscriptions -- Class B 3,336 4,854 Shares issued in reinvestment and capital gains -- Class B 177 30 Less shares redeemed -- Class B (1,035) (601) ------------- ------------- Net Increase (Decrease) -- Class B 2,478 4,283 Subscriptions -- Class C 2,649 3,102 Shares issued in reinvestment and capital gains -- Class C 98 15 Less shares redeemed -- Class C (929) (271) ------------- ------------- Net Increase (Decrease) -- Class C 1,818 2,846 Subscriptions -- Class Z 10,606 18,117 Shares issued in reinvestment and capital gains -- Class Z 326 108 Less shares redeemed -- Class Z (5,997) (8,676) ------------- ------------- Net Increase (Decrease) -- Class Z 4,935 9,549 ------------- ------------- Net Increase (Decrease) in Shares of Beneficial Interest 19,298 29,099 ------------- ------------- 63 COLUMBIA ACORN FAMILY OF FUNDS >FINANCIAL HIGHLIGHTS
COLUMBIA ACORN FUND Class Z Years ended December 31, ----------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000 NET ASSET VALUE, BEGINNING OF PERIOD $ 22.56 $ 15.50 $ 17.88 $ 17.21 $ 18.53 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) 0.04 0.03 0.02 0.05 0.10 Net realized and unrealized gain (loss) 4.78 7.05 (2.40) 1.01 1.55 ----------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 4.82 7.08 (2.38) 1.06 1.65 ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.02) -- -- (0.04) (0.11) From net realized gains (0.91) (0.02) -- (0.35) (2.86) ----------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (0.93) (0.02) -- (0.39) (2.97) =================================================================================================================================== NET ASSET VALUE, END OF PERIOD $ 26.45 $ 22.56 $ 15.50 $ 17.88 $ 17.21 =================================================================================================================================== Total Return (b) 21.51%(c) 45.68% (13.31)% 6.14% 10.06% =================================================================================================================================== RATIOS TO AVERAGE NET ASSETS Expenses (d) 0.81% 0.80% 0.82% 0.82% 0.83% Net investment income (d) 0.18% 0.17% 0.15% 0.28% 0.55% Reimbursement 0.02% -- -- -- -- Portfolio turnover rate 20% 10% 13% 20% 29% Net assets at end of period (IN MILLIONS) $ 8,689 $ 7,065 $ 4,022 $ 4,220 $ 3,983
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested. (c) Had the Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact.
COLUMBIA ACORN INTERNATIONAL Class Z Years ended December 31, ----------------------------------------------------------------------------------------------------------------------------00----- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000 NET ASSET VALUE, BEGINNING OF PERIOD $ 22.66 $ 15.40 $ 18.47 $ 23.85 $ 35.33 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) 0.25 0.21 0.14 0.12 0.01 Net realized and unrealized gain (loss) 6.37 7.13 (3.10) (5.11) (6.73) --------------------------------------------------------------------------------------------------------------------------00------- Total from Investment Operations 6.62 7.34 (2.96) (4.99) (6.72) --------------------------------------------------------------------------------------------------------------------------00------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.25) (0.08) (0.11) -- (0.66) From net realized gains -- -- -- (0.39) (4.10) ---------------------------------------------------------------------------------------------------------------------------00------ Total Distributions Declared to Shareholders (0.25) (0.08) (0.11) (0.39) (4.76) --------------------------------------------------------------------------------------------------------------------------00------- REDEMPTION FEES Redemption fees added to paid in capital 0.00(a)(b) -- -- -- -- =================================================================================================================================== NET ASSET VALUE, END OF PERIOD $ 29.03 $ 22.66 $ 15.40 $ 18.47 $ 23.85 =================================================================================================================================== Total Return (c) 29.47%(d) 47.80% (16.10)% (21.11)% (20.02)% =================================================================================================================================== RATIOS TO AVERAGE NET ASSETS Expenses (e) 1.08% 1.05% 1.06% 1.06% 1.05% Net investment income (e) 1.01% 1.19% 0.80% 0.62% 0.02% Reimbursement 0.02% -- -- -- -- Portfolio turnover rate 40% 40% 52% 45% 63% Net assets at end of period (IN MILLIONS) $ 1,919 $ 1,563 $ 1,241 $ 1,613 $ 2,459
(a) Per share data was calculated using average shares outstanding during the period. (b) Rounds to less than $0.01 per share. (c) Total return at net asset value assuming all distributions reinvested. (d) Had the Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) The benefits derived from custody fees paid indirectly had no impact.
COLUMBIA ACORN USA Class Z Years ended December 31, SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000 ----------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, BEGINNING OF PERIOD $ 21.01 $ 14.28 $ 17.52 $ 14.90 $ 16.75 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (0.15) (0.13) (0.10) (0.08) (0.05) Net realized and unrealized gain (loss) 4.48 6.86 (3.14) 2.94 (1.48) ----------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 4.33 6.73 (3.24) 2.86 (1.53) ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income -- -- -- -- (0.00)(b) From net realized gains (0.14) -- -- (0.24) (0.32) ----------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (0.14) -- -- (0.24) (0.32) NET ASSET VALUE, END OF PERIOD $ 25.20 $ 21.01 $ 14.28 $ 17.52 $ 14.90 =================================================================================================================================== Total Return (c) 20.62%(d) 47.13% (18.49)% 19.25% (8.99)% =================================================================================================================================== RATIOS TO AVERAGE NET ASSETS Expenses (e) 1.09% 1.11% 1.17% 1.17% 1.15% Net investment loss (e) (0.66)% (0.72)% (0.64)% (0.46)% (0.32)% Reimbursement 0.02% -- -- -- -- Portfolio turnover rate 18% 7% 31% 24% 45% Net assets at end of period (IN MILLIONS) $ 646 $ 502 $ 235 $ 229 $ 222
(a) Per share data was calculated using average shares outstanding during the period. (b) Rounds to less than $0.01 per share. (c) Total return at net asset value assuming all distributions reinvested. (d) Had the Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) The benefits derived from custody fees paid indirectly had no impact. See accompanying notes to financial statements. 1-800-922-6769 64-65 Spread COLUMBIA ACORN FAMILY OF FUNDS >FINANCIAL HIGHLIGHTS
COLUMBIA ACORN INTERNATIONAL SELECT Class Z Years ended December 31, ----------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000 NET ASSET VALUE, BEGINNING OF PERIOD $ 14.58 $ 10.29 $ 12.09 $ 17.15 $ 19.93 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (a) 0.04 0.06 0.03 (0.05) (0.11) Net realized and unrealized gain (loss) 3.47 4.24 (1.83) (4.92) (2.53) ----------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 3.51 4.30 (1.80) (4.97) (2.64) ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.07) (0.01) -- (0.01) (0.04) From net realized gains -- -- -- (0.08) (0.10) ----------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (0.07) (0.01) -- (0.09) (0.14) =================================================================================================================================== REDEMPTION FEES Redemption fees added to paid in capital --(a)(b) -- -- -- -- =================================================================================================================================== NET ASSET VALUE, END OF PERIOD $ 18.02 $ 14.58 $ 10.29 $ 12.09 $ 17.15 =================================================================================================================================== Total Return (c) 24.14%(d) 41.79%(c) (14.89)%(c) (29.05)%(c) (13.35)% =================================================================================================================================== RATIOS TO AVERAGE NET ASSETS Expenses (e) 1.45% 1.45% 1.45% 1.45% 1.33% Net investment income (loss) (e) 0.27% 0.56% 0.26% (0.32)% (0.42)% Reimbursement 0.29% 0.42% 0.33% 0.01% -- Portfolio turnover rate 73% 69% 102% 82% 79% Net assets at end of period (IN MILLIONS) $ 46 $ 34 $ 26 $ 37 $ 130
(a) Per share data was calculated using average shares outstanding during the period. (b) Rounds to less than $0.01 per share. (c) Total return at net asset value assuming all distributions reinvested. (d) Had the Advisor and/or Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) The benefits derived from custody fees paid indirectly had no impact.
COLUMBIA ACORN SELECT Class Z Years ended December 31, ----------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000 NET ASSET VALUE, BEGINNING OF PERIOD $ 18.20 $ 14.04 $ 15.23 $ 14.13 $ 13.70 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (0.10) (0.10) (0.10) (0.05) (0.07) Net realized and unrealized gain (loss) 3.47 4.39 (1.09) 1.18 1.59 ----------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 3.37 4.29 (1.19) 1.13 1.52 ----------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income -- -- -- -- (0.01) From net realized gains (0.44) (0.13) -- (0.03) (1.08) ----------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (0.44) (0.13) -- (0.03) (1.09) ----------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 21.13 $ 18.20 $ 14.04 $ 15.23 $ 14.13 =================================================================================================================================== Total Return (b) 18.58%(c) 30.61% (7.81)%(c) 8.00%(c) 11.68% =================================================================================================================================== RATIOS TO AVERAGE NET ASSETS Expenses 1.13%(d) 1.12%(d) 1.26%(d) 1.35% 1.34%(e) Net investment loss (0.52)%(d) (0.63)%(d) (0.67)%(d) (0.44)% (0.52)%(e) Reimbursement 0.02% -- 0.01% 0.03% -- Portfolio turnover rate 34% 16% 40% 82% 116% Net assets at end of period (IN MILLIONS) $ 445 $ 294 $ 93 $ 70 $ 67
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested. (c) Had the Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact. (e) In accordance with a requirement of the Securities and Exchange Commission, the ratios reflect total expenses prior to the reduction of custody fees for cash balances it maintains with the custodian ("custody fees paid indirectly"). The ratios of expenses to average daily net assets and net investment loss to average daily net assets net of custody fees paid indirectly would have been 1.32% and (0.50)%, respectively for the year ended December 31, 2000. See accompanying notes to financial statements. 1-800-922-6769 66-67 Spread Columbia Acorn Family of Funds >Notes to Financial Statements 1. Nature of Operations Columbia Acorn Fund, Columbia Acorn International, Columbia Acorn USA, Columbia Acorn International Select and Columbia Acorn Select (the "Funds") are each a series of Columbia Acorn Trust (the "Trust"), an open-end management investment company organized as a Massachusetts business trust. The investment objective of each Fund is to seek long-term growth of capital. The Funds may issue an unlimited number of shares. The Funds offer four classes of shares: Class A, Class B, Class C and Class Z. Class A shares are sold with a front-end sales charge. A contingent deferred sales charge ("CDSC") is assessed to Class A shares purchased without an initial sales charge on redemptions made within eighteen months on an original purchase of $1 million to $25 million. Class B shares are subject to a CDSC. Class B shares will convert to Class A shares in three, four or eight years after purchase, depending on the program under which shares are purchased. Class C shares are subject to a CDSC on redemptions made within one year after purchase. Effective January 3, 2005, Columbia Acorn International and Columbia Acorn International Select imposed a 2% redemption fee on Class A, Class B and Class C shares that are owned 60 days or less. See "Fund Policy on Trading of Fund Shares and Redemption Fees" as disclosed within the Funds' prospectus for more information. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares. Generally, you may exchange your Class Z or Class A shares of the Fund for shares of another fund at no additional charge. However, if you exchange Class Z shares of Columbia Acorn International or Columbia Acorn International Select that you have owned 60 days or less for Class Z shares of a fund distributed by Columbia Funds Distributor, Inc., that does not have a redemption fee (including Columbia Acorn Fund, Columbia Acorn USA and Columbia Acorn Select), the Fund will charge you a redemption fee of 2% of the redemption proceeds. Exchanges between Columbia Acorn International and Columbia Acorn International Select (or a fund distributed by Columbia Funds Distributor, Inc. that has a redemption fee) will not be subject to the 2% redemption fee. In addition, if you redeem shares of Columbia Acorn International or Columbia Acorn International Select that you have owned 60 days or less, the Fund will charge you a redemption fee of 2% of the redemption proceeds, with certain exceptions. See "Fund Policy on Trading of Fund Shares and Redemption Fees" as disclosed within the Funds' prospectus for more information. The financial highlights for Class A, Class B and Class C shares are presented in a separate annual report. The annual financial statements for the Columbia Thermostat Fund, another Fund of the Trust, begin on page 75 of this report. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are borne pro rata on the basis of the relative net assets of all classes, except each class bears certain expenses unique to that class such as distribution services, transfer agent, and certain other class specific expenses. Differences in class expenses may result in payment of different dividend distributions for each class. All the share classes of the Trust have equal rights with respect to voting subject to class specific arrangements. 2. Significant Accounting Policies >Security valuation Securities of the Funds are valued at market value or, if a market quotation for a security is not readily available or is deemed not to be reliable because of events or circumstances that have occurred between the market quotation and the time as of which the security is to be valued, the security is valued at a fair value determined in accordance with procedures established by the Board of Trustees. Securities traded on securities exchanges or in over-the-counter markets in which transaction prices are reported are valued at the last sales price at the time of valuation. If a security is traded principally on the Nasdaq Stock Market Inc., the Nasdaq Official Closing Price will be applied. Securities for which there are no reported sales on the valuation date are valued at the latest bid quotation. Short-term debt obligations having a maturity of 60 days or less from the valuation date are valued on an amortized cost basis, which approximate fair value. Securities for which quotations are not available are valued at a fair value as determined in good faith by the Board of Trustees. The Trust has retained an independent statistical fair value pricing service to assist in the fair valuation process for securities principally traded in a foreign market in order to adjust for possible changes in value that may occur between the close of the foreign exchange and the time at which Fund shares are priced. If a security is valued at a "fair value", that value may be different from the last quoted market price for the security. 1-800-922-6769 68 >Repurchase agreements The Funds may engage in repurchase agreement transactions. The Funds, through their custodian, receive delivery of underlying securities collateralizing repurchase agreements. The Funds' investment advisor determines that the value of the underlying securities is at all times at least equal to the resale price. In the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral may be subject to legal proceedings. >Foreign currency translations Values of investments denominated in foreign currencies are converted into U.S. dollars using the spot market rate of exchange at the time of valuation. Purchases and sales of investments and dividend and interest income are translated into U.S. dollars using the spot market rate of exchange prevailing on the respective dates of such transactions. The gain or loss resulting from changes in foreign exchange rates is included with net realized and unrealized gain or loss from investments, as appropriate. >Security transactions and investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed) and dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon as the information is available to the Funds. Interest income is recorded on the accrual basis and includes amortization of discounts on short-term debt obligations and long-term debt obligations when required for federal income tax purposes. Realized gains and losses from security transactions are reported on an identified cost basis. Awards from class action litigation may be recorded as a reduction of cost. If the Funds no longer own the applicable securities, the proceeds are recorded as realized gains. The Funds estimate components of distributions from real estate investment trusts (REITs). Distributions received in excess of income are recorded as a reduction of the cost of the related investments. If the Funds no longer own the applicable securities, any distributions received in excess of income are recorded as realized gains. >Restricted Securities Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale at the issuer's expense either upon demand by the Funds or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Board of Trustees. The Funds will not incur any registration costs upon such resale. >Use of estimates 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 amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. >Financial instruments Each Fund may purchase or sell exchange-traded financial futures contracts, which are contracts that obligate that Fund to make or take delivery of a financial instrument or the cash value of a securities index at a specified future date at a specified price. The Funds enter into such contracts to hedge a portion of their portfolio. Gains and losses are reflected as "Net Realized Gain (Loss) on Futures" in the Statements of Operations. Additionally, each Fund, except for Columbia Acorn USA and Columbia Acorn Select, may engage in portfolio hedging with respect to changes in foreign currency exchange rates by entering into forward foreign currency contracts to purchase or sell foreign currencies. The Statements of Operations reflect gains and losses as realized for closed forward foreign currency contracts and unrealized for open contracts. The Funds bear the market risk that arises from changes in the value of financial instruments and securities indices (futures contracts) or from changes in foreign currency rates (forward foreign currency contracts) and the credit risk should a counterparty fail to perform under such contracts. None of the Funds entered into any futures contracts or forward foreign currency contracts during the year ended December 31, 2004. >Fund share valuation Fund shares are sold and redeemed on a continuing basis at net asset value. Net asset value per share is determined daily as of the close of trading on the New York Stock Exchange ("Exchange") on each day the Exchange is open for trading. All income, expenses (other than the Class A, Class B and Class C 12b-1 service and distribution fees, and Class A, Class B, Class C and Class Z shares Transfer Agent fees) and realized and unrealized gains (losses) of a fund are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. Redemption fees are accounted for as an addition 69 Columbia Acorn Family of Funds >Notes to Financial Statements, continued to paid in capital and are allocated to each class proportionately for purposes of determining the net asset value of each class. >Custody fees/credits Custody fees are reduced based on each Fund's cash balances maintained with the custodian. The Funds could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if they had not entered into such an agreement. The amount is disclosed as a reduction of total expenses in the Statements of Operations. >Federal income taxes The Funds have complied with the provisions of the Internal Revenue Code available to regulated investment companies and, in the manner provided therein, distribute all their taxable income, as well as any net realized gain on sales of investments and foreign currency transactions reportable for federal income tax purposes. Accordingly, the Funds paid no federal income taxes and no federal income tax provision was required. >Foreign capital gains taxes Realized gains in certain countries may be subject to foreign taxes at the fund level, at rates ranging from approximately 10% to 30%. The Funds accrue for such foreign taxes on net realized and unrealized gains at the appropriate rate for each jurisdiction. >Distributions to Shareholders Distributions to shareholders are recorded on the ex-date. 3. Federal Tax Information The timing and character of 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. Reclassifications are made to the Funds' capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended December 31, 2004, permanent differences resulting primarily from differing treatments for distribution reclassifications, foreign currency transactions, passive foreign investment company ("PFIC") adjustments, foreign capital gains tax adjustments, REIT adjustments, net operating loss reclassifications and redemption based payments treated as dividend paid deduction were identified and reclassified among the components of the Funds' net assets as follows: UNDISTRIBUTED OR ACCUMULATED ACCUMULATED NET INVESTMENT NET REALIZED PAID IN UNREALIZED INCOME (LOSS) GAIN (LOSS) CAPITAL APPRECIATION -------------------------------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $ (3,401) $ (31,294) $34,695 $ -- Columbia Acorn International (115) (1,100) -- 1,215 Columbia Acorn USA 6,612 2 (6,614) -- Columbia Acorn International Select 13 (13) -- -- Columbia Acorn Select 8,958 (14,760) 5,802 -- Net investment income and net realized gains (losses), as disclosed on the Statements of Operations, and net assets were not affected by these reclassifications. The tax character of distributions paid during the years ended December 31, 2004 and December 31, 2003 was as follows: LONG- TERM ORDINARY CAPITAL DECEMBER 31, 2004 INCOME* GAINS ------------------------------------------------------------ (IN THOUSANDS) Columbia Acorn Fund $ 30,840 $ 441,598 Columbia Acorn International 16,930 -- Columbia Acorn USA -- 4,748 Columbia Acorn International Select 157 -- Columbia Acorn Select -- 25,216 LONG- TERM ORDINARY CAPITAL DECEMBER 31, 2003 INCOME* GAINS ------------------------------------------------------------ (IN THOUSANDS) Columbia Acorn Fund $ -- $ 9,917 Columbia Acorn International 5,935 -- Columbia Acorn USA -- -- Columbia Acorn International Select 19 -- Columbia Acorn Select 736 3,445 * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2004, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* -------------------------------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $ 13,818 $ 195,429 $ 5,504,772 Columbia Acorn International 31,140 -- 700,391 Columbia Acorn USA -- 13,435 280,331 Columbia Acorn International Select 1,031 -- 14,562 Columbia Acorn Select 896 6,548 243,766 * The difference between book-basis and tax-basis net unrealized appreciation is primarily due to deferral of losses from wash sales and PFIC adjustments. 1-800-922-6769 70 The following capital loss carryforwards may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: YEAR OF COLUMBIA ACORN COLUMBIA ACORN EXPIRATION INTERNATIONAL USA ------------------------------------------------------------------ (IN THOUSANDS) 2009 $ -- $ 2,529* 2010 14,102 506 2011 48,477 -- ------------------------------------------------------------------ TOTAL $ 62,579 $ 3,035 YEAR OF COLUMBIA ACORN EXPIRATION INTERNATIONAL SELECT ------------------------------------------------ (IN THOUSANDS) 2009 $ 16,135 2010 12,528 2011 2,488 ------------------------------------------------ TOTAL $ 31,151 * Of these carryforwards, $2,529 (expiring in 2009) remains from the Columbia Acorn USA's merger with Stein Roe Small Company Growth Fund on 7/26/2002. Utilization of Stein Roe Small Company Growth Fund's losses could be subject to limitations imposed by the Internal Revenue Code. The following capital loss carryforwards were utilized during the year ended December 31, 2004: ------------------------------------------------ (IN THOUSANDS) Columbia Acorn International $173,711 Columbia Acorn USA 10,064 Columbia Acorn International Select 6,949 ================================================ 4. Transactions with Affiliates Columbia Wanger Asset Management, L.P. ("Columbia WAM"), an indirect, wholly-owned subsidiary of Columbia Management Group, Inc., which in turn is a wholly-owned subsidiary of Bank of America Corporation ("BOA"), furnishes continuing investment supervision to the Funds and is responsible for the overall management of the Funds' business affairs. Prior to April 1, 2004, Columbia Management Group, Inc. was a wholly-owned subsidiary of Fleet National Bank, which in turn was a wholly-owned subsidiary of FleetBoston Financial Corporation ("Fleet"). On April 1, 2004, Fleet was acquired by BOA. Under the Funds' investment management agreement, fees are accrued daily and paid monthly to Columbia WAM at the annual rates shown in the table below for each fund. COLUMBIA ACORN FUND ---------------------------------------------------------- Net asset value: On the first $700 million 0.75% Next $1.3 billion 0.70% Net assets in excess of $2 billion 0.65% COLUMBIA ACORN INTERNATIONAL ---------------------------------------------------------- Net asset value: On the first $100 million 1.20% Next $400 million 0.95% Net assets in excess of $500 million 0.75% COLUMBIA ACORN USA ---------------------------------------------------------- Net asset value: On the first $200 million 0.95% Net assets in excess of $200 million 0.90% COLUMBIA ACORN INTERNATIONAL SELECT ---------------------------------------------------------- On average daily net assets: 0.95% COLUMBIA ACORN SELECT ---------------------------------------------------------- Net asset value: On the first $700 million 0.90% Net assets in excess of $700 million 0.85% Prior to August 1, 2004: On average daily net assets: 0.90% For the year ended December 31, 2004, the Funds' effective investment advisory fee rates were as follows: ---------------------------------------------------------- Columbia Acorn Fund 0.66% Columbia Acorn International 0.82 Columbia Acorn USA 0.91 Columbia Acorn International Select 0.95 Columbia Acorn Select 0.89 ========================================================== In accordance with the terms of the NYAG Settlement (as defined and discussed further under Note 8 to these Financial Statements - "Legal Proceedings"), Columbia WAM waived a portion of the fees payable under the Funds' investment management agreement so that those fees are retained at the following rates as a percent of average daily net assets: COLUMBIA ACORN FUND - 0.740% - up to $700 million; 0.690% - $700 million to $2 billion; 0.640% - $2 billion to $6 billion; 0.630% - $6 billion and over; COLUMBIA ACORN INTERNATIONAL - 1.190% - up to $100 million; 0.940% - $100 million to $500 million; 0.740% - $500 million and over; COLUMBIA ACORN USA - 0.940% - up to $200 million; 0.890% - $200 million and over; COLUMBIA ACORN INTERNATIONAL SELECT - 0.940% on average daily net assets; COLUMBIA ACORN SELECT - 0.850% - up to $700 million; 0.800% - $700 million and over. The fee waiver was 71 Columbia Acorn Family of Funds >Notes to Financial Statements, continued effective as of February 10, 2005 but applied as if it had gone into effect on December 1, 2004. The financial statements, as of December 31, 2004, are not reflective of these changes. >Expense Limit Columbia WAM has voluntarily agreed to reimburse the ordinary operating expenses (exclusive of interest, taxes and extraordinary expenses, if any) exceeding 1.45% of the average annual net assets for Columbia Acorn International Select Class Z shares and 1.35% of the average annual net assets for Columbia Acorn Select Class Z shares. Columbia WAM provides administrative services and receives an administration fee from the Funds at the following annual rates: COLUMBIA ACORN TRUST ---------------------------------------------------------- Average daily net asset value: On the first $8 billion 0.05% Next $8 billion 0.04% Average daily net assets in excess of $16 billion 0.03% For the year ended December 31, 2004 each Fund's effective administration fee rate was 0.048%. Prior to August 1, 2004, Columbia WAM was paid at the annual rate of 0.05% of each Fund's average daily net assets. Columbia Funds Distributor, Inc. ("CFDI"), an indirect, wholly-owned subsidiary of BOA, is the Funds' principal underwriter and receives no compensation on the sale of Class Z shares. Each Fund has adopted a 12b-1 plan which requires it to pay the CFDI a service and distribution fee on the net assets attributable to Class A, Class B and Class C shares. Columbia Funds Services, Inc. (the "Transfer Agent"), an indirect, wholly-owned subsidiary of BOA, provides shareholder services to the Funds. For such services, the Transfer Agent receives a fee, paid monthly, at the annual rate of $21.00 per open account. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. Effective February 1, 2004 the Transfer Agent made the decision to waive the reimbursement for certain out-of-pocket expenses. Prior to October 1, 2004, the Transfer Agent received a fee, paid monthly, at the annual rate of $28.00 per open account. Prior to February 1, 2004, the Transfer Agent was entitled to receive a monthly transfer agent fee at the annual rate of 0.07% of the average daily net assets attributable to Class A, Class B and Class C shares plus flat-rate charges based on the number of shareholder accounts and transactions for Class A, Class B, Class C and Class Z shares. Certain officers and trustees of the Trust are also officers of Columbia WAM. The Trust makes no direct payments to its officers and trustees who are affiliated with Columbia WAM. Trustees' fees and expenses paid by the Funds for the year ended December 31, 2004, including each Fund's portion of a special payment to the chairman of the board of $25,000 for extraordinary time and effort spent on board matters during 2004, were as follows: ---------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $656 Columbia Acorn International 95 Columbia Acorn USA 41 Columbia Acorn International Select 2 Columbia Acorn Select 23 ========================================================== In April 2004, the Board of Trustees appointed a Chief Compliance Officer to the Trust in accordance with federal securities regulations. The Funds will pay their pro-rata share of the expenses associated with the Office of the Chief Compliance Officer. These expenses are disclosed separately as "Compliance fees" on the Statements of Operations. The Trust provides a deferred compensation plan for its trustees. Under that plan, a trustee may elect to defer all or a portion of his or her compensation. Amounts deferred are retained by the Trust and represent an unfunded obligation of the Trust. The value of amounts deferred is determined by reference to the change in value of Class Z shares of one or more series of the Trust or a money market fund as specified by the trustee. Benefits under the deferred compensation plan are payable upon retirement. An affiliate may include any company in which a fund owns five percent or more of its outstanding voting securities. On December 31, 2004, Columbia Acorn Fund, Columbia Acorn USA and Columbia Acorn Select each held five percent or more of the outstanding voting securities of one or more companies. Details of investments in those affiliated companies are presented on pages 34, 48 and 55, respectively. During the year ended December 31, 2004, the Funds engaged in purchase and sale transactions with funds that have a common investment advisor (or affiliated investment advisors), common Directors/Trustees, and/or common 1-800-922-6769 72 Officers. Those transactions complied with Rule 17a-7 under the Investment Company Act of 1940 and were as follows: FUNDS PURCHASES SALES ---------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $ 33,441 $ 741 Columbia Acorn International 3,657 13,528 Columbia Acorn USA -- 1,963 Columbia Acorn International Select 608 4,794 Columbia Acorn Select -- 889 5. Borrowing Arrangements The Trust participates in a $150 million credit facility, which was entered into to facilitate portfolio liquidity. Interest is charged to each participating fund based on its borrowings at rate per annum equal to the Federal Funds rate plus 0.50%. In addition, a commitment fee of 0.10% per annum is accrued and apportioned among the participating funds based on their pro-rata portion of the unutilized line of credit. The commitment fee is included in "Other expenses" on the Statements of Operations. No amounts were borrowed under this facility for the year ended December 31, 2004. 6. Investment Transactions The aggregate cost of purchases and proceeds from sales other than short-term obligations for the year ended December 31, 2004 were: COLUMBIA ACORN FUND ---------------------------------------------------------- (IN THOUSANDS) Investment securities Purchases $ 2,641,143 Proceeds from sales 2,226,641 ========================================================== COLUMBIA ACORN INTERNATIONAL ---------------------------------------------------------- (IN THOUSANDS) Investment securities Purchases $ 688,543 Proceeds from sales 800,140 ========================================================== COLUMBIA ACORN USA ---------------------------------------------------------- (IN THOUSANDS) Investment securities Purchases $ 141,569 Proceeds from sales 127,021 ========================================================== COLUMBIA ACORN INTERNATIONAL SELECT ---------------------------------------------------------- (IN THOUSANDS) Investment securities Purchases $ 33,091 Proceeds from sales 31,991 ========================================================== COLUMBIA ACORN SELECT ---------------------------------------------------------- (IN THOUSANDS) Investment securities Purchases $ 516,805 Proceeds from sales 297,997 ========================================================== 7. Redemption Fees For the year ended December 31, 2004, the redemption fees for the Class Z shares of Columbia Acorn International and Columbia Acorn International Select amounted to $85,858 and $3,572, respectively. 8. Legal Proceedings On March 15, 2004, Columbia Management Advisors, Inc. ("Columbia Management"), the advisor to the Columbia Funds, and CFDI (collectively with Columbia Management, "Columbia"), the distributor of the shares of the Columbia Funds, the Columbia Acorn Family of Funds and the Wanger Advisors Trust Funds (collectively, "the Columbia Family of Funds"), entered into agreements in principle with the staff of the U.S. Securities and Exchange Commission ("SEC") and the Office of the New York Attorney General ("NYAG") to resolve the proceedings brought in connection with the SEC's and NYAG's investigations of frequent trading and market timing in certain Columbia mutual funds. Columbia WAM, the advisor to the Columbia Acorn Family of Funds and the Wanger Advisors Trust Funds, was not a respondent in either proceeding nor were any of its officers or directors. On February 9, 2005, Columbia entered into an Assurance of Discontinuance (the "NYAG Settlement") with the NYAG and consented to the entry of a cease-and-desist order by the SEC (the "SEC Order" and together, the "Settlements"). The Settlements contain substantially the same terms and conditions as outlined in the agreements in principle. Although none of the Columbia Acorn Family of Funds is a party to the Settlement orders, under the terms of the Settlements and in order for Columbia Management to continue to provide administrative services to the Columbia Acorn Family of Funds, the Board of Trustees of the Trust expects to comply voluntarily with certain requirements, including: the election of an independent board chairman, which the Board had done well in advance of the regulatory proceedings; and the appointment of one or more individuals to monitor legal compliance and to add another level of assurance that the management fees to be charged to the Funds are negotiated at arm's length and are reasonable. Under the terms of the SEC Order, Columbia has agreed, among other things, to: pay $70 million in disgorgement and $70 million in civil money penalties; cease and desist from violations of the antifraud provisions and certain other provisions of the federal securities laws; maintain certain compliance and ethics oversight structures; retain an independent consultant to review Columbia's applicable supervisory, compliance, control and other 73 Columbia Acorn Family of Funds >Notes to Financial Statements, continued policies and procedures; and retain an independent distribution consultant (see below). The NYAG Settlement also, among other things, requires Columbia and its affiliates, Banc of America Capital Management, LLC and BACAP Distributors, LLC to reduce management fees paid by the Columbia Family of Funds, Nations Funds and other related mutual funds collectively by $32 million per year for five years, for a projected total of $160 million in management fee reductions based on net assets as of March 15, 2004. Pursuant to the procedures set forth in the SEC Order, the settlement amounts will be distributed in accordance with a distribution plan to be developed by an independent distribution consultant, who is acceptable to the SEC staff and the independent trustees of the funds. The distribution plan must be based on a methodology developed in consultation with Columbia and the independent trustees of the funds and not unacceptable to the staff of the SEC. More specific information on the distribution plan will be communicated by Columbia WAM and/or its affiliates at a later date. The Trust, Columbia WAM and the Trustees of the Trust are defendants in several derivative and class action lawsuits that allege, in summary, defendants permitted investors to engage in improper trading of shares of various funds in violation of certain federal and state laws. All of these lawsuits have been consolidated with similar suits in a Multi-District Litigation proceeding in Baltimore, Maryland, and consolidated class action and derivative complaints have been filed. The Trust and Columbia WAM are also defendants in a class action lawsuit that alleges, in summary, that the Trust and Columbia WAM exposed shareholders of Columbia Acorn International Fund to trading by market timers by allegedly (a) failing to properly evaluate daily whether a significant event affecting the value of that Fund's securities had occurred after foreign markets had closed but before the calculation of the Fund's net asset value ("NAV"); (b) failing to implement the Fund's portfolio valuation and share pricing policies and procedures; and (c) failing to know and implement applicable rules and regulations concerning the calculation of NAV. Columbia WAM and the Trustees of the Trust are also defendants in a lawsuit alleging that Columbia WAM used Fund assets to make undisclosed payments to brokers as an incentive for the brokers to market the Funds over other mutual funds to investors. The complaint alleges Columbia WAM and the Trustees of the Trust breached certain common law duties and federal laws. On January 11, 2005 a putative class action lawsuit was filed in federal district court in Massachusetts against, among others, the Trustees of the Trust and Columbia WAM. The lawsuit alleges that defendants violated common law duties to fund shareholders as well as sections of the Investment Company Act of 1940, by failing to ensure that the Trust funds and other affiliated funds participated in securities class action settlements for which the funds were eligible. Specifically, plaintiffs allege that defendants failed to submit Proof of Claims in connection with settlements of securities class action lawsuits filed against companies in which the funds held positions. The complaint seeks compensatory and punitive damages, and the disgorgement of all fees paid to the Columbia WAM and affiliated advisers. The Trust and Columbia WAM intend to defend these suits vigorously. The Trust does not believe that the pending actions will have a material adverse effect on the financial statements of any Fund, and Columbia WAM does not believe that the pending actions will have a material adverse effect on its ability to perform under its contracts with the Funds. As a result of these matters or any adverse publicity or other developments resulting from them, there may be increased redemptions or reduced sales of Fund shares, which could increase transaction costs or operating expenses, or have other adverse consequences for the Funds. In connection with the events described in detail above, various parties have filed suit against certain funds, their Boards and/or BOA (and affiliated entities). These suits are ongoing. Accordingly, an estimate of the financial impact of this litigation on any fund, if any, cannot currently be made. For the year ended December 31, 2004, Columbia Management has assumed consulting services and legal fees incurred by the Funds in connection with these matters and the amounts are as follows: ---------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $ 1,116 Columbia Acorn International 162 Columbia Acorn USA 69 Columbia Acorn International Select 4 Columbia Acorn Select 90 ========================================================== 1-800-922-6769 74 Columbia Thermostat Fund >Statement of Investments, December 31, 2004 NUMBER OF SHARES OR PRINCIPAL AMOUNT (000) VALUE (000) ----------------------------------------------------------------------------- >BOND FUNDS: 59.4% 6,761 Columbia Intermediate Bond Fund, Class Z $ 61,593 3,451 Columbia Federal Securities Fund, Class Z 36,995 2,795 Columbia High Yield Fund, Class Z 24,623 ----------------------------------------------------------------------------- TOTAL BOND FUNDS (COST: $122,197) 123,211 >STOCK FUNDS: 40.0% 2,291 Columbia Growth Stock Fund, Class Z (b) 20,683 1,134 Columbia Growth & Income Fund, Class Z 20,598 628 Columbia Acorn Fund, Class Z 16,623 466 Columbia Mid Cap Value Fund, Class Z (b) 12,465 590 Columbia Acorn Select, Class Z 12,463 ----------------------------------------------------------------------------- TOTAL STOCK FUNDS (COST: $66,413) 82,832 SHORT-TERM OBLIGATIONS: 0.4% $ 740 Repurchase Agreement with State Street Bank & Trust Co. dated 12/31/04, due 1/03/05 at 1.90% Collateralized by a Federal National Mortgage Association Note, maturing 1/05/05, market value $760 (repurchase proceeds: $740) 740 ----------------------------------------------------------------------------- (AMORTIZED COST: $740) 740 ----------- TOTAL INVESTMENTS: 99.8% 206,783 (COST: $189,350) (a) CASH AND OTHER ASSETS LESS LIABILITIES: 0.2% 481 ----------- TOTAL NET ASSETS: 100% $ 207,264 ============================================================================= >Notes to Statement of Investments (in thousands) (a) At December 31, 2004, for federal income tax purposes cost of investments was $189,862 and net unrealized appreciation was $16,921 consisting of gross unrealized appreciation of $17,021 and gross unrealized depreciation of $100. (b) Non-income producing security. 75 Columbia Thermostat Fund >Statement of Assets and Liabilities DECEMBER 31, 2004 ----------------------------------------------------------------------------- (IN THOUSANDS) ASSETS Unaffiliated investments, at value (cost $740) $ 740 Affiliated investments, at value (cost: $188,610) 206,043 Cash 1 Receivable for: Fund shares sold 304 Dividends and interest 473 Expense reimbursement due from Advisor 80 --------------- Total Assets 207,641 LIABILITIES Payable for: Fund shares redeemed 148 Transfer agent fees 20 Custody fees 1 Legal & audit fees 18 Reports to shareholders 71 12b-1 Service & Distribution fees 105 Other liabilities 14 --------------- Total Liabilities 377 --------------- NET ASSETS $ 207,264 =============== COMPOSITION OF NET ASSETS: Paid in capital $ 186,468 Undistributed net investment income 15 Accumulated net realized gain 3,348 Net unrealized appreciation on investments 17,433 --------------- NET ASSETS $ 207,264 =============== Net asset value per share -- Class A (a) $ 13.11 (Net assets/shares) ($77,092/5,879) Maximum offering price per share -- Class A (b) $ 13.91 (Net asset value per share/front-end sales charge) ($13.11/0.9425) Net asset value and offering price per share -- Class B (a) $ 13.14 (Net assets/shares) ($78,040/5,941) Net asset value and offering price per share -- Class C (a) $ 13.13 (Net assets/shares) ($31,161/2,372) Net asset value, offering and redemption price per share -- Class Z $ 13.12 (Net assets/shares) ($20,971/1,598) (a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. See accompanying notes to financial statements. 1-800-922-6769 76 Columbia Thermostat Fund >Statement of Operations For the Year Ended December 31, 2004 (IN THOUSANDS) ----------------------------------------------------------------------------- INVESTMENT INCOME: Dividends from affiliated investment company shares $ 4,834 Interest income 12 ----------- Total Investment Income 4,846 EXPENSES: Management fee 177 Administration fee 84 12b-1 Service and Distribution fees: Class A 225 Class B 631 Class C 276 Transfer agent fees: Class A 107 Class B 154 Class C 54 Class Z 26 Trustees' fees 4 Custody fees 15 Legal & audit fees 29 Reports to shareholders 145 Registration & blue sky fees 97 Compliance fees 3 Non-recurring costs (See Note 7) 16 Other expenses 8 ----------- Total expenses 2,051 Less custody fees paid indirectly --* Less fees waived by Distributor (65) Less reimbursement of expenses by Advisor (403) Less reimbursement of expenses by Transfer Agent (55) Non-recurring costs reimbursed (See Note 7) (16) ----------- Net Expenses 1,512 ----------- Net Investment Income 3,334 NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on: Affiliated investments 2,200 Distributions from affiliated investment company shares 1,492 ----------- Net realized gain 3,692 ----------- Net change in unrealized appreciation on investments 8,154 ----------- Net realized and unrealized gain 11,846 ----------- Net Increase in Net Assets from Operations $ 15,180 =========== * Rounds to less than $500. See accompanying notes to financial statements. 77 Columbia Thermostat Fund >Statement of Changes in Net Assets Year ended Year ended INCREASE IN NET ASSETS December 31, December 31, ----------- ----------- (IN THOUSANDS) 2004 2003 (a) OPERATIONS: Net investment income $ 3,334 $ 696 Net realized gain on investments and distributions from investment company shares 3,692 272 Net change in net unrealized appreciation on investments 8,154 9,219 ----------- ----------- Net Increase from Operations 15,180 10,187 DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income -- Class A (1,488) (395) Net realized gain -- Class A (141) (21) Net investment income -- Class B (997) (108) Net realized gain -- Class B (146) (30) Net investment income -- Class C (383) (43) Net realized gain -- Class C (61) (10) Net investment income -- Class Z (450) (160) Net realized gain -- Class Z (36) (14) ----------- ----------- Total Distributions to Shareholders (3,702) (781) SHARE TRANSACTIONS: Subscriptions -- Class A 42,302 40,815 Distributions reinvested -- Class A 1,425 373 Redemptions -- Class A (13,080) (1,441) ----------- ----------- Net Increase -- Class A 30,647 39,747 Subscriptions -- Class B 27,802 48,741 Distributions reinvested -- Class B 1,024 125 Redemptions -- Class B (6,671) (1,176) ----------- ----------- Net Increase -- Class B 22,155 47,690 Subscriptions -- Class C 12,939 19,668 Distributions reinvested -- Class C 378 44 Redemptions -- Class C (4,000) (1,015) ----------- ----------- Net Increase -- Class C 9,317 18,697 Subscriptions -- Class Z 8,408 9,094 Distributions reinvested -- Class Z 470 166 Redemptions -- Class Z (3,140) (1,023) ----------- ----------- Net Increase -- Class Z 5,738 8,237 ----------- ----------- Net Increase from Share Transactions 67,857 114,371 ----------- ----------- Total Increase in Net Assets 79,335 123,777 ----------- ----------- NET ASSETS: Beginning of period 127,929 4,152 ----------- ----------- End of period $ 207,264 $ 127,929 =========== =========== UNDISTRIBUTED NET INVESTMENT INCOME $ 15 $ -- =========== =========== (a) Class A, Class B and Class D commenced operations March 3, 2003. On October 13, 2003, Class D was redesignated Class C. See accompanying notes to financial statements. 1-800-922-6769 78 Columbia Thermostat Fund >Statement of Changes in Net Assets, continued Year ended Year ended CHANGES IN SHARES OF BENEFICIAL INTEREST: December 31, December 31, ----------- ----------- (IN THOUSANDS) 2004 2003 (a) Subscriptions -- Class A 3,381 3,529 Shares issued in reinvestment and capital gains -- Class A 110 31 Less shares redeemed -- Class A (1,049) (123) ----------- ----------- Net Increase -- Class A 2,442 3,437 Subscriptions -- Class B 2,213 4,268 Shares issued in reinvestment and capital gains -- Class B 79 10 Less shares redeemed -- Class B (530) (99) ----------- ----------- Net Increase -- Class B 1,762 4,179 Subscriptions -- Class C 1,028 1,712 Shares issued in reinvestment and capital gains -- Class C 29 4 Less shares redeemed -- Class C (316) (85) ----------- ----------- Net Increase -- Class C 741 1,631 Subscriptions -- Class Z 669 821 Shares issued in reinvestment and capital gains -- Class Z 36 14 Less shares redeemed -- Class Z (250) (91) ----------- ----------- Net Increase -- Class Z 455 744 ----------- ----------- Net increase in Shares of Beneficial Interest 5,400 9,991 ----------- ----------- (a) Class A, Class B and Class D commenced operations March 3, 2003. On October 13, 2003, Class D was redesignated Class C. See accompanying notes to financial statements. 79 Columbia Thermostat Fund >Financial Highlights
Inception September 25, 2002 through Class Z Year ended December 31, December 31, -------------------------- ------------ SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 NET ASSET VALUE, BEGINNING OF PERIOD $ 12.31 $ 10.41 $ 10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) 0.31 0.19 0.04 Net realized and unrealized gain 0.82 1.87 0.37 --------- --------- ------------ Total from Investment Operations 1.13 2.06 0.41 --------- --------- ------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.29) (0.16) -- From net realized gains (0.03) 0.00(b) -- --------- --------- ------------ Total Distributions Declared to Shareholders (0.32) (0.16) -- --------- --------- ------------ NET ASSET VALUE, END OF PERIOD $ 13.12 $ 12.31 $ 10.41 ========= ========= ============ Total Return (c)(d) 9.17% 19.79% 4.10%(e) ========= ========= ============ RATIOS TO AVERAGE NET ASSETS Expenses (f) 0.25%(g) 0.38%(g) 0.62%(h)(i) Net investment income 2.48%(g) 1.64%(g) 1.41%(h)(i) Reimbursement 0.21% 0.88% 19.94%(h) Portfolio turnover rate 67% 61% 11%(e) Net assets at end of period (IN MILLIONS) $ 21 $ 14 $ 4
(a) Per share data was calculated using average shares outstanding during the period. Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests. (b) Rounds to less than $0.01 per share. (c) Total return at net asset value assuming all distributions reinvested. (d) Had the Advisor and/or Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) Does not include expenses of the investment companies in which the Fund invests. (g) The benefits derived from custody fees paid indirectly had no impact. (h) Annualized. (i) In accordance with a requirement of the Securities and Exchange Commission, the ratios reflect total expenses prior to the reduction of custody fees for cash balances it maintains with the custodian ("custody fees paid indirectly"). The ratios of expenses to average daily net assets and net investment income to average daily net assets net of custody fees paid indirectly would have been 0.60% and 1.43%, respectively for the period ended December 31, 2002. See accompanying notes to financial statements. 1-800-922-6769 80 Columbia Thermostat Fund >Notes to Financial Statements, continued 1. Nature of Operations Columbia Thermostat Fund (the "Fund"), a series of Columbia Acorn Trust (the "Trust"), an open-end management investment company organized as a Massachusetts business trust, commenced operations September 25, 2002. The Fund may issue an unlimited number of shares. The Fund currently offers four classes of shares: Class A, Class B, Class C and Class Z. On October 13, 2003, Class D was redesignated Class C. Class A shares are sold with a front-end sales charge. A contingent deferred sales charge ("CDSC") may be assessed to Class A shares purchased without an initial sales charge on redemptions made within eighteen months on an original purchase of $1 million to $25 million. Class B shares are subject to a CDSC. Class B shares will convert to Class A shares in three, four or eight years after purchase, depending on the program under which shares are purchased. Class C shares are subject to a CDSC on redemptions made within one year after purchase. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares. The financial highlights for Class A, Class B and Class C shares are presented in a separate annual report. The annual report for the other series of the Trust is also included in this report. The investment objective of the Fund is to provide long-term total return. The Fund pursues its investment objective by investing in shares of other mutual funds. As a `fund of funds', under normal circumstances, the Fund allocates at least 95% of its net assets among a selected group of stock and bond mutual funds (the "Portfolio Funds") according to the current level of the Standard & Poor's 500 Stock Index in relation to predetermined ranges set by the Fund's investment adviser. As of December 31, 2004, the Fund invested in five stock Portfolio Funds (Columbia Acorn Fund, Columbia Acorn Select Fund, Columbia Growth & Income Fund, Columbia Mid Cap Value Fund and Columbia Growth Stock Fund) and three bond Portfolio Funds (Columbia Federal Securities Fund, Columbia Intermediate Bond Fund and Columbia High Yield Fund). The Fund may also invest up to 5% of its net assets plus any cash received that day in cash, repurchase agreements, high quality short-term paper and government securities. 2. Significant Accounting Policies >Security valuation Investments in Portfolio Funds are valued at their net asset value as reported by the underlying funds. Repurchase agreements, high quality short-term paper and government securities having a maturity of 60 days or less from the valuation date are valued on an amortized cost basis, which approximates fair value. >Repurchase agreements The Fund may engage in repurchase agreement transactions. The Fund, through its custodian, receives delivery of underlying securities collateralizing each repurchase agreement. The Fund's investment advisor determines that the value of the underlying securities is at all times at least equal to the resale price. In the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral may be subject to legal proceedings. >Security transactions and investment income Portfolio Fund transactions are accounted for on the trade date (date the order to buy or sell is executed). Dividend income and realized gain distributions from other funds are recorded on the ex-dividend date. Interest income is recorded on the accrual basis and includes amortization of discounts on short-term debt obligations when required for federal income tax purposes. Realized gains and losses from security transactions are reported on an identified cost basis. Awards from class action litigation may be recorded as a reduction of cost by Portfolio Funds. If the Portfolio Fund no longer owns the applicable securities, the proceeds are recorded as realized gains. >Use of estimates 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 amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. >Fund share valuation Fund shares are sold and redeemed on a continuing basis at net asset value. Net asset value per share is determined daily as of the close of trading on the New York Stock Exchange ("Exchange") on each day the Exchange is open for trading. All income, expenses (other than the Class A, Class B and Class C 12b-1 service and distribution fees, and Class A, Class B, Class C and Class Z Transfer Agent fees) and realized and unrealized gains (losses) of the Fund are 81 Columbia Thermostat Fund >Notes to Financial Statements, continued allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. >Custody fees/credits Custody fees are reduced based on the Fund's cash balance maintained with the custodian. The Fund 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. The amount is disclosed as a reduction of total expenses in the Statement of Operations. >Federal income taxes The Fund has complied with the provisions of the Internal Revenue Code available to regulated investment companies and, in the manner provided therein, distributes all of its taxable income, as well as any net realized gain on sales of Portfolio Fund shares and any distributions of net realized gains received by the Fund from its Portfolio Funds, reportable for federal income tax purposes. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required. >Distributions to Shareholders Distributions to shareholders are recorded on the ex-date. 3. Federal Tax Information The timing and character of 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. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended December 31, 2004, permanent differences resulting primarily from differing treatments for redemption based payments treated as dividend paid deductions were identified and reclassified among the components of the Fund's net assets as follows: UNDISTRIBUTED ACCUMULATED NET INVESTMENT NET REALIZED INCOME GAIN PAID IN CAPITAL ------------------------------------------------------------------------ (IN THOUSANDS) $(1) $(166) $167 Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by these reclassifications. The tax character of distributions paid during the year ended December 31, 2004 and December 31, 2003 was as follows: DECEMBER 31, DECEMBER 31, 2004 2003 --------------------------------------------------------------------- (IN THOUSANDS) Distributions paid from: Ordinary Income* $ 3,645 $ 771 Long-Term Capital Gains 57 10 * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2004, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* ------------------------------------------------------------------------ (IN THOUSANDS) $2,436 $1,446 $16,921 * The difference between book-basis and tax-basis net unrealized appreciation is primarily due to tax deferral of losses on wash sales. 4. Transactions with Affiliates Columbia Wanger Asset Management, L.P. ("Columbia WAM"), an indirect, wholly-owned subsidiary of Columbia Management Group, Inc., which in turn is a wholly-owned subsidiary of Bank of America Corporation ("BOA"), furnishes continuing investment supervision to the Fund and is responsible for the overall management of the Fund's business affairs. Prior to April 1, 2004, Columbia Management Group, Inc. was a wholly-owned subsidiary of Fleet National Bank, which in turn was a wholly-owned subsidiary of FleetBoston Financial Corporation ("Fleet"). On April 1, 2004, Fleet was acquired by BOA. Under the Fund's investment management agreement, fees are accrued daily and paid monthly to Columbia WAM at the annual rate of 0.10% of the Fund's average daily net assets. >Expense Limit Columbia WAM has agreed to contractually reimburse the direct operating expenses (exclusive of interest and fees on borrowings and expenses associated with the Fund's investment in other investment companies) exceeding 0.25% of the average annual net assets of the Fund's Class Z shares. Prior to August 1, 2003 Columbia WAM had agreed to voluntarily reimburse the direct operating expenses (exclusive of interest and fees on borrowings and expenses associated with the Fund's investment in other investment 1-800-922-6769 82 companies) exceeding 0.60% of the average annual net assets of the Fund's Class Z shares. Columbia WAM provides administrative services and receives an administration fee from the Fund at the following annual rates: COLUMBIA ACORN TRUST ------------------------------------------------------------------- Average daily net asset value: On the first $8 billion 0.05% Next $8 billion 0.04% Average daily net asset value in excess of $16 billion 0.03% For the year ended December 31, 2004 the Fund's effective administration fee rate was 0.048%. Prior to August 1, 2004, Columbia WAM was paid at annual rate of 0.05% of the Fund's average daily net assets. Columbia Funds Distributor, Inc. ("CFDI"), an indirect, wholly-owned subsidiary of BOA, is the Fund's principal indirect underwriter and receives no compensation on the sale of Class Z shares. The Fund has adopted a 12b-1 plan which requires it to pay CFDI a service and distribution fee on net assets attributable to Class A, Class B and Class C shares. Columbia Funds Services, Inc. (the "Transfer Agent"), an indirect, wholly-owned subsidiary of BOA, provides shareholder services to the Fund. For such services, the Transfer Agent receives a fee, paid monthly, at the annual rate of $21.00 per open account. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. Effective February 1, 2004 the Transfer Agent made the decision to waive the reimbursement for certain out-of-pocket expenses. Prior to October 1, 2004, the Transfer Agent received a fee, paid monthly, at the annual rate of $28.00 per open account. Prior to February 1, 2004, the Transfer Agent was entitled to receive a monthly transfer agent fee at the annual rate of 0.07% of the average daily net assets attributable to Class A, Class B and Class C shares plus flat-rate charges based on the number of shareholder accounts and transactions for Class A, Class B, Class C and Class Z shares. Certain officers and trustees of the Trust are also officers of Columbia WAM. The Trust makes no direct payments to its officers and trustees who are affiliated with Columbia WAM. Trustees' fees and expenses paid by the Fund for the year ended December 31, 2004, including the Fund's portion of a special payment to the chairman of the board of $25,000 for extraordinary time and effort spent on board matters during 2004, were $3,722. In April 2004, the Board of Trustees appointed a Chief Compliance Officer to the Trust in accordance with federal securities regulations. The Fund will pay its pro-rata share of the expenses associated with the Office of the Chief Compliance Officer. This expense is disclosed separately as "Compliance fees" on the Statement of Operations. 5. Borrowing Arrangements The Trust participates in a $150 million credit facility, which was entered into to facilitate portfolio liquidity. Interest is charged to each participating fund based on its borrowings at rate per annum equal to the Federal Funds rate plus 0.50%. In addition, a commitment fee of 0.10% per annum is accrued and apportioned among the participating funds based on their pro-rata portion of the unutilized line of credit. The commitment fee is included in "Other expenses" on the Statement of Operations. No amounts were borrowed under this facility for the year ended December 31, 2004. 6. Investment Transactions The aggregate cost of purchases and proceeds from sales other than short-term obligations for the year ended December 31, 2004 were: ---------------------------------------------------------- (IN THOUSANDS) Purchases $187,095 Proceeds from sales 118,286 ========================================================== 7. Legal Proceedings On March 15, 2004, Columbia Management Advisors, Inc. ("Columbia Management"), the advisor to the Columbia Funds, and CFDI (collectively with Columbia Management, "Columbia"), the distributor of the shares of the Columbia Funds, the Columbia Acorn Family of Funds and the Wanger Advisors Trust Funds (collectively, "the Columbia Family of Funds"), entered into agreements in principle with the staff of the U.S. Securities and Exchange Commission ("SEC") and the Office of the New York Attorney General ("NYAG") to resolve the proceedings brought in connection with the SEC's and NYAG's investigations of frequent trading and market timing in certain Columbia mutual funds. Columbia WAM, the advisor to the Columbia Acorn Family of Funds and the Wanger Advisors Trust Funds, was not a respondent in either proceeding nor were any of its officers or directors. On February 9, 2005, Columbia entered into an Assurance of Discontinuance (the "NYAG Settlement") with the NYAG and consented to the entry of a cease-and-desist order by the SEC (the "SEC Order" and together, the "Settlements"). The Settlements contain substantially the same terms and conditions as outlined in the agreements in principle. Although none of the Columbia Acorn Family of Funds is a party to the Settlement orders, under the terms of the Settlements and in order for Columbia Management to continue to provide administrative services to the Columbia Acorn Family of Funds, the Board of Trustees of the Trust 83 Columbia Thermostat Fund >Notes to Financial Statements, continued expects to comply voluntarily with certain requirements, including: the election of an independent board chairman, which the Board had done well in advance of the regulatory proceedings; and the appointment of one or more individuals to monitor legal compliance and to add another level of assurance that the management fees to be charged to the Funds are negotiated at arm's length and are reasonable. Under the terms of the SEC Order, Columbia has agreed, among other things, to: pay $70 million in disgorgement and $70 million in civil money penalties; cease and desist from violations of the antifraud provisions and certain other provisions of the federal securities laws; maintain certain compliance and ethics oversight structures; retain an independent consultant to review Columbia's applicable supervisory, compliance, control and other policies and procedures; and retain an independent distribution consultant (see below). The NYAG Settlement also, among other things, requires Columbia and its affiliates, Banc of America Capital Management, LLC and BACAP Distributors, LLC to reduce management fees paid by the Columbia Family of Funds, Nations Funds and other related mutual funds collectively by $32 million per year for five years, for a projected total of $160 million in management fee reductions based on net assets as of March 15, 2004. Pursuant to the procedures set forth in the SEC Order, the settlement amounts will be distributed in accordance with a distribution plan to be developed by an independent distribution consultant, who is acceptable to the SEC staff and the independent trustees of the funds. The distribution plan must be based on a methodology developed in consultation with Columbia and the independent trustees of the funds and not unacceptable to the staff of the SEC. More specific information on the distribution plan will be communicated by Columbia WAM and/or its affiliates at a later date. The Trust, Columbia WAM and the Trustees of the Trust are defendants in several derivative and class action lawsuits that allege, in summary, defendants permitted investors to engage in improper trading of shares of various funds in violation of certain federal and state laws. All of these lawsuits have been consolidated with similar suits in a Multi-District Litigation proceeding in Baltimore, Maryland, and consolidated class action and derivative complaints have been filed. The Trust and Columbia WAM are also defendants in a class action lawsuit that alleges, in summary, that the Trust and Columbia WAM exposed shareholders of Columbia Acorn International Fund to trading by market timers by allegedly (a) failing to properly evaluate daily whether a significant event affecting the value of that Fund's securities had occurred after foreign markets had closed but before the calculation of the Fund's net asset value ("NAV"); (b) failing to implement the Fund's portfolio valuation and share pricing policies and procedures; and (c) failing to know and implement applicable rules and regulations concerning the calculation of NAV. Columbia WAM and the Trustees of the Trust are also defendants in a lawsuit alleging that Columbia WAM used Fund assets to make undisclosed payments to brokers as an incentive for the brokers to market the Funds over other mutual funds to investors. The complaint alleges Columbia WAM and the Trustees of the Trust breached certain common law duties and federal laws. On January 11, 2005 a putative class action lawsuit was filed in federal district court in Massachusetts against, among others, the Trustees of the Trust and Columbia WAM. The lawsuit alleges that defendants violated common law duties to fund shareholders as well as sections of the Investment Company Act of 1940, by failing to ensure that the Trust funds and other affiliated funds participated in securities class action settlements for which the funds were eligible. Specifically, plaintiffs allege that defendants failed to submit Proof of Claims in connection with settlements of securities class action lawsuits filed against companies in which the funds held positions. The complaint seeks compensatory and punitive damages, and the disgorgement of all fees paid to the Columbia WAM and affiliated advisers. The Trust and Columbia WAM intend to defend these suits vigorously. The Trust does not believe that the pending actions will have a material adverse effect on the financial statements of any Fund, and Columbia WAM does not believe that the pending actions will have a material adverse effect on its ability to perform under its contracts with the Funds. As a result of these matters or any adverse publicity or other developments resulting from them, there may be increased redemptions or reduced sales of Fund shares, which could increase transaction costs or operating expenses, or have other adverse consequences for the Fund. In connection with the events described in detail above, various parties have filed suit against certain funds, their Boards and/or BOA (and affiliated entities). These suits are ongoing. Accordingly, an estimate of the financial impact of this litigation on any fund, if any, cannot currently be made. For the year ended December 31, 2004, Columbia Management has assumed $16,377 of consulting services and legal fees incurred by the Fund in connection with these matters. 1-800-922-6769 84 Report of Independent Registered Public Accounting Firm TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF COLUMBIA ACORN TRUST: In our opinion, the accompanying statements of assets and liabilities, including the statements of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Columbia Acorn Fund, Columbia Acorn International, Columbia Acorn USA, Columbia Acorn International Select, Columbia Acorn Select and Columbia Thermostat Fund (each a series of Columbia Acorn Trust, hereinafter referred to as the "Funds") at December 31, 2004, the results of their operations, the changes in their net assets and the financial highlights for the year then ended, 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 Funds' 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 securities at December 31, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The statement of changes for the year ended December 31, 2003 and the financial highlights of the Funds for the periods ended December 31, 2003 and prior were audited by other independent auditors whose reported dated February 6, 2004 expressed an unqualified opinion on those financial statements. PricewaterhouseCoopers LLP Chicago, Illinois February 14, 2005 85 Columbia Acorn Family of Funds >Unaudited Information FEDERAL INCOME TAX INFORMATION (IN THOUSANDS) COLUMBIA ACORN For the fiscal year ended December 31, 2004, the Fund designates long-term capital gains of $655,225. 100.00% of the ordinary income distributed by the Fund, for the year ended December 31, 2004, qualifies for the corporate dividends received deduction. For non-corporate shareholders 100.00%, or the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period January 1, 2004 to December 31, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. COLUMBIA ACORN INTERNATIONAL Foreign taxes paid during the fiscal year ended December 31, 2004, amounting to $3,925 ($0.05 per share) are expected to be passed through to shareholders as 100% allowable foreign tax credits on Form 1099-DIV for the year ended December 31, 2004. Gross income derived from sources within foreign countries amounted to $39,927 ($0.56 per share) for the fiscal year ended December 31, 2004. For non-corporate shareholders 100.00%, or the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period January 1, 2004 to December 31, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. COLUMBIA ACORN USA For the fiscal year ended December 31, 2004, the Fund designates long-term capital gains of $18,183. COLUMBIA ACORN INTERNATIONAL SELECT Foreign taxes paid during the fiscal year ended December 31, 2004, amounting to $87 ($0.03 per share) are expected to be passed through to shareholders as 100% allowable foreign tax credits on Form 1099-DIV for the year ended December 31, 2004. Gross income derived from sources within foreign countries amounted to $838 ($0.26 per share) for the fiscal year ended December 31, 2004. For non-corporate shareholders 100.00%, or the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period January 1, 2004 to December 31, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. COLUMBIA ACORN SELECT For the fiscal year ended December 31, 2004, the Fund designates long-term capital gains of $36,867. COLUMBIA THERMOSTAT FUND For the fiscal year ended December 31, 2004, the Fund designates long-term capital gains of $1,530. 12.29% of the ordinary income distributed by the Fund, for the year ended December 31, 2004, qualifies for the corporate dividends received deduction. For non-corporate shareholders 11.21%, or the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period January 1, 2004 to December 31, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. 1-800-922-6769 86 Changes in Independent Registered Public Accounting Firm Effective April 13, 2004, the audit committee of the Trust requested that Ernst & Young LLP ("E&Y") resign as the auditors of the Funds. Also effective July 14, 2004, upon the recommendation of the audit committee, the Trust selected PricewaterhouseCoopers LLP ("PWC") as independent registered public accounting firm to audit the books and records of each Fund for its fiscal year ending December 31, 2004. The cessation of the relationship with E&Y was based on the impairment of E&Y's independence resulting from the consummation of the merger of FleetBoston Financial Corporation and Bank of America Corporation and accordingly, E&Y's ability to provide audit services to the Funds. E&Y's report on the financial statements of each Fund for the past two years did not contain an adverse opinion or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the period E&Y was engaged, there were no disagreements with E&Y on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to E&Y's satisfaction, would have caused it to make reference to that matter in connection with its report. 87 Columbia Acorn Family of Funds Class Z Share Information MINIMUM INITIAL INVESTMENT IN COLUMBIA ACORN INTERNATIONAL, COLUMBIA ACORN INTERNATIONAL SELECT, COLUMBIA ACORN SELECT, COLUMBIA THERMOSTAT FUND $1,000 $1,000 FOR AN IRA MINIMUM INITIAL INVESTMENT IN COLUMBIA ACORN FUND AND COLUMBIA ACORN USA $50,000 MINIMUM SUBSEQUENT INVESTMENT IN ALL FUNDS $50 EXCHANGE FEE NONE COLUMBIA ACORN FUND ACRNX Management Fee 0.66% 12b-1 Fee None Other Expenses 0.15% ------------ Expense Ratio 0.81% COLUMBIA ACORN INTERNATIONAL ACINX Management Fee 0.82% 12b-1 Fee None Other Expenses 0.26% ------------ Expense Ratio 1.08% COLUMBIA ACORN USA AUSAX Management Fee 0.91% 12b-1 Fee None Other Expenses 0.18% ------------ Expense Ratio 1.09% COLUMBIA ACORN INTERNATIONAL SELECT ACFFX Management Fee 0.95% 12b-1 Fee None Other Expenses 0.50% ------------ Net Expense Ratio 1.45% COLUMBIA ACORN SELECT ACTWX Management Fee 0.89% 12b-1 Fee None Other Expenses 0.24% ------------ Expense Ratio 1.13% COLUMBIA THERMOSTAT FUND COTZX Management Fee 0.10% 12b-1 Fee None Other Expenses 0.15% ------------ Net Expense Ratio 0.25%* Fees and expenses are for the year ended December 31, 2004 and for Columbia Acorn International Select and Columbia Thermostat Fund include the effect of Columbia Wanger Asset Management's undertaking to reimburse those funds for any ordinary operating expenses, net of custody fees paid indirectly, exceeding 1.45% and 0.25% of their average net assets, respectively. The expense limitation for Columbia Acorn International Select is voluntary and can be terminated by either the Fund or Columbia Wanger Asset Management, L.P. on 30 days' notice. Columbia Thermostat Fund's reimbursement arrangement is contractual through April 30, 2005. The Fund's adviser and/or affiliates have contractually agreed to waive a portion of "other expenses" through April 30, 2005. * Does not include estimated fees and expenses of 0.86% incurred by the Fund from the underlying portfolio funds. 1-800-922-6769 88 This page intentionally left blank. 89 Board of Trustees and Management of Columbia Acorn Funds Each trustee serves a term of unlimited duration, provided that a majority of trustees always has been elected by shareholders. The trustees appoint their own successors, provided that at least two-thirds of the trustees, after such appointment, have been elected by shareholders. Shareholders may remove a trustee, with or without cause, upon the vote of two-thirds of Acorn's outstanding shares at any meeting called for that purpose. A trustee may be removed, with or without cause, upon the vote of a majority of the trustees. The names of the trustees and officers of Acorn, the date each was first elected or appointed to office, their principal business occupations during at least the last five years and other directorships they hold, are shown below. Each trustee serves in such capacity for each of the six series of Acorn. Mr. Wanger also serves as a trustee for each of the four series of the Wanger Advisors Trust. THE ADDRESS FOR THE TRUSTEES AND OFFICERS OF THE TRUST IS COLUMBIA WANGER ASSET MANAGEMENT, L.P., 227 WEST MONROE STREET, SUITE 3000, CHICAGO, ILLINOIS 60606.
NUMBER OF NAME, POSITION(S) YEAR FIRST PORTFOLIOS IN WITH COLUMBIA ACORN ELECTED OR PRINCIPAL OCCUPATION(S) FUND COMPLEX AND AGE AT APPOINTED DURING OVERSEEN BY OTHER JANUARY 1, 2005 TO OFFICE* PAST FIVE YEARS TRUSTEE/OFFICER DIRECTORSHIPS ------------------------ ------------ --------------------------------------- --------------- --------------------------------- TRUSTEES WHO ARE NOT INTERESTED PERSONS OF COLUMBIA ACORN: MARGARET EISEN, 51, 2002 Chief Investment Officer, EAM 6 Antigenics, Inc. (biotechnology Trustee International LLC since 2003; former and drugs); Global Financial chair, Institute for Financial Markets; Group (venture capital fund of formerly managing director, DeGuardiola funds); Lehman Brothers/First Advisors; formerly managing director, Trust Income Opportunity Fund North American Equities at General (high-yield closed-end fund). Motors Asset Management; prio thereto, director of Worldwide Pension Investments for DuPont Asset Management. JEROME KAHN, JR., 70, 1987 Former president, William Harris 6 None. Trustee Investors, Inc. (investment adviser). STEVEN N. KAPLAN, 45, 1999 Neubauer Family Professor of 6 None. Trustee Entrepreneurship and Finance, Graduate School of Business, University of Chicago. DAVID C. KLEINMAN, 69, 1972 Adjunct professor of strategic 6 Sonic Foundry, Inc. Trustee management, University of Chicago (software); Irex Corporation Graduate School of Business; Business (insulation contracting). consultant. ALLAN B. MUCHIN, 69, 1998 Chairman emeritus, Katten Muchin Zavis 6 Alberto-Culver Company Trustee Rosenman (law firm). (toiletries) until 1/27/05. ROBERT E. NASON, 68, 1998 Consultant and private investor since 6 None. Trustee and Chairman 1998; from 1990-1998, executive partner and chief executive officer, member of the executive committee of Grant Thornton, LLP (public accounting firm) and member of the policy board of Grant Thornton International. JOHN A. WING, 69, 2002 Frank Wakely Gunsaulus Professor of Law 6 AmerUs Life Holdings Trustee and Finance, and chairman of the Center (life insurance); LDF, Inc. for the Study of Law and Financial and Labe Federal Bank Markets, Illinois Institute of (banking); Margo Caribe, Technology; prior thereto, chairman of Inc. (farming). the board and chief executive officer of ABN-AMRO Incorporated, formerly The Chicago Corporation, and chief executive officer of Market Liquidity Network, TRUSTEES WHO ARE INTERESTED PERSONS OF COLUMBIA ACORN: CHARLES P. MCQUAID, 51, 1992 President, Columbia WAM since October, 10 None. Trustee and President (1) 2003; Chief Investment Officer, Columbia WAM since September 2003; Portfolio manager since 1995 and director of research since July 1992 through December 2003, Columbia WAM; interim director of international research, Columbia WAM from October 2003 to December 2004; principal, Wanger Asset Management, L.P. ("WAM") from July 1995 to September 2000; president, Wanger Advisors Trust. RALPH WANGER, 70, 1970 Founder, former president, chief 10 Wanger Advisors Trust Trustee (1) investment officer and portfolio (4 portfolios). manager, Columbia WAM (1992-2003); former president, Columbia Acorn from April 1992 through September 2003; former president, Wanger Advisors Trust (1994 through September 2003); principal, WAM from July 1992 until September 2000; president, WAM Ltd. from July 1992 to September 2000; director, Wanger Investment Company plc; director, Columbia WAM.
1-800-922-6769 90
NUMBER OF NAME, POSITION(S) YEAR FIRST PORTFOLIOS IN WITH COLUMBIA ACORN ELECTED OR PRINCIPAL OCCUPATION(S) FUND COMPLEX AND AGE AT APPOINTED DURING OVERSEEN BY OTHER JANUARY 1, 2005 TO OFFICE* PAST FIVE YEARS TRUSTEE/OFFICER DIRECTORSHIPS ------------------------ ------------ --------------------------------------- -------------- --------------------------------- OFFICERS OF COLUMBIA ACORN: J. KEVIN CONNAUGHTON, 40, 2001 Treasurer of the Columbia Funds and of 10 None. Assistant Treasurer the Columbia All-Star Funds since December 2000 (formerly controller and chief accounting officer of the Columbia Funds and of the Columbia All-Star Funds from February 1998 to October 2000); treasurer of the Stein Roe Funds since February 2001 (formerly chief accounting officer and controller from May 2000 to February 2001); treasurer of the Galaxy Funds since September 2002; senior vice president of Columbia Funds Group since January 2001; (prior thereto, vice president of Colonial Management Associates from February 1998 to October 2000). MICHAEL G. CLARKE, 34, 2004 Chief Accounting Officer of the 10 None. Assistant Treasurer Columbia Funds, Liberty Funds, Stein Roe Funds and All-Star Funds since October 2004 (formerly Controller of the Columbia Funds, Liberty Funds, Stein Roe Funds and All-Star Funds from May 2004 to October 2004; Assistant Treasurer from June 2002 to May 2004; Vice President, Product Strategy & Development of the Liberty Funds and Stein Roe Funds from February 2001 to June 2002; Assistant Treasurer of the Liberty Funds, Stein Roe Funds and the All-Star Funds from August 1999 to February 2001. P. ZACHARY EGAN, 36, 2003 Director of international research, 6 None. Vice President Columbia WAM, since December 2004; analyst and portfolio manager, Columbia WAM since 1999; prior thereto, a research fellow with the Robert Bosch Foundation. Kenneth A. Kalina, 45, 1995 Chief compliance officer, Columbia WAM 10 None. Assistant Treasurer since May 2004; treasurer and chief financial officer, Columbia WAM since April 2000; assistant treasurer, Wanger Advisors Trust; fund controller, Columbia WAM since September 1995; director, New Americas Small Cap Fund. BRUCE H. LAUER, 47, 1995 Chief operating officer, Columbia WAM 10 None. Vice President, since April 1995; principal, WAM from Secretary January 2000 to September 2000; vice and Treasurer president, treasurer and secretary, Wanger Advisors Trust; director, Wanger Investment Company plc and New Americas Small Cap Fund. ROBERT A. MOHN, 43, 1997 Director of domestic research, Columbia 10 None. Vice President WAM, since March 2004; analyst and portfolio manager, Columbia WAM since August 1992; principal, WAM from 1995 to September 2000; vice president, Wanger Advisors Trust LOUIS J. MENDES, 40, 2003 Analyst and portfolio manager, Columbia 6 None. Vice President WAM since 2001; prior thereto, analyst and portfolio manager, Merrill Lynch TODD M. NARTER, 40, 2001 Analyst and portfolio manager, Columbia 10 None. Vice President WAM since June 1997; vice president, Wanger Advisors Trust CHRISTOPHER J. OLSON, 40, 2001 Analyst and portfolio manager, Columbia 10 None. Vice President WAM since January 2001; vice president, Wanger Advisors Trust; prior to 2001, director and portfolio strategy analyst with UBS Asset Management/Brinson Partners. BEN ANDREWS, 39, 2004 Analyst and portfolio manager of 10 None. Vice President Columbia WAM since 1998; prior thereto senior analyst at Rothschild Investment Corporation VINCENT P. PIETROPAOLO, 39, 2001 Assistant General Counsel, Bank of 10 None. Assistant Secretary America (and its predecessors) since December 1999. ROBERT SCALES, 52, 2004 Deputy Counsel, Grant Thornton LLP 10 None. Chief Compliance Officer, 2002-2004; prior thereto, Associate Senior Vice President, and general counsel, UBS PaineWebber. General Counsel
* Dates prior to April 1992 correspond to the date first elected or appointed as a director or officer of Acorn Fund Inc., the Trust's predecessor. (1) Trustee who is an "interested person" of the Trust and of Columbia WAM, as defined in the Investment Company Act of 1940, because he is an officer of the Trust and/or because he is an employee or other affiliated person of Columbia WAM. The SAI includes additional information about Fund trustees and is available, without charge, upon request by calling 1-800-345-6611. 91 Columbia Acorn -------------------------------------------------------------------------------- Family of Funds INVESTMENT ADVISER Columbia Wanger Asset Management, L.P. 227 West Monroe Street, Suite 3000 Chicago, Illinois 60606 1-800-922-6769 DISTRIBUTOR Columbia Funds Distributor, Inc. One Financial Center Boston, Massachusetts 02111-2621 TRANSFER AGENT, DIVIDEND DISBURSING AGENT Columbia Funds Services, Inc. P.O. Box 8081 Boston, Massachusetts 02266-8081 1-800-345-6611 LEGAL COUNSEL Bell, Boyd & Lloyd LLC Chicago, Illinois INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers LLP Chicago, Illinois THIS REPORT, INCLUDING THE SCHEDULES OF INVESTMENTS, IS SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF COLUMBIA ACORN TRUST. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION UNLESS PRECEDED OR ACCOMPANIED BY A PROSPECTUS. AN INVESTOR SHOULD CAREFULLY CONSIDER CHARGES AND EXPENSES BEFORE INVESTING. TO OBTAIN A PROSPECTUS CONTAINING THIS AND OTHER INFORMATION, PLEASE CALL (800) 922-6769 OR VISIT OUR WEBSITE (SHOWN BELOW). PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY. A DESCRIPTION OF THE POLICIES AND PROCEDURES THAT THE FUNDS USE TO DETERMINE HOW TO VOTE PROXIES RELATING TO THEIR PORTFOLIO SECURITIES AND A COPY OF THE FUNDS' VOTING RECORD ARE AVAILABLE (I) AT WWW.COLUMBIMANAGEMENT.COM; (II) ON THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT WWW.SEC.GOV AND (III) WITHOUT CHARGE, UPON REQUEST, BY CALLING 800-922-6769. THE FUNDS FILE A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q. THE FUNDS' FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT WWW.SEC.GOV AND MAY BE REVIEWED AND COPIED AT THE SEC'S PUBLIC REFERENCE ROOM IN WASHINGTON, D.C. INFORMATION ON THE OPERATION OF THE PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330. FIND OUT WHAT'S NEW - VISIT OUR WEB SITE AT: www.columbiafunds.com OUR E-MAIL ADDRESS IS: serviceinquiries@columbiamanagement.com SHAREHOLDERS SHOULD NOT INCLUDE PERSONAL INFORMATION SUCH AS ACCOUNT NUMBERS, SOCIAL SECURITY NUMBERS OR TAXPAYER IDENTIFICATION NUMBERS IN E-MAIL. WE ARE UNABLE TO ACCEPT ACCOUNT TRANSACTIONS SENT VIA E-MAIL. 1-800-922-6769 92 PRESORTED FIRST-CLASS MAIL U.S. POSTAGE PAID HOLLISTON, MA PERMIT NO. 20 [EAGLE HEAD LOGO] COLUMBIAFUNDS A MEMBER OF COLUMBIA MANAGEMENT GROUP (C)2005 COLUMBIA FUNDS DISTRIBUTOR, INC. ONE FINANCIAL CENTER, BOSTON, MA 02111-2621 ACN-02/099U-0105 (02/05) 05/4450 [LADY HOLDING FILE] COLUMBIA ACORN FUNDS ANNUAL REPORT December 31, 2004 Columbia Acorn Fund Columbia Acorn International Columbia Acorn USA Columbia Acorn International Select Columbia Acorn Select Columbia Thermostat Fund Not FDIC May Lose Value Insured No Bank Guarantee The discussion in this report of portfolio companies is for illustration only and is not a recommendation of individual stocks. The information is believed to be accurate, but the information and the views of the portfolio managers may change at any time without notice and the portfolio managers may alter a fund's portfolio holdings based on these views and the fund's circumstances at that time. >LETTER TO SHAREHOLDERS FROM THE COLUMBIA ACORN TRUST BOARD OF TRUSTEES The Trustees of the Columbia Acorn Trust are pleased to present this annual report to shareholders of the Columbia Acorn Family of Funds ("Acorn Funds") for 2004. Your Trustees addressed several important shareholder issues during the year. Renewal of Agreements/Expense Reductions Following an in-depth review and analysis, we unanimously approved the renewal of agreements with our investment adviser, Columbia Wanger Asset Management ("CWAM") and two other Columbia Management subsidiaries to manage investments and provide administrative, distribution and transfer agent services. We believe CWAM has consistently provided exceptional value to shareholders and that it will continue to do so under the present agreement, which preserves critical elements of the Firm's autonomy and commits it to focusing on managing the assets of the Acorn Funds. As part of the renewal process, we negotiated a minimum reduction of 25% in transfer agent fees paid by the Acorn Funds effective September 30, 2004. We also negotiated reductions in the advisory fee rates for Columbia Acorn Select and in the administrative fee rates for all Acorn Funds by the establishment of new break points. Further, the 12b-1 plan was changed to reduce annual charges to all Class A shareholders from 35 to 25 basis points and to all Class B shareholders from 100 to 85 basis points representing reductions of 28.6% and 15%, respectively. The administrative fee and 12b-1 plan reductions were effective August 1, 2004. Increase in Minimum Investment for New Shareholders We decided to implement a plan to reduce future cash inflows into Columbia Acorn Fund and Columbia Acorn USA. The minimum investment for new shareholders is now $50,000. This action was taken to protect existing shareholders from the potential impairment of the investment process and performance, which could result if the large amounts of cash inflows experienced by these funds were to continue. Trustee Independence The Securities and Exchange Commission ("SEC") issued new independence requirements in 2004 calling for independent trustees of mutual funds to represent at least 75% of the total number of trustees and also requiring an independent chairperson. Your Trustees have adhered to those hallmarks of governance for several years. We currently have seven independent trustees (including the chairperson) who are not affiliated in any way with entities of Bank of America Corporation ("B of A"), the parent of our investment adviser, distributor and transfer agent. Charles McQuaid and Ralph Wanger of our investment adviser, CWAM, are the only "interested" trustees. New Chief Compliance Officer We recruited and appointed Robert Scales as Chief Compliance Officer ("CCO") of the Acorn Funds in April, 2004. This is a new position reporting directly to the Trustees through our Compliance Committee. Mr. Scales has experience as a lawyer in the securities and financial services industries and five years with the Enforcement Division of the SEC. He reviewed the policies and procedures of the B of A entities serving the Acorn Funds during 2004 and reported his findings to us. Mr. Scales is monitoring the performance of these B of A entities in 2005 under the direction and oversight of our Compliance Committee. He is reporting his findings to us on a regular basis. 1 Columbia Management Market Timing Charges Throughout 2004 we monitored the regulatory proceedings related to frequent trading brought against B of A entities by the SEC and the New York Attorney General. As we told you in our letter to shareholders dated March 23, 2004, complaints were filed against Columbia Management Advisors ("CMA"), which provides administrative services to the Acorn Funds and Columbia Funds Distributors ("CFD"), the distributor for the Acorn Funds. CWAM was not a party to these complaints. On February 9, 2005, the parties in those proceedings finalized settlement agreements that will result in advisory fee reductions for all of the Acorn Funds. In addition, CMA and CFD will pay a substantial amount in penalties. The distribution of that money to the Columbia family of funds and/or its shareholders will be determined by an independent distribution consultant ("IDC") acceptable to the SEC. The IDC will receive recommendations and comments from us before making the final determination regarding payments to any Acorn fund or its shareholders. We are hopeful this will be resolved in 2005. Certain provisions of the settlement agreements call for us to carry out special oversight procedures if we want CMA to provide services to the Acorn Funds in the future. These procedures, which we expect to follow voluntarily, relate to the review, negotiation and determination of management and other fees paid by the Acorn Funds and to the monitoring of compliance. Any incremental cost associated with these special procedures will be paid by Columbia Management. We also focused on the revised practices and control procedures of CFD directed at preventing improper trading activity. Reviews of those practices and controls were conducted by our independent legal counsel, our independent consultants and our CCO. Although there never can be absolute assurance that improper trading activity can always be identified or terminated, we believe that CFD has strengthened its internal practices and controls to identify and discourage such activity. We will continue to monitor CFD's control environment in 2005 through the direct involvement of our CCO and oversight of our Compliance Committee. As we all look forward to Acorn Funds' 35th consecutive year of serving shareholders, your Trustees remain dedicated and focused on the goal of providing exceptional value. We believe such value is delivered to shareholders through a rational investment philosophy and policy consistently applied by qualified investment management with the highest ethical standards. The Acorn Funds have established a record of providing a distinct investment opportunity among mutual funds. We are committed to preserving that opportunity in the years ahead. We thank our fellow shareholders for their continued interest and investment in the Acorn Funds. /s/ Robert E. Nason Robert E. Nason INDEPENDENT CHAIRMAN OF THE BOARD OF TRUSTEES COLUMBIA ACORN TRUST 2 Columbia Acorn Family of Funds Annual Report 2004 Table of Contents Squirrel Chatter: The Miracle Year 4 Columbia Acorn Family of Funds Performance At A Glance 8 Understanding Your Expenses 10 COLUMBIA ACORN FUND In a Nutshell 12 At a Glance 13 Major Portfolio Changes 24 Statement of Investments 26 COLUMBIA ACORN INTERNATIONAL In a Nutshell 14 At a Glance 15 Major Portfolio Changes 38 Statement of Investments 40 Portfolio Diversification 44 COLUMBIA ACORN USA In a Nutshell 16 At a Glance 17 Major Portfolio Changes 45 Statement of Investments 46 COLUMBIA ACORN INTERNATIONAL SELECT In a Nutshell 18 At a Glance 19 Major Portfolio Changes 51 Statement of Investments 52 Portfolio Diversification 54 COLUMBIA ACORN SELECT In a Nutshell 20 At a Glance 21 Major Portfolio Changes 55 Statement of Investments 56 COLUMBIA THERMOSTAT FUND In a Nutshell 22 At a Glance 23 Statement of Investments 78 Statement of Assets and Liabilities 79 Statement of Operations 80 Statement of Changes in Net Assets 81 Financial Highlights 83 Notes to Financial Statements 84 COLUMBIA ACORN FAMILY OF FUNDS Statements of Assets and Liabilities 60 Statements of Operations 61 Statements of Changes in Net Assets 62 Financial Highlights 66 Notes to Financial Statements 71 Report of Independent Registered Public Accounting Firm 89 Unaudited Information 90 Change in Independent Registered Public Accounting Firm 91 Columbia Acorn Family of Funds Class A, B and C Share Information 92 Board of Trustees and Management of Columbia Acorn Funds 94 3 >Squirrel Chatter: THE MIRACLE YEAR [Photo of Ralph Wanger] 1905 was a year of surprises. The first surprise was the victory of the Japanese over the Russians in the Russo-Japanese War. In May 1905, the untested Japanese Navy annihilated the Russian fleet at Tsushima. This was the first time a non-white country had beaten the main force of a European colonial power. The second unexpected event was in physics. 2005 will be celebrated as the centennial of Albert Einstein's "Miracle Year." The journal, ANNALEN DER PHYSIK, volume 17, published three articles in September 1905 all written by Einstein, an obscure clerk in the Swiss patent office in Bern. He had an undergraduate degree in physics but no Ph.D (it was granted a year later). Each of the articles was on a different subject and each one revolutionized its branch of physics. Einstein's papers created 20th century physics almost single-handedly. ATOMS In 1905 there were different theories about the structure of matter. If you take a glass of water and pour nine-tenths of it out, you still have a glass with water in it. What happens if you repeat this process of throwing out 90% of the water in the glass? After you repeat the process a few more times, you have such a small amount of water that you can only see it under a microscope, and in a few more steps the water drop will be too small to be seen even under the microscope. Can you continue the boring job of splitting water forever or do you finally get to a point where it isn't water anymore? Of course we know the answer: Once you get down to a single molecule of water you can't split it and still say that you have water left. Many leading scientists did not accept the atomic theory in 1905. Einstein looked at the process called Brownian Motion in which a grain of pollen or other small object moves around in a random way. (The same mathematical process makes stock prices jiggle.) He deduced that this motion was caused by billions of atoms bumping into the pollen grain in an irregular pattern. He was even able to calculate the size of the atoms involved, thus proving that atoms really existed. PHOTONS In 1905 there was still a basic debate about the nature of light. The greatest achievement of 19th century physics was Maxwell's set of partial differential equations governing electromagnetic fields, including light. Maxwell's equations required that light be a wave. The great Max Planck had introduced the idea of a quantum of energy in 1900 to get an equation that tracked the spectrum of heat radiation, but most scientists doubted that a light quantum was "real." Heinrich Hertz, Philip Lenard and others showed that when a beam of ultraviolet light shines on a piece of metal you produce an electrical current in the metal. There was no way to explain the photoelectric effect according to the Maxwell wave theory of light. The second paper Einstein wrote dealt with the problem of the photoelectric effect. If you cut the amount of energy in a beam of light by 90% and keep reducing it, you still have a beam of light. If you keep slicing the amount of light, does the beam of light keep getting smaller and smaller forever or do you get down to an "atom" of light that can't be split further? Einstein proved that there was a tiny amount of light that could not be further divided. The least amount of light that exists is a single photon (or quantum) of light. 1 The photoelectric effect is explained by photons acting as particles, not as a wave. Einstein's discovery of the photon had a number of interesting effects. First, it led to the development of quantum mechanics and thus to most of 20th century physics. Second, it won Einstein his only Nobel Prize. Third, it uncovered a paradox that still puzzles students, the duality of light. If you run an experiment to show that light is a wave, you can prove it's a wave. If you run an experiment to show that it's a particle, you can prove it's a particle. This duality principle contradicts common sense but when you study science you have to get used to it. The fourth effect was that it made Lenard a life-long enemy of Einstein. Philip Lenard, who received the Nobel Prize in 1905 for his own work on cathode rays, was close to the solution but Einstein ended up getting the credit. Lenard became an unrelenting foe of Einstein, and influenced the Nobel committee's decision not to give Einstein the prize for his theory of relativity. Later on, Lenard became an ardent Nazi. 1-800-922-6769 4 RELATIVITY In 1905, there was also a debate in scientific circles about speed. If you were in a really powerful rocket ship in space, and you pushed the throttle forward, you would speed up. If you kept on increasing the power, would you go ever faster, or was there an absolute speed limit in the universe that you could not exceed? The third paper became the best known, Einstein's special theory of relativity. It explained that there was a cosmic speed limit, the speed of light. Very odd things happen when your rocket ship is moving close to the speed of light. Time slows down and you get shorter, under the Lorentz contraction equation, giving rise to the limerick: A sexy young techie named Fisk, Had a motion exceedingly brisk. So fast was his action The Lorentz contraction Shortened his rod to a disk. In a very brief paper published later in 1905, Einstein added in a note that his theory of relativity implied the equation E=mc 2. That solved the paradox of radioactivity; Mme. Curie's radium was producing much more energy than could be explained by 19th century physics. Einstein showed that radioactive energy was caused by turning a small amount of mass into a lot of energy. So we had this technical journal containing three papers written by a man unknown in science, a non-Ph.D, a non-academic, writing on a German-dominated field with all the fussiness about rank and reputation that you would expect. Would anyone care? Einstein did not receive any communication from any physicists for the first couple months after he published, but in early 1906 Max Planck read and understood the papers. He wrote to Einstein and sent his assistant, another important physicist, Max von Laue, to visit Einstein in Bern. Planck's subsequent endorsement made Einstein acceptable to the community of physicists, and his papers became required study for all physicists, as they remain. The compelling human question: How the heck did Einstein do it? How could one human being produce three revolutionary papers in one year, on three different subjects, while carrying a full-time job at the patent office to boot? We can admire but not explain. The "Miracle Year" commemorates one of the greatest feats of the human mind ever. 2004 SCARLET A WINNERS Each year we honor those outside analysts who have provided advice and insight to our investment team on some of the top-performing stocks that we held in the Funds. The criteria for domestic stock Scarlet A winners was an annual gain of over 45% and a dollar gain of over $60 million across the Funds. On the international side, the stock needed to increase more than 50% and make more than $20 million for the Funds. Our thanks to Kindra Devaney Tartarsky, formerly with Fulcrum Partners, who suggested we look at teen retailer ABERCROMBIE & FITCH. In 2004, the stock was up 89% and had a dollar gain for the Funds of $66 million. Barry Sahgal, now with Gilford Securities, receives his second Scarlet A for natural gas producer ULTRA PETROLEUM. The stock had an annual gain of 95% and made over $62 million for the Funds. ESCO TECHNOLOGIES, a manufacturer of automatic electric meter readers, increased nearly 76% in 2004 and made over $60 million for the Funds. Richard Eastman of Robert W. Baird & Co. brought Esco to us three years ago and has provided superior coverage on this stock and the filtration industry ever since. PEOPLE'S BANK OF BRIDGEPORT gained 86% in 2004, earning nearly $64 million for the Funds. Our thanks to Sal DiMartino with Bear Stearns for recommending this stock to us 10 years ago. On the international side, ANGLO IRISH BANK made it a three-peat in 2004. The stock first won the Scarlet A for David Smith of Davy Stockbrokers in Dublin in 2002 and it's still going strong. For the year, the stock increased 56% and made $63 million for the Funds. Based in the United Kingdom, oil and gas producer TULLOW OIL had an impressive 94% gain for the year and made $36 million for the Funds. Credit goes to Tony Alves of KBC Peel Securities in 5 London and, making a second appearance on the 2004 Scarlet A list, Barry Sahgal. Marc de Natris of Fortis Bank is back among the Scarlet A winners this year. Marc received the "A" in 2000 and 2001 for different stocks. This year, we credit him for his help on AALBERTS INDUSTRIES, a Netherlands-based, diversified industrial company. Aalberts increased 91% and made nearly $35 million for the Funds. French postage meter machine manufacturer NEOPOST rounds out our international winners. The stock increased 57% in '04 and made $28 million for the Funds. Our thanks to Caroline Cohen of Deutsche Bank for the insight she provided on this stock. COLUMBIA WAM NEWS We are pleased to announce that Zach Egan has been named director of international research for Columbia Wanger Asset Management. In this position, Zach will provide leadership and quality control to Columbia Wanger's international research efforts. Congratulations Zach! /s/ Ralph Wanger Ralph Wanger FOUNDER, ADVISOR AND TRUSTEE COLUMBIA WANGER ASSET MANAGEMENT, L.P. ________________________________________________________________________________ 1 PLANCK AND EINSTEIN HAD DISCOVERED THE QUANTUM JUMP, WHICH WAS THE SMALLEST THING THAT COULD POSSIBLY EXIST IN THE UNIVERSE. MODERN WRITERS, FOR REASONS DIFFICULT TO EXPLAIN, NOW USE THE PHRASE QUANTUM JUMP TO MEAN A BIG EVENT. WHEN NON-SCIENTISTS START THROWING AROUND SCIENTIFIC TERMS WITHOUT UNDERSTANDING THEM, FUNNY THINGS HAPPEN. DON'T GET ME STARTED ON THE HEISENBERG UNCERTAINTY PRINCIPLE. INCIDENTALLY, ALBERT EINSTEIN'S FATHER, HERMANN, WAS BORN IN THE WURTTEMBERG VILLAGE OF BUCHAU, WHERE HIS FAMILY HAD LIVED FOR GENERATIONS. HERMANN MOVED 20 MILES FROM BUCHAU TO THE CITY OF ULM, WHERE ALBERT WAS BORN. MY GREAT-GREAT GRANDFATHER, JOSEPH KOHN, WAS ALSO FROM BUCHAU AND HE HAD MANY EINSTEINS IN HIS FAMILY TREE. I AM VERY PROUD OF THE EINSTEIN CONNECTION. SOURCES: "EINSTEIN: A CELEBRATION," SEMINAR AT THE ASPEN INSTITUTE, AUGUST 8-11, 2004. EINSTEIN, ALBERT, "IDEAS AND OPINIONS," CROWN PUBLISHERS, 1954. KAKU, MICHIO, "EINSTEIN COSMOS: HOW ALBERT EINSTEIN'S VISION TRANSFORMED OUR UNDERSTANDING OF SPACE AND TIME," ATLAS BOOKS, 2004. "DISCOVER" MAGAZINE, "SPECIAL EINSTEIN ISSUE," SEPTEMBER 2004. A SPECIAL THANKS TO DOUG STONE OF YALE UNIVERSITY FOR EDITING THIS ESSAY. AS OF 12/31/04, FUND POSITIONS, AS A PERCENT OF NET ASSETS, IN THE HOLDINGS MENTIONED WERE AS FOLLOWS: ABERCROMBIE & FITCH: COLUMBIA ACORN FUND, 0.4%; COLUMBIA ACORN USA, 1.5%; COLUMBIA ACORN SELECT, 3.6%. ULTRA PETROLEUM: COLUMBIA ACORN FUND, 0.6%. ESCO TECHNOLOGIES: COLUMBIA ACORN FUND, 0.6%; COLUMBIA ACORN USA, 2.5%. PEOPLE'S BANK OF BRIDGEPORT: COLUMBIA ACORN FUND, 0.9%. ANGLO IRISH BANK: COLUMBIA ACORN FUND, 0.6%; COLUMBIA ACORN INTERNATIONAL, 2.7%; COLUMBIA ACORN INTERNATIONAL SELECT, 5.8%. TULLOW OIL: COLUMBIA ACORN FUND, 0.3%; COLUMBIA ACORN INTERNATIONAL, 1.0%. AALBERTS INDUSTRIES: COLUMBIA ACORN FUND, 0.3%; COLUMBIA ACORN INTERNATIONAL, 1.3%. NEOPOST: COLUMBIA ACORN FUND, 0.2%; COLUMBIA ACORN INTERNATIONAL, 1.4%; COLUMBIA ACORN INTERNATIONAL SELECT, 4.1%. 1-800-922-6769 6 >NET ASSET VALUE PER SHARE AS OF 12/31/04
COLUMBIA COLUMBIA COLUMBIA ACORN COLUMBIA COLUMBIA ACORN ACORN INTERNATIONAL COLUMBIA THERMOSTAT ACORN FUND INTERNATIONAL USA SELECT ACORN SELECT FUND ---------------------------------------------------------------------------------------------------------------- Class A $ 25.93 $ 28.75 $ 24.77 $ 17.85 $ 20.83 $ 13.11 ---------------------------------------------------------------------------------------------------------------- Class B $ 25.19 $ 28.18 $ 24.14 $ 17.36 $ 20.23 $ 13.14 ---------------------------------------------------------------------------------------------------------------- Class C $ 25.18 $ 28.19 $ 24.14 $ 17.38 $ 20.23 $ 13.13 ----------------------------------------------------------------------------------------------------------------
>2004 YEAR-END DISTRIBUTIONS The following table details the funds' year-end distributions. The record date for COLUMBIA ACORN FUND, COLUMBIA ACORN USA and COLUMBIA ACORN SELECT was December 9, 2004. The ex-dividend date was December 10, 2004, and the payable date was December 13, 2004. For COLUMBIA THERMOSTAT FUND, the record date was December 23, 2004. The ex-dividend date was December 27, 2004, and the payable date was December 28, 2004.
LONG-TERM SHORT-TERM CAPITAL CAPITAL ORDINARY REINVESTMENT GAINS GAINS INCOME PRICE ---------------------------------------------------------------------------------------------------------------- Columbia Acorn Fund Class A $ 0.8319 $ 0.0491 None $ 25.06 ---------------------------------------------------------------------------------------------------------------- Columbia Acorn Fund Class B and C $ 0.8319 $ 0.0491 None $ 24.35 ---------------------------------------------------------------------------------------------------------------- Columbia Acorn USA Class A $ 0.1376 None None $ 24.02 ---------------------------------------------------------------------------------------------------------------- Columbia Acorn USA Class B $ 0.1376 None None $ 23.41 ---------------------------------------------------------------------------------------------------------------- Columbia Acorn USA Class C $ 0.1376 None None $ 23.42 ---------------------------------------------------------------------------------------------------------------- Columbia Acorn Select Class A $ 0.4398 None None $ 20.33 ---------------------------------------------------------------------------------------------------------------- Columbia Acorn Select Class B and C $ 0.4398 None None $ 19.75 ---------------------------------------------------------------------------------------------------------------- Columbia Thermostat Fund, Class A $ 0.0011 $ 0.0079 $ 0.2575 $ 13.04 ---------------------------------------------------------------------------------------------------------------- Columbia Thermostat Fund, Class B $ 0.0011 $ 0.0079 $ 0.1703 $ 13.06 ---------------------------------------------------------------------------------------------------------------- Columbia Thermostat Fund, Class C $ 0.0011 $ 0.0079 $ 0.1628 $ 13.06 ----------------------------------------------------------------------------------------------------------------
7 Columbia Acorn Family of Funds >Share Class Performance Average Annual Total Returns through 12/31/04
CLASS A CLASS B CLASS C WITHOUT WITH WITHOUT WITH WITHOUT WITH SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE SALES CHARGE --------------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN FUND (10/16/2000) --------------------------------------------------------------------------------------------------------------------- 3 months* 12.35% 5.89% 12.17% 7.17% 12.12% 11.12% --------------------------------------------------------------------------------------------------------------------- 1 year 21.05% 14.09% 20.15% 15.15% 20.11% 19.11% --------------------------------------------------------------------------------------------------------------------- 3 years 14.76% 12.51% 13.97% 13.20% 13.98% 13.98% --------------------------------------------------------------------------------------------------------------------- Life of fund 13.62% 12.03% 12.87% 12.55% 12.86% 12.86% --------------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN INTERNATIONAL (10/16/2000) --------------------------------------------------------------------------------------------------------------------- 3 months* 16.63% 9.93% 16.40% 11.40% 16.39% 15.39% --------------------------------------------------------------------------------------------------------------------- 1 year 28.91% 21.50% 27.91% 22.91% 28.01% 27.01% --------------------------------------------------------------------------------------------------------------------- 3 years 16.53% 14.26% 15.71% 14.96% 15.75% 15.75% --------------------------------------------------------------------------------------------------------------------- Life of fund 4.02% 2.57% 3.32% 2.90% 3.33% 3.33% --------------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN USA (10/16/2000) --------------------------------------------------------------------------------------------------------------------- 3 months* 14.17% 7.61% 14.00% 9.00% 13.95% 12.95% --------------------------------------------------------------------------------------------------------------------- 1 year 20.12% 13.21% 19.26% 14.26% 19.26% 18.26% --------------------------------------------------------------------------------------------------------------------- 3 years 12.49% 10.29% 11.75% 10.94% 11.75% 11.75% --------------------------------------------------------------------------------------------------------------------- Life of fund 15.22% 13.61% 14.49% 14.18% 14.49% 14.49% --------------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN INT'L SELECT (10/16/2000) --------------------------------------------------------------------------------------------------------------------- 3 months* 13.19% 6.68% 13.02% 8.02% 13.00% 12.00% --------------------------------------------------------------------------------------------------------------------- 1 year 23.76% 16.64% 22.95% 17.95% 22.91% 21.91% --------------------------------------------------------------------------------------------------------------------- 3 year 14.00% 11.77% 13.22% 12.44% 13.24% 13.24% --------------------------------------------------------------------------------------------------------------------- Life of fund 0.38% -1.02% -0.32% -0.79% -0.29% -0.29% --------------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN SELECT (10/16/2000) --------------------------------------------------------------------------------------------------------------------- 3 months* 13.80% 7.26% 13.57% 8.57% 13.57% 12.57% --------------------------------------------------------------------------------------------------------------------- 1 year 18.16% 11.37% 17.24% 12.24% 17.24% 16.24% --------------------------------------------------------------------------------------------------------------------- 3 year 12.13% 9.94% 11.37% 10.55% 11.37% 11.37% --------------------------------------------------------------------------------------------------------------------- Life of fund 12.02% 10.46% 11.26% 10.93% 11.27% 11.27% --------------------------------------------------------------------------------------------------------------------- COLUMBIA THERMOSTAT FUND (3/3/2003) --------------------------------------------------------------------------------------------------------------------- 3 months* 5.75% -0.33% 5.63% 0.63% 5.58% 4.58% --------------------------------------------------------------------------------------------------------------------- 1 year 8.92% 2.65% 8.27% 3.27% 8.13% 7.13% --------------------------------------------------------------------------------------------------------------------- Life of fund 17.29% 13.57% 16.54% 14.62% 16.46% 16.46% ---------------------------------------------------------------------------------------------------------------------
*Not annualized. PERFORMANCE SHOWN HERE IS PAST PERFORMANCE WHICH CANNOT GUARANTEE FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN A FUND WILL FLUCTUATE SO THAT FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE CHANGES OVER TIME. VISIT COLUMBIAFUNDS.COM FOR DAILY UPDATES. THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM 5.75% SALES CHARGE FOR CLASS A SHARES, THE APPROPRIATE CLASS B CONTINGENT DEFERRED SALES CHARGE FOR THE HOLDING PERIOD AFTER PURCHASE AS FOLLOWS: THROUGH FIRST YEAR--5%, SECOND YEAR--4%, THIRD YEAR--3%, FOURTH YEAR--3%, FIFTH YEAR--2%, SIXTH YEAR--1%, THEREAFTER--0%; AND THE CLASS C CONTINGENT DEFERRED SALES CHARGE OF 1% FOR THE FIRST YEAR ONLY. PERFORMANCE OF THE DIFFERENT SHARE CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH EACH CLASS. Performance results reflect any voluntary waivers or reimbursements of Fund expenses by the Adviser or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. 1-800-922-6769 8 >Fund Performance vs. Benchmarks Class A Shares, without sales charge, Average Annual Total Returns through 12/31/04
4TH 1 3 LIFE QUARTER* YEAR YEARS OF FUND ------------------------------------------------------------------------------------------ COLUMBIA ACORN FUND (10/16/2000) 12.35% 21.05% 14.76% 13.62% ------------------------------------------------------------------------------------------ S&P 500 9.23% 10.88% 3.59% -1.36% ------------------------------------------------------------------------------------------ Russell 2500 14.22% 18.29% 12.27% 9.74% ------------------------------------------------------------------------------------------ Lipper Small-Cap Core Funds Index 11.44% 18.37% 10.44% 9.66% ------------------------------------------------------------------------------------------ Lipper Mid-Cap Core Funds Index 11.79% 15.44% 9.22% 5.02% ------------------------------------------------------------------------------------------ COLUMBIA ACORN INTERNATIONAL (10/16/2000) 16.63% 28.91% 16.53% 4.02% ------------------------------------------------------------------------------------------ Citigroup EMI Global ex-US 16.70% 29.27% 23.11% 11.47% ------------------------------------------------------------------------------------------ MSCI EAFE 15.32% 20.25% 11.89% 2.58% ------------------------------------------------------------------------------------------ Lipper Int'l Small- Cap Funds Index 16.27% 29.50% 22.74% 9.49% ------------------------------------------------------------------------------------------ COLUMBIA ACORN USA (10/16/2000) 14.17% 20.12% 12.49% 15.22% ------------------------------------------------------------------------------------------ Russell 2000 14.09% 18.33% 11.48% 8.93% ------------------------------------------------------------------------------------------ Lipper Small-Cap Core Funds Index 11.44% 18.37% 10.44% 9.66% ------------------------------------------------------------------------------------------ S&P 500 9.23% 10.88% 3.59% -1.36% COLUMBIA ACORN INT'L SELECT (10/16/2000) 13.19% 23.76% 14.00% 0.38% ------------------------------------------------------------------------------------------ Citigroup World ex-US Cap Range $2-10B 16.46% 25.22% 19.39% 9.84% ------------------------------------------------------------------------------------------ MSCI EAFE 15.32% 20.25% 11.89% 2.58% ------------------------------------------------------------------------------------------ Lipper International Funds Index 14.39% 18.59% 11.60% 2.95% ------------------------------------------------------------------------------------------ COLUMBIA ACORN SELECT (10/16/2000) 13.80% 18.16% 12.13% 12.02% ------------------------------------------------------------------------------------------ S&P MidCap 400 12.16% 16.48% 10.53% 8.07% ------------------------------------------------------------------------------------------ Lipper Mid-Cap Growth Index 13.78% 14.03% 3.37% -6.62% ------------------------------------------------------------------------------------------ S&P 500 9.23% 10.88% 3.59% -1.36% ------------------------------------------------------------------------------------------ COLUMBIA THERMOSTAT FUND (3/3/2003) 5.75% 8.92% -- 17.29% ------------------------------------------------------------------------------------------ S&P 500 9.23% 10.88% -- 24.11% ------------------------------------------------------------------------------------------ Lehman U.S. Credit Intermediate Bond Index 0.77% 4.08% -- 4.82% ------------------------------------------------------------------------------------------ Lipper Flexible Portfolio Funds Index 7.76% 9.50% -- 19.36% ------------------------------------------------------------------------------------------
*Not annualized. PERFORMANCE SHOWN HERE IS PAST PERFORMANCE WHICH CANNOT GUARANTEE FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN A FUND WILL FLUCTUATE SO THAT FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE CHANGES OVER TIME. VISIT COLUMBIAFUNDS.COM FOR DAILY UPDATES. DESCRIPTION OF INDEXES: S&P 500 is a broad, market-weighted average of U.S. blue-chip company stock performance. S&P MIDCAP 400 is a broad market-weighted index of 400 stocks that are in the next size/tier down from the S&P 500. RUSSELL 2000 is a market-weighted index of 2000 smaller U.S. companies, formed by taking the largest 3,000 companies and eliminating the largest 1,000. RUSSELL 2500 is the smallest 2,500 U.S. companies from this same group. CITIGROUP EMI GLOBAL EX-US is the bottom 20% of institutionally investable capital of developed and emerging countries, selected by index sponsor, outside the U.S. MSCI EAFE is Morgan Stanley's Europe, Australasia and Far East Index, a widely recognized international benchmark that comprises 20 major markets in proportion to world stock market capitalization. CITIGROUP WORLD EX-US CAP RANGE $2-$10B is a subset of the Broad Market Index, representing a mid-cap developed market index excluding the U.S. LIPPER INDEXES include the largest funds tracked by Lipper, Inc. in the named category. LIPPER MID-CAP GROWTH INDEX, 30 mid-cap growth funds; LIPPER MID-CAP CORE FUNDS INDEX, 30 mid-cap core funds; LIPPER INTERNATIONAL FUNDS INDEX, 30 largest non-U.S. funds, not including non-U.S. small-cap funds; LIPPER INTERNATIONAL SMALL-CAP FUNDS INDEX, 10 largest non-U.S. funds investing in small-cap companies, including Columbia Acorn International; LIPPER SMALL-CAP CORE FUNDS INDEX, 30 largest small-cap core funds, including Columbia Acorn Fund. LIPPER FLEXIBLE PORTFOLIO FUNDS INDEX is an equal dollar weighted index of the 30 largest mutual funds within the Flexible Portfolio fund classification, as defined by Lipper. The LEHMAN U.S. CREDIT INTERMEDIATE BOND INDEX is the intermediate component of the U.S. Credit Index. The U.S. Credit Index includes publicly issued U.S. corporate and foreign debentures and secured notes that meet specified maturity, liquidity, and quality requirements. All indexes are unmanaged and returns include reinvested distributions. A more complete description of each index is included in the Fund's statement of additional information. It is not possible to invest directly in an index. 9 >UNDERSTANDING YOUR EXPENSES As a fund shareholder, you incur two types of costs. There are transaction costs, which generally include sales charges on purchases and may include redemption or exchange fees. There are also continuing costs, which generally include investment advisory fees, Rule 12b-1 fees, and other fund expenses. The information on these pages is intended to help you understand your ongoing costs of investing in the funds and to compare these costs with the ongoing costs of investing in other mutual funds. Analyzing your fund's expenses To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in the Class A, B and C shares of the Columbia Acorn Funds for the last six months. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using each fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column assumes that the return each year is 5% before expenses and then applies each fund's actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during the reporting period. Compare with other funds Since all mutual fund companies are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the funds with other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the continuing cost of investing in a fund and do not reflect any transactional costs, such as sales charges or redemption or exchange fees. Estimating your actual expenses To estimate the expenses that you paid over the period, first you will need your account balance at the end of the period: o For shareholders who receive their account statements from Columbia Funds Services, Inc., your account balance is available online at www.columbiafunds.com or by calling Shareholder Services at 800.922.6769. o For shareholders who receive their account statements from their brokerage firm, contact your brokerage firm to obtain your account balance. 1. Divide your ending account balance by $1,000. For example, if an account balance was $8,600 at the end of the period, the result would be 8.6. 2. In the section of the table titled "Expenses paid during the period," locate the amount for your fund. You will find this number is in the column labeled "actual." Multiply this number by the result from step 1. Your answer is an estimate of the expenses you paid on your account during the period. 1-800-922-6769 10 >July 1, 2004 - December 31, 2004
ACCOUNT VALUE AT ACCOUNT VALUE AT FUND'S THE BEGINNING OF THE END OF EXPENSES PAID ANNUALIZED THE PERIOD ($) THE PERIOD ($) DURING THE PERIOD ($) EXPENSE ------------------------------------------------------------------------------------- ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL RATIO (%)* ------------------------------------------------------------------------------------------------------------------ COLUMBIA ACORN FUND ------------------------------------------------------------------------------------------------------------------ Class A 1,000.00 1,000.00 1113.32 1019.30 6.16 5.89 1.16 ------------------------------------------------------------------------------------------------------------------ Class B 1,000.00 1,000.00 1108.79 1015.58 10.07 9.63 1.90 ------------------------------------------------------------------------------------------------------------------ Class C 1,000.00 1,000.00 1108.39 1015.33 10.33 9.88 1.95 ------------------------------------------------------------------------------------------------------------------ COLUMBIA ACORN INTERNATIONAL ------------------------------------------------------------------------------------------------------------------ Class A 1,000.00 1,000.00 1188.02 1017.75 8.08 7.46 1.47 ------------------------------------------------------------------------------------------------------------------ Class B 1,000.00 1,000.00 1183.50 1013.88 12.29 11.34 2.24 ------------------------------------------------------------------------------------------------------------------ Class C 1,000.00 1,000.00 1183.50 1013.72 12.46 11.49 2.27 ------------------------------------------------------------------------------------------------------------------ COLUMBIA ACORN USA ------------------------------------------------------------------------------------------------------------------ Class A 1,000.00 1,000.00 1095.52 1017.70 7.80 7.51 1.48 ------------------------------------------------------------------------------------------------------------------ Class B 1,000.00 1,000.00 1092.30 1014.08 11.57 11.14 2.20 ------------------------------------------------------------------------------------------------------------------ Class C 1,000.00 1,000.00 1091.30 1013.83 11.83 11.39 2.25 ------------------------------------------------------------------------------------------------------------------ COLUMBIA ACORN INTERNATIONAL SELECT ------------------------------------------------------------------------------------------------------------------ Class A 1,000.00 1,000.00 1151.62 1016.49 9.30 8.72 1.72 ------------------------------------------------------------------------------------------------------------------ Class B 1,000.00 1,000.00 1148.10 1013.47 12.53 11.74 2.32 ------------------------------------------------------------------------------------------------------------------ Class C 1,000.00 1,000.00 1147.20 1012.82 13.22 12.40 2.45 ------------------------------------------------------------------------------------------------------------------ COLUMBIA ACORN SELECT ------------------------------------------------------------------------------------------------------------------ Class A 1,000.00 1,000.00 1102.61 1017.95 7.56 7.25 1.43 ------------------------------------------------------------------------------------------------------------------ Class B 1,000.00 1,000.00 1097.68 1013.98 11.71 11.24 2.22 ------------------------------------------------------------------------------------------------------------------ Class C 1,000.00 1,000.00 1097.68 1013.77 11.92 11.44 2.26 ------------------------------------------------------------------------------------------------------------------ COLUMBIA THERMOSTAT FUND ------------------------------------------------------------------------------------------------------------------ Class A 1,000.00 1,000.00 1060.88 1022.62 2.59 2.54 0.50 ------------------------------------------------------------------------------------------------------------------ Class B 1,000.00 1,000.00 1058.92 1019.51 5.80 5.69 1.12 ------------------------------------------------------------------------------------------------------------------ Class C 1,000.00 1,000.00 1057.41 1018.85 6.46 6.34 1.25 ------------------------------------------------------------------------------------------------------------------
Expenses paid during the period are equal to each fund's annualized expense ratio, multiplied by the average account value over the period, then multiplied by the number of days in the funds' most recent fiscal half-year and divided by 366. Had the Investment Adviser and/or Transfer Agent not waived a portion of expenses, total return would have been reduced. It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the funds and do not reflect any transactional costs, such as sales charges, redemption or exchange fees. Therefore, the hypothetical examples provided may not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher. Columbia Thermostat Fund's expenses do not include fees and expenses incurred by the Fund from the underlying portfolio funds. * For the six months ended 12/31/04. 11 Columbia Acorn Fund >In a Nutshell [Photo of Charles P. McQuaid] [Photo of Robert A. Mohn] Columbia Acorn Fund rose 21.05% (Class A shares, without sales charge) in 2004. As shown on Page 9, the Fund beat all of its small-cap benchmarks and almost doubled the 10.88% return of the large-cap S&P 500. Solid stock picking, plus heavy weightings in energy, industrial and foreign stocks, produced good annual results. During the fourth quarter, Columbia Acorn Fund's 12.35% gain was below the Russell 2500 small-cap benchmark. The Russell was boosted by returns from the smallest caps and more speculative companies. Columbia Acorn Fund was modestly ahead of the Lipper Small- and Mid-Cap Core Funds Indexes for the quarter. Great stock picks included retailer Urban Outfitters, riverboat casino operator Pinnacle Entertainment, and gaming equipment maker Shuffle Master. All more than doubled during the year because their earnings exceeded expectations. People's Bank of Bridgeport cashed out of its credit card business, enabling shareholders to cash in on an 86% gain. Handbag maker Coach bagged a 49% profit. Energy was our best performing group for the year. Quicksilver Resources, Southwestern Energy and Ultra Petroleum all about doubled, while our largest dollar winner, XTO Energy, jumped 57%. All of these stocks benefited from higher prices and higher production. Though we continue to be bullish on the group, during the fourth quarter we believed that oil prices were at a short-term speculative high and subject to a correction. Consequently, we trimmed our energy holdings, and swapped some oil producer stocks based on our valuation judgments. Believing that oil companies will increase capital spending, we also swapped some oil producers into oil service companies. A number of industrial companies also manufactured big profits in 2004. Industrial safety goods maker Mine Safety Appliances and water treatment equipment company Pentair each jumped over 90% while automatic electronic meter reader manufacturer Esco Technologies read nearly a 76% gain. We applaud our industrial goods and services analyst, Rob Chalupnik, for these picks. Due to what we believe to be reasonable valuations, a fairly good economy, and the weak dollar, we added to our domestic industrial holdings. The biggest loser for the year was Novell, a developer of open source software. The stock missed earnings targets and declined nearly 36% for the year. For the fourth quarter, drug company AtheroGenics was the biggest dollar loser. The stock was a big winner in the third quarter but gave back much of that gain in the fourth quarter when questions were raised about missing disclosure in trial results it released in September. The stock was off 29% for the three months. Educational toy manufacturer Leapfrog Enterprises missed its earnings and declined 40% in the quarter. Columbia Acorn's foreign stocks jumped 36.25% in the year. The UK's Tullow Oil rose 94%, rewarded by the market for its opportunistic acquisition of Energy Africa. Other foreign winners were driven by fine earnings gains: Dutch industrial company Aalberts Industries surged 91%, and Austrian brick producer Wienerberger delivered a solid 84% gain. Our largest foreign dollar winner, Anglo Irish Bank, a lender to small businesses, returned 56%. Columbia Acorn's foreign weighting remains at about 15%. /s/ Charles P. McQuaid /s/ Robert A. Mohn Charles P. McQuaid Robert A. Mohn LEAD PORTFOLIO MANAGER CO-PORTFOLIO MANAGER People's Bank Shows its Cards -------------------------------------------------------------------------------- Columbia Acorn Fund co-manager Rob Mohn discovered People's Bank of Bridgeport back in 1994, finding an excellent credit card company inside what was then a troubled thrift. Rob noted that People's credit card operation had fast growth and low credit losses, and calculated that this undiscovered division accounted for nearly half of the value of the company. Since that time the credit card business had its ups and downs, while People's substantially improved its savings and loan business. In 2004 the company sold its credit card business at over a 15% premium to assets. Though additional upside is possible from cost cuts and remaining demutualization, we trimmed Columbia Acorn's position in the fourth quarter. The stock was up seven-fold from our initial purchase. SMALL-CAP STOCKS ARE OFTEN MORE VOLATILE AND LESS LIQUID THAN THE STOCKS OF LARGER COMPANIES. SMALL COMPANIES MAY HAVE A SHORTER HISTORY OF OPERATIONS THAN LARGER COMPANIES AND MAY HAVE A LESS DIVERSIFIED PRODUCT LINE, MAKING THEM MORE SUSCEPTIBLE TO MARKET PRESSURE. INVESTMENTS IN FOREIGN SECURITIES HAVE SPECIAL RISKS, INCLUDING POLITICAL OR ECONOMIC INSTABILITY, HIGHER COSTS, DIFFERENT REGULATIONS, ACCOUNTING STANDARDS, TRADING PRACTICES AND LEVELS OF INFORMATION, AND CURRENCY EXCHANGE RATE FLUCTUATIONS. AS OF 12/31/04, THE FUND'S POSITIONS IN THE HOLDINGS MENTIONED WERE: URBAN OUTFITTERS, 0.3%; PINNACLE ENTERTAINMENT, 0.3%; SHUFFLE MASTER, 0.2%; PEOPLE'S BANK OF BRIDGEPORT, 0.9%; COACH, 1.2%; QUICKSILVER RESOURCES, 0.2%; SOUTHWESTERN ENERGY, 0.2%; ULTRA PETROLEUM, 0.6%; XTO ENERGY, 1.8%; MINE SAFETY APPLIANCES, 0.3%; PENTAIR, 0.3%; ESCO TECHNOLOGIES, 0.6%; NOVELL, 0.6%; ATHEROGENICS, 0.2%; LEAPFROG ENTERPRISES, 0.0%; TULLOW OIL, 0.3%; ENERGY AFRICA, 0.0%; AALBERTS INDUSTRIES, 0.3%; WIENERBERGER, 0.3%; ANGLO IRISH BANK, 0.6%. 1-800-922-6769 12 Columbia Acorn Fund >At a Glance TICKER SYMBOL: LACAX TOTAL NET ASSETS OF THE FUND: $13,841.5 MILLION PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (BASED ON CLASS A SHARE RETURNS) >through December 31, 2004 LIFE OF 1 YEAR 3 YEARS FUND ------ ------- ------- Returns before NAV 21.05% 14.76% 13.62% taxes POP 14.09 12.51 12.03 --------------------------------------------------------------------------- Returns after taxes NAV 20.37 14.53 12.74 on distributions POP 13.45 12.29 11.16 --------------------------------------------------------------------------- Returns after taxes NAV 14.44 12.75 11.48 on distributions and POP 9.88 10.78 10.07 sale of fund shares --------------------------------------------------------------------------- S&P 500 (pretax) 10.88 3.59 -1.36 --------------------------------------------------------------------------- Russell 2500 (pretax) 18.29 12.27 9.74 --------------------------------------------------------------------------- Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Returns after taxes on distributions and sale of fund shares reflect the additional tax impact of long-term gains or losses realized when fund shares are sold. The returns are taxed at the maximum rate and assume shares were purchased at the beginning of the period. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A shares only; after-tax returns for other share classes will vary. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. PUBLIC OFFERING PRICE (POP) RETURNS INCLUDE THE MAXIMUM SALES CHARGE OF 5.75% FOR CLASS A SHARES. NET ASSET VALUE (NAV) RETURNS DO NOT INCLUDE SALES CHARGES OR CONTINGENT DEFERRED SALES CHARGES (CDSC). COLUMBIA ACORN FUND PORTFOLIO DIVERSIFICATION >as a % of net assets, as of December 31, 2004 [PIE CHART] Consumer Goods/Services 20.7% Industrial Goods/Services 14.6% Other* 8.8% Finance 13.2% Energy/Minerals 9.3% Health Care 8.6% Real Estate 2.2% Information 22.6% Software/Services 10.2% Computer Related Hardware 6.8% Telecommunications 3.2% Media 2.4% * Other includes cash and other assets less liabilities of 7.5%. Foreign equities within the portfolio were 15.0% diversified by country as follows: 9.0% Europe; 0.5% Asia without Japan; 2.1% Canada; 1.2% Japan; 0.5% Australia/New Zealand; 1.7% Emerging Markets. THE VALUE OF A $50,000 INVESTMENT IN COLUMBIA ACORN FUND (CLASS A) >October 16, 2000 through December 31, 2004 Illustration is based on a hypothetical $50,000 investment from inception in Class A shares of the Fund, which includes the 4.50% initial sales charge for this level of investment. Performance may reflect any voluntary waiver or reimbursement of Fund expenses by the Adviser or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. The Russell 2500 is the smallest 2,500 U.S. companies taken from a group of the largest 3,000 companies. The index is unmanaged and returns for the index and the Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE CHANGES OVER TIME. VISIT COLUMBIAFUNDS.COM FOR DAILY UPDATES. -------------------------------------------------------- CLASS A CLASS B CLASS C -------------------------------------------------------- WITHOUT SALES CHARGE $85,657 $83,306 $83,273 -------------------------------------------------------- WITH SALES CHARGE $81,802 $82,306 $83,273 -------------------------------------------------------- [MOUNTAIN CHART] Columbia Acorn Columbia Acorn Fund - A Fund - A with at NAV sales charge Russell 2500 10/16/2000 50000.00 47750.00 50000.00 10/31/2000 51370.00 49058.30 52159.30 48667.90 46477.90 47569.10 12/31/2000 53695.30 51279.10 51666.00 54661.80 52202.10 53363.80 53257.00 50860.50 49927.60 3/31/2001 50823.20 48536.20 47188.50 55290.60 52802.50 51355.90 57634.90 55041.30 52900.60 6/30/2001 58389.90 55762.30 53651.70 57245.40 54669.40 51733.10 54961.40 52488.10 50037.90 9/30/2001 47475.60 45339.20 43562.50 49507.60 47279.70 45815.00 53280.10 50882.40 49520.30 12/31/2001 56679.30 54128.80 52296.30 56106.90 53582.10 51647.20 55371.90 52880.10 50742.80 3/31/2002 59414.00 56740.40 54251.20 59253.60 56587.20 54113.20 57440.40 54855.60 52527.10 6/30/2002 54511.00 52058.00 49567.00 48013.30 45852.70 43651.70 48397.40 46219.50 43783.70 9/30/2002 45498.40 43450.90 40314.90 47409.30 45275.90 41628.80 50467.20 48196.20 45027.30 12/31/2002 48842.20 46644.20 42990.10 47665.10 45520.10 41847.80 46902.40 44791.80 40842.20 3/31/2003 47474.60 45338.30 41231.60 51581.20 49260.00 44906.20 55212.50 52727.90 49322.70 6/30/2003 56902.00 54341.40 50265.00 59542.20 56862.80 52966.90 62632.50 59814.00 55417.80 9/30/2003 61899.70 59114.20 54664.00 66932.10 63920.20 58983.20 69100.70 65991.20 61203.60 12/31/2003 70759.10 67575.00 62554.60 73306.50 70007.70 64836.80 74706.60 71344.80 65839.40 3/31/2004 75789.90 72379.30 66235.10 73046.30 69759.20 63053.70 74353.80 71007.90 64340.60 6/30/2004 76933.90 73471.90 66457.30 73010.30 69724.80 62590.30 72915.40 69634.20 62430.30 9/30/2004 76233.00 72802.50 64784.90 78116.00 74600.70 66262.50 82998.20 79263.30 71210.20 12/31/2004 85657.00 81802.40 73998.20 COLUMBIA ACORN FUND TOP 10 HOLDINGS (AS A % OF NET ASSETS) 1. XTO Energy 1.8% NATURAL GAS PRODUCER 2. International Game Technology 1.7% SLOT MACHINES & PROGRESSIVE JACKPOTS 3. Coach 1.2% DESIGNER & RETAILER OF BRANDED LEATHER ACCESSORIES 4. Expeditors International of Washington 1.1% INTERNATIONAL FREIGHT FORWARDER 5. AmeriCredit 1.0% AUTO LENDING 6. People's Bank of Bridgeport 0.9% CONNECTICUT SAVINGS & LOAN 7. Chico's FAS 0.8% WOMEN'S SPECIALTY RETAIL 8. TCF Financial 0.8% GREAT LAKES BANK 9. ITT Educational Services 0.8% POSTSECONDARY DEGREE PROGRAMS 10. Lincare Holdings 0.8% HOME HEALTH CARE SERVICES The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. 13 Columbia Acorn International >In a Nutshell [Photo of P. Zachary Egan] [Photo of Louis J. Mendes III] Columbia Acorn International rose 28.91% (Class A shares, without sales charge) in 2004. As shown on Page 9, the Fund finished slightly behind the Citigroup EMI Global ex-US benchmark Index but substantially outperformed the large-cap MSCI EAFE Index. During the fourth quarter, Columbia Acorn International's 16.63% gain fell short of the EMI benchmark but outperformed the large-cap MSCI EAFE Index. A weak U.S. dollar, particularly against the euro, aided performance, contributing over six percentage points of 2004's 28.91% return and more than seven percentage points of the fourth quarter's 16.63% return. Columbia Acorn International did not do any currency hedging during the past year and does not anticipate doing so in the year ahead. As in past years, the Fund's biggest percentage winners in 2004 came from very different industries and regions of the world. Edgars Consolidated Stores, a South African retailer first purchased in 2004, returned 153% for the year and 83% in the fourth quarter alone, on strong earnings growth. Another new 2004 purchase, Natura Cosmeticos, a manufacturer and direct seller of Brazilian cosmetics, rallied 139% for the year and 44% in the fourth quarter. ComfortDelGro, a Singaporean transport company expanding into taxicab franchises in China, was the third best annual performer, returning 107%. Within Europe, Amplifon, an Italian manufacturer of hearing aids, surged 100%. Other winners included Aalberts Industries, discussed separately on this page, which rose over 90%, and Tullow Oil, an UK-based oil exploration company benefiting from the rise in energy prices. Technology-related stocks were among the leading detractors to portfolio performance during the year. ASE Test, a Taiwanese tester of semiconductor devices, was the Fund's largest percentage loser, declining 55% on weak earnings. Ngai Lik Industrial, a Hong Kong-based manufacturer of audio equipment, declined 37% as higher raw material costs squeezed margins. Another loser was Kappa Create, a Japanese sushi chain operator. Rising over 50% from January to June, the stock declined sharply in the second half when increased competition caused reduced sales, ending the year down 31%. International small caps have outperformed large caps for a fifth year in a row and valuations are now close to long-term average valuations relative to large caps, whereas two years ago they traded at a moderate discount. Fortunately, our international small-cap universe is comprised of more than 4,400 potential investment opportunities. With a dedicated team of nine international analysts, we feel we have the resources to sift through this universe and find attractive investments for our shareholders. /s/ P. Zachary Egan /s/ Louis J. Mendes III P. Zachary Egan Louis J. Mendes III CO-PORTFOLIO MANAGER CO-PORTFOLIO MANAGER Aalberts Benefits From Expansion -------------------------------------------------------------------------------- Aalberts Industries is a Netherlands-based, diversified industrial company that manufactures valves and fittings for water, energy and gas distribution and heat treats specialty metal components. Aalberts has taken advantage of an industrial slowdown in Western Europe to consolidate its markets, while developing world-class manufacturing facilities in Central and Eastern Europe, where its revenues have grown 30% annually. Given the continued high level of infrastructure investments in countries like Poland and the Czech Republic, we believe Aalberts will continue to outperform. The stock gained 91% in the year, not your typical Dutch treat. INVESTMENTS IN FOREIGN SECURITIES HAVE SPECIAL RISKS, INCLUDING POLITICAL OR ECONOMIC INSTABILITY, HIGHER COSTS, DIFFERENT REGULATIONS, ACCOUNTING STANDARDS, TRADING PRACTICES AND LEVELS OF INFORMATION, AND CURRENCY EXCHANGE RATE FLUCTUATIONS. SMALL-CAP STOCKS ARE OFTEN MORE VOLATILE AND LESS LIQUID THAN THE STOCKS OF LARGER COMPANIES. SMALL COMPANIES MAY HAVE A SHORTER HISTORY OF OPERATIONS THAN LARGER COMPANIES AND MAY HAVE A LESS DIVERSIFIED PRODUCT LINE, MAKING THEM MORE SUSCEPTIBLE TO MARKET PRESSURE. AS OF 12/31/04, THE FUND'S POSITIONS IN THE HOLDINGS MENTIONED WERE: EDGARS CONSOLIDATED STORES, 0.9%; NATURA COSMETICOS, 0.9%; COMFORTDELGRO, 0.7%; AMPLIFON, 0.7%; AALBERTS INDUSTRIES, 1.3%; TULLOW OIL,1.0%; ASE TEST, 0.4%; NGAI LIK INDUSTRIAL, 0.2%; KAPPA CREATE, 0.6%. 1-800-922-6769 14 Columbia Acorn International >At a Glance TICKER SYMBOL: LAIAX TOTAL NET ASSETS OF THE FUND: $2,075.0 MILLION PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (BASED ON CLASS A SHARE RETURNS) >through December 31, 2004 LIFE 1 YEAR 3 YEARS OF FUND ------ ------- ------- Returns before taxes NAV 28.91% 16.53% 4.02% POP 21.50 14.26 2.57 ------------------------------------------------------------------------- Returns after taxes NAV 29.00 16.58 3.33 on distributions POP 21.59 14.30 1.89 ------------------------------------------------------------------------- Returns after taxes NAV 19.13 14.43 3.24 on distributions and POP 14.29 12.42 2.00 sale of fund shares ------------------------------------------------------------------------- Citigroup EMI Global 29.27 23.11 11.47 ex-US (pretax) ------------------------------------------------------------------------- Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Returns after taxes on distributions and sale of fund shares reflect the additional tax impact of long-term gains or losses realized when fund shares are sold. The returns are taxed at the maximum rate and assume shares were purchased at the beginning of the period. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A shares only; after-tax returns for other share classes will vary. The return after taxes on distributions may be higher than the return before taxes due to qualified foreign tax credits. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. PUBLIC OFFERING PRICE (POP) RETURNS INCLUDE THE MAXIMUM SALES CHARGE OF 5.75% FOR CLASS A SHARES. NET ASSET VALUE (NAV) RETURNS DO NOT INCLUDE SALES CHARGES OR CONTINGENT DEFERRED SALES CHARGES (CDSC). COLUMBIA ACORN INTERNATIONAL PORTFOLIO DIVERSIFICATION > as a % of net assets, as of December 31, 2004 [PIE CHART] Consumer 23.0% Goods/Services Finance 13.8% Information 11.4% Other* 6.1% Energy/Minerals 8.1% Health Care 6.8% Transportation 2.6% Real Estate 1.0% Utilities 0.8% Industrial 26.4% Goods/Services * Cash and other assets less liabilities. THE VALUE OF A $10,000 INVESTMENT IN COLUMBIA ACORN INTERNATIONAL (CLASS A) >October 16, 2000 through December 31, 2004 Illustration is based on a hypothetical $10,000 investment from inception in Class A shares of the Fund, which includes the 5.75% maximum initial sales charge. Performance may reflect any voluntary waiver or reimbursement of Fund expenses by the Adviser or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. The Citigroup EMI Global ex-US is Citigroup's index of the bottom 20% of institutionally investable capital of developed and emerging countries, as selected by Citigroup, excluding the U.S. The index is unmanaged and returns for both the index and Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE CHANGES OVER TIME. VISIT COLUMBIAFUNDS.COM FOR DAILY UPDATES. -------------------------------------------------------- CLASS A CLASS B CLASS C -------------------------------------------------------- WITHOUT SALES CHARGE $11,806 $11,478 $11,482 -------------------------------------------------------- WITH SALES CHARGE $11,127 $11,282 $11,482 -------------------------------------------------------- [MOUNTAIN CHART] Columbia Acorn Columbia Acorn International - A International - A Citigroup EMI at NAV with sales charge Global ex-US 10/16/2000 10000.00 9425.00 10000.00 10/31/2000 10153.00 9569.20 9992.50 9322.48 8786.44 9552.43 12/31/2000 9513.60 8966.56 9924.99 9940.76 9369.16 10110.00 9222.04 8691.77 9717.45 3/31/2001 8332.11 7853.02 8964.83 8651.23 8153.79 9551.59 8591.54 8097.53 9532.42 6/30/2001 8167.12 7697.51 9209.03 7837.98 7387.30 8938.99 7675.74 7234.38 8914.82 9/30/2001 6626.46 6245.44 7753.79 6939.23 6540.23 8068.84 7325.75 6904.52 8400.57 12/31/2001 7459.81 7030.87 8469.75 7277.04 6858.61 8316.39 7252.30 6835.29 8455.58 3/31/2002 7626.52 7187.99 9006.50 7874.38 7421.60 9194.03 7838.16 7387.47 9488.25 6/30/2002 7516.79 7084.58 9111.52 6720.01 6333.61 8338.89 6610.48 6230.38 8288.88 9/30/2002 6016.86 5670.89 7523.75 6045.14 5697.54 7693.78 6228.30 5870.18 7981.33 12/31/2002 6232.66 5874.29 7886.31 6078.09 5728.60 7753.79 5911.55 5571.64 7615.44 3/31/2003 5822.29 5487.51 7541.26 6350.95 5985.77 8252.21 6871.73 6476.61 8955.66 6/30/2003 7066.20 6659.90 9289.88 7217.42 6802.42 9620.77 7535.71 7102.40 10080.90 9/30/2003 7821.31 7371.58 10541.80 8417.29 7933.30 11308.50 8642.04 8145.12 11514.40 12/31/2003 9160.56 8633.83 12225.40 9429.88 8887.66 12664.60 9780.67 9218.28 13101.40 3/31/2004 9780.67 9218.28 13422.20 9564.52 9014.56 12971.30 9593.21 9041.60 12973.00 6/30/2004 9940.48 9368.91 13389.70 9678.06 9121.57 12917.10 9723.54 9164.44 13056.30 9/30/2004 10126.10 9543.85 13543.10 10487.60 9884.56 13958.20 11284.70 10635.80 15056.70 12/31/2004 11806.30 11127.40 15804.30 COLUMBIA ACORN INTERNATIONAL TOP 10 HOLDINGS (AS A % OF NET ASSETS) 1. Anglo Irish Bank (Ireland) 2.7% SMALL BUSINESS & MIDDLE MARKET BANKING 2. Rhoen-Klinikum (Germany) 1.8% HOSPITAL MANAGEMENT 3. Neopost (France) 1.4% POSTAGE METER MACHINES 4. Grafton Group (Ireland) 1.4% BUILDERS, WHOLESALERS & DIY RETAILING 5. Billabong International (Australia) 1.3% SURFWEAR APPAREL MANUFACTURER 6. Kerry (Ireland) 1.3% FOOD INGREDIENTS 7. Aalberts Industries (Netherlands) 1.3% FLOW CONTROL & HEAT TREATMENT 8. SES Global (Luxembourg) 1.2% SATELLITE BROADCASTING SERVICES 9. Housing Development Finance (India) 1.2% PREMIER MORTGAGE LENDER IN INDIA 10. Exel (United Kingdom) 1.2% GLOBAL LOGISTICS & FREIGHT FORWARDING The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. 15 Columbia Acorn USA >In a Nutshell [Photo of Robert A. Mohn] Columbia Acorn USA ended the fourth quarter up 14.17% (Class A shares, without sales charge). For the year, the Fund returned 20.12%. Fund performance topped the benchmark Russell 2000 for both time periods. See Page 9 for more performance information. There was a great deal of pessimism about the market and the political environment going into the quarter and many investors were hanging out on the sidelines. After the elections, the money came back into the markets, fueling a fierce fourth quarter rally. Some of our biggest winners for the quarter were health care stocks. Lincare Holdings, a provider of home health care services, increased 44% in the quarter on news of a higher than expected government dispensing fee for respiratory medication. For the year, Lincare had a 42% gain. Edwards Lifesciences' heart valves were big sellers, pumping the stock up 23% in the fourth quarter and 37% for the year. Technology stocks also had a strong quarter. Micros Systems, a developer of reservation systems used in hotels and restaurants, gained 56% in the quarter and was up 80% for the year. On the telecom side, Western Wireless ended the year up 59%, gaining 13% in the quarter (and even more so far in 2005 on news that Alltel will be buying the company). While slightly cooler in the fourth quarter, energy stocks were strong 2004 performers. Quicksilver Resources, a natural gas producer, was up an impressive 128% for the year and 13% for the quarter. Chicago Bridge & Iron, discussed separately on this page, was added to the Fund in '04 and immediately went to work. For the year the stock was up 55%, gaining 33% in the fourth quarter. The laggards for the year included southeast supermarket chain Winn Dixie Stores, down 58%. The Fund no longer holds the stock. Novell, a developer of open source software, failed to meet earnings targets and declined 36% for the year. Last quarter we mentioned drug company AtheroGenics' strong performance. The stock gave back some of its third quarter gain, falling 29% in the fourth quarter (but up nearly 3% for the year) as questions were raised about missing disclosure in trial results it released in September. Generally speaking, we think companies are operating in a healthy economy that should provide growth going forward. We will continue to search for what we believe are winning small-cap stocks selling at good prices. /s/ Robert A. Mohn Robert A. Mohn LEAD PORTFOLIO MANAGER What's In A Name -------------------------------------------------------------------------------- Chicago Bridge & Iron is not based in Chicago and does not make bridges. The company is a leading designer and manufacturer of tanks used to convert liquified natural gas (LNG) into the pipeline gas used to heat our homes and generate electricity. The last LNG terminal built in the United States was constructed more than 15 years ago so Chicago Bridge & Iron's conversion expertise has not been considered particularly valuable. As a result of the natural gas shortage that has developed in recent years, however, more than 20 new LNG terminals have been proposed. Chicago Bridge & Iron's specialized skills are now attracting attention. The stock rose 55% in Columbia Acorn USA in 2004. SMALL-CAP STOCKS ARE OFTEN MORE VOLATILE AND LESS LIQUID THAN THE STOCKS OF LARGER COMPANIES. SMALL COMPANIES MAY HAVE A SHORTER HISTORY OF OPERATIONS THAN LARGER COMPANIES AND MAY HAVE A LESS DIVERSIFIED PRODUCT LINE, MAKING THEM MORE SUSCEPTIBLE TO MARKET PRESSURE. AS OF 12/31/04, THE FUND'S POSITIONS IN THE HOLDINGS MENTIONED WERE: LINCARE HOLDINGS, 1.2%; EDWARDS LIFESCIENCES, 2.7%; MICROS SYSTEMS, 2.6%; WESTERN WIRELESS, 2.5%; ALLTEL, 0.0%; QUICKSILVER RESOURCES, 2.6%; CHICAGO BRIDGE & Iron, 1.5%; WINN DIXIE STORES, 0.0%; NOVELL, 1.0%; ATHEROGENICS, 0.7%. 1-800-922-6769 16 Columbia Acorn USA >At a Glance TICKER SYMBOL: LAUAX TOTAL NET ASSETS OF THE FUND: $870.7 MILLION PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (BASED ON CLASS A SHARE RETURNS) >through December 31, 2004 LIFE OF 1 YEAR 3 YEARS FUND ------ ------- ------- Returns before taxes NAV 20.12% 12.49% 15.22% POP 13.21 10.29 13.61 ------------------------------------------------------------------------- Returns after taxes NAV 20.01 12.46 15.14 on distributions POP 13.11 10.26 13.54 ------------------------------------------------------------------------- Returns after taxes NAV 13.21 10.79 13.30 on distributions and POP 8.71 8.87 11.86 sale of fund shares ------------------------------------------------------------------------- Russell 2000 (pretax) 18.33 11.48 8.93 ------------------------------------------------------------------------- Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Returns after taxes on distributions and sale of fund shares reflect the additional tax impact of long-term gains or losses realized when fund shares are sold. The returns are taxed at the maximum rate and assume shares were purchased at the beginning of the period. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A shares only; after-tax returns for other share classes will vary. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. PUBLIC OFFERING PRICE (POP) RETURNS INCLUDE THE MAXIMUM SALES CHARGE OF 5.75% FOR CLASS A SHARES. NET ASSET VALUE (NAV) RETURNS DO NOT INCLUDE SALES CHARGES OR CONTINGENT DEFERRED SALES CHARGES (CDSC). COLUMBIA ACORN USA PORTFOLIO DIVERSIFICATION > as a % of net assets, as of december 31, 2004 [PIE CHART] Consumer 17.4% Goods/Services Health Care 14.0% Other* 8.9% Energy/Minerals 11.7% Finance 10.0% Industrial 9.2% Goods/Services Information 28.8% Software/Services 13.2% Telecommunications 7.6% Computer Related Hardware 5.4% Media 2.6% * Other includes cash and other assets less liabilities of 8.4%. THE VALUE OF A $50,000 INVESTMENT IN COLUMBIA ACORN USA (CLASS A) >October 16, 2000 through December 31, 2004 Illustration is based on a hypothetical $50,000 investment from inception in Class A shares of the Fund, which includes the 4.50% initial sales charge for this level of investment. Performance may reflect any voluntary waiver or reimbursement of Fund expenses by the Adviser or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. The Russell 2000 is a market-weighted index of 2,000 smaller U.S. companies formed by taking the largest 3,000 U.S. companies and eliminating the largest 1,000. The index is unmanaged and returns for both the index and the Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE CHANGES OVER TIME. VISIT COLUMBIAFUNDS.COM FOR DAILY UPDATES. -------------------------------------------------------- CLASS A CLASS B CLASS C -------------------------------------------------------- WITHOUT SALES CHARGE $90,865 $88,467 $88,466 -------------------------------------------------------- WITH SALES CHARGE $86,776 $87,467 $88,466 -------------------------------------------------------- [MOUNTAIN CHART] Columbia Acorn USA - A Columbia Acorn USA - A at NAV with sales charge Russell 2000 10/16/2000 50000.00 47750.00 50000.00 10/31/2000 52060.00 49717.30 51819.50 49024.90 46818.80 46500.20 12/31/2000 53795.00 51374.20 50493.70 57194.90 54621.10 53122.60 57011.80 54446.30 49637.00 3/31/2001 55672.10 53166.80 47208.90 62397.20 59589.40 50902.10 65866.50 62902.60 52153.20 6/30/2001 67671.30 64626.10 53954.10 68354.80 65278.80 51033.60 66440.80 63451.00 49385.30 9/30/2001 56826.80 54269.60 42737.40 56968.90 54405.30 45238.40 60295.90 57582.60 48740.60 12/31/2001 63823.20 60951.20 51749.00 64550.80 61646.00 51210.80 62323.80 59519.20 49807.30 3/31/2002 67608.80 64566.40 53810.40 68595.90 65509.10 54300.80 64692.80 61781.70 51890.80 6/30/2002 60791.80 58056.20 49316.10 52475.50 50114.10 41867.90 51672.70 49347.40 41761.20 9/30/2002 47807.50 45656.20 38762.20 50068.80 47815.70 40005.00 54409.80 51961.40 43575.20 12/31/2002 51711.10 49384.10 41149.00 50909.60 48618.60 40010.10 50181.50 47923.40 38801.20 3/31/2003 50291.90 48028.80 39300.80 55215.50 52730.80 43027.20 60941.40 58199.00 47644.60 6/30/2003 61892.10 59106.90 48506.80 64776.20 61861.30 51541.90 68313.00 65238.90 53905.00 9/30/2003 66707.60 63705.80 52910.00 73525.20 70216.50 57353.20 75091.30 71712.20 59388.60 12/31/2003 75639.40 72235.70 60593.40 79542.40 75963.00 63226.00 79908.30 76312.40 63792.70 3/31/2004 79325.00 75755.40 64387.30 77357.70 73876.60 61104.50 80382.40 76765.20 62077.10 6/30/2004 82938.60 79206.30 64691.40 77829.60 74327.20 60335.50 76701.00 73249.50 60025.40 9/30/2004 79585.00 76003.70 62843.30 81845.20 78162.20 64080.30 87754.40 83805.50 69638.60 12/31/2004 90865.00 86776.10 71699.80 COLUMBIA ACORN USA TOP 10 HOLDINGS (AS A % OF NET ASSETS) 1. AmeriCredit 3.1% AUTO LENDING 2. Edwards Lifesciences 2.7% HEART VALVES 3. Micros Systems 2.6% INFORMATION SYSTEMS FOR RESTAURANTS & HOTELS 4. Quicksilver Resources 2.6% NATURAL GAS & COAL SEAM GAS PRODUCER 5. Western Wireless 2.5% RURAL CELLULAR PHONE SERVICES 6. Esco Technologies 2.5% AUTOMATIC ELECTRIC METER READERS 7. ITT Educational Services 2.2% POSTSECONDARY DEGREE PROGRAMS 8. Crown Castle International 1.9% COMMUNICATION TOWERS 9. Commonwealth Telephone 1.9% RURAL PHONE FRANCHISES & CLEC 10. Kronos 1.7% LABOR MANAGEMENT SOLUTIONS The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. 17 Columbia Acorn International Select >In a Nutshell [Photo of Todd M. Narter] [Photo of Christopher J. Olson] International markets continued to surge in the fourth quarter. Columbia Acorn International Select increased 13.19% (Class A shares, without sales charge) for the three months, underperforming the 16.46% increase in the benchmark Citigroup World ex-US Cap Range $2-10B Index. The relative underperformance was due in large part to holding some cash in a strong market. We opted to take profits in a number of positions in the Fund during the fourth quarter to look for better values elsewhere. We believe that the Fund is well positioned for future growth. The Fund finished 2004 up 23.76%, a solid return but behind the 25.22% return for the Citigroup World ex-US Cap Range $2-10B Index. Letting our winners run was a successful strategy this past year. For the third year in a row, Anglo Irish Bank was the Fund's largest contributor to performance. The stock finished the year up 56% and is the Fund's largest position. Other significant winners include large holdings with great franchises. Neopost, a maker of franking machines in France, the Fund's second largest position, had another strong year, up 58%. Tenaris, a maker of steel pipes for the oil and gas industry jumped 49%. Lion Nathan, the major beer brewer and distributor in Australia and New Zealand, rose 54% and Daito Trust Construction (discussed separately on this page), a major apartment builder and manager in Japan, finished the year up 62%. Several stocks in the portfolio reduced the Fund's gains. Topping the list of poor performers in the Fund this year was Sugi Pharmacy, a drugstore chain in Japan. Shares were down 13% as the company reported higher costs than expected during its expansion program. Funai Electric, a maker of consumer electronic products in Japan, was down 11% as the retail environment in the United States was weaker than expected. Other weak performers included Venture, an electronic manufacturing services company in Singapore, down 15% and Compass Group, a catering services provider in the UK, which fell 29% on an earnings downgrade driven by a weak dollar and issues with a supplier. Share prices have risen strongly in the past two years. While stocks are not as cheap as they once were, we continue to find well-run companies with good strategies and strong balance sheets that we believe will be good investments. /s/ Todd M. Narter /s/ Christopher J. Olson Todd M. Narter Christopher J. Olson CO-PORTFOLIO MANAGER CO-PORTFOLIO MANAGER A DAITO YOU CAN TRUST -------------------------------------------------------------------------------- Daito Trust Construction builds and manages residential property in Japan. The company's unique business model encompasses construction of lease apartments for landowners, as well as tenant recruitment and property management. The real estate market during the past year has improved in metropolitan areas, with prices firming and vacancy rates improving. While the average Japanese consumer remains frugal, demand for rental housing has strengthened and contributed to a recovery in residential property. This shift has been a boon to Daito, not only from construction, but from leasing and management of rental units as well. The stock achieved stellar performance, appreciating 62% during the past 12-month period. MID-CAP STOCKS TEND TO BE MORE VOLATILE AND MAY BE LESS LIQUID THAN THE STOCKS OF LARGER COMPANIES. INVESTMENTS IN FOREIGN SECURITIES HAVE SPECIAL RISKS, INCLUDING POLITICAL OR ECONOMIC INSTABILITY, HIGHER COSTS, DIFFERENT REGULATIONS, ACCOUNTING STANDARDS, TRADING PRACTICES AND LEVELS OF INFORMATION, AND CURRENCY EXCHANGE RATE FLUCTUATIONS. AS OF 12/31/04, THE FUND'S POSITIONS IN THE HOLDINGS MENTIONED WERE: ANGLO IRISH BANK, 5.8%; NEOPOST, 4.1%; TENARIS, 2.4%; LION NATHAN, 3.4%; DAITO TRUST CONSTRUCTION, 3.1%; SUGI PHARMACY, 1.9%; FUNAI ELECTRIC, 2.1%; VENTURE, 0.8%; COMPASS GROUP, 1.8%. 1-800-922-6769 18 Columbia Acorn International Select TICKER SYMBOL: LAFAX >At a Glance TOTAL NET ASSETS OF THE FUND: $58.3 MILLION PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (BASED ON CLASS A SHARE RETURNS) LIFE OF 1 YEAR 3 YEARS FUND ------ ------- ------- Returns before taxes NAV 23.76% 14.00% 0.38% POP 16.64 11.77 -1.02 ------------------------------------------------------------------------- Returns after taxes NAV 23.89 14.09 0.41 on distributions POP 16.77 11.86 -0.99 ------------------------------------------------------------------------- Returns after taxes NAV 15.64 12.22 0.37 on distributions and POP 11.01 10.26 -0.82 sale of fund shares ------------------------------------------------------------------------- Citigroup World 25.22 19.39 9.84 ex-US Cap Range $2-10B (pretax) ------------------------------------------------------------------------- Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Returns after taxes on distributions and sale of fund shares reflect the additional tax impact of long-term gains or losses realized when fund shares are sold. The returns are taxed at the maximum rate and assume shares were purchased at the beginning of the period. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A shares only; after-tax returns for other share classes will vary. The return after taxes on distributions may be higher than the return before taxes due to qualified foreign tax credits. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. PUBLIC OFFERING PRICE (POP) RETURNS INCLUDE THE MAXIMUM SALES CHARGE OF 5.75% FOR CLASS A SHARES. NET ASSET VALUE (NAV) RETURNS DO NOT INCLUDE SALES CHARGES OR CONTINGENT DEFERRED SALES CHARGES (CDSC). COLUMBIA ACORN INTERNATIONAL SELECT PORTFOLIO DIVERSIFICATION >as a % of net assets, as of December 31, 2004 [PIE CHART] Consumer Goods/Services 19.4% Finance 17.4% Other* 11.7% Information 12.3% Energy/Minerals 6.6% Health Care 5.0% Transportation 1.0% Industrial Goods/Services 26.6% *Other includes cash and other assets less liabilities of 10.1%. THE VALUE OF A $10,000 INVESTMENT IN COLUMBIA ACORN INTERNATIONAL SELECT (CLASS A) >October 16, 2000 through December 31, 2004 Illustration is based on a hypothetical $10,000 investment from inception in Class A shares of the Fund, which includes the 5.75% maximum initial sales charge. Performance may reflect any voluntary waiver or reimbursement of Fund expenses by the Adviser or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. Citigroup World ex-US Cap Range $2-10B Index is a subset of Citigroup's Broad Market Index, representing a mid-cap developed market index excluding the U.S. The index and Fund returns include reinvested dividends and capital gains. It is not possible to invest directly in an index. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE CHANGES OVER TIME. VISIT COLUMBIAFUNDS.COM FOR DAILY UPDATES. ------------------------------------------------------ CLASS A CLASS B CLASS C ------------------------------------------------------ WITHOUT SALES CHARGE $10,162 $9,865 $9,877 ------------------------------------------------------ WITH SALES CHARGE $ 9,578 $9,669 $9,877 ------------------------------------------------------ [MOUNTAIN CHART] Columbia Acorn Columbia Acorn Citigroup World International International Select - A ex-US Cap Range Select - A at NAV with sales charge $2-$10B 10/16/2000 10000.00 9425.00 10000.00 10/31/2000 10344.00 9749.22 10149.40 9023.07 8504.24 9847.09 12/31/2000 9683.56 9126.76 10327.70 9994.40 9419.72 10276.40 8848.04 8339.28 9903.21 3/31/2001 7662.41 7221.82 9130.62 8063.15 7599.52 9804.72 8040.57 7578.24 9720.89 6/30/2001 7699.65 7256.92 9468.01 7296.19 6876.66 9230.41 7142.97 6732.25 9146.72 9/30/2001 5937.95 5596.52 8084.34 6313.23 5950.22 8409.04 6659.83 6276.89 8709.59 12/31/2001 6858.96 6464.57 8728.38 6506.41 6132.29 8470.69 6427.03 6057.47 8599.67 3/31/2002 6654.54 6271.91 9091.63 6858.84 6464.46 9258.15 6926.74 6528.45 9552.29 6/30/2002 6710.63 6324.77 9220.72 5989.23 5644.85 8394.89 6097.04 5746.46 8375.00 9/30/2002 5653.79 5328.69 7625.65 5642.48 5318.04 7761.81 5779.03 5446.73 8157.05 12/31/2002 5818.90 5484.31 7927.16 5534.94 5216.68 7728.22 5301.92 4997.06 7583.65 3/31/2003 5347.51 5040.03 7454.12 5847.51 5511.28 8112.84 6353.32 5988.00 8694.63 6/30/2003 6393.34 6025.73 8942.64 6495.64 6122.14 9301.62 6774.30 6384.78 9837.88 9/30/2003 7024.27 6620.37 10243.30 7546.88 7112.93 11034.20 7706.12 7263.01 11127.00 12/31/2003 8211.64 7739.47 11862.70 8359.45 7878.78 12112.00 8717.23 8215.99 12403.30 3/31/2004 8773.89 8269.39 12885.70 8592.27 8098.22 12447.10 8598.29 8103.89 12412.60 6/30/2004 8824.42 8317.02 12727.40 8619.70 8124.06 12245.10 8613.66 8118.38 12357.80 9/30/2004 8978.02 8461.78 12754.80 9240.18 8708.87 13184.50 9820.46 9255.78 14226.50 12/31/2004 10162.30 9577.93 14854.70 COLUMBIA ACORN INTERNATIONAL SELECT TOP 10 HOLDINGS (AS A % OF NET ASSETS) 1. Anglo Irish Bank (Ireland) 5.8% SMALL BUSINESS & MIDDLE MARKET BANKING 2. Neopost (France) 4.1% POSTAGE METER MACHINES 3. Komercni Banka (Czech Republic) 3.7% LEADING CZECH UNIVERSAL BANK 4. Exel (United Kingdom) 3.7% GLOBAL LOGISTICS & FREIGHT FORWARDING 5. Lion Nathan (Australia) 3.4% BEER BREWER/DISTRIBUTOR 6. Depfa Bank (Ireland) 3.3% INTERNATIONAL PUBLIC SECTOR FINANCE 7. Daito Trust Construction (Japan) 3.1% APARTMENT BUILDER 8. Hoya (Japan) 2.9% OPTO-ELECTRICAL COMPONENTS & EYEGLASS LENSES 9. Shimano (Japan) 2.9% BICYCLE COMPONENTS & FISHING TACKLE 10. SES Global (Luxembourg) 2.7% SATELLITE BROADCASTING SERVICES The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. 19 Columbia Acorn Select >In a Nutshell [Photo of Ben Andrews] It was a good quarter and year for Columbia Acorn Select. The Fund gained 13.80% (Class A shares, without sales charge) during the fourth quarter, outperforming the S&P MidCap 400's 12.16% return and the S&P 500's 9.23% gain. For the year, Columbia Acorn Select was up 18.16% vs. a 16.48% gain for the S&P MidCap 400 and a 10.88% return for the S&P 500. McAfee, ITT Educational Services and Abercrombie & Fitch all did well for the Fund in the quarter and in the year. McAfee was up 83% for the 12 months while ITT Educational Services increased 66%. Together these two stocks made up a third of the Fund's return for the year. Abercrombie & Fitch, up an impressive 90% in the year, was another big contributor to Fund performance. On the downside, Skillsoft Publishing cost the Fund one half of a percent of performance in the quarter as the stock slid due to continued pricing pressure from its largest competitor, Netg. For the year, the largest detractors to performance were Synopsys, down 42%, and Interpublic Group, down 32%. We are evaluating whether or not Synopsys has turn around potential. Interpublic Group was sold in the quarter. During the fourth quarter, Oracle purchased one of the Fund's holdings, PeopleSoft, after a lengthy and much publicized takeover battle. During the 17-month negotiation process for PeopleSoft, its board of directors received a lot of bad press for not having the shareholders' best interests in mind. Our Firm's due diligence refuted this and we backed the board. In the end, the board's moves did put its customer and shareholder interests first when trying to negotiate with a very adversarial suitor. We received the cash proceeds from the PeopleSoft transaction two days before the end of the quarter, which increased the Fund's cash at quarter end to an unusually high level. We feel comfortable operating Columbia Acorn Select with a cash position of between 4% and 10%. We added six new names to the portfolio during the quarter while deleting one (PeopleSoft). New ideas include an investment in the cable industry with UnitedGlobalCom and Liberty Media International. Both stocks focus on serving foreign markets. The Fund also purchased IAC/InterActiveCorp, a large Internet company, as its stock price reached a two-year low. FMC Technologies was added as we believe offshore deep-water oil drilling will increase over the next several years. The Fund also purchased Aspect Communications and AnswerThink. /s/ Ben Andrews Ben Andrews LEAD PORTFOLIO MANAGER TCF Financial's Innovative Approach -------------------------------------------------------------------------------- TCF Financial was one of Columbia Acorn Select's big winners, rising 29% in 2004. TCF does banking a little bit different than other banks. More retailer than banker, TCF stresses convenience banking, with branches open seven days a week, coin-counting machines available in every branch, and a large presence in local supermarket chains. Most other banks are obsessed with keeping their expenses down. TCF focuses instead on wisely spending money to grow its highly profitable, low-cost deposit base. Proving the adage that "you must spend money to make money," TCF's 26% return on equity ranked #2 out of the other 50 largest banks in the country.* COLUMBIA ACORN SELECT IS A NON-DIVERSIFIED FUND. THE PERFORMANCE OF EACH OF ITS HOLDINGS WILL HAVE A GREATER IMPACT ON THE FUND'S TOTAL RETURN, AND MAY MAKE THE FUND'S RETURNS MORE VOLATILE THAN A MORE DIVERSIFIED FUND. MID-CAP STOCKS TEND TO BE MORE VOLATILE AND MAY BE LESS LIQUID THAN THE STOCKS OF LARGER COMPANIES. AS OF 12/31/04, THE FUND'S POSITIONS IN THE HOLDINGS MENTIONED WERE: MCAFEE, 7.2%; ITT EDUCATIONAL SERVICES, 5.3%; ABERCROMBIE & Fitch, 3.6%; SKILLSOFT PUBLISHING, 3.9%; NETG, 0.0%; SYNOPSYS, 1.3%; INTERPUBLIC GROUP, 0.0%; ORACLE, 0.0%; PEOPLESOFT, 0.0%; UNITEDGLOBALCOM, 0.8%; LIBERTY MEDIA INTERNATIONAL, 0.9%; IAC/INTERACTIVECORP, 1.6%; FMC TECHNOLOGIES, 1.0%; ASPECT COMMUNICATIONS, 0.1%; ANSWERTHINK, 0.2%; TCF FINANCIAL, 5.0%. * SOURCE: CITIGATE FINANCIAL INTELLIGENCE. RANKING BASED ON THE 50 LARGEST BANK HOLDING COMPANIES IN THE U.S. BASED ON ASSET SIZE AT 9/30/04. 1-800-922-6769 20 Columbia Acorn Select >At a Glance TICKER SYMBOL: LTFAX TOTAL NET ASSETS OF THE FUND: $1,257.1 MILLION PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (BASED ON CLASS A SHARE RETURNS) >through December 31, 2004 LIFE OF 1 YEAR 3 YEARS FUND ------ ------- -------- Returns before NAV 18.16% 12.13% 12.02% taxes POP 11.37 9.94 10.46 ------------------------------------------------------------------------- Returns after taxes NAV 17.78 11.98 11.82 on distributions POP 11.01 9.79 10.26 ------------------------------------------------------------------------- Returns after taxes NAV 12.29 10.46 10.41 on distributions and POP 7.84 8.54 9.03 sale of fund shares ------------------------------------------------------------------------- S&P MidCap 16.48 10.53 8.07 400 (pretax) ------------------------------------------------------------------------- Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Returns after taxes on distributions and sale of fund shares reflect the additional tax impact of long-term gains or losses realized when fund shares are sold. The returns are taxed at the maximum rate and assume shares were purchased at the beginning of the period. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A shares only; after-tax returns for other share classes will vary. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. PUBLIC OFFERING PRICE (POP) RETURNS INCLUDE THE MAXIMUM SALES CHARGE OF 5.75% FOR CLASS A SHARES. NET ASSET VALUE (NAV) RETURNS DO NOT INCLUDE SALES CHARGES OR CONTINGENT DEFERRED SALES CHARGES (CDSC). COLUMBIA ACORN SELECT PORTFOLIO DIVERSIFICATION >as a % of net assets, as of December 31, 2004 [PIE CHART] Consumer Goods/Services 30.4% Finance 14.6% Health Care 7.3% Industrial Goods/Services 2.7% Energy/Minerals 1.0% Other* 13.4% Information 30.6% *Cash and other assets less liabilities. THE VALUE OF A $10,000 INVESTMENT IN COLUMBIA ACORN SELECT (CLASS A) >October 16, 2000 through December 31, 2004 Illustration is based on a hypothetical $10,000 investment from inception in Class A shares of the Fund, which includes the 5.75% maximum initial sales charge. Performance may reflect any voluntary waiver or reimbursement of Fund expenses by the Adviser or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. The S&P MidCap 400 is a broad, market-weighted index of 400 stocks that are in the next size/tier down from the S&P 500. The Index is unmanaged and returns for both the index and the Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE CHANGES OVER TIME. VISIT COLUMBIAFUNDS.COM FOR DAILY UPDATES. --------------------------------------------------------------- CLASS A CLASS B CLASS C --------------------------------------------------------------- WITHOUT SALES CHARGE $16,137 $15,684 $15,685 --------------------------------------------------------------- WITH SALES CHARGE $15,210 $15,484 $15,685 --------------------------------------------------------------- [MOUNTAIN CHART] Columbia Acorn Columbia Acorn Select - A Select - A S&P at NAV with sales charge MidCap 400 10/16/2000 10000.00 9425.00 10000.00 10/31/2000 10958.00 10327.90 10382.20 9893.98 9325.07 9598.49 12/31/2000 10632.10 10020.70 10332.80 10940.40 10311.30 10562.90 10300.40 9708.11 9960.11 3/31/2001 9893.52 9324.64 9219.60 10608.80 9998.81 10236.70 11188.10 10544.80 10475.10 6/30/2001 11000.10 10367.60 10432.80 10894.50 10268.10 10277.40 10382.50 9785.47 9941.21 9/30/2001 9742.90 9182.69 8704.65 9946.53 9374.60 9089.70 10978.00 10346.80 9765.89 12/31/2001 11445.60 10787.50 10270.40 11219.00 10573.90 10217.00 10977.80 10346.60 10229.60 3/31/2002 11355.50 10702.50 10960.90 10736.60 10119.20 10909.60 11038.30 10403.60 10725.60 6/30/2002 10849.50 10225.70 9940.60 10162.80 9578.39 8977.69 10404.60 9806.35 9022.86 9/30/2002 9921.85 9351.34 8295.93 10465.60 9863.79 8655.40 10985.70 10354.00 9156.16 12/31/2002 10510.00 9905.69 8779.89 10464.80 9863.10 8523.31 10479.50 9876.91 8320.33 3/31/2003 10691.20 10076.40 8390.46 11302.70 10652.80 8999.64 11906.30 11221.60 9745.48 6/30/2003 12215.80 11513.40 9869.69 12797.30 12061.50 10219.90 13325.80 12559.60 10683.50 9/30/2003 13031.30 12282.00 10519.90 13507.00 12730.30 11315.40 13401.60 12631.00 11709.60 12/31/2003 13658.90 12873.50 11907.20 14030.50 13223.70 12165.20 14386.80 13559.60 12457.30 3/31/2004 14379.60 13552.80 12510.20 13955.40 13153.00 12099.60 14182.90 13367.40 12350.60 6/30/2004 14638.20 13796.50 12631.70 14001.40 13196.30 12042.30 13879.60 13081.50 12010.70 9/30/2004 14183.60 13368.00 12366.40 14736.70 13889.40 12564.30 15638.60 14739.40 13312.50 12/31/2004 16137.50 15209.60 13869.90 COLUMBIA ACORN SELECT TOP 10 HOLDINGS (AS A % OF NET ASSETS) 1. McAfee 7.2% SECURITY SOFTWARE & SERVICES 2. ITT Educational Services 5.3% POSTSECONDARY DEGREE PROGRAMS 3. TCF Financial 5.0% GREAT LAKES BANK 4. Harley-Davidson 4.8% MOTORCYCLES & RELATED MERCHANDISE 5. First Health Group 4.2% PPO NETWORK 6. Safeway 4.0% RETAIL FOOD & DRUG STORES 7. Skillsoft Publishing 3.9% PROVIDER OF WEB-BASED LEARNING SOLUTIONS (E-LEARNING) 8. Abercrombie & Fitch 3.6% TEEN APPAREL RETAILER 9. Tellabs 3.5% TELECOMMUNICATIONS EQUIPMENT 10. Markel 3.5% SPECIALTY INSURANCE The Fund's top 10 holdings and portfolio diversification vary with changes in portfolio investments. See the Statement of Investments for a complete list of the Fund's holdings. 21 Columbia Thermostat Fund >In a Nutshell [Photo of Ralph Wanger] [Photo of Charles P. McQuaid] Columbia Thermostat Fund ended the quarter up 5.75% (Class A shares, without sales charge) and the year up 8.92%. Fund returns were between the S&P 500 and the Lehman Brothers U.S. Credit Intermediate Bond Index, which is the expected result for Columbia Thermostat. See Page 9 for additional data. The strong equity market in the fourth quarter allowed the Lipper Flexible Portfolio Funds Index to beat the Fund's performance for the quarter and the year. The weighted average return for the equity portion of the Thermostat portfolio was 12.05% for the year. The standout equity fund in the group was Columbia Acorn Fund (Class Z shares) up 21.51% for the annual period. Columbia Growth Stock Fund was the annual laggard, down 2.17%. The weighted average annual return for the bond portion of the Fund was 5.16% with portfolio bond fund returns ranging from 7.42% to 4.11%. Thermostat hit three reallocation triggers in the fourth quarter. Stock exposure was increased in October while bond exposure was increased in both November and December as the equity market rallied following the U.S. election. Assets in Columbia Thermostat Fund at year-end were $207 million. Thank you for your investment in the Fund. As we move into 2005, we continue to believe that Thermostat will provide a satisfactory, low-risk result for a portion of your invested dollars. /s/ Ralph Wanger /s/ Charles P. McQuaid Ralph Wanger Charles P. McQuaid CO-PORTFOLIO MANAGER CO-PORTFOLIO MANAGER RESULTS OF THE FUNDS OWNED IN COLUMBIA THERMOSTAT FUND EQUITIES 4TH QUARTER 1-YEAR WEIGHTING TOTAL TOTAL FUND IN FUND RETURN RETURN ------------------------------------------------------------ Columbia 20% 12.44% 21.51% Acorn Fund ------------------------------------------------------------ Columbia 15% 13.82% 18.58% Acorn Select ------------------------------------------------------------ Columbia Growth 25% 8.14% -2.17% Stock Fund ------------------------------------------------------------ Columbia Growth 25% 8.17% 13.71% & Income Fund ------------------------------------------------------------ Columbia Mid Cap 15% 9.55% 15.58% Value Fund ------------------------------------------------------------ WEIGHTED AVERAGE EQUITY RETURN 100% 10.06% 12.05% ------------------------------------------------------------ FIXED INCOME 4TH QUARTER 1-YEAR WEIGHTING TOTAL TOTAL FUND IN FUND RETURN RETURN ------------------------------------------------------------ Columbia Federal 30% 0.76% 4.11% Securities Fund ------------------------------------------------------------ Columbia Intermediate 50% 1.42% 4.88% Bond Fund ------------------------------------------------------------ Columbia High 20% 1.88% 7.42% Yield Fund ------------------------------------------------------------ WEIGHTED AVERAGE INCOME RETURN 100% 1.32% 5.16% ------------------------------------------------------------ COLUMBIA THERMOSTAT FUND REBALANCING IN THE QUARTER ------------------------------------------------------------ OCTOBER 22, 2004: 55% stock, 45% bond NOVEMBER 24, 2004: 45% stock, 55% bond DECEMBER 14, 2004: 40% stock, 60% bond THE VALUE OF AN INVESTMENT IN THE FUND IS BASED PRIMARILY ON THE PERFORMANCE OF THE UNDERLYING PORTFOLIO FUNDS AND THE ALLOCATION OF THE FUND'S ASSETS AMONG THEM. AN INVESTMENT IN THE UNDERLYING FUNDS MAY PRESENT CERTAIN RISKS, INCLUDING STOCK MARKET FLUCTUATIONS THAT OCCUR IN RESPONSE TO ECONOMIC AND BUSINESS DEVELOPMENTS; AND A GREATER DEGREE OF SOCIAL, POLITICAL AND ECONOMIC VOLATILITY ASSOCIATED WITH INTERNATIONAL INVESTING. INVESTING IN SMALL- AND MID-CAP STOCKS MAY PRESENT SPECIAL RISKS INCLUDING POSSIBLE ILLIQUIDITY AND GREATER PRICE VOLATILITY THAN STOCKS OF LARGER, MORE ESTABLISHED COMPANIES. CHANGES IN INTEREST RATES AND CHANGES IN THE FINANCIAL STRENGTH OF ISSUERS OF LOWER-RATED BONDS MAY ALSO AFFECT UNDERLYING FUND PERFORMANCE. THE FUND IS ALSO SUBJECT TO THE RISK THAT THE INVESTMENT ADVISER'S DECISIONS REGARDING ASSET CLASSES AND PORTFOLIO FUNDS WILL NOT ANTICIPATE MARKET TRENDS SUCCESSFULLY, RESULTING IN A FAILURE TO PRESERVE CAPITAL OR LOWER TOTAL RETURN. IN ADDITION, THE FUND MAY BUY AND SELL SHARES OF THE PORTFOLIO FUNDS FREQUENTLY. THIS MAY RESULT IN HIGHER TRANSACTION COSTS AND ADDITIONAL TAX LIABILITY. THIS IS NOT AN OFFER OF THE SHARES OF ANY OTHER MUTUAL FUND MENTIONED HEREIN. 1-800-922-6769 22 Columbia Thermostat Fund >At a Glance TICKER SYMBOL: CTFAX TOTAL NET ASSETS OF THE FUND: $207.3 MILLION PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (BASED ON CLASS A SHARE RETURNS) >through December 31, 2004 LIFE OF 1 YEAR FUND ------ ------- Returns before NAV 8.92% 17.29% taxes POP 2.65 13.57 --------------------------------------------------------------- Returns after taxes NAV 8.16 16.65 on distributions POP 1.94 12.95 --------------------------------------------------------------- Returns after taxes NAV 5.85 14.49 on distributions and POP 1.77 11.29 sale of fund shares --------------------------------------------------------------- S&P 500 (pretax) 10.88 24.11 Lehman U.S. Credit --------------------------------------------------------------- Intermediate Bond 4.08 4.82 Index (pretax) --------------------------------------------------------------- Lipper Flexible Portfolio 9.50 19.36 Funds Index (pretax)* --------------------------------------------------------------- Past performance, before and after taxes, cannot predict future investment results. After-tax returns are calculated using the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Returns after taxes on distributions and sale of fund shares reflect the additional tax impact of long-term gains or losses realized when fund shares are sold. The returns are taxed at the maximum rate and assume shares were purchased at the beginning of the period. Actual after-tax returns depend on the investor's tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. After-tax returns are shown for Class A shares only; after-tax returns for other share classes will vary. Indexes do not reflect any deduction for fees, expenses or taxes. Investment returns and principal value may fluctuate, resulting in a gain or loss on sale. PUBLIC OFFERING PRICE (POP) RETURNS INCLUDE THE MAXIMUM SALES CHARGE OF 5.75% FOR CLASS A SHARES. NET ASSET VALUE (NAV) RETURNS DO NOT INCLUDE SALES CHARGES OR CONTINGENT DEFERRED SALES CHARGES (CDSC). *The Lipper Flexible Portfolio Funds Index is an equal dollar weighted index of the 30 largest mutual funds within the flexible portfolio fund classification, as defined by Lipper. COLUMBIA THERMOSTAT FUND PORTFOLIO WEIGHTINGS >as a % of assets in each investment category, as of December 31, 2004 STOCK MUTUAL FUNDS [PIE CHART] Columbia Acorn Fund 20% Columbia Acorn Select 15% Columbia Growth Stock Fund 25% Columbia Growth & Income Fund 25% Columbia Mid Cap Value Fund 15% BOND MUTUAL FUNDS [PIE CHART] Columbia Federal Securities Fund 30% Columbia Intermediate Bond Fund 50% Columbia High Yield Fund 20% THE VALUE OF A $10,000 INVESTMENT IN COLUMBIA THERMOSTAT FUND (CLASS A) >March 3, 2003 through December 31, 2004 Illustration is based on a hypothetical $10,000 investment from inception in Class A shares of the Fund, which includes the 5.75% maximum initial sales charge. Performance may reflect any voluntary waiver or reimbursement of Fund expenses by the Adviser or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. The S&P 500 is a broad, market-weighted average of U.S. blue-chip company stock performance. The Lehman U.S. Credit Intermediate Bond Index is the intermediate component of the U.S. Credit Index. The U.S. Credit Index includes publicly issued U.S. corporate and foreign debentures and secured notes that meet specified maturity, liquidity, and quality requirements. The Indexes are unmanaged and returns for the indexes and the Fund include reinvested dividends and capital gains. It is not possible to invest directly in an index. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL FLUCTUATE SO THAT FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE CHANGES OVER TIME. VISIT COLUMBIAFUNDS.COM FOR DAILY UPDATES. WITHOUT CLASS A CLASS B CLASS C SALES CHARGE $13,408 $13,250 $13,233 ------------------------------------------------------- WITH SALES CHARGE $12,637 $12,850 $13,233 [MOUNTAIN CHART]
Columbia Columbia Thermostat Fund - A Thermostat Fund - A Lehman U.S. Credit Intermediate at NAV with sales charge S&P 500 Bond Index 3/3/2003 10000.00 9425.00 10000.00 10000.00 3/31/2003 10089.00 9508.88 10097.10 10020.70 10603.50 9993.84 10928.80 10158.30 11078.60 10441.60 11504.60 10417.70 6/30/2003 11224.80 10579.40 11651.40 10423.30 11284.30 10635.50 11856.80 10103.50 11512.20 10850.30 12088.00 10134.20 9/30/2003 11482.30 10822.10 11959.70 10436.00 11868.10 11185.70 12636.20 10342.80 12007.00 11316.60 12747.40 10374.00 12/31/2003 12308.40 11600.60 13416.00 10476.90 12478.20 11760.70 13662.20 10561.20 12618.00 11892.40 13852.10 10678.30 3/31/2004 12658.30 11930.50 13643.10 10772.80 12397.60 11684.70 13428.90 10497.80 12437.20 11722.10 13613.20 10431.30 6/30/2004 12635.00 11908.50 13877.90 10469.00 12444.20 11728.70 13418.60 10575.70 12513.90 11794.40 13472.90 10781.00 9/30/2004 12674.10 11945.30 13618.80 10821.40 12884.50 12143.60 13826.90 10904.10 13184.70 12426.60 14386.30 10807.80 12/31/2004 13407.50 12636.60 14875.90 10904.50
COLUMBIA THERMOSTAT FUND ASSET ALLOCATION >as a % of net assets, as of December 31, 2004 [PIE CHART] Stock Mutual Funds 40.0% Bond Mutual Funds 59.4% Cash and other Assets less Liabilities 0.6% 23 Columbia Acorn Fund >Major Portfolio Changes in the Fourth Quarter (Unaudited) NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 Additions ---------------------------------------------------------------------------- INFORMATION Advantech (Taiwan) 0 986,000 American Tower 2,250,000 2,750,000 Avnet 1,695,000 2,075,000 Avocent 945,000 1,070,000 Bearing Point 3,350,000 4,000,000 CDW 0 230,000 Ceridian 1,090,000 1,395,000 Entravision Communications 1,000,000 1,200,000 Fair Isaac 530,000 990,000 FTI Consulting 0 302,000 Gray Television 1,400,000 1,452,000 Hong Kong Exchanges & Clearing (Hong Kong) 7,000,000 9,000,000 Liberty Media International 864,000 1,000,000 Maximus 0 300,000 McAfee 1,600,000 1,658,000 Pinnacle Systems 2,000,000 2,500,000 Rogers 445,000 660,000 Salem Communications 770,000 1,291,000 Semtech 850,000 1,425,000 SES Global (Luxembourg) 2,537,000 2,907,000 Symbol Technologies 1,235,000 1,810,000 Symmetricom 1,225,000 1,510,000 Wincor Nixdorf (Germany) 0 130,000 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Brookstone 600,000 819,000 Central Parking 1,140,000 1,514,000 Edgars Consolidated Stores (South Africa) 0 350,000 Fast Retailing (Japan) 200,000 300,000 HNI 1,750,000 2,200,000 International Speedway Motors 805,000 905,000 Jurys Doyle Hotel (Ireland) 720,000 880,000 Knoll 0 650,000 Nobia (Sweden) 1,700,000 2,130,000 Oxford Industries 664,000 836,000 Park 24 (Japan) 0 700,000 Petco Animal Supplies 1,015,000 1,245,000 Princeton Review 1,750,000 1,850,000 RC 2 545,000 845,000 Sports Authority 873,000 1,400,000 NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES Bilfinger Berger (Germany) 525,000 635,000 Carbone Lorraine (France) 0 93,000 Clarcor 1,400,000 1,600,000 Dominion Homes 290,000 490,000 Donaldson 1,700,000 2,000,000 Genlyte Group 430,000 700,000 Imtech (Netherlands) 0 46,000 Meitec (Japan) 280,000 447,000 M/I Homes 141,000 218,000 Oshkosh Truck 0 106,000 Quanta Services 1,450,000 1,548,000 Sika (Switzerland) 25,000 35,000 Spartech 2,550,000 2,947,000 Watsco 1,525,000 2,276,000 ---------------------------------------------------------------------------- FINANCE Associated Banc-Corp 2,412,000 2,712,000 Cascade Financial 188,000 358,000 CityBank Lynnwood 455,000 500,000 First Financial BankShares 82,000 111,000 Great Southern Bancorp 465,000 479,000 Intermediate Capital (United Kingdom) 500,000 620,000 Komercni Banka (Czech Republic) 172,000 195,000 Nuveen Investments 524,000 782,000 Provident Bancorp 0 160,000 Scottish Re Group 650,000 1,174,000 Selective Insurance Group 600,000 710,000 Sterling Bancorp 0 123,000 (INCLUDES THE EFFECT OF A 6 FOR 5 STOCK SPLIT) Washington Federal 869,000 1,059,000 West Bancorporation 251,000 493,000 ---------------------------------------------------------------------------- ENERGY/MINERALS Atmos Energy 1,076,000 1,206,000 Ivanhoe Mines (Canada) 0 1,000,000 Pride International 0 1,500,000 Range Resources 950,000 1,000,000 Western Gas 2,900,000 3,000,000 ---------------------------------------------------------------------------- HEALTH CARE AtheroGenics 789,000 1,179,000 Charles River Laboratories 640,000 840,000 Neurocrine Biosciences 360,000 500,000 Pozen 2,200,000 2,400,000 United Drug (Ireland) 2,000,000 2,106,000 ---------------------------------------------------------------------------- OTHER INDUSTRIES Allied Waste Industries 1,500,000 2,500,000 Heartland Express 0 371,000 Highland Hospitality 1,240,000 1,552,000 1-800-922-6769 24 NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 Sales ---------------------------------------------------------------------------- INFORMATION Activision 1,125,000 1,000,000 Asyst Technologies 664,000 0 Autobytel 500,000 0 Avid Technology 1,469,000 1,300,000 Euronet Worldwide 249,000 0 Information Holdings 600,000 0 Mediacom Communications 2,500,000 1,250,000 Netegrity 973,000 0 PeopleSoft 3,450,000 0 Shuffle Master 940,000 700,000 SPSS 385,000 222,000 THQ 1,260,000 800,000 Trimble Navigation 1,350,000 1,200,000 Zebra Technologies 591,000 400,000 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Leapfrog Enterprises 1,275,000 0 Lion Nathan (Australia) 4,000,000 2,500,000 Monarch Casino & Resort 805,000 0 Orbitz 1,050,000 0 Otsuke Kagu (Japan) 280,000 0 Rank Group (United Kingdom) 2,500,000 0 Uni-Charm (Japan) 255,000 0 Urban Outfitters 1,026,000 826,000 Whole Foods Market 350,000 230,000 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES G&K Services 550,000 300,000 Givaudan (Switzerland) 37,000 20,000 Hub Group 469,000 424,000 Sembcorp Logistics (Singapore) 7,500,000 0 SYMYX 347,000 0 Tenaris (Argentina) 700,000 600,000 ---------------------------------------------------------------------------- FINANCE Bank of the Ozarks 436,000 0 First Federal Capital 700,000 0 HCC Insurance Holdings 1,320,000 1,020,000 Jardine Lloyd Thompson (United Kingdom) 1,992,000 0 People's Bank of Bridgeport 3,276,000 3,196,000 Philadelphia Consolidated Holding 720,000 575,000 RLI 800,000 570,000 Texas Regional Bancshares 1,980,000 1,830,000 NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 ---------------------------------------------------------------------------- ENERGY/MINERALS Clayton Williams Energy 440,000 0 Gamesa (Spain) 670,000 0 Nexen (Canada) 925,000 0 Southwestern Energy 1,100,000 500,000 Ultra Petroleum 2,195,000 1,700,000 XTO Energy 7,275,000 7,000,000 ---------------------------------------------------------------------------- HEALTH CARE Bioveris 194,000 0 First Health Group 5,586,000 4,586,000 Omega Pharma (Belgium) 276,000 236,000 Protein Design Labs 608,000 0 Sangamo Biosciences 1,698,000 0 Smith & Nephew (United Kingdom) 2,910,000 0 Yuhan (South Korea) 138,000 10,992 ---------------------------------------------------------------------------- OTHER INDUSTRIES Am NV (Netherlands) 687,000 106,000 The Rouse Company 825,000 0 25 Columbia Acorn Fund >Statement of Investments, December 31, 2004 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- SECURITIES: 92.5% ---------------------------------------------------------------------------- INFORMATION: 22.6% SOFTWARE/SERVICES >BUSINESS SOFTWARE: 4.6% 1,625,000 Kronos (b)(c) $ 83,086 LABOR MANAGEMENT SOLUTIONS 1,300,000 Avid Technology (b) 80,275 DIGITAL NONLINEAR EDITING SOFTWARE & SYSTEMS 11,500,000 Novell (b) 77,625 DIRECTORY, OPERATING SYSTEM & IDENTITY MANAGEMENT SOFTWARE 950,000 Micros Systems (b)(c) 74,157 INFORMATION SYSTEMS FOR RESTAURANTS & HOTELS 1,658,000 McAfee (b) 47,966 SECURITY SOFTWARE & SERVICES 3,448,000 Aspect Communications (b)(c) 38,411 CALL CENTER SOFTWARE 6,700,000 E.Piphany (b)(c) 32,361 CRM SOFTWARE 1,521,000 Sybase (b) 30,344 DATABASE SOFTWARE 2,200,000 JDA Software Group (b)(c) 29,964 APPLICATIONS/SOFTWARE & SERVICES FOR RETAILERS 2,000,000 MRO Software (b)(c) 26,040 ENTERPRISE MAINTENANCE SOFTWARE 2,200,000 MAPICS (b)(c) 23,210 MID MARKET ERP SOFTWARE 1,300,000 Witness Systems (b)(c) 22,698 CUSTOMER EXPERIENCE MANAGEMENT SOFTWARE 3,000,000 Lawson Software (b) 20,610 ENTERPRISE RESOURCE PLANNING (ERP) SOFTWARE 6,000,000 Actuate (b)(c) 15,300 INFORMATION DELIVERY SOFTWARE & SOLUTIONS 5,000,000 Indus International (b)(c) 10,695 600,000 Indus International (b)(c) 1,283 ENTERPRISE ASSET MANAGEMENT SOFTWARE 1,575,000 Radiant Systems (b)(c) 10,253 POINT OF SALE SYSTEMS FOR CONVENIENCE STORES 300,000 Maximus (b) 9,336 OUTSOURCER FOR GOVERNMENT 1,250,000 ClickSoftware Technologies (b) 3,588 SERVICE CHAIN OPTIMIZATION SOFTWARE 222,000 SPSS (b) 3,472 STATISTICAL/BUSINESS ANALYSIS SOFTWARE ---------------------------------------------------------------------------- 640,674 >BUSINESS INFORMATION/BUSINESS SERVICES/ PUBLISHING: 1.7% 1,200,000 Getty Images (b) 82,620 PHOTOGRAPHS FOR PUBLICATIONS & ELECTRONIC MEDIA 990,000 Fair Isaac 36,313 CREDIT SCORING & DECISION ANALYTIC SOFTWARE 1,336,000 Navigant Consulting (b) 35,538 FINANCIAL CONSULTING FIRM 2,685,000 InfoUSA (b)(c) 30,045 BUSINESS DATA FOR SALES LEADS 1,395,000 Ceridian (b) 25,501 HR SERVICES & PAYMENT PROCESSING NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 350,000 Dex Media $ 8,736 YELLOW PAGES PUBLISHER 1,700,000 PRIMEDIA (b) 6,460 SPECIALTY MAGAZINES & OTHER PUBLICATIONS 302,000 FTI Consulting (b) 6,363 FINANCIAL CONSULTING FIRM ---------------------------------------------------------------------------- 231,576 >TRANSACTION PROCESSORS: 1.0% 1,457,000 Global Payments 85,293 CREDIT CARD PROCESSOR 9,000,000 Hong Kong Exchanges & Clearing (Hong Kong) 24,141 HONG KONG EQUITY & DERIVATIVES OPERATOR 1,250,000 Pegasus Systems (b)(c) 15,750 TRANSACTION PROCESSOR FOR HOTEL INDUSTRY 600,000 Cubic 15,102 REVENUE COLLECTION & DEFENSE SYSTEMS ---------------------------------------------------------------------------- 140,286 >INTERNET: 1.0% 9,500,000 Skillsoft Publishing (b)(c) 53,675 PROVIDER OF WEB-BASED LEARNING SOLUTIONS (E-LEARNING) 2,000,000 RSA Security (b) 40,120 ENTERPRISE SECURITY SOFTWARE 2,000,000 ValueClick (b) 26,660 INTERNET ADVERTISING 1,400,000 DoubleClick (b) 10,892 INTERNET ADVERTISING & DIRECT MARKETING STATISTICAL DATA 1,879,808 Vital Stream, Cl. C (b) 1,560 STREAMING SERVICES FOR THE INTERNET ---------------------------------------------------------------------------- 132,907 >COMPUTER SERVICES: 0.8% 4,000,000 Bearing Point (b) 32,120 BUSINESS CONSULTING & TECHNOLOGY STRATEGY 4,600,000 AnswerThink (b)(c) 21,436 IT INTEGRATOR FOR FORTUNE 2000 2,000,000 Ciber (b) 19,280 SOFTWARE SERVICES & STAFFING 4,656,000 Igate Capital (b)(c) 18,857 TECHNOLOGY STAFFING SERVICES 2,300,000 Analysts International (b)(c) 9,200 TECHNOLOGY STAFFING SERVICES 1,025,000 New Horizons Worldwide (b)(c) 5,750 COMPUTER TRAINING SERVICES ---------------------------------------------------------------------------- 106,643 >ELECTRONICS DISTRIBUTION: 0.7% 2,075,000 Avnet (b) 37,848 ELECTRONIC COMPONENTS DISTRIBUTION 680,000 Tech Data (b) 30,872 I/T DISTRIBUTOR 230,000 CDW 15,260 TECH RETAILER 710,000 Agilysys 12,169 I/T DISTRIBUTOR ---------------------------------------------------------------------------- 96,149 1-800-922-6769 26 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >CONSUMER SOFTWARE: 0.4% 1,000,000 Activision (b) $ 20,180 ENTERTAINMENT SOFTWARE 800,000 THQ (b) 18,352 ENTERTAINMENT SOFTWARE 2,500,000 Pinnacle Systems (b) 15,250 VIDEO EDITING SOFTWARE & HARDWARE ---------------------------------------------------------------------------- 53,782 COMPUTER RELATED HARDWARE >COMPUTER HARDWARE/RELATED SYSTEMS: 2.6% 2,500,000 Seachange International (b)(c) 43,600 SYSTEMS FOR VIDEO ON DEMAND & AD INSERTION 1,070,000 Avocent (b) 43,356 COMPUTER CONTROL SWITCHES 1,525,000 Unova (b) 38,567 BARCODE & WIRELESS LAN SYSTEMS 1,810,000 Symbol Technologies 31,313 MOBILE COMPUTERS & BARCODE SCANNERS 371,900 Neopost (France) 28,814 POSTAGE METER MACHINES 660,000 Rogers (b) 28,446 PCB LAMINATES & HIGH PERFORMANCE FOAMS 535,000 II VI (b) 22,732 LASER COMPONENTS 400,000 Zebra Technologies (b) 22,512 BAR CODE PRINTERS 1,500,000 CTS 19,935 ELECTRONIC COMPONENTS, SENSORS & EMS 788,000 Belden CDT 18,282 SPECIALTY CABLE 625,000 Excel Technologies (b)(c) 16,250 LASER SYSTEMS & ELECTRO-OPTICAL COMPONENTS 5,000,000 Concurrent Computer (b)(c) 14,300 VIDEO ON DEMAND SYSTEMS & SERVICES 2,900,000 3Com (b) 12,093 NETWORKING EQUIPMENT 130,000 Wincor Nixdorf (Germany) (b)(f) 10,432 RETAIL POS SYSTEMS & ATM MACHINES 6,800,000 Phoenixtec Power (Taiwan) 8,193 UNINTERRUPTABLE POWER SUPPLIES 230,000 Applied Films (b) 4,959 THIN-FILM GLASS COATING EQUIPMENT 986,000 Advantech (Tawain) 2,388 EMBEDED COMPUTERS ---------------------------------------------------------------------------- 366,172 >GAMING EQUIPMENT: 1.9% 6,700,000 International Game Technology 230,346 SLOT MACHINES & PROGRESSIVE JACKPOTS 700,000 Shuffle Master (b) 32,970 CARD SHUFFLERS, CASINO GAMES & SLOT MACHINES ---------------------------------------------------------------------------- 263,316 >INSTRUMENTATION: 1.0% 1,200,000 Trimble Navigation (b) 39,648 GPS-BASED INSTRUMENTS 600,000 Mettler Toledo (b) 30,786 LABORATORY EQUIPMENT NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 536,000 Dionex (b) $ 30,375 ION & LIQUID CHROMATOGRAPHY 428,000 Varian (b) 17,552 ANALYTICAL INSTRUMENTS 2,300,000 Spectris (United Kingdom) 16,839 ELECTRONIC INSTRUMENTATION & CONTROLS ---------------------------------------------------------------------------- 135,200 >SEMICONDUCTORS/RELATED EQUIPMENT: 0.9% 1,425,000 Semtech (b) 31,165 ANALOG SEMICONDUCTORS 1,315,000 Integrated Circuit Systems (b) 27,510 SILICON TIMING DEVICES 685,000 Littelfuse (b) 23,400 LITTLE FUSES 1,250,000 IXYS (b) 12,900 POWER SEMICONDUCTORS 565,000 Supertex (b) 12,261 MIXED-SIGNAL SEMICONDUCTORS 1,380,000 Ase Test (Taiwan) (b) 9,329 SEMICONDUCTOR PACKAGING & TEST SERVICES 361,000 Actel (b) 6,332 FIELD PROGRAMMABLE GATE ARRAYS 604,000 Pericom Semiconductor (b) 5,696 SEMICONDUCTORS: INTERFACE INTEGRATED CIRCUITS ---------------------------------------------------------------------------- 128,593 >CONTRACT MANUFACTURING: 0.4% 1,500,000 Jabil Circuit (b) 38,370 ELECTRONIC MANUFACTURING SERVICES 1,600,000 Plexus (b) 20,816 ELECTRONIC MANUFACTURING SERVICES ---------------------------------------------------------------------------- 59,186 TELECOMMUNICATIONS >MOBILE COMMUNICATIONS: 1.8% 3,000,000 Western Wireless (b) 87,900 RURAL CELLULAR PHONE SERVICES 4,000,000 Crown Castle International (b) 66,560 COMMUNICATION TOWERS 2,750,000 American Tower (b) 50,600 COMMUNICATION TOWERS IN USA & MEXICO 520,000 Telephone & Data Systems 40,014 CELLULAR & TELEPHONE SERVICES ---------------------------------------------------------------------------- 245,074 >TELECOMMUNICATIONS EQUIPMENT: 1.1% 8,700,000 Tellabs (b) 74,733 TELECOMMUNICATIONS EQUIPMENT 830,000 Plantronics 34,420 COMMUNICATION HEADSETS 2,000,000 Andrew (b) 27,260 WIRELESS INFRASTRUCTURE EQUIPMENT 1,510,000 Symmetricom (b) 14,662 NETWORK TIMING & SYNCHRONIZATION DEVICES ---------------------------------------------------------------------------- 151,075 >TELECOMMUNICATIONS/WIRELINE COMMUNICATIONS: 0.3% 800,000 Commonwealth Telephone (b) 39,728 RURAL PHONE FRANCHISES & CLEC 27 Columbia Acorn Fund >Statement of Investments, continued NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- MEDIA >TELEVISION PROGRAMMING/CATV: 1.1% 1,000,000 Liberty Media International (b) $ 46,230 CATV HOLDING COMPANY 3,000,000 UnitedGlobalCom (b) 28,980 VIDEO, VOICE & DATA SERVICES OUTSIDE THE USA 2,605,000 Liberty Media 28,603 CATV PROGRAMMING & MEDIA COMPANY HOLDINGS 2,700,000 Insight Communications (b) 25,029 CATV FRANCHISES IN MIDWEST 1,100,000 Corus Entertainment (Canada) 22,914 TELEVISION PROGRAMMING & RADIO STATIONS 1,250,000 Mediacom Communications (b) 7,813 CABLE TELEVISION FRANCHISES ---------------------------------------------------------------------------- 159,569 >TV/SATELLITE BROADCASTING: 0.7% 2,907,000 SES Global (Luxembourg) 37,800 SATELLITE BROADCASTING SERVICES 1,452,000 Gray Television 22,506 MID MARKET AFFILIATED TV STATIONS 450,000 Alliance Atlantis Communication (Canada) (b) 12,265 CATV CHANNELS, TV/MOVIE PRODUCTION/DISTRIBUTION 1,200,000 Entravision Communications (b) 10,020 SPANISH LANGUAGE TV, RADIO & OUTDOOR 270,000 Metropole TV (France) 7,643 TELEVISION BROADCASTER 200,000 Young Broadcasting (b) 2,112 TELEVISION STATIONS ---------------------------------------------------------------------------- 92,346 >RADIO BROADCASTING: 0.6% 1,291,000 Salem Communications (b) 32,210 RADIO STATIONS FOR RELIGIOUS PROGRAMMING 1,200,000 Cumulus Media, Cl. A (b) 18,096 RADIO STATIONS IN SMALL CITIES 992,000 Saga Communications (b) 16,715 RADIO STATIONS IN SMALL & MID-SIZED CITIES 1,200,000 Spanish Broadcasting (b) 12,672 SPANISH LANGUAGE RADIO STATIONS ---------------------------------------------------------------------------- 79,693 ------------ INFORMATION: TOTAL 3,121,969 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES: 20.7% SERVICES >RETAIL: 6.0% 2,495,000 Chico's FAS (b) 113,597 WOMEN'S SPECIALTY RETAIL 3,200,000 Michaels Stores 95,904 CRAFT & HOBBY SPECIALTY RETAILER 3,743,000 Christopher & Banks (c) 69,058 WOMEN'S APPAREL RETAILER 2,265,000 Aeropostale (b) 66,659 MALL BASED TEEN RETAILER 1,245,000 Abercrombie & Fitch 58,453 TEEN APPAREL RETAILER NUMBER OF SHARES OR PRINCIPAL AMOUNT (000) VALUE (000) ---------------------------------------------------------------------------- 1,245,000 Petco Animal Supplies (b) $ 49,153 PET SUPPLIES & SERVICES 1,400,000 Williams Sonoma (b) 49,056 HOME GOODS & FURNISHING RETAILER 826,000 Urban Outfitters (b) 36,674 ECLECTIC HOME & APPAREL RETAILER 1,400,000 Sports Authority (b)(c) 36,050 SPORTING GOODS STORES 1,300,000 Borders Group 33,020 BOOKSTORES 1,072,000 Zale (b) 32,021 SPECIALTY RETAILER OF JEWELRY 955,000 West Marine (b) 23,636 LARGEST RETAILER OF BOATING SUPPLIES 1,370,000 Hot Topic (b) 23,550 MUSIC INSPIRED RETAILER OF APPAREL, ACCESSORIES & GIFTS 1,093,000 Ann Taylor (b) 23,532 WOMEN'S APPAREL RETAILER 300,000 Fast Retailing (Japan) (f) 22,755 APPAREL RETAILER 230,000 Whole Foods Market 21,931 NATURAL FOOD SUPERMARKETS 700,000 Genesco (b) 21,798 MULTI-CONCEPT BRANDED FOOTWEAR RETAILER 350,000 Edgars Consolidated Stores (South Africa) 18,740 LEADING RETAIL CONGLOMERATE 819,000 Brookstone (b) 16,011 SPECIALTY CONSUMER PRODUCT RETAILER 2,250,000 Esprit Holdings (Hong Kong) 13,605 GLOBAL APPAREL BRAND MANAGER 1,062,000 Gaiam (b)(c) 6,531 HEALTHY LIVING CATALOG & E-COMMERCE $ 6,000 Gadzooks 5% Convertible 10/07/08 (e)(g) 600 TEEN APPAREL RETAILER ---------------------------------------------------------------------------- 832,334 >CONSUMER SERVICES: 1.6% 2,250,000 ITT Educational Services (b) 106,988 POSTSECONDARY DEGREE PROGRAMS 1,290,000 Coinstar (b)(c) 34,611 OWNER/OPERATOR OF COIN COUNTING MACHINES 775,000 Weight Watchers (b) 31,829 WEIGHT LOSS PROGRAMS 1,514,000 Central Parking 22,937 OWNER, OPERATOR & MANAGER OF PARKING LOTS & GARAGES 700,000 Park 24 (Japan) (f) 12,518 PARKING LOT OPERATOR 1,850,000 Princeton Review (b)(c) 11,378 COLLEGE PREPARATION COURSES 2,350,000 Bally Total Fitness (b)(c) 9,964 NATIONAL CHAIN OF FITNESS CENTERS ---------------------------------------------------------------------------- 230,225 >CASINOS: 1.3% 890,000 Station Casinos 48,665 CASINOS & RIVERBOATS 875,000 Argosy Gaming (b) 40,862 REGIONAL RIVERBOAT CASINOS 1-800-922-6769 28 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >CASINOS--CONTINUED 1,925,000 Pinnacle Entertainment (b) $ 38,077 REGIONAL RIVERBOAT CASINOS 2,750,000 Alliance Gaming (b)(c) 37,977 DIVERSIFIED GAMING COMPANY 4,130,000 Sky City Entertainment (New Zealand) 15,959 CASINO/ENTERTAINMENT COMPLEX 226,000 Lakes Entertainment (b) 3,682 NATIVE AMERICAN CASINO DEVELOPMENT ---------------------------------------------------------------------------- 185,222 >TRAVEL: 1.0% 2,314,500 Intrawest (Canada) 53,130 OWNER/OPERATOR OF SKI RESORTS 3,380,000 LaQuinta (b) 30,724 OWNER/FRANCHISER OF MID-PRICED HOTELS 1,115,000 Vail Resorts (b) 24,998 OWNER/OPERATOR OF SKI RESORTS 880,000 Jurys Doyle Hotel (Ireland) 14,685 OWNER/OPERATOR OF MID-PRICED HOTELS 1,045,000 Navigant International (b)(c) 12,718 CORPORATE TRAVEL AGENCY ---------------------------------------------------------------------------- 136,255 >ENTERTAINMENT/LEISURE PRODUCTS: 0.9% 905,000 International Speedway Motors 47,784 LARGEST MOTORSPORT RACETRACK OWNER & OPERATOR 845,000 RC2 (b) 27,547 COLLECTIBLES & TOYS 1,110,000 Amer Group (Finland) (f) 19,327 BRANDED SPORTING GOODS 363,000 Speedway Motorsports 14,222 MOTORSPORT RACETRACK OWNER & OPERATOR 345,000 Intralot (Greece) 8,421 LOTTERY & GAMING SYSTEMS & SERVICES 500,000 Callaway Golf 6,750 PREMIUM GOLF CLUBS & BALLS ---------------------------------------------------------------------------- 124,051 >RESTAURANTS: 0.7% 2,000,000 AFC Enterprises (b)(c) 47,300 POPEYES CHICKEN 1,447,000 Autogrill (Italy) (b)(f) 24,078 TOLLWAY RESTAURANTS 364,000 Cheesecake Factory (b) 11,819 CASUAL DINING RESTAURANTS 388,000 Kappa Create (Japan) (f) 11,584 SUSHI CHAIN RESTAURANT OPERATOR ---------------------------------------------------------------------------- 94,781 >CRUISE LINES: 0.2% 400,000 Carnival 23,052 LARGEST CRUISE LINE ---------------------------------------------------------------------------- GOODS >FURNITURE/TEXTILES: 2.3% 2,200,000 HNI 94,710 OFFICE FURNITURE & FIREPLACES 740,000 Mohawk Industries (b) 67,525 CARPET & FLOORING NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 1,900,000 Herman Miller $ 52,497 OFFICE FURNITURE 844,000 American Woodmark (c) 36,866 KITCHEN CABINET MANUFACTURER 2,130,000 Nobia (Sweden) (f) 35,171 KITCHEN CABINET MANUFACTURING & DISTRIBUTION 550,000 Masonite International (Canada) (b) 18,918 DOOR MANUFACTURER 650,000 Knoll (b) 11,375 OFFICE FURNITURE ---------------------------------------------------------------------------- 317,062 >APPAREL: 2.2% 2,990,000 Coach (b) 168,636 DESIGNER & RETAILER OF BRANDED LEATHER ACCESSORIES 836,000 Oxford Industries 34,527 BRANDED & PRIVATE LABEL APPAREL 3,000,000 Billabong International (Australia) 26,843 SURFWEAR APPAREL MANUFACTURER 400,000 Columbia Sportswear (b) 23,844 ACTIVE OUTDOOR APPAREL, FOOTWEAR & ACCESSORIES 469,000 Carter's (b) 15,941 CHILDREN'S BRANDED APPAREL 728,000 Steven Madden (b)(c) 13,730 WHOLESALER/RETAILER OF FASHION FOOTWEAR 5,000,000 Pacific Brands (Australia) 12,464 AUSTRALIAN BRANDED APPAREL 1,000,000 Wacoal (Japan) (f) 12,015 WOMEN'S SPECIALTY APPAREL ---------------------------------------------------------------------------- 308,000 >LEISURE VEHICLES: 1.3% 1,745,000 Harley-Davidson 106,009 MOTORCYCLES & RELATED MERCHANDISE 550,000 Polaris Industries 37,411 MANUFACTURER OF LEISURE VEHICLES & RELATED PRODUCTS 1,495,000 Monaco Coach (c) 30,752 RECREATIONAL VEHICLES 2,850,000 Ducati Motor (Italy) (b)(f) 3,394 MOTORCYCLES & RELATED MERCHANDISE ---------------------------------------------------------------------------- 177,566 >DURABLE GOODS: 1.1% 1,316,000 Helen of Troy (b) 44,231 HAIRDRYERS & CURLING IRONS 465,000 Hyundai Mobis (South Korea) (b)(f) 29,344 AUTO PARTS 478,000 Hunter Douglas (Netherlands) 25,412 WINDOW SHADES & VENETIAN BLINDS 10,000,000 Techtronic Industries (Hong Kong) 21,871 MANUFACTURER OF POWER TOOLS & MOTORIZED APPLIANCES 610,000 Shimano (Japan) (f) 17,383 BICYCLE COMPONENTS & FISHING TACKLE 133,000 Funai Electric (Japan) (f) 16,499 CONSUMER ELECTRONICS ---------------------------------------------------------------------------- 154,740 29 Columbia Acorn Fund >Statement of Investments, continued NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >NONDURABLES: 1.1% 895,000 Scotts Company (b) $ 65,800 CONSUMER LAWN & GARDEN PRODUCTS 1,989,000 SCP Pool 63,449 DISTRIBUTOR OF SWIMMING POOL SUPPLIES 630,000 Natura Cosmeticos (Brazil) 18,383 DIRECT RETAILER OF COSMETICS ---------------------------------------------------------------------------- 147,632 >FOOD & BEVERAGES: 1.0% 1,600,000 Kerry (Ireland) 38,251 FOOD INGREDIENTS 725,000 Orkla (Norway) (f) 23,699 FOOD & DIVERSIFIED CONSUMER GOODS 850,000 NBTY (b) 20,409 VITAMINS & SUPPLEMENTS 30,000,000 Global Bio-Chem Technology Group (China) 19,876 1,841,250 Global Bio-Chem Technology Group Warrants (China) (b) 88 CHINESE REFINER OF CORN-BASED COMMODITIES 2,500,000 Lion Nathan (Australia) 16,801 BEER BREWER/DISTRIBUTOR 180,000 Davide Campari (Italy) (f) 11,578 SPIRITS & WINE ---------------------------------------------------------------------------- 130,702 ------------ CONSUMER GOODS/SERVICES: TOTAL 2,861,622 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES: 14.6% >LOGISTICS: 2.3% 2,750,000 Expeditors International of Washington 153,670 INTERNATIONAL FREIGHT FORWARDER 900,000 UTI Worldwide 61,218 INTERNATIONAL FREIGHT FORWARDER 1,000,000 Forward Air (b) 44,700 FREIGHT TRANSPORTATION BETWEEN AIRPORTS 2,600,000 Exel (United Kingdom) 36,028 GLOBAL LOGISTICS & FREIGHT FORWARDING 424,000 Hub Group (b) 22,141 TRUCK & RAIL FREIGHT FORWARDER ---------------------------------------------------------------------------- 317,757 >INDUSTRIAL GOODS: 1.9% 1,600,000 Clarcor (c) 87,632 MOBILE & INDUSTRIAL FILTERS 2,000,000 Donaldson 65,160 INDUSTRIAL AIR FILTRATION 700,000 Genlyte Group (b)(c) 59,976 COMMERCIAL LIGHTING FIXTURES 804,000 Mine Safety Appliances 40,763 SAFETY EQUIPMENT 100,000 Bacou Dalloz (France) 7,992 SAFETY EQUIPMENT 2,500,000 Electric City (b)(c) 3,075 ELECTRICITY CONSERVATION DEVICES ---------------------------------------------------------------------------- 264,598 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >MACHINERY: 1.8% 1,050,000 Esco Technologies (b)(c) $ 80,483 AUTOMATIC ELECTRIC METER READERS 2,250,000 Ametek 80,258 AEROSPACE/INDUSTRIAL INSTRUMENTS 840,000 Pentair 36,590 PUMPS, WATER TREATMENT & TOOLS 785,000 Gardner Denver (b) 28,488 AIR COMPRESSORS, BLOWERS & PUMPS 500,000 Cobham (United Kingdom) 11,854 AEROSPACE COMPONENTS 106,000 Oshkosh Truck 7,248 SPECIALTY TRUCK MANUFACTURER 150,000 Tennant 5,948 NON-RESIDENTIAL FLOOR CLEANING EQUIPMENT ---------------------------------------------------------------------------- 250,869 >INDUSTRIAL DISTRIBUTION: 1.7% 2,276,000 Watsco (c) 80,161 HVAC DISTRIBUTION 3,800,000 Grafton Group (Ireland) (b) 41,177 BUILDERS, WHOLESALERS & DIY RETAILING 1,200,000 Hughes Supply 38,820 INDUSTRIAL DISTRIBUTION 1,375,000 Airgas 36,451 INDUSTRIAL GAS DISTRIBUTOR 900,000 Nuco2 (b)(c) 19,971 BULK CO2 GAS DISTRIBUTION TO RESTAURANTS 600,000 Aviall (b) 13,782 AIRCRAFT REPLACEMENT PARTS DISTRIBUTOR ---------------------------------------------------------------------------- 230,362 >SPECIALTY CHEMICALS & INDUSTRIAL MATERIALS: 1.5% 2,947,000 Spartech (c) 79,834 PLASTICS DISTRIBUTION & COMPOUNDING 42,500 Geberit International (Switzerland) (f) 30,991 PLUMBING SUPPLIES 450,000 Novozymes (Denmark) (f) 22,773 INDUSTRIAL ENZYMES 1,000,000 Schulman 21,410 PLASTICS DISTRIBUTION & COMPOUNDING 35,000 Sika (Switzerland) (f) 20,910 CHEMICALS FOR CONSTRUCTION & INDUSTRIAL APPLICATION 200,000 Imerys (France) 16,728 INDUSTRIAL MINERALS PRODUCER 20,000 Givaudan (Switzerland) (f) 13,150 INDUSTRIAL FRAGRANCES & FLAVORS 93,000 Carbone Lorraine (France) (b) 4,913 ADVANCED INDUSTRIAL MATERIALS 337,000 National Patent Development (b) 775 PLASTIC SHIELDS FOR RECREATIONAL USE ---------------------------------------------------------------------------- 211,484 >CONSTRUCTION: 1.2% 738,000 Florida Rock Industries 43,933 CONCRETE & AGGREGATES 1,134,000 Simpson 39,577 WALL JOINT MAKER 1-800-922-6769 30 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >CONSTRUCTION--CONTINUED 787,500 Wienerberger (Austria) (f) $ 37,531 BRICKS & CLAY ROOFING TILES 380,000 Daito Trust Construction (Japan) (f) 18,032 APARTMENT BUILDER 490,000 Dominion Homes (b)(c) 12,359 OHIO/KENTUCKY HOME BUILDER 218,000 M/I Homes 12,014 OHIO HOME BUILDER 3,000,000 Consorcio (Mexico) (b) 9,016 AFFORDABLE HOUSING BUILDER ---------------------------------------------------------------------------- 172,462 >WATER: 1.1% 856,000 Cuno (b) 50,846 FILTRATION & FLUIDS CLARIFICATION 3,000,000 Tetra Tech (b)(c) 50,220 RESOURCE MANAGEMENT & INFRASTRUCTURE CONSULTING 1,080,000 Pall 31,266 FILTRATION & FLUIDS CLARIFICATION 554,000 Watts Water Technologies 17,861 WATER, VALVES, REGULATORS & FILTRATION ---------------------------------------------------------------------------- 150,193 >STEEL: 1.0% 2,850,000 Gibraltar Steel (c) 67,317 STEEL PROCESSING 600,000 Tenaris (Argentina) 29,340 STEEL PIPE FOR OIL WELLS & PIPELINES 158,000 Vallourec (France) 23,541 SEAMLESS TUBES 1,050,000 Worthington Industries 20,559 STEEL PROCESSING ---------------------------------------------------------------------------- 140,757 >OUTSOURCING SERVICES & TRAINING: 0.8% 1,800,000 Labor Ready (b) 30,456 TEMPORARY MANUAL LABOR 635,000 Bilfinger Berger (Germany) (f) 26,019 CONSTRUCTION & RELATED SERVICES 447,000 Meitec (Japan) (f) 16,627 STAFFING COMPANY SPECIALIZING IN RD ENGINEERS 640,000 United Services Group (Netherlands) 14,910 TEMPORARY STAFFING SERVICES 1,548,000 Quanta Services (b) 12,384 ELECTRICAL & TELECOM CONSTRUCTION SERVICES 950,000 Administaff (b) 11,979 PROFESSIONAL EMPLOYER ORGANIZATION 600,000 GP Strategies (b) 4,470 TRAINING PROGRAMS ---------------------------------------------------------------------------- 116,845 >OTHER INDUSTRIAL SERVICES: 0.7% 825,000 Mobile Mini (b)(c) 27,258 LEASES PORTABLE STORAGE UNITS 60,000 Schindler (Switzerland) (f) 23,699 ELEVATOR MANUFACTURER & SERVICE PROVIDER 1,500,000 Clark (b)(c) 23,280 EXECUTIVE COMPENSATION & BENEFITS CONSULTING NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 300,000 G&K Services $ 13,026 UNIFORM RENTAL 185,000 Jaakko Poyry (Finland) (f) 5,563 ENGINEERING CONSULTANTS IN FORESTRY, ENERGY 46,000 Imtech (Netherlands) 1,617 TECHNICAL ENGINEERING ---------------------------------------------------------------------------- 94,443 >CONGLOMERATES: 0.4% 740,000 Aalberts Industries (Netherlands) 35,783 FLOW CONTROL & HEAT TREATMENT 5,550 Pargesa (Switzerland) (f) 19,450 INDUSTRIAL & MEDIA HOLDINGS ---------------------------------------------------------------------------- 55,233 >ELECTRICAL COMPONENTS: 0.2% 1,125,000 Ushio (Japan) (f) 20,937 INDUSTRIAL LIGHT SOURCES ---------------------------------------------------------------------------- ------------ INDUSTRIAL GOODS/SERVICES: TOTAL 2,025,940 ---------------------------------------------------------------------------- FINANCE: 13.2% >BANKS: 5.6% 3,502,000 TCF Financial 112,554 GREAT LAKES BANK 2,712,000 Associated Banc-Corp 90,066 MIDWEST BANK 3,300,000 Anglo Irish Bank (Ireland) 80,010 SMALL BUSINESS & MIDDLE MARKET BANKING 1,638,000 BOK Financial (b) 79,869 OKLAHOMA BANK 2,187,000 Glacier Bancorp (c) 74,445 MOUNTAIN STATES BANK 1,830,000 Texas Regional Bancshares 59,804 SOUTH TEXAS BANK 1,320,000 West Coast Bancorp (c) 33,541 PORTLAND SMALL BUSINESS LENDER 1,850,000 Depfa Bank (Ireland) (f) 30,941 INTERNATIONAL PUBLIC SECTOR FINANCE 195,000 Komercni Banka (Czech Republic) (f) 28,372 LEADING CZECH UNIVERSAL BANK 1,758,000 Republic 26,862 MICHIGAN BANK 756,000 Chittenden 21,720 VERMONT & WESTERN MASSACHUSETTS BANK 2,150,000 Den Norske Bank (Norway) (f) 21,094 LARGEST NORWEGIAN BANK 500,000 CityBank Lynnwood (c) 18,075 SEATTLE REAL ESTATE LENDER 370,000 Cullen Frost Bankers 17,982 SAN ANTONIO BANK 479,000 Great Southern Bancorp 16,765 MISSOURI REAL ESTATE LENDER 400,000 CorpBanca (Chile) (b) 11,500 CHILEAN LOCAL BANK 1,000,000 Credito Emiliano (Italy) (f) 9,899 ITALIAN REGIONAL BANK 31 Columbia Acorn Fund >Statement of Investments, continued NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >BANKS--CONTINUED 493,000 West Bancorporation $ 8,682 DES MOINES SMALL BUSINESS BANK 358,000 Cascade Financial 6,730 SEATTLE COMMUNITY BANK 82,000 BankFirst 6,476 OKLAHOMA COMMUNITY BANK 111,000 First Financial BankShares 4,974 WEST TEXAS COMMUNITY BANK 169,000 First Mutual Bancshares 4,279 SEATTLE COMMUNITY BANK6 170,000 Midwest Bank 3,718 CHICAGO BANK 123,000 Sterling Bancorp 3,475 NEW YORK CITY SMALL BIZ BANK 15,000 S Y Bancorp 362 LOUISVILLE BANK ---------------------------------------------------------------------------- 772,195 >INSURANCE: 2.5% 826,000 Leucadia National 57,390 INSURANCE HOLDING COMPANY 138,000 Markel (b) 50,232 SPECIALTY INSURANCE 995,000 Protective Life 42,477 LIFE INSURANCE 575,000 Philadelphia Consolidated Holding (b) 38,031 SPECIALTY INSURANCE 1,020,000 HCC Insurance Holdings 33,782 SPECIALTY INSURANCE 710,000 Selective Insurance Group 31,410 COMMERCIAL & PERSONAL LINES INSURANCE 1,174,000 Scottish Re Group 30,407 LIFE REINSURANCE 570,000 RLI 23,695 SPECIALTY INSURANCE 210,000 StanCorp Financial 17,325 GROUP LIFE & DISABILITY INSURANCE 340,000 Stewart Information Services 14,161 TITLE COMPANY 700,000 United National Group (b) 13,034 SPECIALTY INSURANCE ---------------------------------------------------------------------------- 351,944 >SAVINGS & LOANS: 1.9% 3,196,000 People's Bank of Bridgeport 124,292 CONNECTICUT SAVINGS & LOAN 1,178,000 Anchor Bancorp Wisconsin (c) 34,339 WISCONSIN THRIFT 1,700,000 Housing Development Finance (India) 30,113 PREMIER MORTGAGE LENDER IN INDIA 1,059,000 Washington Federal 28,106 MORTGAGE LENDER 487,000 Downey Financial 27,759 CALIFORNIA HOME LENDER 226,000 FirstFed Financial (b) 11,723 SANTA MONICA SAVINGS & LOAN 200,000 Bankinter (Spain) (f) 10,615 MORTGAGE LENDER NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 160,000 Provident Bancorp $ 2,110 NEW YORK STATE THRIFT ---------------------------------------------------------------------------- 269,057 >FINANCE COMPANIES: 1.6% 5,831,000 AmeriCredit (b) 142,568 AUTO LENDING 1,820,000 World Acceptance (b)(c) 50,068 PERSONAL LOANS 1,000,000 Northgate (United Kingdom) 16,368 LIGHT COMMERCIAL VEHICLE RENTAL SPECIALIST 620,000 Intermediate Capital (United Kingdom) 12,952 EUROPEAN PROVIDER OF MEZZANINE CAPITAL ---------------------------------------------------------------------------- 221,956 >MONEY MANAGEMENT: 1.4% 2,390,000 SEI Investments 100,213 MUTUAL FUND ADMINISTRATION & INVESTMENT MANAGEMENT 1,195,000 Eaton Vance 62,319 SPECIALTY MUTUAL FUNDS 782,000 Nuveen Investments 30,866 SPECIALTY MUTUAL FUNDS ---------------------------------------------------------------------------- 193,398 >BROKERAGE: 0.2% 1,215,000 Investment Technology Group (b) 24,300 ELECTRONIC TRADING ---------------------------------------------------------------------------- ------------ FINANCE: TOTAL 1,832,850 ---------------------------------------------------------------------------- ENERGY/MINERALS: 9.3% >OIL/GAS PRODUCERS: 5.2% 7,000,000 XTO Energy 247,660 NATURAL GAS PRODUCER 3,000,000 Western Gas 87,750 OIL PRODUCER & COAL SEAM GAS PRODUCER 1,700,000 Ultra Petroleum (b) 81,821 NATURAL GAS PRODUCER 3,000,000 Talisman Energy (Canada) 80,865 OIL & GAS PRODUCER 15,400,000 Tullow Oil (United Kingdom) 45,011 OIL & GAS PRODUCER 930,000 Petrokazakhstan (Canada) 34,503 70,000 Petrokazakhstan (Canada) 2,597 OIL PRODUCER & REFINER IN KAZAKHSTAN 830,000 Quicksilver Resources (b) 30,527 NATURAL GAS & COAL SEAM GAS PRODUCER 500,000 Southwestern Energy (b) 25,345 NATURAL GAS PRODUCER 814,000 Denbury Resources (b) 22,344 OIL PRODUCER USING CO2 INJECTION 1,100,000 McMoran Exploration (b) 20,570 NATURAL GAS PRODUCERS & LNG DEVELOPER 1,000,000 Range Resources 20,460 OIL & GAS PRODUCER 2,265,000 Tipperary (b)(c) 11,257 COAL SEAM GAS PRODUCER 1,000,000 Fairbourne Energy (Canada) (b) 10,040 OIL & GAS PRODUCER ---------------------------------------------------------------------------- 720,750 1-800-922-6769 32 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >OIL SERVICES: 2.4% 2,300,000 FMC Technologies (b) $ 74,060 OIL & GAS WELL HEAD MANUFACTURER 710,000 Carbo Ceramics 48,990 NATURAL GAS WELL STIMULANTS 800,000 Chicago Bridge & Iron 32,000 ENGINEERING & CONSTRUCTION FOR PETROCHEMICALS & LNG 1,500,000 Pride International (b) 30,810 OFFSHORE DRILLING CONTRACTOR 2,400,000 Key Energy Services (b) 28,320 OIL & GAS WELL WORKOVER SERVICES 333,000 Fugro (Netherlands) 27,694 SURVEY & GPS SERVICES 1,250,000 Enerflex Systems (Canada) (c) 24,539 NATURAL GAS COMPRESSOR 4,750,000 Newpark Resources (b)(c) 24,463 DRILLING FLUID SERVICES TO OIL & GAS INDUSTRY 2,000,000 Saipem (Italy) (f) 23,963 OFFSHORE CONSTRUCTION & DRILLING 1,200,000 Hanover Compressor (b) 16,956 NATURAL GAS COMPRESSOR RENTAL ---------------------------------------------------------------------------- 331,795 >DISTRIBUTION/MARKETING/REFINING: 1.3% 1,600,000 Equitable Resources 97,056 NATURAL GAS UTILITY & PRODUCER 1,900,000 Oneok 53,998 NATURAL GAS UTILITY, MARKETING & PROCESSING 1,206,000 Atmos Energy 32,984 NATURAL GAS UTILITY ---------------------------------------------------------------------------- 184,038 >MINING: 0.4% 1,800,000 Xstrata (United Kingdom) 32,153 DIVERSIFIED MINING HOLDING COMPANY 900,000 Noranda (Canada) 15,793 DIVERSIFIED MINING HOLDING COMPANY 1,000,000 Ivanhoe Mines (Canada) (b) 7,207 COPPER MINING IN MONGOLIA ---------------------------------------------------------------------------- 55,153 ------------ ENERGY/MINERALS: TOTAL 1,291,736 ---------------------------------------------------------------------------- HEALTH CARE: 8.6% >SERVICES: 3.2% 2,491,000 Lincare Holdings (b) 106,241 HOME HEALTH CARE SERVICES 4,586,000 First Health Group (b) 85,805 PPO NETWORK 3,470,000 Gambro (Sweden) (f) 49,451 PRODUCTS/SERVICES FOR RENAL CARE 2,592,000 NDCHealth Group (c) 48,185 HEALTH CLAIMS PROCESSING & DRUG MARKETING SERVICES 840,000 Charles River Laboratories (b) 38,648 PHARMACEUTICAL RESEARCH 510,000 OPG Groep (Netherlands) 29,704 HEALTCARE SUPPLIES & PHARMACIES 1,333,000 Dendrite International (b) 25,860 SOFTWARE FOR PHARMACEUTICAL SALES FORCE 700,000 Accredo Health (b) 19,404 SPECIALTY PHARMACY NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 550,000 Serologicals (b) $ 12,166 BLOOD COLLECTION & ANTIBODY PRODUCTION 236,000 Omega Pharma (Belgium) 11,268 OTC PRODUCTS, PHARMACY & DENTAL SUPPLIES 440,000 Medquist (b) 6,512 MEDICAL TRANSCRIPTION SERVICES ---------------------------------------------------------------------------- 433,244 >MEDICAL EQUIPMENT/LABORATORY SUPPLIES: 2.7% 1,629,000 Edwards Lifesciences (b) 67,213 HEART VALVES 1,240,000 Diagnostic Products (b) 68,262 IMMUNODIAGNOSTIC KITS 365,000 Essilor International (France) 28,502 EYEGLASS LENSES 1,000,000 Sola International (b) 27,540 SPECIALTY EYEGLASS LENSES 1,900,000 CTI Molecular Imaging (b) 26,961 MEDICAL DIAGNOSTIC DEVICES 1,000,000 VISX (b) 25,870 LASER EYE SURGERY EQUIPMENT 583,000 Orthofix International (b) 23,016 BONE FIXATION & STIMULATION DEVICES 200,000 Synthes-Stratec (Switzerland) (b)(f) 22,326 PRODUCTS FOR ORTHOPEDIC SURGERY 714,000 ICU Medical (b)(c) 19,521 INTRAVENOUS THERAPY PRODUCTS 750,000 Intermagnetics General (b) 19,058 MRI EQUIPMENT 390,000 Hogy Medical (Japan) (f) 18,325 DISPOSABLE SURGICAL PRODUCTS 875,000 Viasys Healthcare (b) 16,625 RESPIRATORY & NEUROLOGY MEDICAL EQUIPMENT 350,000 Haemonetics (b) 12,674 BLOOD & PLASMA COLLECTION EQUIPMENT 48,000 Diagnosticos (Brazil) 432 LARGEST PRIVATE DIAGNOSTIC SERVICES COMPANY IN BRAZIL ---------------------------------------------------------------------------- 376,325 >BIOTECHNOLOGY/DRUG DELIVERY: 1.9% 1,179,000 AtheroGenics (b) 27,777 DRUGS FOR ATHEROSCLEROSIS 519,000 Martek Biosciences (b) 26,573 FATTY ACIDS FOR BABY FORMULA & OTHER FOODS 500,000 Neurocrine Biosciences (b) 24,650 DRUGS FOR SLEEP, DIABETES, MS & ENDOMETRIOSIS 1,350,000 DOV Pharmaceutical (b)(c) 24,368 DRUGS FOR INSOMNIA, ANXIETY, PAIN & DEPRESSION 2,000,000 Medarex (b) 21,560 HUMANIZED ANTIBODIES 1,055,000 Nektar Therapeutics (b) 21,353 DRUG DELIVERY TECHNOLOGIES 1,600,000 Ligand Pharmaceuticals (b) 18,624 DRUGS FOR PAIN, CANCER, OSTEOPOROSIS, & DIABETES 2,400,000 Pozen (b)(c) 17,448 DRUGS FOR MIGRAINES 2,000,000 Lexicon Genetics (b) 15,510 DRUG DISCOVERY 776,000 NPS Pharmaceuticals (b) 14,185 DRUGS FOR OSTEOPOROSIS & HYPERPARATHYROIDISM 33 Columbia Acorn Fund >Statement of Investments, continued NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >BIOTECHNOLOGY/DRUG DELIVERY--CONTINUED 460,000 Myriad Genetics (b) $ 10,355 GENE DISCOVERY & DIAGNOSTIC PRODUCTS 635,000 Maxygen (b) 8,122 MOLECULAR BREEDING 1,708,000 Ciphergen Biosystems (b)(c) 7,344 PROTEIN CHIPS USED FOR DRUG TARGET DISCOVERY 3,500,000 La Jolla Pharmaceutical (b)(c) 5,845 LUPUS TREATMENT 865,000 Arena Pharmaceuticals (b) 5,787 NOVEL DRUG TARGETING TECHNOLOGY 638,000 Diversa (b) 5,576 MOLECULAR BREEDING 1,875,000 Locus Discovery, Series D, Pfd. (b)(e)(g) 3,750 HIGH THROUGHPUT RATIONAL DRUG DESIGN 461,000 SYRRX, Series C (b)(e)(g) 2,305 X-RAY CRYSTALLOGRAPHY 1,249,999 Perlegen Sciences (b)(e)(g) 2,237 LARGE SCALE GENE SEQUENCING 359,944 Microdose (b)(e)(g) 270 DRUG INHALERS ---------------------------------------------------------------------------- 263,639 >MEDICAL SUPPLIES: 0.3% 686,000 Techne (b) 26,685 CYTOKINES, ANTIBODIES, OTHER REAGENTS FOR LIFE SCIENCES 650,000 Owens & Minor 18,310 DISTRIBUTION OF MEDICAL SUPPLIES ---------------------------------------------------------------------------- 44,995 >PHARMACEUTICALS: 0.3% 775,000 Par Pharmaceuticals (b) 32,070 GENERICS 2,106,000 United Drug (Ireland) 9,927 IRISH PHARMACEUTICAL WHOLESALER & OUTSOURCER 10,992 Yuhan (South Korea) (b)(f) 924 OTC & PRESCRIPTION DRUG MANUFACTURER ---------------------------------------------------------------------------- 42,921 >HOSPITAL MANAGEMENT: 0.2% 500,000 Rhoen-Klinikum (Germany) (f) 30,537 HOSPITAL MANAGEMENT ---------------------------------------------------------------------------- ------------ HEALTH CARE: TOTAL 1,191,661 ---------------------------------------------------------------------------- OTHER INDUSTRIES: 3.5% >REAL ESTATE: 2.2% 1,320,000 General Growth Properties 47,731 REGIONAL SHOPPING MALLS 699,000 Forest City Enterprises, Cl. B 40,402 COMMERCIAL & RESIDENTIAL PROPERTY DEVELOPER 635,000 Macerich Company 39,878 REGIONAL SHOPPING MALLS 620,000 Mills 39,531 REGIONAL SHOPPING MALLS 650,000 SL Green Realty 39,358 MANHATTAN OFFICE BUILDINGS 575,000 Federal Realty Investment Trust 29,699 SHOPPING CENTERS NUMBER OF SHARES OR PRINCIPAL AMOUNT VALUE (000) ---------------------------------------------------------------------------- 1,375,000 Crescent Real Estate Equities $ 25,108 CLASS A OFFICE BUILDINGS 1,552,000 Highland Hospitality 17,444 HOTEL REAL ESTATE INVESTMENT TRUST 1,355,000 Sponda (Finland) (f) 13,175 OFFICE & WAREHOUSE PROPERTY COMPANY 1,000,000 Diamondrock Hospitality (b)(e) 10,200 HOTEL REAL ESTATE INVESTMENT TRUST 157,420 Security Capital European Realty (Luxembourg) (b)(e)(g) 2,692 37,407 Security Capital European Realty (Luxembourg) (b)(e)(g) 613 SELF STORAGE PROPERTIES 106,000 Am NV (Netherlands) 1,025 PROPERTY DEVELOPER ---------------------------------------------------------------------------- 306,856 >WASTE MANAGEMENT: 0.5% 1,275,000 Waste Connections (b) 43,669 SOLID WASTE MANAGEMENT 2,500,000 Allied Waste Industries (b) 23,200 SOLID WASTE MANAGEMENT ---------------------------------------------------------------------------- 66,869 >TRANSPORTATION: 0.4% 620,000 Grupo Aeroportaurio Del Sureste (Mexico) 16,957 CANCUN & COZUMEL AIRPORT OPERATOR 70,000 Kobenhavns Lufthavne (Denmark) (f) 14,824 COPENHAGEN AIRPORT AUTHORITY 15,000,000 ComfortDelGro (Singapore) 14,239 TAXI & MASS TRANSIT SERVICE 371,000 Heartland Express 8,336 TOP PERFORMING TRUCKER ---------------------------------------------------------------------------- 54,356 >REGULATED UTILITIES: 0.4% 1,650,000 Northeast Utilities 31,103 REGULATED ELECTRIC UTILITY 799,800 Red Electrica (Spain) (f) 17,901 SPANISH POWER GRID ---------------------------------------------------------------------------- 49,004 ------------ OTHER INDUSTRIES TOTAL 477,085 TOTAL COMMON STOCKS AND OTHER ------------ EQUITY-LIKE SECURITIES: 92.5% 12,802,863 (COST: $7,276,617) ---------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS: 7.5% $ 100,000 Bayer (h) 2.25% - 2.378% 1/20/05 - 2/14/05 99,774 82,000 Pfizer (h) 2.20% - 2.28% 1/27/05 - 2/09/05 81,840 81,000 Campbell Soup 2.07% - 2.10% 1/03/05 - 1/07/05 80,983 80,000 Toyota Credit 2.30% -2.306% 2/10/05 -2/11/05 79,793 75,000 Prudential Funding 2.12% - 2.23% 1/19/05 - 2/17/05 74,846 1-800-922-6769 34 PRINCIPAL AMOUNT VALUE (000) ---------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS--CONTINUED $ 70,000 Household Finance $ 69,904 2.12% - 2.26% 1/11/05 - 2/01/05 66,000 General Electric Capital 2.21% - 2.28% 1/21/05 - 2/16/05 65,887 65,000 SBC Communications (h) 2.26% - 2.31% 2/03/05 - 2/07/05 64,856 60,000 American Express Credit 2.00% 1/05/05 - 1/06/05 59,985 60,000 United Parcel Service 1.95% 1/13/05 - 1/14/05 59,960 58,000 John Hancock (h) 2.27% - 2.32% 1/11/05 - 2/02/05 57,884 55,000 Siemens Capital 2.14% - 2.18% 1/18/05 - 1/24/05 54,935 35,000 General Electric Capital 2.28% 2/15/05 34,900 30,000 Citicorp 2.14% 1/10/05 29,984 30,000 American General Finance 2.29% 2/04/05 29,935 27,000 Coca Cola 2.15% 1/26/05 26,960 25,000 Marshall + Ilsley 2.11% -2.33% 1/12/05 - 2/16/05 24,949 38,346 Repurchase Agreement with State Street Bank & Trust Co. dated 12/31/04, due 1/03/05 at 1.90% collateralized by a Federal National Mortgage Association Note, maturing 1/05/05, market value $39,115 (repurchase proceeds: $38,352) 38,346 ---------------------------------------------------------------------------- (AMORTIZED COST: $1,035,721) 1,035,721 ------------ TOTAL INVESTMENTS: 100.0% 13,838,584 (COST: $8,312,338) (A) ------------ CASH AND OTHER ASSETS LESS LIABILITIES: 0.0% 2,875 ------------ TOTAL NET ASSETS: 100% $ 13,841,459 ============================================================================ 35 Columbia Acorn Fund >Statement of Investments, continued -------------------------------------------------------------------------------- >Notes to Statement of Investments (in thousands) (a) At December 31, 2004, for federal income tax purposes cost of investments was $8,334,204 and net unrealized appreciation was $5,504,380 consisting of gross unrealized appreciation of $5,793,358 and gross unrealized depreciation of $288,978. (b) Non-income producing security. (c) An affiliate may include any company in which the Fund owns five percent or more of its outstanding voting shares. On December 31, 2004, the Fund held five percent or more of the outstanding voting securities of the following companies: AnswerThink 10.60% Christopher & Banks 10.47 New Horizons Worldwide 9.81 Indus International 9.78 Actuate 9.74 World Acceptance 9.71 Gibraltar Steel 9.61 Analysts International 9.50 Spartech 9.17 Skillsoft Publishing 8.95 Glacier Bancorp 8.92 Seachange International 8.90 West Coast Bancorp 8.88 Igate Capital 8.87 E.Piphany 8.75 MAPICS 8.54 Watsco 8.50 Pozen 8.32 Esco Technologies 8.21 Clark 8.02 Concurrent Computer 7.95 MRO Software 7.93 Nuco2 7.68 JDA Software Group 7.56 Gaiam 7.22 NDCHealth Group 7.20 AFC Enterprises 7.08 Bally Total Fitness 6.90 Navigant International 6.75 Princeton Review 6.71 DOV Pharmaceutical 6.30% Clarcor 6.26 Electric City 6.01 Dominion Homes 5.97 Ciphergen Biosystems 5.82 Aspect Communications 5.76 Pegasus Systems 5.75 La Jolla Pharmaceutical 5.70 Newpark Resources 5.66 Mobile Mini 5.65 Enerflex Systems 5.60 Steve Madden 5.58 Tipperary 5.48 Radiant Systems 5.46 Sports Authority 5.42 Alliance Gaming 5.39 Witness Systems 5.35 Tetra Tech 5.33 ICU Medical 5.26 Excel Technologies 5.19 Anchor Bancorp Wisconsin 5.13 Micros Systems 5.13 American Woodmark 5.13 Kronos 5.12 Coinstar 5.11 Genlyte Group 5.09 Monaco Coach 5.08 InfoUSA 5.02 CityBank Lynnwood 5.02 The aggregate cost and value of these companies at December 31, 2004, was $562,929 and $1,928,260, respectively. Investments in affiliate companies represent 13.9% of total net assets at December 31, 2004. Investment activity and income amounts relating to affiliates during the twelve months ended December 31, 2004 were as follows: Dividend Income $ 7,758 Net realized gain or loss $ 36,513 Change in unrealized gain or loss $ 59,516 Purchases $ 395,993 Proceeds from sales $ 271,683 1-800-922-6769 36 (d) On December 31, 2004, the market value of foreign securities (in thousands) represents 14.96% of total net assets. The Fund's foreign portfolio was diversified as follows: VALUE PERCENT =========================================================== Canada $ 282,771 2.04% Ireland 214,991 1.55 United Kingdom 171,205 1.24 Japan 166,675 1.20 Netherlands 136,145 0.98 Switzerland 130,526 0.94 France 118,133 0.85 Sweden 84,622 0.61 Italy 72,912 0.53 Germany 66,988 0.48 Hong Kong 59,617 0.43 Australia 56,108 0.41 Norway 44,793 0.32 Luxembourg 41,105 0.30 Finland 38,065 0.28 Denmark 37,597 0.27 VALUE PERCENT =========================================================== Austria $ 37,531 0.27% South Korea 30,268 0.22 India 30,113 0.22 Argentina 29,340 0.21 Spain 28,516 0.21 Czech Republic 28,372 0.21 Mexico 25,973 0.19 China 19,964 0.14 Taiwan 19,910 0.14 Brazil 18,815 0.14 South Africa 18,740 0.14 New Zealand 15,959 0.12 Singapore 14,239 0.10 Chile 11,500 0.08 Belgium 11,268 0.08 Greece 8,421 0.06 ----------- --------- Total Foreign Portfolio $ 2,071,182 14.96% =========== ========= (e) Denotes a restricted security, which is subject to restrictions on resale under federal securities laws. At December 31, 2004, these securities were illiquid. At December 31, 2004, these securities (in thousands) amounted to $22,667, which represents 0.16% of total net assets. Additional information on these securities is as follows:
ACQUISITION SHARES/ SECURITY DATES PAR (000) COST (000) VALUE (000) ------------------------------------------------------------------------------------------------------ Diamondrock Hospitality 06/29/04 1,000 $ 10,000 $ 10,200 Locus Discovery, Series D, Pfd. 09/05/01 1,875 7,500 3,750 Gadzooks 5% Convertible 10/07/08 10/08/03 $ 6,000 6,000 600 Microdose 11/24/00 360 2,005 270 Perlegen Sciences 03/30/01 1,250 4,500 2,237 Security Capital European Realty 08/20/98-11/12/99 195 3,897 3,305 SYRRX, Series C 01/08/01 461 2,997 2,305 --------- --------- $ 36,899 $ 22,667 ========= =========
(f) Represents a security valued by an independent statistical fair value pricing service at 12/31/04. Foreign securities which had a market holiday on 12/31/04 were valued under this method. See Security Valuation in Note 2 for further information. (g) Represents fair value as determined in good faith under procedures approved by the Board of Trustees. (h) Security exempt from registration under Section 4(2) of the Securities Act of 1933. These securities may only be resold in exempt transactions to qualified buyers. Private resales of these securities to qualified institutional buyers are also exempt from registration pursuant to Rule 144A under the Securities Act of 1933. At December 31, 2004, these securities amounted to $304,354, which represents 2.2% of net assets. 37 Columbia Acorn International >Major Portfolio Changes in the Fourth Quarter (Unaudited) NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 Additions ---------------------------------------------------------------------------- EUROPE >UNITED KINGDOM/IRELAND BBA Group 1,200,000 2,200,000 Business Post 1,050,000 1,070,000 IAWS (Ireland) 297,100 900,000 Intermediate Capital 500,000 701,000 Jurys Doyle Hotel (Ireland) 810,000 890,000 Northgate 600,000 700,000 United Drug (Ireland) 2,950,000 3,056,000 >NETHERLANDS Kon Ten Cate 158,000 237,000 Unit 4 Agresso 0 178,000 >FRANCE Camaieu 54,000 114,000 Carbone Lorraine 0 47,000 Iliad 0 250,000 Imerys 160,000 182,000 Norbert Dentressangle 0 110,000 >GERMANY Deutsche Boerse 120,000 175,000 GFK 300,000 350,000 Grenkeleasing 0 115,000 Wincor Nixdorf 100,000 175,000 >SWITZERLAND Kuehne & Nagel 0 70,000 >SWEDEN Nobia 860,000 1,075,000 Sweco 0 80,000 >NORWAY Ekornes 220,000 462,000 >CZECH REPUBLIC Komercni Banka 118,000 141,000 >RUSSIAN FEDERATION Mechel Steel Group 0 102,000 NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 ---------------------------------------------------------------------------- ASIA >JAPAN Meitec 200,000 385,000 Park 24 170,000 750,000 >TAIWAN Advantech 0 747,000 Chicony Electronics 4,000,000 6,464,000 ---------------------------------------------------------------------------- OTHER COUNTRIES >CANADA Ivanhoe Mines 0 850,000 ---------------------------------------------------------------------------- LATIN AMERICA >BRAZIL Diagnosticos 0 156,250 1-800-922-6769 38 NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 Sales ---------------------------------------------------------------------------- EUROPE >UNITED KINGDOM/IRELAND Grafton Group (Ireland) 2,750,000 2,630,000 Jardine Lloyd Thompson 1,593,000 0 Rank Group 2,250,000 0 Smith & Nephew 1,450,000 0 Tullow Oil 7,500,000 7,245,000 >NETHERLANDS Am NV 467,000 72,000 >FRANCE/BELGIUM Bonduelle 15,000 0 Omega Pharma (Belgium) 224,000 184,000 >GERMANY Beru 75,000 0 Kali & Salz 225,000 0 >ITALY Autogrill 1,130,000 830,000 >SWEDEN Intrum Justitia 2,280,000 0 >SPAIN Gamesa 600,000 300,000 NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 ---------------------------------------------------------------------------- ASIA >JAPAN Chiyoda Integre 411,200 205,000 Otsuka Kagu 326,900 0 Uni-Charm 172,000 0 >HONG KONG/CHINA Jiangsu Expressway (China) 5,694,000 0 >SOUTH KOREA Yuhan 165,000 104,940 >INDIA Housing Development Finance 1,500,000 1,372,330 >SINGAPORE Sembcorp Logisitics 6,000,000 0 ---------------------------------------------------------------------------- OTHER COUNTRIES >CANADA Talisman Energy 795,000 635,000 ---------------------------------------------------------------------------- LATIN AMERICA >ARGENTINA Tenaris 440,000 340,000 39 Columbia Acorn International >Statement of Investments, December 31, 2004 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- COMMON STOCKS AND OTHER EQUITY-LIKE SECURITIES: 93.9% ---------------------------------------------------------------------------- EUROPE: 57.1% >UNITED KINGDOM/IRELAND: 17.5% 2,350,000 Anglo Irish Bank (Ireland) $ 56,977 SMALL BUSINESS & MIDDLE MARKET BANKING 2,630,000 Grafton Group (Ireland) (b) 28,499 BUILDERS, WHOLESALERS & DIY RETAILING 1,100,000 Kerry (Ireland) 26,298 FOOD INGREDIENTS 1,750,000 Exel 24,250 GLOBAL LOGISTICS & FREIGHT FORWARDING 1,275,000 Depfa Bank (Ireland) (e) 21,324 INTERNATIONAL PUBLIC SECTOR FINANCE 7,245,000 Tullow Oil 21,176 OIL & GAS PRODUCER 2,600,000 Expro International 17,889 OFFSHORE OIL FIELD SERVICES 5,494,000 RPS Group 16,032 ENVIRONMENTAL CONSULTING 900,000 IAWS (Ireland) 14,872 MANUFACTURER OF BAKED GOODS 890,000 Jurys Doyle Hotel (Ireland) 14,852 OWNER/OPERATOR OF MID-PRICED HOTELS 701,000 Intermediate Capital 14,645 EUROPEAN PROVIDER OF MEZZANINE CAPITAL 3,056,000 United Drug (Ireland) 14,405 IRISH PHARMACEUTICAL WHOLESALER & OUTSOURCER 600,000 Cobham 14,225 AEROSPACE COMPONENTS 750,000 Xstrata 13,397 DIVERSIFIED MINING HOLDING COMPANY 1,070,000 Business Post 12,766 PARCEL & EXPRESS MAIL SERVICE 2,200,000 BBA Group 12,049 AVIATION SUPPORT SERVICES & NON-WOVEN MATERIALS 1,300,000 Kensington 11,872 NON-CONFORMING MORTGAGE COMPANY 700,000 Northgate 11,457 LIGHT COMMERCIAL VEHICLE RENTAL SPECIALIST 1,200,000 Spectris 8,786 ELECTRONIC INSTRUMENTS & CONTROLS 500,000 Viridian 6,996 NORTHERN IRELAND ELECTRIC UTILITY ---------------------------------------------------------------------------- 362,767 >NETHERLANDS: 7.5% 540,000 Aalberts Industries 26,112 FLOW CONTROL & HEAT TREATMENT 278,800 Fugro 23,187 SURVEY & GPS SERVICES 327,000 OPG Groep 19,046 HEALTHCARE SUPPLIES & PHARMACIES 237,000 Kon Ten Cate 17,399 ADVANCED TEXTILES & INDUSTRIAL FABRICS 340,000 Sligro Food Group 16,717 FOOD SERVICE & WHOLESALING 400,000 Imtech 14,060 TECHNICAL ENGINEERING NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 584,000 United Services Group $ 13,606 TEMPORARY STAFFING SERVICES 248,000 Hunter Douglas 13,185 WINDOW SHADES & VENETIAN BLINDS 420,000 Vopak 8,915 OIL & CHEMICAL STORAGE 178,000 Unit 4 Aggresso (b) 2,749 BUSINESS & SECURITY SOFTWARE 72,000 Am NV 696 PROPERTY DEVELOPER ---------------------------------------------------------------------------- 155,672 >FRANCE/BELGIUM: 7.4% 377,500 Neopost 29,248 POSTAGE METER MACHINES 117,000 Vallourec 17,432 SEAMLESS TUBES 182,000 Imerys 15,223 INDUSTRIAL MINERALS PRODUCER 404,000 Fininfo 12,455 DATA FEEDS FOR FRENCH BANKS & BROKERS 150,000 Bacou Dalloz 11,987 SAFETY EQUIPMENT 114,000 Camaieu 11,303 WOMEN'S APPAREL RETAILER 140,000 Essilor International 10,932 EYEGLASS LENSES 360,000 Metropole TV 10,191 TELEVISION BROADCASTER 250,000 Iliad 9,441 HIGH SPEED INTERNET SERVICE PROVIDER 184,000 Omega Pharma (Belgium) 8,785 OTC PRODUCTS, PHARMACY & DENTAL SUPPLIES 60,000 Pierre & Vacances 6,863 VACATION APARTMENT LETS 110,000 Norbert Dentressangle 6,079 TRANSPORT 47,000 Carbone Lorraine (b) 2,483 ADVANCED INDUSTRIAL MATERIALS 10,000 April Group 257 INSURANCE POLICY CONSTRUCTION ---------------------------------------------------------------------------- 152,679 >GERMANY/AUSTRIA: 7.1% 315,000 Rhoen-Klinikum Pfd. (e) 19,314 300,000 Rhoen-Klinikum (e) 18,322 HOSPITAL MANAGEMENT 375,000 Wienerberger (Austria) (e) 17,872 BRICKS & CLAY ROOFING TILES 450,000 Hugo Boss Designs (e) 14,926 FASHION APPAREL 175,000 Wincor Nixdorf (b)(e) 14,043 RETAIL POS SYSTEMS & ATM MACHINES 350,000 GFK (e) 13,576 MARKET RESEARCH SERVICES 300,000 Bilfinger Berger (e) 12,292 CONSTRUCTION & RELATED SERVICES 175,000 Deutsche Boerse (e) 10,491 TRADING, CLEARING & SETTLEMENT SERVICES FOR FINANCIAL MARKETS 1-800-922-6769 40 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >GERMANY/AUSTRIA--CONTINUED 200,000 Vossloh (e) $ 9,847 RAIL INFRASTRUCTURE & DIESEL LOCOMOTIVES 800,000 Takkt (e) 8,397 MAIL ORDER RETAILER OF OFFICE & WAREHOUSE DURABLES 115,000 Grenkeleasing (e) 5,430 FINANCING FOR IT EQUIPMENT 260,000 Deutsche Beteiligungs (b)(e) 3,715 PRIVATE EQUITY INVESTMENT MANAGEMENT ---------------------------------------------------------------------------- 148,225 >SWITZERLAND: 4.6% 25,000 Geberit International (e) 18,230 PLUMBING SUPPLIES 40,000 Schindler (e) 15,799 ELEVATOR MANUFACTURER & SERVICE PROVIDER 70,000 Kuehne & Nagel (e) 15,017 FREIGHT FORWARDING/LOGISTICS 24,000 Sika (b)(e) 14,338 CHEMICALS FOR CONSTRUCTION & INDUSTRIAL APPLICATION 3,000 Pargesa (e) 10,514 INDUSTRIAL & MEDIA CONGLOMERATE 85,000 Synthes-Stratec (b)(e) 9,489 PRODUCTS FOR ORTHOPEDIC SURGERY 10,000 Givaudan (e) 6,575 INDUSTRIAL FRAGRANCES & FLAVORS 110,000 Bachem (e) 6,311 PEPTIDES ---------------------------------------------------------------------------- 96,273 >ITALY: 2.7% 270,000 Amplifon (e) 14,924 HEARING AID RETAILER 830,000 Autogrill (b)(e) 13,811 TOLLWAY RESTAURANTS 212,000 Davide Campari (e) 13,636 SPIRITS & WINE 1,000,000 Credit Emiliano (e) 9,899 ITALIAN REGIONAL BANK 3,300,000 Ducati Motor (b)(e) 3,930 MOTORCYCLES & RELATED MERCHANDISE ---------------------------------------------------------------------------- 56,200 >SWEDEN: 2.2% 394,200 Hexagon (e) 18,725 DIVERSIFIED ENGINEERING 1,075,000 Nobia (e) 17,751 KITCHEN CABINET MANUFACTURING & DISTRIBUTION 470,000 Gambro (e) 6,698 PRODUCTS/SERVICES FOR RENAL CARE 80,000 Sweco (b)(e) 1,525 NORDIC INFRASTRUCTURE/ENVIRONMENT CONSULTING ---------------------------------------------------------------------------- 44,699 >SPAIN: 1.9% 2,000,000 Abengoa (e) 19,686 ENGINEERING & CONSTRUCTION 420,000 Red Electrica (e) 9,400 SPANISH POWER GRID 120,000 Bankinter (e) 6,369 MORTGAGE LENDER NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 300,000 Gamesa (e) $ 4,182 WIND TURBINES ---------------------------------------------------------------------------- 39,637 >FINLAND: 1.5% 439,000 Jaakko Poyry (e) 13,201 ENGINEERING CONSULTANTS IN FORESTRY, ENERGY 555,000 Amer Group (e) 9,663 BRANDED SPORTING GOODS 950,000 Sponda (e) 9,237 OFFICE & WAREHOUSE PROPERTY COMPANY ---------------------------------------------------------------------------- 32,101 >NORWAY: 1.3% 462,000 Ekornes (e) 10,019 NICHE FURNITURE MANUFACTURER 910,000 Den Norske Bank (e) 8,928 LARGEST NORWEGIAN BANK 221,000 Orkla (e) 7,224 FOOD & DIVERSIFIED CONSUMER GOODS ---------------------------------------------------------------------------- 26,171 >LUXEMBOURG: 1.2% 1,880,000 SES Global 24,446 SATELLITE BROADCASTING SERVICES ---------------------------------------------------------------------------- >CZECH REPUBLIC: 1.0% 141,000 Komercni Banka (e) 20,515 LEADING CZECH UNIVERSAL BANK ---------------------------------------------------------------------------- >GREECE: 0.5% 465,000 Intralot 11,350 LOTTERY & GAMING SYSTEMS/SERVICES ---------------------------------------------------------------------------- >DENMARK: 0.4% 35,000 Kobenhavns Lufthavne (e) 7,412 COPENHAGEN AIRPORT AUTHORITY ---------------------------------------------------------------------------- >POLAND: 0.2% 167,000 Central European Distribution (b) 4,933 SPIRITS & WINE DISTRIBUTION ---------------------------------------------------------------------------- >RUSSIAN FEDERATION: 0.1% 102,000 Mechel Steel Group (b) 2,280 INTEGRATED STEEL & METALLURGICAL COAL PRODUCER ---------------------------------------------------------------------------- ------------ EUROPE: TOTAL 1,185,360 ---------------------------------------------------------------------------- ASIA: 24.2% >JAPAN: 12.9% 480,100 Daito Trust Construction (e) 22,781 APARTMENT BUILDER 2,900,000 Bank of Yokohama (e) 18,218 REGIONAL BANK 1,500,000 Wacoal (e) 18,023 WOMEN'S SPECIALTY APPAREL 220,000 Fast Retailing (e) 16,687 APPAREL RETAILER 41 Columbia Acorn International >Statement of Investments, continued NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >JAPAN--CONTINUED 385,000 Meitec (e) $ 14,321 STAFFING COMPANY SPECIALIZING IN RD ENGINEERS 5,200 Dentsu (e) 13,985 ADVERTISING AGENCY 818,000 NIFCO (e) 13,668 MOLDED PLASTIC COMPONENTS 110,000 Funai Electric (e) 13,646 CONSUMER ELECTRONICS 750,000 Park 24 (e) 13,413 PARKING LOT OPERATOR 358,000 Eneserve (e) 12,976 POWER GENERATORS 402,000 Kappa Create (e) 12,002 SUSHI CHAIN RESTAURANT OPERATOR 2,248,000 Hiroshima Bank (e) 11,876 REGIONAL BANK 330,000 Sugi Pharmacy (e) 11,192 DRUGSTORE OPERATOR 226,000 Hogy Medical (e) 10,619 DISPOSABLE SURGICAL PRODUCTS 906,000 Toyo Technica (e) 10,458 VALUE ADDED RESELLER OF IMPORTED INSTRUMENTATION 255,000 ARRK (e) 10,431 PROTOTYPES & MOLDS FOR NEW PRODUCT DEVELOPMENT 550,000 Ushio (e) 10,236 INDUSTRIAL LIGHT SOURCES 1,500,000 Fukuoka Bank (e) 9,858 REGIONAL BANK 1,400,000 Chiba Bank (e) 9,345 REGIONAL BANK 325,000 Olympus Optical (e) 6,925 MEDICAL EQUIPMENT & CAMERAS 205,000 Chiyoda Integre (e) 4,131 PLASTIC COMPONENTS FOR CONSUMER ELECTRONICS 155,200 Ain Pharmaciez (e) 3,095 DISPENSING PHARMACY/DRUGSTORE OPERATOR ---------------------------------------------------------------------------- 267,886 >HONG KONG/CHINA: 3.9% 25,000,000 Global Bio-Chem Technology Group (China) 16,564 1,875,000 Global Bio-Chem Technology Group Warrants (China) (b) 89 CHINESE REFINER OF CORN-BASED COMMODITIES 6,000,000 Hong Kong Exchanges & Clearing 16,094 HONG KONG EQUITY & DERIVATIVES OPERATOR 6,000,000 Techtronic Industries 13,122 MANUFACTURER OF POWER TOOLS & MOTORIZED APPLIANCES 2,000,000 Esprit Holdings 12,093 GLOBAL APPAREL BRAND MANAGER 9,800,000 Hainan Meilan Airport (China) 8,258 CHINESE AIRPORT OPERATOR 17,700,000 Linmark 6,376 SOURCING OF CONSUMER GOODS 28,000,000 Lerado Group 4,179 BABY STROLLERS & INFANT CAR SEATS MANUFACTURER 14,500,000 Ngai Lik Industrial 3,656 CONSUMER ELECTRONICS MANUFACTURER ---------------------------------------------------------------------------- 80,431 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >TAIWAN: 2.9% 15,740,000 Phoenixtec Power $ 18,963 UNINTERRUPTABLE POWER SUPPLIES 1,230,000 ASE Test (b) 8,315 SEMICONDUCTOR PACKAGING & TEST SERVICES 3,683,000 Springsoft Systems 7,878 ELECTRONIC DESIGN AUTOMATION SOFTWARE 5,302,590 Wah Lee Industrial 6,922 DISTRIBUTOR OF CHEMICALS, MATERIALS & EQUIPMENT 8,470,000 Bank of Kaohsiung 6,741 COMMERICAL BANKING 6,464,000 Chicony Eletronic 6,568 PC POWER SUPPLIES & KEYBOARDS 3,010,000 Taiwan Fu Hsing 3,276 DOOR LOCK MANUFACTURER 747,000 Advantech 1,809 EMBEDDED COMPUTERS ---------------------------------------------------------------------------- 60,472 >SOUTH KOREA: 1.7% 250,000 Hyundai Mobis (b)(e) 15,776 AUTO PARTS 104,940 Yuhan (b)(e) 8,820 OTC & PRESCRIPTION DRUG MANUFACTURER 100,000 Samsung Fire & Marine (e) 7,890 NON-LIFE INSURANCE 200,000 Samyoung Heat Exchange (e) 2,051 POWER PLANT RELATED MACHINERY ---------------------------------------------------------------------------- 34,537 >INDIA: 1.2% 1,372,330 Housing Development Finance 24,308 PREMIER MORTGAGE LENDER IN INDIA ---------------------------------------------------------------------------- >SINGAPORE: 1.1% 15,000,000 ComfortDelGro 14,239 TAXI & MASS TRANSIT SERVICE 1,000,000 Venture 9,738 ELECTRONIC CONTRACT MANUFACTURER ---------------------------------------------------------------------------- 23,977 >INDONESIA: 0.5% 55,000,000 PT Perusahaan Gas Negara (e) 11,256 GAS PIPELINE OPERATOR ---------------------------------------------------------------------------- ------------ ASIA: TOTAL 502,867 ---------------------------------------------------------------------------- OTHER COUNTRIES: 8.9% >AUSTRALIA/NEW ZEALAND: 4.1% 3,000,000 Billabong International 26,843 SURFWEAR APPAREL MANUFACTURER 350,000 Perpetual Trustees 17,204 AUSTRALIAN MUTUAL FUND MANAGER 2,500,000 Lion Nathan 16,801 BEER BREWER/DISTRIBUTOR 5,000,000 Pacific Brands 12,464 AUSTRALIAN BRANDED APPAREL 3,000,000 Sky City Entertainment (New Zealand) 11,593 CASINO/ENTERTAINMENT COMPLEX ---------------------------------------------------------------------------- 84,905 1-800-922-6769 42 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >CANADA: 3.9% 635,000 Talisman Energy $ 17,116 OIL & GAS PRODUCER 340,000 Masonite International (b) 11,694 DOOR MANUFACTURER 500,000 Corus Entertainment 10,415 TELEVISION PROGRAMMING & RADIO STATIONS 450,000 Intrawest 10,330 OWNER/OPERATOR OF SKI RESORTS 1,000,000 Fairbourne Energy (b) 10,040 OIL & GAS PRODUCER 235,000 Petrokazakhstan 8,719 OIL PRODUCER & REFINER IN KAZAKHSTAN 400,000 Noranda 7,019 DIVERSIFIED MINING HOLDING COMPANY 850,000 Ivanhoe Mines (b) 6,126 COPPER MINING IN MONGOLIA ---------------------------------------------------------------------------- 81,459 >SOUTH AFRICA: 0.9% 350,000 Edgars Consolidated Stores 18,740 LEADING RETAIL CONGLOMERATE ---------------------------------------------------------------------------- ------------ OTHER COUNTRIES: TOTAL 185,104 ---------------------------------------------------------------------------- LATIN AMERICA: 3.7% >MEXICO: 1.5% 660,000 Grupo Aeroportaurio Del Sureste 18,051 CANCUN & COZUMEL AIRPORT OPERATOR 3,000,000 Consorcio ARA (b) 9,016 AFFORDABLE HOUSING BUILDER 700,000 URBI Desarrollo (b) 3,058 AFFORDABLE HOUSING BUILDER ---------------------------------------------------------------------------- 30,125 >BRAZIL: 1.0% 640,000 Natura Cosmeticos 18,675 DIRECT RETAILER OF COSMETICS 156,250 Diagnosticos (b) 1,406 LARGEST PRIVATE DIAGNOSTIC SERVICES COMPANY IN BRAZIL ---------------------------------------------------------------------------- 20,081 ---------------------------------------------------------------------------- NUMBER OF SHARES OR PRINCIPAL AMOUNT (000) VALUE (000) ---------------------------------------------------------------------------- >ARGENTINA: 0.8% 340,000 Tenaris $ 16,626 STEEL PIPE FOR OIL WELLS & PIPELINES ---------------------------------------------------------------------------- >CHILE: 0.4% 300,000 CorpBanca (b) 8,625 CHILEAN LOCAL BANK ---------------------------------------------------------------------------- ------------ LATIN AMERICA: TOTAL 75,457 Total Common Stocks and Other ------------ EQUITY-LIKE SECURITIES: 93.9% 1,948,788 (COST: $1,233,203) ---------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS: 5.1% $ 35,000 Colgate Palmolive 2.17% 1/07/05 (c) 34,988 32,000 American Express Credit 2.26% 1/04/05 31,994 30,000 American General Finance 2.27% 1/03/05 29,996 9,076 Repurchase Agreement with State Street Bank & Trust Co. dated 12/31/04, due 1/03/05 at 1.90% collateralized by a Federal National Mortgage Association Note, maturing 1/05/05, market value $9,260 (repurchase proceeds: $9,077) 9,076 ---------------------------------------------------------------------------- (AMORTIZED COST: $106,054) 106,054 ------------ TOTAL INVESTMENTS: 99.0% 2,054,842 (COST: $1,339,257) (A) CASH AND OTHER ASSETS LESS LIABILITIES: 1.0% 20,170 ------------ TOTAL NET ASSETS: 100% $ 2,075,012 ============================================================================ -------------------------------------------------------------------------------- >Notes to Statement of Investments (in thousands) (a) At December 31, 2004, for federal income tax purposes cost of investments was $1,354,913 and net unrealized appreciation was $699,929 consisting of gross unrealized appreciation of $721,173 and gross unrealized depreciation of $21,244. (b) Non-income producing security. (c) Security exempt from registration under Section 4(2) of the Securities Act of 1933. This security may only be resold in exempt transactions to qualified buyers. Private resales of this security to qualified institutional buyers are also exempt from registration pursuant to Rule 144A under the Securities Act of 1933. At December 31, 2004, the value of this security represents 1.7% of net assets. (d) On December 31, 2004, the Fund's total investments were denominated in currencies as follows: CURRENCY VALUE % OF NET ASSETS -------------------------- ---------- --------------- Euro $ 797,536 38.4% Japanese Yen 267,886 12.9 British Pounds 185,539 8.9 US Dollar 173,602 8.4 Other currencies less than 5% of total net assets 630,279 30.4 ---------- --------------- $2,054,842 99.0% ========== =============== (e) Represents a security valued by an independent statistical fair value pricing service at 12/31/04. Foreign securities which had a market holiday on 12/31/04 were valued under this method. See Security Valuation in Note 2 for further information. 43 Columbia Acorn International >Portfolio Diversi1/2cation At December 31, 2004, the Fund's portfolio investments as a percent of net assets were diversified as follows: VALUE (000) PERCENT ---------------------------------------------------------------------------- >INDUSTRIAL GOODS/SERVICES Other Industrial Services $ 127,951 6.2% Industrial Materials 91,176 4.4 Conglomerates 75,037 3.6 Construction 56,221 2.7 Machinery 41,146 2.0 Outsourcing & Training Services 39,976 1.9 Steel 34,058 1.6 Electrical Components 32,774 1.6 Industrial Distribution 28,499 1.4 Speciality Chemicals 20,913 1.0 ---------------------------------------------------------------------------- 547,751 26.4 >CONSUMER GOODS/SERVICES Retail 88,034 4.2 Apparels 78,632 3.8 Food 65,111 3.1 Furniture & Textiles 52,649 2.5 Beverage 30,437 1.5 Restaurants 25,813 1.2 Travel 25,182 1.2 Other Consumer Services 24,455 1.2 Nondurables 18,675 0.9 Durables Goods 17,052 0.8 Consumer Electronics 13,646 0.7 Casinos 11,593 0.6 Gaming 11,350 0.6 Leisure Products 9,663 0.5 Consumer Goods Distribution 4,933 0.2 ---------------------------------------------------------------------------- 477,225 23.0 >FINANCE Banks 182,306 8.8 Other Finance Companies 43,404 2.1 Savings & Loans 30,677 1.5 Money Management 20,919 1.0 Insurance 8,147 0.4 ---------------------------------------------------------------------------- 285,453 13.8 VALUE (000) PERCENT ---------------------------------------------------------------------------- >INFORMATION Business Information & Marketing Services $ 42,063 2.0% Computer Hardware & Related Equipment 41,383 2.0 Financial Processors 26,585 1.3 Satellite Broadcasting 24,446 1.2 Instrumentation 19,244 0.9 Advertising 13,985 0.7 Contract Manufacturing 13,394 0.6 Business Software 10,627 0.5 Television Programming 10,415 0.5 Television Broadcasting 10,191 0.5 Internet Related 9,441 0.5 Semiconductors & Related Equipment 8,315 0.4 Electronics Distribution 6,922 0.3 ---------------------------------------------------------------------------- 237,011 11.4 >ENERGY/MINERALS Oil/Gas Producers 57,051 2.8 Oil Services 41,076 2.0 Agricultural Commodities 16,653 0.8 Mining 15,425 0.7 Non-Ferrous Metals 13,397 0.7 Independent Power 12,976 0.6 Distribution/Marketing/ Refining 11,256 0.5 ---------------------------------------------------------------------------- 167,834 8.1 >HEALTH CARE Hospital Management 37,636 1.8 Pharmaceuticals 32,010 1.6 Medical Equipment 27,346 1.3 Services 25,744 1.2 Hospital/Laboratory Supplies 12,025 0.6 Biotechnology/Drug Delivery 6,311 0.3 ---------------------------------------------------------------------------- 141,072 6.8 >OTHER INDUSTRIES Transportation 54,039 2.6 Real Estate 22,007 1.0 Regulated Utilities 16,396 0.8 ---------------------------------------------------------------------------- 92,442 4.4 TOTAL COMMON STOCKS AND ------------------------------- OTHER EQUITY-LIKE SECURITIES 1,948,788 93.9 SHORT-TERM OBLIGATIONS 106,054 5.1 ------------------------------- TOTAL INVESTMENTS 2,054,842 99.0 CASH AND OTHER ASSETS LESS LIABILITIES 20,170 1.0 ------------------------------- NET ASSETS $ 2,075,012 100.0% ============================================================================ 1-800-922-6769 44 Columbia Acorn USA >Major Portfolio Changes in the Fourth Quarter (Unaudited) NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 Additions ---------------------------------------------------------------------------- INFORMATION Ceridian 0 90,000 Maximus 0 60,000 Symbol Technologies 450,000 520,000 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Central Parking 321,700 364,400 International Speedway Motors 91,300 121,300 Petco Animal Supplies 95,000 220,000 ---------------------------------------------------------------------------- ENERGY/MINERALS Pride International 0 120,000 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES Florida Rock Industries 97,700 112,700 NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 Sales ---------------------------------------------------------------------------- INFORMATION Avocent 50,000 0 Euronet Worldwide 70,500 0 Mediacom Communications 600,000 300,000 PeopleSoft 304,991 0 THQ 64,000 0 Western Wireless 927,000 742,000 Zebra Technologies 204,000 99,000 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Leapfrog Enterprises 50,000 0 Urban Outfitters 138,200 48,200 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES Hub Group 246,000 221,000 ---------------------------------------------------------------------------- OTHER INDUSTRIES The Rouse Company 47,000 0 45 Columbia Acorn USA >Statement of Investments, December 31, 2004 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- COMMON STOCKS: 91.6% ---------------------------------------------------------------------------- INFORMATION: 28.8% >BUSINESS/CONSUMER SOFTWARE: 8.6% 287,600 Micros Systems (b) $ 22,450 INFORMATION SYSTEMS FOR RESTAURANTS & HOTELS 296,650 Kronos (b) 15,168 LABOR MANAGEMENT SOLUTIONS 974,000 JDA Software (b) 13,266 APPLICATIONS/SOFTWARE & SERVICES FOR RETAILERS 1,330,000 Novell (b) 8,977 DIRECTORY, OPERATING SYSTEM & IDENTITY MANAGEMENT SOFTWARE 473,500 MRO Software (b) 6,165 ENTERPRISE MAINTENANCE SOFTWARE 653,200 E.Piphany (b) 3,155 CRM SOFTWARE 60,000 Maximus (b) 1,867 OUTSOURCER FOR GOVERNMENT 104,200 SPSS (b) 1,630 STATISTICAL/BUSINESS ANALYSIS SOFTWARE 100,000 Aspect Communications (b) 1,114 CALL CENTER SOFTWARE 65,000 MAPICS (b) 686 MID MARKET ERP SOFTWARE ---------------------------------------------------------------------------- 74,478 >COMPUTER HARDWARE/SEMICONDUCTORS/ RELATED EQUIPMENT: 4.9% 520,000 Symbol Technologies 8,996 MOBILE COMPUTERS & BARCODE SCANNERS 365,300 Integrated Circuit Systems (b) 7,642 SILICON TIMING DEVICES 424,100 Seachange International (b) 7,396 SYSTEMS FOR VIDEO ON DEMAND & AD INSERTION 260,000 Unova (b) 6,575 BARCODE & WIRELESS LAN SYSTEMS 99,000 Zebra Technologies (b) 5,572 BAR CODE PRINTERS 70,000 Littelfuse (b) 2,391 LITTLE FUSES 100,000 Belden CDT 2,320 SPECIALTY CABLE 40,000 Rogers (b) 1,724 PCB LAMINATES & HIGH PERFORMANCE FOAMS ---------------------------------------------------------------------------- 42,616 >MOBILE COMMUNICATIONS: 4.6% 742,000 Western Wireless (b) 21,741 RURAL CELLULAR PHONE SERVICES 1,005,000 Crown Castle International (b) 16,723 COMMUNICATION TOWERS 10,000 Telephone & Data Systems 769 CELLULAR & TELEPHONE SERVICES 40,000 American Tower (b) 736 COMMUNICATION TOWERS IN USA & MEXICO ---------------------------------------------------------------------------- 39,969 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >TELECOMMUNICATIONS/WIRELINE COMMUNICATIONS: 2.7% 333,800 Commonwealth Telephone (b) $ 16,576 RURAL PHONE FRANCHISES & CLEC 480,000 Andrew (b) 6,542 WIRELESS INFRASTRUCTURE EQUIPMENT ---------------------------------------------------------------------------- 23,118 >BROADCASTING: 2.4% 695,000 Spanish Broadcasting (b) 7,339 SPANISH LANGUAGE RADIO STATIONS 293,100 Salem Communications (b) 7,313 RADIO STATIONS FOR RELIGIOUS PROGRAMMING 510,000 Entravision Communications (b) 4,258 SPANISH LANGUAGE TV, RADIO & OUTDOOR 138,500 Gray Television 2,147 MID MARKET AFFILIATED TV STATIONS ---------------------------------------------------------------------------- 21,057 >TRANSACTION PROCESSORS: 1.6% 211,640 Global Payments 12,389 CREDIT CARD PROCESSOR 143,100 Pegasus Systems (b) 1,803 TRANSACTION PROCESSOR FOR HOTEL INDUSTRY ---------------------------------------------------------------------------- 14,192 >COMPUTER SERVICES: 1.1% 1,005,500 AnswerThink (b) 4,685 IT INTEGRATOR FOR FORTUNE 2000 786,000 RCM Technologies (b)(c) 3,954 TECHNOLOGY ENGINEERING SERVICES 200,000 Igate Capital (b) 810 TECHNOLOGY STAFFING SERVICES ---------------------------------------------------------------------------- 9,449 >BUSINESS INFORMATION/BUSINESS SERVICES/PUBLISHING: 1.0% 102,800 Getty Images (b) 7,078 PHOTOGRAPHS FOR PUBLICATIONS & ELECTRONIC MEDIA 90,000 Ceridian (b) 1,645 HR SERVICES & PAYMENT PROCESSING ---------------------------------------------------------------------------- 8,723 >INTERNET: 0.9% 285,000 ValueClick (b) 3,799 INTERNET ADVERTISING 460,600 DoubleClick (b) 3,583 INTERNET ADVERTISING & DIRECT MARKETING STATISTICAL DATA ---------------------------------------------------------------------------- 7,382 >INSTRUMENTATION: 0.3% 90,000 Trimble Navigation (b) 2,974 GPS-BASED INSTRUMENTS ---------------------------------------------------------------------------- >TELECOMMUNICATION EQUIPMENT: 0.3% 300,000 Symmetricom (b) 2,913 NETWORK TIMING & SYNCHRONIZATION DEVICES ---------------------------------------------------------------------------- >TELEVISION PROGRAMMING: 0.2% 300,000 Mediacom Communications (b) 1,875 CABLE TELEVISION FRANCHISES ---------------------------------------------------------------------------- 1-800-922-6769 46 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >CONTRACT MANUFACTURING: 0.2% 140,000 Plexus (b) $ 1,841 ELECTRONIC MANUFACTURING SERVICES ---------------------------------------------------------------------------- ------------ INFORMATION: TOTAL 250,587 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES: 17.4% >RETAIL: 7.7% 285,000 Abercrombie & Fitch 13,381 TEEN APPAREL RETAILER 435,750 Aeropostale (b) 12,824 MALL BASED TEEN RETAILER 220,000 Petco Animal Supplies (b) 8,686 PET SUPPLIES & SERVICES 393,750 Christopher & Banks 7,264 WOMEN'S APPAREL RETAILER 115,000 Chico's FAS (b) 5,236 WOMEN'S SPECIALTY RETAIL 212,500 Ann Taylor (b) 4,575 WOMEN'S APPAREL RETAILER 100,000 Michaels Stores 2,997 CRAFT & HOBBY SPECIALTY RETAILER 95,000 Genesco (b) 2,958 MULTI-CONCEPT BRANDED FOOTWEAR RETAILER 100,000 Sports Authority (b) 2,575 SPORTING GOODS STORES 129,900 Brookstone (b) 2,539 SPECIALTY CONSUMER PRODUCT RETAILER 48,200 Urban Outfitters (b) 2,140 ECLECTIC HOME & APPAREL RETAILER 60,000 West Marine (b) 1,485 LARGEST RETAILER OF BOATING SUPPLIES ---------------------------------------------------------------------------- 66,660 >CONSUMER SERVICES: 4.4% 396,000 ITT Educational Services (b) 18,830 POSTSECONDARY DEGREE PROGRAM 435,000 Coinstar (b) 11,671 OWNER/OPERATOR OF COIN COUNTING MACHINES 364,400 Central Parking 5,520 OWNER, OPERATOR & MANAGER OF PARKING LOTS & GARAGES 60,000 Weight Watchers (b) 2,464 WEIGHT LOSS PROGRAMS ---------------------------------------------------------------------------- 38,485 >APPAREL: 1.8% 194,200 Oxford Industries 8,020 BRANDED & PRIVATE LABEL APPAREL 84,000 Coach (b) 4,737 DESIGNER & RETAILER OF BRANDED LEATHER ACCESSORIES 134,000 Steven Madden (b) 2,527 WHOLESALER/RETAILER OF FASHION FOOTWEAR ---------------------------------------------------------------------------- 15,284 >NONDURABLES: 1.4% 167,200 Scotts Company (b) 12,292 CONSUMER LAWN & GARDEN PRODUCTS ---------------------------------------------------------------------------- NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >ENTERTAINMENT/LEISURE PRODUCTS: 1.0% 121,300 International Speedway Motors $ 6,404 LARGEST MOTORSPORT RACETRACK OWNER & OPERATOR 195,000 Callaway Golf 2,632 PREMIUM GOLF CLUBS & BALLS ---------------------------------------------------------------------------- 9,036 >FURNITURE: 1.0% 60,000 American Woodmark 2,621 KITCHEN CABINET MANUFACTURER 85,000 Herman Miller 2,348 OFFICE FURNITURE 20,000 Mohawk Industries (b) 1,825 CARPET & FLOORING 40,000 HNI 1,722 OFFICE FURNITURE & FIREPLACES ---------------------------------------------------------------------------- 8,516 >FOOD & BEVERAGES: 0.1% 37,000 NBTY (b) 888 VITAMINS & SUPPLEMENTS ---------------------------------------------------------------------------- ------------ CONSUMER GOODS/SERVICES: TOTAL 151,161 ---------------------------------------------------------------------------- HEALTH CARE: 14.0% >MEDICAL EQUIPMENT: 5.4% 573,000 Edwards Lifesciences (b) 23,642 HEART VALVES 141,300 Diagnostic Products 7,778 IMMUNODIAGNOSTIC KITS 170,600 VISX (b) 4,413 LASER EYE SURGERY 220,000 Viasys Healthcare (b) 4,180 RESPIRATORY & NEUROLOGY MEDICAL EQUIPMENT 245,000 CTI Molecular Imaging (b) 3,476 MEDICAL DIAGNOSTIC DEVICES 115,700 ICU Medical (b) 3,163 INTRAVENOUS THERAPY PRODUCTS ---------------------------------------------------------------------------- 46,652 >SERVICES: 4.1% 744,000 First Health Group (b) 13,920 PPO NETWORK 246,800 Lincare Holdings (b) 10,526 HOME HEALTH CARE SERVICES 423,800 NDCHealth Group 7,878 HEALTH CLAIMS PROCESSING & DRUG MARKETING SERVICES 100,000 Dendrite International (b) 1,940 SOFTWARE FOR PHARMACEUTICAL SALES FORCE 40,000 Charles River Laboratories (b) 1,840 PHARMACEUTICAL RESEARCH ---------------------------------------------------------------------------- 36,104 >BIOTECHNOLOGY/DRUG DELIVERY: 2.6% 360,000 Nektar Therapeutics (b) 7,286 DRUG DELIVERY TECHNOLOGIES 260,000 AtheroGenics (b) 6,125 DRUGS FOR ATHEROSCLEROSIS, RHEUMATOID ARTHRITIS, ASTHMA 47 Columbia Acorn USA >Statement of Investments, continued NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >BIOTECHNOLOGY/DRUG DELIVERY--CONTINUED 415,000 Ligand Pharmaceuticals (b) $ 4,831 DRUGS FOR PAIN, CANCER, OSTEOPOROSIS, & DIABETES 300,000 Lexicon Genetics (b) 2,326 DRUG DISCOVERY 154,000 SYRRX, Series C (b)(d)(e) 770 X-RAY CRYSTALLOGRAPHY 375,000 Locus Discovery, Series D, Pfd. (b)(d)(e) 750 HIGH THROUGHPUT RATIONAL DRUG DESIGN 15,000 Neurocrine Biosciences (b) 739 DRUGS FOR SLEEP, DIABETES, MS & ENDOMETRIOSIS 363,636 Metabolex, Series F (b)(d)(e) 53 DRUGS FOR DIABETES ---------------------------------------------------------------------------- 22,880 >MEDICAL SUPPLIES: 1.0% 222,800 Techne (b) 8,667 CYTOKINES, ANTIBODIES, OTHER REAGENTS FOR LIFE SCIENCES ---------------------------------------------------------------------------- >PHARMACEUTICALS: 0.9% 192,000 Par Pharmaceuticals (b) 7,945 GENERICS ---------------------------------------------------------------------------- ------------ HEALTH CARE: TOTAL 122,248 ---------------------------------------------------------------------------- ENERGY/MINERALS: 11.7% >OIL SERVICES: 5.4% 335,000 Chicago Bridge & Iron 13,400 ENGINEERING & CONSTRUCTION FOR PETROCHEMICALS & LNG 401,700 FMC Technologies (b) 12,935 OIL & GAS WELL HEAD MANUFACTURER 355,000 Hanover Compressor (b) 5,016 NATURAL GAS COMPRESSOR RENTAL 941,000 Newpark Resources (b) 4,846 DRILLING FLUID SERVICES TO OIL & GAS INDUSTRY 61,000 Carbo Ceramics 4,209 NATURAL GAS WELL STIMULANTS 120,000 Pride International (b) 2,465 OFFSHORE DRILLING CONTRACTOR 215,000 Pioneer Drilling (b) 2,169 OIL & GAS WELL DRILLER 135,000 Key Energy Services (b) 1,593 OIL & GAS WELL WORKOVER SERVICES ---------------------------------------------------------------------------- 46,633 >OIL & GAS PRODUCERS: 4.1% 610,000 Quicksilver Resources (b) 22,436 NATURAL GAS & COAL SEAM GAS PRODUCER 272,000 Western Gas 7,956 OIL & COAL SEAM GAS PRODUCER 52,100 Southwestern Energy (b) 2,641 NATURAL GAS PRODUCER 75,000 Range Resources 1,534 OIL & GAS PRODUCER 70,000 McMoran Exploration (b) 1,309 NATURAL GAS PRODUCERS & LNG DEVELOPER ---------------------------------------------------------------------------- 35,876 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >DISTRIBUTION/MARKETING/REFINING: 2.2% 115,600 Equitable Resources $ 7,012 NATURAL GAS UTILITY & PRODUCER 245,000 Oneok 6,963 NATURAL GAS UTILITY, MARKETING & PROCESSING 193,000 Atmos Energy 5,278 NATURAL GAS UTILITY ---------------------------------------------------------------------------- 19,253 ------------ ENERGY/MINERALS: TOTAL 101,762 ---------------------------------------------------------------------------- FINANCE: 10.0% >FINANCE COMPANIES: 4.7% 1,091,500 AmeriCredit (b) 26,687 AUTO LENDING 520,200 World Acceptance (b) 14,311 PERSONAL LOANS ---------------------------------------------------------------------------- 40,998 >INSURANCE: 2.8% 430,000 HCC Insurance Holdings 14,241 SPECIALTY INSURANCE 16,500 Markel (b) 6,006 SPECIALTY INSURANCE 35,000 Philadelphia Consolidated Holding (b) 2,315 SPECIALTY INSURANCE 91,000 United National Group (b) 1,694 SPECIALTY INSURANCE ---------------------------------------------------------------------------- 24,256 >BANKS: 1.7% 263,000 TCF Financial 8,453 GREAT LAKES BANK 197,656 Chittenden 5,678 VERMONT & WESTERN MASSACHUSETTS BANK 10,000 West Bancorporation 176 DES MOINES SMALL BUSINESS BANK 2,900 First Financial BankShares 130 WEST TEXAS COMMUNITY BANK ---------------------------------------------------------------------------- 14,437 >SAVINGS & LOAN: 0.8% 69,000 Downey Financial 3,933 CALIFORNIA HOME LENDER 116,400 Anchor Bancorp Wisconsin 3,393 WISCONSIN THRIFT ---------------------------------------------------------------------------- 7,326 ------------ FINANCE: TOTAL 87,017 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES: 9.2% >MACHINERY: 3.9% 282,000 Esco Technologies (b) 21,615 AUTOMATIC ELECTRIC METER READERS 194,000 Pentair 8,451 PUMPS, WATER TREATMENT & TOOLS 110,000 Ametek 3,924 AEROSPACE/INDUSTRIAL INSTRUMENTS ---------------------------------------------------------------------------- 33,990 1-800-922-6769 48 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >LOGISTICS: 1.3% 221,000 Hub Group (b) $ 11,540 TRUCK & RAIL FREIGHT FORWARDER ---------------------------------------------------------------------------- >INDUSTRIAL GOODS: 1.2% 112,000 Genlyte Group (b) 9,596 COMMERCIAL LIGHTING FIXTURES 25,000 Donaldson 814 INDUSTRIAL AIR FILTRATION ---------------------------------------------------------------------------- 10,410 >WATER: 0.9% 134,000 Cuno (b) 7,959 FILTRATION & FLUIDS CLARIFICATION ---------------------------------------------------------------------------- >CONSTRUCTION: 0.8% 112,700 Florida Rock Industries 6,709 CONCRETE & AGGREGATES ---------------------------------------------------------------------------- >SPECIALTY CHEMICALS/INDUSTRIAL MATERIALS: 0.4% 114,400 Spartech 3,099 PLASTICS DISTRIBUTION & COMPOUNDING ---------------------------------------------------------------------------- >INDUSTRIAL SERVICES: 0.3% 95,000 Clark (b) 1,474 EXECUTIVE COMPENSATION & BENEFITS CONSULTING 41,900 Insurance Auto Auctions (b) 939 AUTO SALVAGE SERVICES ---------------------------------------------------------------------------- 2,413 >INDUSTRIAL DISTRIBUTION: 0.2% 100,000 Nuco2 (b) 2,219 BULK CO2 GAS DISTRIBUTION TO RESTAURANTS ---------------------------------------------------------------------------- >OUTSOURCING SERVICES: 0.2% 269,500 Quanta Services (b) 2,156 ELECTRICAL & TELECOM CONSTRUCTION SERVICES ---------------------------------------------------------------------------- ------------ INDUSTRIAL GOODS/SERVICES: TOTAL 80,495 ---------------------------------------------------------------------------- OTHER INDUSTRIES: 0.5% >REAL ESTATE: 0.3% 100,000 Crescent Real Estate Equities 1,826 CLASS A OFFICE BUILDINGS 35,000 Highland Hospitality 393 HOTEL REAL ESTATE INVESTMENT TRUST ---------------------------------------------------------------------------- 2,219 >REGULATED UTILITIES: 0.2% 90,000 Northeast Utilities 1,696 REGULATED ELECTRIC UTILITY ---------------------------------------------------------------------------- ------------ OTHER INDUSTRIES: TOTAL 3,915 ------------ TOTAL COMMON STOCKS: 91.6% 797,185 (COST: $516,601) PRINCIPAL AMOUNT (000) VALUE (000) ---------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS: 8.3% $ 23,000 BellSouth 2.29% 1/07/05 (f) $ 22,991 23,000 Chevron/Texaco Funding 2.26% 1/04/05 22,996 26,603 Repurchase Agreement with State Street Bank & Trust Co. dated 12/31/04, due 1/03/05 at 1.90% collateralized by a Federal National Mortgage Association Note, maturing 1/05/05, market value $27,136 (repurchase proceeds: $26,607) 26,603 ---------------------------------------------------------------------------- (AMORTIZED COST: $72,590) 72,590 ------------ TOTAL INVESTMENTS: 99.9% 869,775 (COST: $589,191) (A) CASH AND OTHER ASSETS LESS LIABILITIES: 0.1% 907 ------------ TOTAL NET ASSETS: 100% $ 870,682 ============================================================================ 49 Columbia Acorn USA >Statement of Investments, December 31, 2004 -------------------------------------------------------------------------------- >Notes to Statement of Investments (in thousands) (a) At December 31, 2004, for federal income tax purposes cost of investments was $589,444 and net unrealized appreciation was $280,331 consisting of gross unrealized appreciation of $302,917 and gross unrealized depreciation of $22,586. (b) Non-income producing security. (c) An affiliate may include any company in which the Fund owns five percent or more of its outstanding voting shares. On December 31, 2004, the Fund held five percent or more of the outstanding voting securities of the following company: RCM Technologies 6.92% The aggregate cost and value of this company at December 31 , 2004, was $5,636 and $3,954, respectively. Investments in affiliate companies represent 0.5% of total net assets at December 31, 2004. Investment activity and income amounts relating to affiliates during the twelve months ended December 31, 2004, were as follows: Dividend Income $ -- Net realized gain or loss $ (3,800) Change in unrealized gain or loss $ (1,838) Purchases $ -- Proceeds from sales $ 562 (d) Denotes a restricted security, which is subject to restrictions on resale under federal securities laws. At December 31, 2004, these securities were illiquid. At December 31, 2004, these securities (in thousands) amounted to $1,573 which represents 0.2% of total net assets. Additional information on these securities is as follows:
ACQUISITION SECURITY DATES SHARES (000) COST (000) VALUE (000) -------------------------------------------------------------------------------------- Locus Discovery, Series D, Pfd. 09/05/01 375 $ 1,500 $ 750 Metabolex, Series F 05/11/00 364 2,000 53 SYRRX, Series C 01/08/01 154 1,001 770 ------- ------- $ 4,501 $ 1,573 ======= =======
(e) Represents fair value as determined in good faith under procedures approved by the Board of Trustees. (f) Security exempt from registration under Section 4(2) of the Securities Act of 1933. This security may only be resold in exempt transactions to qualified buyers. Private resales of this security to qualified institutional buyers are also exempt from registration pursuant to Rule 144A under the Securities Act of 1933. At December 31, 2004, the value of this security represents 2.6% of net assets. 1-800-922-6769 50 Columbia Acorn International Select >Major Portfolio Changes in the Fourth Quarter (Unaudited) NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 Additions ---------------------------------------------------------------------------- EUROPE >UNITED KINGDOM/IRELAND Compass Group 120,000 220,000 Depfa Bank (Ireland) 98,000 114,000 Exel 135,000 155,000 >SWITZERLAND Kuehne & Nagel 0 5,500 Synthes-Stratec 5,000 10,000 >FRANCE Neopost 25,100 31,000 >NORWAY Orkla 0 26,000 >CZECH REPUBLIC Komercni Banka 12,000 15,000 >GERMANY Deutsche Boerse 0 13,000 ---------------------------------------------------------------------------- ASIA >JAPAN Hoya 12,400 15,000 Shimano 35,000 59,000 >HONG KONG/CHINA Global Bio-Chem Technology Group (China) 0 800,000 Hong Kong Exchanges & Clearing 0 425,000 >SINGAPORE ComfortDelGro 0 600,000 ---------------------------------------------------------------------------- OTHER COUNTRIES >CANADA Kinross Gold 80,000 164,400 >AUSTRALIA Lion Nathan 260,000 300,000 NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 SALES ---------------------------------------------------------------------------- EUROPE >UNITED KINGDOM Anglo Irish Bank (Ireland) 160,000 140,000 BG Group 240,000 0 Jardine Lloyd Thompson 100,000 0 Rank Group 200,000 0 Smith & Nephew 46,000 0 ---------------------------------------------------------------------------- ASIA >JAPAN Uni-Charm 25,100 0 ---------------------------------------------------------------------------- LATIN AMERICA >ARGENTINA Tenaris 39,200 29,200 51 Columbia Acorn International Select >Statement of Investments, December 31, 2004 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- COMMON STOCKS: 89.9% ---------------------------------------------------------------------------- EUROPE: 53.5% >UNITED KINGDOM/IRELAND: 20.3% 140,000 Anglo Irish Bank (Ireland) $ 3,394 SMALL BUSINESS & MIDDLE MARKET BANKING 155,000 Exel 2,148 GLOBAL LOGISTICS & FREIGHT FORWARDING 114,000 Depfa Bank (Ireland) (d) 1,907 INTERNATIONAL PUBLIC SECTOR FINANCE 104,000 Grafton Group (Ireland) (b) 1,127 BUILDERS, WHOLESALERS & DIY RETAILING 220,000 Compass Group 1,038 INTERNATIONAL CONCESSION & CONTRACT CATERER 40,000 Kerry (Ireland) 956 FOOD INGREDIENTS 70,000 British Sky Broadcasting 754 DIGITAL SATELLITE BROADCASTING 17,000 Cobham 403 AEROSPACE COMPONENTS 6,000 Intermediate Capital 125 EUROPEAN PROVIDER OF MEZZANINE CAPITAL ---------------------------------------------------------------------------- 11,852 >SWITZERLAND: 10.3% 1,900 Geberit International (d) 1,386 PLUMBING SUPPLIES 5,500 Kuehne & Nagel (d) 1,180 FREIGHT FORWARDING/LOGISTICS 10,000 Synthes-Stratec (b)(d) 1,116 PRODUCTS FOR ORTHOPEDIC SURGERY 7,000 Swatch Group (d) 1,026 WATCH & ELECTRONICS MANUFACTURER 2,300 Schindler (d) 909 ELEVATOR MANUFACTURER & SERVICE PROVIDER 600 Givaudan (d) 395 INDUSTRIAL FRAGRANCES & FLAVORS ---------------------------------------------------------------------------- 6,012 >FRANCE/BELGIUM: 7.1% 31,000 Neopost 2,402 POSTAGE METER MACHINES 14,000 Imerys 1,171 INDUSTRIAL MINERALS PRODUCER 7,000 Essilor International 547 EYEGLASS LENSES ---------------------------------------------------------------------------- 4,120 >NORWAY: 4.1% 157,500 Den Norske Bank (d) 1,545 LARGEST NORWEGIAN BANK 26,000 Orkla (d) 850 FOOD & DIVERSIFIED CONSUMER GOODS ---------------------------------------------------------------------------- 2,395 >CZECH REPUBLIC: 3.7% 15,000 Komercni Banka (d) 2,183 LEADING CZECH UNIVERSAL BANK ---------------------------------------------------------------------------- >LUXEMBOURG: 2.7% 120,000 SES Global 1,560 SATELLITE BROADCASTING SERVICES ---------------------------------------------------------------------------- NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >GERMANY: 2.6% 13,000 Deutsche Boerse (d) $ 779 TRADING, CLEARING & SETTLEMENT SERVICES FOR FINANCIAL MARKETS 12,000 Rhoen-Klinikum (d) 736 HOSPITAL MANAGEMENT ---------------------------------------------------------------------------- 1,515 >SPAIN: 1.7% 43,000 Red Electrica (d) 962 SPANISH POWER GRID ---------------------------------------------------------------------------- >ITALY: 1.0% 34,000 Autogrill (b)(d) 566 TOLLWAY RESTAURANTS ---------------------------------------------------------------------------- ------------ EUROPE: TOTAL 31,165 ---------------------------------------------------------------------------- ASIA: 24.9% >JAPAN: 20.3% 38,000 Daito Trust Construction (d) 1,803 APARTMENT BUILDER 15,000 Hoya (d) 1,694 OPTO-ELECTRICAL COMPONENTS & EYEGLASS LENSES 59,000 Shimano (d) 1,681 BICYCLE COMPONENTS & FISHING TACKLE 9,700 Funai Electric (d) 1,203 CONSUMER ELECTRONICS 64,000 Ushio (d) 1,191 INDUSTRIAL LIGHT SOURCES 32,300 Sugi Pharmacy (d) 1,095 DRUGSTORE OPERATOR 181,800 Hiroshima Bank (d) 960 REGIONAL BANK 11,500 Fast Retailing (d) 872 APPAREL RETAILER 310 Dentsu (d) 834 ADVERTISING AGENCY 23,000 Olympus Optical (d) 490 MEDICAL EQUIPMENT & CAMERAS ---------------------------------------------------------------------------- 11,823 >HONG KONG/CHINA: 2.9% 425,000 Hong Kong Exchanges & Clearing 1,140 HONG KONG EQUITY & DERIVATIVES OPERATOR 800,000 Global Bio-Chem Technology Group (China) 530 CHINESE REFINER OF CORN-BASED COMMODITIES ---------------------------------------------------------------------------- 1,670 >SINGAPORE: 1.7% 600,000 ComfortDelGro 570 TAXI & MASS TRANSIT SERVICE 45,000 Venture 438 ELECTRONIC CONTRACT MANUFACTURER ---------------------------------------------------------------------------- 1,008 ------------ ASIA: TOTAL 14,501 ---------------------------------------------------------------------------- 1-800-922-6769 52 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- OTHER COUNTRIES: 9.1% >CANADA: 5.7% 47,000 Talisman Energy $ 1,267 OIL & GAS PRODUCER 164,400 Kinross Gold (b) 1,158 GOLD MINING 50,000 Noranda 877 DIVERSIFIED MINING HOLDING COMPANY ---------------------------------------------------------------------------- 3,302 >AUSTRALIA: 3.4% 300,000 Lion Nathan 2,016 BEER BREWER/DISTRIBUTOR ---------------------------------------------------------------------------- ------------ OTHER: TOTAL 5,318 ---------------------------------------------------------------------------- LATIN AMERICA: 2.4% >ARGENTINA: 2.4% 29,200 Tenaris 1,428 STEEL PIPE FOR OIL WELLS & PIPELINES ---------------------------------------------------------------------------- ------------ LATIN AMERICA: TOTAL 1,428 ------------ TOTAL COMMON STOCKS: 89.9% 52,412 (COST: $36,884) PRINCIPAL AMOUNT (000) VALUE (000) ---------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS: 10.6% $ 6,163 Repurchase Agreement with State Street Bank & Trust Co. dated 12/31/04, due 1/03/05 at 1.90% collateralized by a Federal Home Loan Bank Note, maturing 4/02/18, market value $6,286 (repurchase proceeds: $6,164) $ 6,163 ---------------------------------------------------------------------------- (COST: $6,163) 6,163 ------------ TOTAL INVESTMENTS: 100.5% 58,575 (COST: $43,047) (a) CASH AND OTHER ASSETS LESS LIABILITIES: (0.5%) (287) ------------ TOTAL NET ASSETS: 100% $ 58,288 ============================================================================ -------------------------------------------------------------------------------- >Notes to Statement of Investments (in thousands) (a) At December 31, 2004, for federal income tax purpose cost of investments was $44,012 and net unrealized appreciation was $14,563 consisting of gross unrealized appreciation of $15,223 and gross unrealized depreciation of $660. (b) Non-income producing security. (c) On December 31, 2004, the Fund's total investments were denominated in currencies as follows: CURRENCY VALUE %OF NET ASSETS ------------------ ------- -------------- Euro $16,107 27.6% Japanese Yen 11,823 20.3 US Dollar 7,591 13.0 Swiss Franc 6,012 10.3 British Pounds 4,469 7.7 Canadian Dollar 3,302 5.7 Other currencies less than 5% of total net assets 9,271 15.9 ------- ------ $58,575 100.5% ======= ====== (d) Represents a security valued by an independent statistical fair value pricing service at 12/31/04. Foreign securities which had a market holiday on 12/31/04 were valued under this method. See Security Valuation in Note 2 for further information. 53 Columbia Acorn International Select >Portfolio Diversi1/2cation At December 31, 2004, the Fund's portfolio investments as a percent of net assets were diversified as follows: VALUE (000) PERCENT ---------------------------------------------------------------------------- >INDUSTRIAL GOODS/SERVICES Other Industrial Services $ 4,237 7.3% Industrial Materials 2,557 4.4 Machinery 2,402 4.1 Construction 1,803 3.1 Electrical Components 1,594 2.7 Steel 1,428 2.4 Industrial Distribution 1,127 1.9 Speciality Chemicals 395 0.7 ---------------------------------------------------------------------------- 15,543 26.6 >CONSUMER GOODS/SERVICES Durable Goods 2,707 4.6 Beverage 2,016 3.5 Retail 1,967 3.4 Food 1,806 3.1 Restaurants 1,604 2.7 Consumer Electronics 1,203 2.1 ---------------------------------------------------------------------------- 11,303 19.4 >FINANCE Banks 9,989 17.2 Other Finance Companies 125 0.2 ---------------------------------------------------------------------------- 10,114 17.4 VALUE (000) PERCENT ---------------------------------------------------------------------------- >INFORMATION Financial Processors $ 1,919 3.3% Semiconductors and Related Equipment 1,694 2.9 Satellite Broadcasting and Services 1,560 2.7 Advertising 834 1.4 Television Broadcasting 754 1.3 Contract Manufacturing 438 0.7 ---------------------------------------------------------------------------- 7,199 12.3 >ENERGY/MINERALS Oil/Gas Producers 1,267 2.2 Non-Ferrous Metals 1,158 2.0 Mining 877 1.5 Agricultural Commodities (includes Forestry) 530 0.9 ---------------------------------------------------------------------------- 3,832 6.6 >HEALTH CARE Medical Equipment 2,153 3.7 Hospital Management 736 1.3 ---------------------------------------------------------------------------- 2,889 5.0 >OTHER INDUSTRIES Regulated Utilities 962 1.6 Transportation 570 1.0 ---------------------------------------------------------------------------- 1,532 2.6 TOTAL COMMON STOCKS AND ------------------------------- OTHER EQUITY-LIKE SECURITIES 52,412 89.9 SHORT-TERM OBLIGATIONS 6,163 10.6 ------------------------------- TOTAL INVESTMENTS 58,575 100.5 CASH AND OTHER ASSETS LESS LIABILITIES (287) (0.5) ------------------------------- NET ASSETS $ 58,288 100.0% ============================================================================ 1-800-922-6769 54 Columbia Acorn Select >Major Portfolio Changes in the Fourth Quarter (Unaudited) NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 Additions ---------------------------------------------------------------------------- INFORMATION AnswerThink 0 647,660 Aspect Communications 0 80,200 IAC/InterActiveCorp 0 720,000 Liberty Media International 0 235,000 McAfee 2,750,000 3,150,000 Skillsoft Publishing 4,188,100 8,625,900 Tellabs 4,100,000 5,100,000 UnitedGlobalCom 0 1,100,000 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES ITT Educational Services 1,350,000 1,395,000 International Speedway Motors 460,000 485,000 Safeway 1,550,000 2,540,000 ---------------------------------------------------------------------------- FINANCE Janus Capital 360,000 1,220,000 ---------------------------------------------------------------------------- ENERGY/MINERALS FMC Technologies 0 380,000 NUMBER OF SHARES ------------------------------- 09/30/04 12/31/04 Sales ---------------------------------------------------------------------------- INFORMATION Fair Isaac 1,000,000 537,800 PeopleSoft 2,135,000 0 Synopsys 1,040,000 860,000 ---------------------------------------------------------------------------- HEALTH CARE First Health Group 3,350,000 2,836,500 55 Columbia Acorn Select >Statement of Investments, December 31, 2004 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- COMMON STOCKS: 86.6% ---------------------------------------------------------------------------- INFORMATION: 30.6% >BUSINESS SOFTWARE: 9.5% 3,150,000 McAfee (b) $ 91,130 SECURITY SOFTWARE & SERVICES 860,000 Synopsys (b) 16,873 SOFTWARE FOR DESIGNING SEMICONDUCTOR CHIPS 1,600,000 Novell (b) 10,800 DIRECTORY, OPERATING SYSTEM & IDENTITY MANAGEMENT SOFTWARE 80,200 Aspect Communications (b) 893 CALL CENTER SOFTWARE ---------------------------------------------------------------------------- 119,696 >INTERNET: 5.5% 8,625,900 Skillsoft Publishing (b)(c) 48,736 PROVIDER OF WEB-BASED LEARNING SOLUTIONS (E-LEARNING) 720,000 IAC/InterActiveCorp (b) 19,886 DOMINATE INTERNET MIDDLEMAN ---------------------------------------------------------------------------- 68,622 >BUSINESS INFORMATION: 4.8% 470,000 Moody's 40,820 CREDIT RATING SERVICE 537,800 Fair Isaac 19,727 CREDIT SCORING & DECISION ANALYTIC SOFTWARE ---------------------------------------------------------------------------- 60,547 >TELECOMMUNICATIONS EQUIPMENT: 3.5% 5,100,000 Tellabs (b) 43,809 TELECOMMUNICATIONS EQUIPMENT ---------------------------------------------------------------------------- >MOBILE COMMUNICATIONS: 3.0% 2,050,000 American Tower (b) 37,720 COMMUNICATION TOWERS IN USA & MEXICO ---------------------------------------------------------------------------- >INSTRUMENTATION: 2.4% 1,000,000 Tektronix 30,210 ANALYTICAL INSTRUMENTS ---------------------------------------------------------------------------- >TELEVISION PROGRAMMING/CATV: 1.7% 235,000 Liberty Media International (b) 10,864 CATV HOLDING COMPANY 1,100,000 UnitedGlobalCom (b) 10,626 VIDEO, VOICE & DATA SERVICES OUTSIDE THE USA ---------------------------------------------------------------------------- 21,490 >COMPUTER SERVICES: 0.2% 647,660 AnswerThink (b) 3,018 IT INTEGRATOR FOR FORTUNE 2000 ---------------------------------------------------------------------------- ------------ INFORMATION: TOTAL 385,112 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES: 30.4% >RETAIL: 10.5% 2,540,000 Safeway (b) 50,140 RETAIL FOOD & DRUG STORES 975,000 Abercrombie & Fitch 45,776 TEEN APPAREL RETAILER 750,000 Costco 36,307 WAREHOUSE SUPERSTORES ---------------------------------------------------------------------------- 132,223 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >CONSUMER SERVICES: 7.7% 1,395,000 ITT Educational Services (b) $ 66,332 POSTSECONDARY DEGREE PROGRAMS 728,000 Weight Watchers (b) 29,899 WEIGHT LOSS PROGRAM ---------------------------------------------------------------------------- 96,231 >FURNITURE & MANUFACTURERS: 5.4% 630,000 Coach (b) 35,532 DESIGNER & RETAILER OF BRANDED LEATHER ACCESSORIES 1,160,000 Herman Miller 32,051 OFFICE FURNITURE ---------------------------------------------------------------------------- 67,583 >LEISURE VEHICLES: 4.8% 1,000,000 Harley-Davidson 60,750 MOTORCYCLES & RELATED MERCHANDISE ---------------------------------------------------------------------------- >ENTERTAINMENT: 2.0% 485,000 International Speedway Motors 25,608 LARGEST MOTORSPORT RACETRACK OWNER & OPERATOR ---------------------------------------------------------------------------- ------------ CONSUMER GOODS/SERVICES: TOTAL 382,395 ---------------------------------------------------------------------------- FINANCE: 14.6% >BANKS: 7.0% 1,970,000 TCF Financial 63,316 GREAT LAKES BANK 750,000 Associated Banc-Corp 24,908 MIDWEST BANK ---------------------------------------------------------------------------- 88,224 >MONEY MANAGEMENT: 4.1% 729,500 SEI Investments 30,588 MUTUAL FUND ADMINISTRATION & INVESTMENT MANAGEMENT 1,220,000 Janus Capital 20,508 MANAGES MUTUAL FUNDS ---------------------------------------------------------------------------- 51,096 >INSURANCE: 3.5% 120,000 Markel (b) 43,680 SPECIALTY INSURANCE ---------------------------------------------------------------------------- ------------ FINANCE: TOTAL 183,000 ---------------------------------------------------------------------------- HEALTH CARE: 7.3% >SERVICES: 7.3% 2,836,500 First Health Group (b) 53,071 PPO NETWORK 910,000 Lincare Holdings (b) 38,811 HOME HEALTH CARE SERVICES ---------------------------------------------------------------------------- 91,882 ------------ HEALTH CARE: TOTAL 91,882 ---------------------------------------------------------------------------- 1-800-922-6769 56 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES: 2.7% >LOGISTICS: 2.7% 620,000 Expeditors International of Washington $ 34,646 INTERNATIONAL FREIGHT FORWARDER ---------------------------------------------------------------------------- ------------ INDUSTRIAL GOODS/SERVICES: TOTAL 34,646 ---------------------------------------------------------------------------- ENERGY/MINERALS: 1.0% >OIL SERVICES: 1.0% 380,000 FMC Technologies (b) 12,236 OIL & GAS WELL HEAD MANUFACTURER ---------------------------------------------------------------------------- ------------ ENERGY/MINERALS: TOTAL 12,236 ------------ TOTAL COMMON STOCKS: 86.6% 1,089,271 (COST: $845,268) PRINCIPAL AMOUNT (000) VALUE (000) ---------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS: 12.6% $ 30,000 American General Finance 2.27% 1/03/05 $ 29,996 29,994 Toyota Credit 2.23% 1/04/05 29,994 27,000 American Express Finance 2.23% 1/03/05 26,992 27,000 BellSouth 2.29% 1/7/05 (d) 26,990 16,000 Colgate Palmolive 2.17% 1/10/05 15,991 28,072 Repurchase Agreement with State Street Bank & Trust Co. dated 12/31/04, due 1/03/05 at 1.90% collateralized by a Federal National Mortgage Association Note, maturing 1/05/05, market value $28,636 (repurchase proceeds: $28,076) 28,072 ---------------------------------------------------------------------------- (AMORTIZED COST: $158,035) 158,035 ------------ TOTAL INVESTMENTS: 99.2% 1,247,306 (COST: $1,003,303) (A) CASH AND OTHER ASSETS LESS LIABILITIES: 0.8% 9,781 ------------ TOTAL NET ASSETS: 100% $ 1,257,087 ============================================================================ -------------------------------------------------------------------------------- >Notes to Statement of Investments (in thousands) (a) At December 31, 2004, for federal income tax purposes cost of investments was $1,003,540 and net unrealized appreciation was $243,766 consisting of gross unrealized appreciation of $271,003 and gross unrealized depreciation of $27,237. (b) Non-income producing security. (c) An affiliate may include any company in which the Fund owns five percent or more of its outstanding voting shares. On December 31, 2004, the Fund held five percent or more of the outstanding voting securities of the following company: Skillsoft Publishing 8.12% The aggregate cost and value of this company at December 31, 2004, was $55,490 and $48,736, respectively. Investments in affiliate companies represent 3.9% of total net assets at December 31, 2004. Investment activity and income amounts relating to affiliates during the twelve months ended December 31, 2004, were as follows: Dividend Income $ -- Net realized gain or loss $ -- Change in unrealized gain or loss $ (6,754) Purchases $ 55,490 Proceeds from sales $ -- (d) Security exempt from registration under Section 4(2) of the Securities Act of 1933. This security may only be resold in exempt transactions to qualified buyers. Private resales of this security to qualified institutional buyers are also exempt from registration pursuant to Rule 144A under the Securities Act of 1933. At December 31, 2004, the value of this security represents 2.1% of net assets. 57 This page intentionally left blank. 58 COLUMBIA ACORN FAMILY OF FUNDS > STATEMENTS OF ASSETS AND LIABILITIES > STATEMENTS OF OPERATIONS > STATEMENTS OF CHANGES IN NET ASSETS > FINANCIAL HIGHLIGHTS > NOTES TO FINANCIAL STATEMENTS 59 Columbia Acorn Family of Funds >Statements of Assets and Liabilities
COLUMBIA COLUMBIA COLUMBIA ACORN ACORN ACORN DECEMBER 31, 2004 FUND INTERNATIONAL USA -------------------- -------------------- -------------------- (IN THOUSANDS) ASSETS Unaffiliated investments (including repurchase agreement), at cost $ 7,749,409 $ 1,339,257 $ 583,555 Affiliated investments, at cost (See Note 4) 562,929 -- 5,636 -------------------- -------------------- -------------------- Unaffiliated investments, at value $ 11,871,978 $ 2,045,766 $ 839,218 Affiliated investments, at value (See Note 4) 1,928,260 -- 3,954 Repurchase agreement, at value 38,346 9,076 26,603 Cash -- 57 1 Foreign currency (cost: Columbia Acorn Fund $14,854; Columbia Acorn International $16,352; Columbia Acorn International Select $50) 15,138 16,664 -- Receivable for: Investments sold 4,178 4,172 -- Fund shares sold 23,692 3,551 2,223 Dividends and interest 6,121 1,598 142 Foreign tax reclaims 872 826 1 Expense reimbursement due from Advisor -- -- -- Deferred Trustees' Compensation Investments 1,498 524 102 Other assets -- -- -- -------------------- -------------------- -------------------- Total Assets 13,890,083 2,082,234 872,244 LIABILITIES Payable to custodian bank 89 -- -- Payable for: Investments purchased 7,118 4,458 449 Fund shares redeemed 34,382 1,502 635 12b-1 Service & Distribution fees 2,594 76 109 Legal & audit fees 267 77 45 Reports to shareholders 1,759 382 171 Deferred Trustees' fees 1,498 524 102 Transfer agent fees 558 95 37 Trustees' fees 11 -- -- Custody fees 113 101 2 Other liabilities 235 7 12 -------------------- -------------------- -------------------- Total Liabilities 48,624 7,222 1,562 -------------------- -------------------- -------------------- NET ASSETS $ 13,841,459 $ 2,075,012 $ 870,682 ==================== ==================== ==================== COMPOSITION OF NET ASSETS Paid in capital $ 8,128,938 $ 1,406,584 $ 580,054 Undistributed net investment income (Accumulated net investment loss) (20,921) 16,151 (103) Accumulated net realized gain (loss) 206,806 (63,744) 10,147 Net unrealized appreciation on: Investments 5,526,246 715,585 280,584 Foreign currency translations 390 436 -- -------------------- -------------------- -------------------- NET ASSETS $ 13,841,459 $ 2,075,012 $ 870,682 ==================== ==================== ==================== Net asset value per share -- Class A (a) $ 25.93 $ 28.75 $ 24.77 (Net assets/shares) ($2,669,936/102,978) ($70,582/2,455) ($112,509/4,542) Maximum offering price per share -- Class A (b) $ 27.51 $ 30.50 $ 26.28 (Net asset value per share/ front-end sales charge) ($25.93/0.9425) ($28.75/0.9425) ($24.77/0.9425) Net asset value and offering price per share -- Class B (a) $ 25.19 $ 28.18 $ 24.14 (Net assets/shares) ($1,399,135/55,544) ($54,752/1,943) ($72,643/3,010) Net asset value and offering price per share -- Class C (a) $ 25.18 $ 28.19 $ 24.14 (Net assets/shares) ($1,083,006/43,004) ($30,547/1,084) ($39,643/1,642) Net asset value and offering price per share -- Class Z (c) $ 26.45 $ 29.03 $ 25.20 (Net assets/shares) ($8,689,382/328,514) ($1,919,131/66,102) ($645,887/25,635)
COLUMBIA COLUMBIA ACORN ACORN DECEMBER 31, 2004 INTERNATIONAL SELECT SELECT -------------------- -------------------- (IN THOUSANDS) ASSETS Unaffiliated investments (including repurchase agreement), at cost $ 43,047 $ 947,813 Affiliated investments, at cost (See Note 4) -- 55,490 -------------------- -------------------- Unaffiliated investments, at value $ 52,412 $ 1,170,498 Affiliated investments, at value (See Note 4) -- 48,736 Repurchase agreement, at value 6,163 28,072 Cash --* 1 Foreign currency (cost: Columbia Acorn Fund $14,854; Columbia Acorn International $16,352; Columbia Acorn International Select $50) 50 -- Receivable for: Investments sold 11 -- Fund shares sold 408 12,610 Dividends and interest 72 158 Foreign tax reclaims 13 -- Expense reimbursement due from Advisor 3 -- Deferred Trustees' Compensation Investments -- -- Other assets 11 16 -------------------- -------------------- Total Assets 59,143 1,260,091 LIABILITIES Payable to custodian bank -- -- Payable for: Investments purchased 674 681 Fund shares redeemed 78 1,508 12b-1 Service & Distribution fees 5 344 Legal & audit fees 24 42 Reports to shareholders 48 273 Deferred Trustees' fees 16 57 Transfer agent fees 6 97 Trustees' fees -- --* Custody fees 4 2 Other liabilities -- -- -------------------- -------------------- Total Liabilities 855 3,004 -------------------- -------------------- NET ASSETS $ 58,288 $ 1,257,087 ==================== ==================== COMPOSITION OF NET ASSETS Paid in capital $ 73,860 $ 1,005,933 Undistributed net investment income (Accumulated net investment loss) 49 (57) Accumulated net realized gain (loss) (31,151) 7,208 Net unrealized appreciation on: Investments 15,528 244,003 Foreign currency translations 2 -- -------------------- -------------------- NET ASSETS $ 58,288 $ 1,257,087 ==================== ==================== Net asset value per share -- Class A (a) $ 17.85 $ 20.83 (Net assets/shares) ($4,357/244) ($515,842/24,767) Maximum offering price per share -- Class A (b) $ 18.94 $ 22.10 (Net asset value per share/ front-end sales charge) ($17.85/0.9425) ($20.83/0.9425) Net asset value and offering price per share -- Class B (a) $ 17.36 $ 20.23 (Net assets/shares) ($5,097/294) ($185,545/9,172) Net asset value and offering price per share -- Class C (a) $ 17.38 $ 20.23 (Net assets/shares) ($2,543/146) ($110,435/5,459) Net asset value and offering price per share -- Class Z (c) $ 18.02 $ 21.13 (Net assets/shares) ($46,291/2,569) ($445,265/21,073)
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. (c) Redemption price per share is equal to net asset value less any applicable redemption fee. * Rounds to less than $500. See accompanying notes to financial statements. 1-800-922-6769 60 Columbia Acorn Family of Funds >Statements of Operations For the Year Ended December 31, 2004
COLUMBIA COLUMBIA COLUMBIA COLUMBIA ACORN COLUMBIA ACORN ACORN ACORN INTERNATIONAL ACORN (IN THOUSANDS) FUND INTERNATIONAL USA SELECT SELECT ----------- ------------- --------- ------------ --------- INVESTMENT INCOME: Dividend income $ 104,281 $ 39,926 $ 2,493 $ 838 $ 4,481 Dividend income from affiliates (See Note 4) 7,758 -- -- -- -- Interest income 11,206 777 730 31 1,485 ----------- ------------- --------- ------------ --------- 123,245 40,703 3,223 869 5,966 Foreign taxes withheld (4,147) (3,906) (5) (87) -- ----------- ------------- --------- ------------ --------- Total Investment Income 119,098 36,797 3,218 782 5,966 EXPENSES: Management fee 79,884 14,433 6,825 431 8,663 Administration fee 5,759 838 356 22 461 12b-1 Service and Distribution fees: Class A 6,960 178 306 10 1,140 Class B 11,958 422 637 36 1,407 Class C 9,641 253 373 27 869 Transfer agent fees: Class A 3,024 102 156 9 550 Class B 3,149 154 173 19 466 Class C 1,843 60 72 7 203 Class Z 3,399 1,333 286 69 401 Custody fees 1,516 1,320 30 51 30 Trustees' fees 656 95 41 2 23 Registration & blue sky fees 593 87 111 60 220 Reports to shareholders 4,347 899 394 92 630 Legal & audit fees 1,091 145 119 32 78 Compliance fees 172 25 11 1 14 Non-recurring costs (See Note 8) 1,116 162 69 4 90 Other expenses 285 56 22 9 28 ----------- ------------- --------- ------------ --------- Total expenses 135,393 20,562 9,981 881 15,273 Less custody fees paid indirectly (27) (1) (1) --* (1) Less reimbursement of expenses by Advisor -- -- -- (131) -- Less reimbursement of expenses by Transfer Agent (2,101) (305) (122) (15) (222) Non-recurring costs reimbursed (See Note 8) (1,116) (162) (69) (4) (90) ----------- ------------- --------- ------------ --------- Net Expenses 132,149 20,094 9,789 731 14,960 ----------- ------------- --------- ------------ --------- Net Investment Income (Loss) (13,051) 16,703 (6,571) 51 (8,994) NET REALIZED AND UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS: Net realized gain (loss) on: Unaffiliated investments 656,773 175,318 32,045 7,210 47,420 Affiliated investments (See Note 4) 36,513 -- (3,800) -- -- Foreign currency transactions (102) 563 -- (2) -- ----------- ------------- --------- ------------ --------- Net realized gain 693,184 175,881 28,245 7,208 47,420 =========== ============= ========= ============ ========= Net change in net unrealized appreciation/ depreciation on: Unaffiliated investments 1,640,564 276,024 123,786 2,774 140,545 Affiliated investments (See Note 4) 59,516 -- (1,838) -- (6,754) Foreign currency translations 1,919 911 -- (12) -- ----------- ------------- --------- ------------ --------- Net change in unrealized appreciation/ depreciation 1,701,999 276,935 121,948 2,762 133,791 =========== ============= ========= ============ ========= Net realized and unrealized gain 2,395,183 452,816 150,193 9,970 181,211 ----------- ------------- --------- ------------ --------- Net Increase in Net Assets resulting from Operations $ 2,382,132 $ 469,519 $ 143,622 $ 10,021 $ 172,217 =========== ============= ========= ============ =========
* Rounds to less than $500. See accompanying notes to financial statements. 61 Columbia Acorn Family of Funds >Statements of Changes in Net Assets
COLUMBIA COLUMBIA ACORN ACORN FUND INTERNATIONAL Year Ended Year Ended Year Ended Year Ended INCREASE (DECREASE) IN NET ASSETS December 31, December 31, December 31, December 31, ------------ ------------ ------------- ------------- (IN THOUSANDS) 2004 2003 2004 2003 OPERATIONS: Net investment income (loss) $ (13,051) $ (9,911) $ 16,703 $ 15,934 Net realized gain (loss) on investments and foreign currency transactions 693,184 90,682 175,881 (7,144) Net change in net unrealized appreciation/ depreciation on investments and foreign currency translations 1,701,999 2,974,675 276,935 561,990 ------------ ------------ ------------- ------------- Net Increase from Operations 2,382,132 3,055,446 469,519 570,780 DISTRIBUTION TO SHAREHOLDERS FROM: Net investment income -- Class A -- -- (374) (106) Net realized gain -- Class A (89,952) (1,752) -- -- Net investment income -- Class B -- -- (75) -- Net realized gain -- Class B (49,011) (1,116) -- -- Net investment income -- Class C -- -- (42) -- Net realized gain -- Class C (37,671) (813) -- -- Net investment income -- Class Z (5,620) -- (16,439) (5,829) Net realized gain -- Class Z (290,184) (6,236) -- -- ------------ ------------ ------------- ------------- Total Distribution to Shareholders (472,438) (9,917) (16,930) (5,935) SHARE TRANSACTIONS: Subscriptions -- Class A 703,271 1,041,782 19,736 45,279 Distributions reinvested -- Class A 81,405 1,584 306 80 Redemptions -- Class A (453,387) (259,438) (17,531) (42,948) ------------ ------------ ------------- ------------- Net Increase (Decrease) -- Class A 331,289 783,928 2,511 2,411 Subscriptions -- Class B 90,732 364,144 10,422 11,463 Distributions reinvested -- Class B 44,616 1,018 66 -- Redemptions -- Class B (146,696) (88,744) (7,152) (5,639) ------------ ------------ ------------- ------------- Net Increase (Decrease) -- Class B (11,348) 276,418 3,336 5,824 Subscriptions -- Class C 145,878 375,513 8,030 14,870 Distributions reinvested -- Class C 30,636 673 35 -- Redemptions -- Class C (136,434) (73,548) (6,936) (13,396) ------------ ------------ ------------- ------------- Net Increase (Decrease) -- Class C 40,080 302,638 1,129 1,474 Subscriptions -- Class Z 1,596,519 1,682,204 206,434 220,802 Distributions reinvested -- Class Z 254,191 5,443 14,669 5,336 Redemptions -- Class Z (1,447,781) (667,986) (284,074) (434,204) ------------ ------------ ------------- ------------- Net Increase (Decrease) -- Class Z 402,929 1,019,661 (62,971) (208,066) ------------ ------------ ------------- ------------- Net Increase (Decrease) from Share Transactions 762,950 2,382,645 (55,995) (198,357) ------------ ------------ ------------- ------------- Redemption Fees -- -- 86 400 ------------ ------------ ------------- ------------- Total Increase in Net Assets 2,672,644 5,428,174 396,680 366,888 NET ASSETS: Beginning of period 11,168,815 5,740,641 1,678,332 1,311,444 ------------ ------------ ------------- ------------- End of period $ 13,841,459 $ 11,168,815 $ 2,075,012 $ 1,678,332 ============ ============ ============= ============= UNDISTRIBUTED NET INVESTMENT INCOME OR (ACCUMULATED NET INVESTMENT LOSS) $ (20,921) $ 6,955 $ 16,151 $ 16,493 ============ ============ ============= =============
COLUMBIA COLUMBIA ACORN ACORN USA INTERNATIONAL SELECT Year Ended Year Ended Year Ended Year Ended INCREASE (DECREASE) IN NET ASSETS December 31, December 31, December 31, December 31, ------------ ------------ ------------- ------------- (IN THOUSANDS) 2004 2003 2004 2003 OPERATIONS: Net investment income (loss) $ (6,571) $ (4,408) $ 51 $ 136 Net realized gain (loss) on investments and foreign currency transactions 28,245 7,301 7,208 (425) Net change in net unrealized appreciation/ depreciation on investments and foreign currency translations 121,948 172,313 2,762 12,936 ------------ ------------ ------------- ------------- Net Increase from Operations 143,622 175,206 10,021 12,647 DISTRIBUTION TO SHAREHOLDERS FROM: Net investment income -- Class A -- -- (6) -- Net realized gain -- Class A (622) -- -- -- Net investment income -- Class B -- -- -- -- Net realized gain -- Class B (415) -- -- -- Net investment income -- Class C -- -- -- -- Net realized gain -- Class C (224) -- -- -- Net investment income -- Class Z -- -- (151) (19) Net realized gain -- Class Z (3,487) -- -- -- ------------ ------------ ------------- ------------- Total Distribution to Shareholders (4,748) -- (157) (19) SHARE TRANSACTIONS: Subscriptions -- Class A 27,362 60,457 1,860 2,350 Distributions reinvested -- Class A 572 -- 5 -- Redemptions -- Class A (22,954) (23,188) (763) (3,212) ------------ ------------ ------------- ------------- Net Increase (Decrease) -- Class A 4,980 37,269 1,102 (862) Subscriptions -- Class B 4,936 19,327 1,664 1,577 Distributions reinvested -- Class B 375 -- -- -- Redemptions -- Class B (10,452) (8,053) (586) (989) ------------ ------------ ------------- ------------- Net Increase (Decrease) -- Class B (5,141) 11,274 1,078 588 Subscriptions -- Class C 5,707 13,056 786 3,211 Distributions reinvested -- Class C 187 -- -- -- Redemptions -- Class C (8,114) (4,575) (2,429) (3,564) ------------ ------------ ------------- ------------- Net Increase (Decrease) -- Class C (2,220) 8,481 (1,643) (353) Subscriptions -- Class Z 199,048 221,496 11,787 23,389 Distributions reinvested -- Class Z 3,134 -- 146 18 Redemptions -- Class Z (161,267) (83,975) (7,456) (25,393) ------------ ------------ ------------- ------------- Net Increase (Decrease) -- Class Z 40,915 137,521 4,477 (1,986) ------------ ------------ ------------- ------------- Net Increase (Decrease) from Share Transactions 38,534 194,545 5,014 (2,613) ------------ ------------ ------------- ------------- Redemption Fees -- -- 4 39 ------------ ------------ ------------- ------------- Total Increase in Net Assets 177,408 369,751 14,882 10,054 NET ASSETS: Beginning of period 693,274 323,523 43,406 33,352 ------------ ------------ ------------- ------------- End of period $ 870,682 $ 693,274 $ 58,288 $ 43,406 ============ ============ ============= ============= UNDISTRIBUTED NET INVESTMENT INCOME OR (ACCUMULATED NET INVESTMENT LOSS) $ (103) $ 92 $ 49 $ 142 ============ ============ ============= =============
COLUMBIA ACORN SELECT Year Ended Year Ended INCREASE (DECREASE) IN NET ASSETS December 31, December 31, ------------ ------------ (IN THOUSANDS) 2004 2003 OPERATIONS: Net investment income (loss) $ (8,994) $ (4,419) Net realized gain (loss) on investments and foreign currency transactions 47,420 8,643 Net change in net unrealized appreciation/ depreciation on investments and foreign currency translations 133,791 95,023 ------------ ------------ Net Increase from Operations 172,217 99,247 DISTRIBUTION TO SHAREHOLDERS FROM: Net investment income -- Class A -- -- Net realized gain -- Class A (10,300) (1,172) Net investment income -- Class B -- -- Net realized gain -- Class B (3,895) (563) Net investment income -- Class C -- -- Net realized gain -- Class C (2,321) (301) Net investment income -- Class Z -- -- Net realized gain -- Class Z (8,700) (2,145) ------------ ------------ Total Distribution to Shareholders (25,216) (4,181) SHARE TRANSACTIONS: Subscriptions -- Class A 274,350 237,520 Distributions reinvested -- Class A 9,614 1,096 Redemptions -- Class A (91,343) (30,378) ------------ ------------ Net Increase (Decrease) -- Class A 192,621 208,238 Subscriptions -- Class B 61,755 78,641 Distributions reinvested -- Class B 3,496 507 Redemptions -- Class B (19,113) (9,321) ------------ ------------ Net Increase (Decrease) -- Class B 46,138 69,827 Subscriptions -- Class C 49,173 50,838 Distributions reinvested -- Class C 1,934 257 Redemptions -- Class C (17,236) (4,391) ------------ ------------ Net Increase (Decrease) -- Class C 33,871 46,704 Subscriptions -- Class Z 204,740 301,467 Distributions reinvested -- Class Z 6,716 1,920 Redemptions -- Class Z (114,619) (150,913) ------------ ------------ Net Increase (Decrease) -- Class Z 96,837 152,474 ------------ ------------ Net Increase (Decrease) from Share Transactions 369,467 477,243 ------------ ------------ Redemption Fees -- -- ------------ ------------ Total Increase in Net Assets 516,468 572,309 NET ASSETS: Beginning of period 740,619 168,310 ------------ ------------ End of period $ 1,257,087 $ 740,619 ============ ============ UNDISTRIBUTED NET INVESTMENT INCOME OR (ACCUMULATED NET INVESTMENT LOSS) $ (57) $ (21) ============ ============
See accompanying notes to financial statements. 1-800-922-6769 62-63 Spread Columbia Acorn Family of Funds >Statements of Changes in Net Assets, continued
COLUMBIA COLUMBIA ACORN ACORN FUND INTERNATIONAL Year Ended Year Ended Year Ended Year Ended CHANGES IN SHARES OF BENEFICIAL INTEREST: December 31, December 31, December 31, December 31, ------------ ------------ ------------- ------------- (IN THOUSANDS) 2004 2003 2004 2003 Subscriptions -- Class A 29,671 56,202 809 2,734 Shares issued in reinvestment and capital gains -- Class A 3,255 73 13 5 Less shares redeemed -- Class A (19,230) (14,204) (722) (2,590) ------------ ------------ ------------- ------------- Net Increase (Decrease) -- Class A 13,696 42,071 100 149 Subscriptions -- Class B 3,928 20,371 438 653 Shares issued in reinvestment and capital gains -- Class B 1,836 48 3 -- Less shares redeemed -- Class B (6,388) (5,154) (301) (343) ------------ ------------ ------------- ------------- Net Increase (Decrease) -- Class B (624) 15,265 140 310 Subscriptions -- Class C 6,282 20,690 333 911 Shares issued in reinvestment and capital gains -- Class C 1,261 32 2 -- Less shares redeemed -- Class C (5,916) (4,207) (293) (833) ------------ ------------ ------------- ------------- Net Increase (Decrease) -- Class C 1,627 16,515 42 78 Subscriptions -- Class Z 66,041 89,984 8,246 13,104 Shares issued in reinvestment and capital gains -- Class Z 9,967 249 624 313 Less shares redeemed -- Class Z (60,621) (36,502) (11,723) (25,027) ------------ ------------ ------------- ------------- Net Increase (Decrease) -- Class Z 15,387 53,731 (2,853) (11,610) ------------ ------------ ------------- ------------- Net Increase (Decrease) in Shares of Beneficial Interest 30,086 127,582 (2,571) (11,073) ------------ ------------ ------------- -------------
COLUMBIA COLUMBIA ACORN ACORN USA INTERNATIONAL SELECT Year Ended Year Ended Year Ended Year Ended CHANGES IN SHARES OF BENEFICIAL INTEREST: December 31, December 31, December 31, December 31, ------------ ------------ ------------- ------------- (IN THOUSANDS) 2004 2003 2004 2003 Subscriptions -- Class A 1,239 3,345 116 216 Shares issued in reinvestment and capital gains -- Class A 24 -- --* -- Less shares redeemed -- Class A (1,043) (1,309) (49) (294) ------------ ------------ ------------- ------------- Net Increase (Decrease) -- Class A 220 2,036 67 (78) Subscriptions -- Class B 229 1,087 108 137 Shares issued in reinvestment and capital gains -- Class B 16 -- -- -- Less shares redeemed -- Class B (485) (512) (38) (95) ------------ ------------ ------------- ------------- Net Increase (Decrease) -- Class B (240) 575 70 42 Subscriptions -- Class C 261 724 52 311 Shares issued in reinvestment and capital gains -- Class C 8 -- -- -- Less shares redeemed -- Class C (379) (279) (167) (339) ------------ ------------ ------------- ------------- Net Increase (Decrease) -- Class C (110) 445 (115) (28) Subscriptions -- Class Z 8,912 12,184 707 2,239 Shares issued in reinvestment and capital gains -- Class Z 128 -- 10 2 Less shares redeemed -- Class Z (7,291) (4,772) (479) (2,435) ------------ ------------ ------------- ------------- Net Increase (Decrease) -- Class Z 1,749 7,412 238 (194) ------------ ------------ ------------- ------------- Net Increase (Decrease) in Shares of Beneficial Interest 1,619 10,468 260 (258) ------------ ------------ ------------- -------------
COLUMBIA ACORN SELECT YEAR ENDED YEAR ENDED CHANGES IN SHARES OF BENEFICIAL INTEREST: DECEMBER 31, DECEMBER 31, ------------ ------------ (IN THOUSANDS) 2004 2003 Subscriptions -- Class A 14,418 14,227 Shares issued in reinvestment and capital gains -- Class A 473 63 Less shares redeemed -- Class A (4,824) (1,869) ------------ ------------ Net Increase (Decrease) -- Class A 10,067 12,421 Subscriptions -- Class B 3,336 4,854 Shares issued in reinvestment and capital gains -- Class B 177 30 Less shares redeemed -- Class B (1,035) (601) ------------ ------------ Net Increase (Decrease) -- Class B 2,478 4,283 Subscriptions -- Class C 2,649 3,102 Shares issued in reinvestment and capital gains -- Class C 98 15 Less shares redeemed -- Class C (929) (271) ------------ ------------ Net Increase (Decrease) -- Class C 1,818 2,846 Subscriptions -- Class Z 10,606 18,117 Shares issued in reinvestment and capital gains -- Class Z 326 108 Less shares redeemed -- Class Z (5,997) (8,676) ------------ ------------ Net Increase (Decrease) -- Class Z 4,935 9,549 ------------ ------------ Net Increase (Decrease) in Shares of Beneficial Interest 19,298 29,099 ------------ ------------
* Rounds to less than 500 shares. See accompanying notes to financial statements. 1-800-922-6769 64-65 Spread Columbia Acorn Family of Funds >Financial Highlights COLUMBIA ACORN FUND
Class A Shares Year ended December 31, ------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000(a) NET ASSET VALUE, BEGINNING OF PERIOD $ 22.20 $ 15.34 $ 17.80 $ 17.19 $ 17.88 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (b) (0.05) (0.07) (0.07) (0.05) 0.01 Net realized and unrealized gain (loss) 4.69 6.95 (2.39) 1.01 1.22 ----------- ----------- --------- --------- --------- Total from Investment Operations 4.64 6.88 (2.46) 0.96 1.23 ----------- ----------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income -- -- -- -- (0.06) From net realized gains (0.91) (0.02) -- (0.35) (1.86) ----------- --------- --------- --------- Total Distributions Declared to Shareholders (0.91) (0.02) -- (0.35) (1.92) ----------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 25.93 $ 22.20 $ 15.34 $ 17.80 $ 17.19 =========== =========== ========= ========= ========= Total Return (c) 21.05%(d) 44.85% (13.82)% 5.56% 7.40%(e) ----------- ----------- --------- --------- --------- RATIOS TO AVERAGE NET ASSETS Expenses (f) 1.20% 1.33% 1.42% 1.42% 1.25%(g)(h) Net investment income (loss) (f) (0.21)% (0.36)% (0.45)% (0.33)% 0.17%(g)(h) Reimbursement 0.02% -- -- -- -- Portfolio turnover rate 20% 10% 13% 20% 29% Net assets at end of period (000'S) $ 2,669,936 $ 1,982,260 $ 724,121 $ 306,405 $ 18,252
(a) Class A Shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) Annualized. (h) The ratios of expenses and net investment loss to average net assets, previously reported as 1.03% and 0.39% respectively, were revised to reflect all class specific expenses in this period.
Class B Shares Year ended December 31, ------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000(a) NET ASSET VALUE, BEGINNING OF PERIOD $ 21.75 $ 15.13 $ 17.67 $ 17.17 $ 17.88 INCOME FROM INVESTMENT OPERATIONS Net investment loss (b) (0.22) (0.18) (0.17) (0.16) (0.01) Net realized and unrealized gain (loss) 4.57 6.82 (2.37) 1.01 1.22 ----------- ----------- --------- --------- --------- Total from Investment Operations 4.35 6.64 (2.54) 0.85 1.21 ----------- ----------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income -- -- -- -- (0.06) From net realized gains (0.91) (0.02) -- (0.35) (1.86) ----------- --------- --------- --------- Total Distributions Declared to Shareholders (0.91) (0.02) -- (0.35) (1.92) ----------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 25.19 $ 21.75 $ 15.13 $ 17.67 $ 17.17 =========== =========== ========= ========= ========= Total Return (c) 20.15%(d) 43.89% (14.37)% 4.92% 7.27%(e) ----------- ----------- --------- --------- --------- RATIOS TO AVERAGE NET ASSETS Expenses (f) 1.95% 1.98% 2.07% 2.07% 1.90%(g)(h) Net investment loss (f) (0.96)% (1.01)% (1.10)% (0.98)% (0.48)%(g)(h) Reimbursement 0.02% -- -- -- -- Portfolio turnover rate 20% 10% 13% 20% 29% Net assets at end of period (000'S) $ 1,399,135 $ 1,221,931 $ 618,727 $ 286,422 $ 15,951
(a) Class B Shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) Annualized. (h) The ratios of expenses and net investment loss to average net assets, previously reported as 1.68% and (0.26)% respectively, were revised to reflect all class specific expenses in this period.
Class C Shares Year ended December 31, ------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000(a) NET ASSET VALUE, BEGINNING OF PERIOD $ 21.75 $ 15.12 $ 17.66 $ 17.17 $ 17.88 INCOME FROM INVESTMENT OPERATIONS Net investment loss (b) (0.22) (0.18) (0.17) (0.17) (0.01) Net realized and unrealized gain (loss) 4.56 6.83 (2.37) 1.01 1.22 ----------- ----------- --------- --------- --------- Total from Investment Operations 4.34 6.65 (2.54) 0.84 1.21 ----------- ----------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income -- -- -- -- (0.06) From net realized gains (0.91) (0.02) -- (0.35) (1.86) ----------- --------- --------- --------- Total Distributions Declared to Shareholders (0.91) (0.02) -- (0.35) (1.92) ----------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 25.18 $ 21.75 $ 15.12 $ 17.66 $ 17.17 =========== =========== ========= ========= ========= Total Return (c) 20.11%(d) 43.99% (14.38)% 4.86% 7.27%(e) ----------- ----------- --------- --------- --------- RATIOS TO AVERAGE NET ASSETS Expenses (f) 1.95% 1.98% 2.07% 2.07% 1.90%(g)(h) Net investment loss (f) (0.96)% (1.01)% (1.10)% (0.98)% (0.48)%(g)(h) Reimbursement 0.02% -- -- -- -- Portfolio turnover rate 20% 10% 13% 20% 29% Net assets at end of period (000'S) $ 1,083,006 $ 900,016 $ 376,024 $ 150,727 $ 8,510
(a) Class C Shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) Annualized. (h) The ratios of expenses and net investment loss to average net assets, previously reported as 1.68% and (0.26)% respectively, were revised to reflect all class specific expenses in this period. See accompanying notes to financial statements. 1-800-922-6769 66 COLUMBIA ACORN INTERNATIONAL
Class A Shares Year ended December 31, ------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000(a) NET ASSET VALUE, BEGINNING OF PERIOD $ 22.45 $ 15.32 $ 18.35 $ 23.84 $ 28.67 INCOME FROM INVESTMENT OPERATIONS Net investment income (b) 0.14 0.10 0.05 0.01 0.02 Net realized and unrealized gain (loss) 6.31 7.08 (3.07) (5.11) (1.26) ----------- ----------- --------- --------- --------- Total from Investment Operations 6.45 7.18 (3.02) (5.10) (1.24) ----------- ----------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.15) (0.05) (0.01) -- -- From net realized gains -- -- -- (0.39) (3.59) ----------- ----------- --------- --------- --------- Total Distributions Declared to Shareholders (0.15) (0.05) (0.01) (0.39) (3.59) ----------- ----------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 28.75 $ 22.45 $ 15.32 $ 18.35 $ 23.84 =========== =========== ========= ========= ========= Total Return (c) 28.91%(d) 46.94% (16.46)% (21.59)% (4.85)%(e) ----------- ----------- --------- --------- --------- RATIOS TO AVERAGE NET ASSETS Expenses (f) 1.48% 1.59% 1.56% 1.65% 1.26%(g)(h) Net investment income (f) 0.61% 0.57% 0.30% 0.03% 0.73%(g)(h) Reimbursement 0.02% -- -- -- -- Portfolio turnover rate 40% 40% 52% 45% 63% Net assets at end of period (000'S) $ 70,582 $ 52,872 $ 33,806 $ 25,587 $ 10,323
(a) Class A Shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) Annualized. (h) The ratios of expenses and net investment loss to average net assets, previously reported as 1.59% and 0.40% respectively, were revised to reflect all class specific expenses in this period.
Class B Shares Year ended December 31, ------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000(a) NET ASSET VALUE, BEGINNING OF PERIOD $ 22.07 $ 15.11 $ 18.22 $ 23.81 $ 28.67 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (b) (0.04) (0.02) (0.06) (0.12) 0.01 Net realized and unrealized gain (loss) 6.19 6.98 (3.05) (5.08) (1.28) ----------- ----------- --------- --------- --------- Total from Investment Operations 6.15 6.96 (3.11) (5.20) (1.27) ----------- ----------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.04) -- -- -- -- ----------- ----------- --------- --------- --------- From net realized gains -- -- -- (0.39) (3.59) ----------- ----------- --------- --------- --------- Total Distributions Declared to Shareholders (0.04) -- -- (0.39) (3.59) ----------- ----------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 28.18 $ 22.07 $ 15.11 $ 18.22 $ 23.81 =========== =========== ========= ========= ========= Total Return (c) 27.91%(d) 46.06% (17.07)% (22.04)% (4.97)%(e) ----------- ----------- --------- --------- --------- RATIOS TO AVERAGE NET ASSETS Expenses (f) 2.27% 2.24% 2.21% 2.30% 1.91%(g)(h) Net investment income (loss) (f) (0.18)% (0.10)% (0.35)% (0.62)% 0.08%(g)(h) Reimbursement 0.02% -- -- -- -- Portfolio turnover rate 40% 40% 52% 45% 63% Net assets at end of period (000'S) $ 54,752 $ 39,800 $ 22,560 $ 17,235 $ 5,675
(a) Class B Shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) Annualized. (h) The ratios of expenses and net investment loss to average net assets, previously reported as 2.24% and (0.25)% respectively, were revised to reflect all class specific expenses in this period.
Class C Shares Year ended December 31, ------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000(a) NET ASSET VALUE, BEGINNING OF PERIOD $ 22.06 $ 15.11 $ 18.21 $ 23.81 $ 28.67 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (b) (0.03) (0.01) (0.06) (0.13) 0.01 Net realized and unrealized gain (loss) 6.20 6.96 (3.04) (5.08) (1.28) ----------- ----------- --------- --------- --------- Total from Investment Operations 6.17 6.95 (3.10) (5.21) (1.27) ----------- ----------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.04) -- -- -- -- From net realized gains -- -- -- (0.39) (3.59) ----------- ----------- --------- --------- --------- Total Distributions Declared to Shareholders (0.04) -- -- (0.39) (3.59) ----------- ----------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 28.19 $ 22.06 $ 15.11 $ 18.21 $ 23.81 =========== =========== ========= ========= ========= Total Return (c) 28.01%(d) 46.00% (17.02)% (22.08)% (4.97)%(e) ----------- ----------- --------- --------- --------- RATIOS TO AVERAGE NET ASSETS Expenses (f) 2.24% 2.24% 2.21% 2.30% 1.91%(g)(h) Net investment income (loss) (f) (0.15)% (0.06)% (0.35)% (0.62)% 0.08%(g)(h) Reimbursement 0.02% -- -- -- -- Portfolio turnover rate 40% 40% 52% 45% 63% Net assets at end of period (000'S) $ 30,547 $ 22,990 $ 14,575 $ 14,327 $ 3,965
(a) Class C Shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) Annualized. (h) The ratios of expenses and net investment loss to average net assets, previously reported as 2.24% and (0.25)% respectively, were revised to reflect all class specific expenses in this period. 67 Columbia Acorn Family of Funds >Financial Highlights continued COLUMBIA ACORN USA
Class A Shares Year ended December 31, ------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000(a) NET ASSET VALUE, BEGINNING OF PERIOD $ 20.74 $ 14.18 $ 17.50 $ 14.88 $ 13.83 INCOME FROM INVESTMENT OPERATIONS Net investment loss (b) (0.24) (0.22) (0.19) (0.19) (0.01) Net realized and unrealized gain (loss) 4.41 6.78 (3.13) 2.96 1.06 ----------- ----------- --------- --------- --------- Total from Investment Operations 4.17 6.56 (3.32) 2.77 1.05 ----------- ----------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net realized gains (0.14) -- -- (0.15) -- ----------- ----------- --------- --------- --------- Total Distributions Declared to Shareholders (0.14) -- -- (0.15) -- ----------- ----------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 24.77 $ 20.74 $ 14.18 $ 17.50 $ 14.88 =========== =========== ========= ========= ========= Total Return (c) 20.12%(d) 46.26% (18.97)% 18.65% 7.59%(e) ----------- ----------- --------- --------- --------- RATIOS TO AVERAGE NET ASSETS Expenses (f) 1.51% 1.65% 1.74% 1.84% 1.41%(g)(h) Net investment loss (f) (1.08)% (1.26)% (1.21)% (1.13)% (0.73)%(g)(h) Reimbursement 0.02% -- -- Portfolio turnover rate 18% 7% 31% 24% 45% Net assets at end of period (000'S) $ 112,509 $ 89,650 $ 32,422 $ 20,455 $ 798
(a) Class A Shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) Annualized. (h) The ratios of expenses and net investment loss to average net assets, previously reported as 1.17% and (0.49)% respectively, were revised to reflect all class specific expenses in this period.
Class B Shares Year ended December 31, ------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000(a) NET ASSET VALUE, BEGINNING OF PERIOD $ 20.36 $ 14.01 $ 17.40 $ 14.87 $ 13.83 INCOME FROM INVESTMENT OPERATIONS Net investment loss (b) (0.39) (0.32) (0.29) (0.30) (0.03) Net realized and unrealized gain (loss) 4.31 6.67 (3.10) 2.96 1.07 ----------- ----------- --------- --------- --------- Total from Investment Operations 3.92 6.35 (3.39) 2.66 1.04 ----------- ----------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net realized gains (0.14) -- -- (0.13) -- ----------- ----------- --------- --------- --------- Total Distributions Declared to Shareholders (0.14) -- -- (0.13) -- ----------- ----------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD 24.14 $ 20.36 $ 14.01 $ 17.40 $ 14.87 =========== =========== ========= ========= ========= Total Return (c) 19.26%(d) 45.32% (19.48)% 17.92% 7.52%(e) ----------- ----------- --------- --------- --------- RATIOS TO AVERAGE NET ASSETS Expenses (f) 2.23% 2.30% 2.39% 2.49% 2.06%(g)(h) Net investment loss (f) (1.80)% (1.91)% (1.86)% (1.78)% (1.38)%(g)(h) Reimbursement 0.02% -- -- -- -- Portfolio turnover rate 18% 7% 31% 24% 45% Net assets at end of period (000'S) $ 72,643 $ 66,175 $ 37,478 $ 27,722 $ 685
(a) Class B Shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) Annualized. (h) The ratios of expenses and net investment loss to average net assets, previously reported as 1.82% and (1.14)% respectively, were revised to reflect all class specific expenses in this period.
Class C Shares Year ended December 31, ------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000(a) NET ASSET VALUE, BEGINNING OF PERIOD $ 20.36 $ 14.01 $ 17.40 $ 14.87 $ 13.83 INCOME FROM INVESTMENT OPERATIONS Net investment loss (b) (0.39) (0.32) (0.29) (0.30) (0.03) Net realized and unrealized gain (loss) 4.31 6.67 (3.10) 2.96 1.07 ----------- ----------- --------- --------- --------- Total from Investment Operations 3.92 6.35 (3.39) 2.66 1.04 ----------- ----------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net realized gains (0.14) -- -- (0.13) -- ----------- ----------- --------- --------- --------- Total Distributions Declared to Shareholders (0.14) -- -- (0.13) -- ----------- ----------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 24.14 $ 20.36 $ 14.01 $ 17.40 $ 14.87 =========== =========== ========= ========= ========= Total Return (c) 19.26%(d) 45.32% (19.48)% 17.92% 7.52%(e) ----------- ----------- --------- --------- --------- RATIOS TO AVERAGE NET ASSETS Expenses (f) 2.23% 2.30% 2.39% 2.49% 2.06%(g)(h) Net investment loss (f) (1.80)% (1.91)% (1.86)% (1.78)% (1.38)%(g)(h) Reimbursement 0.02% -- -- -- -- Portfolio turnover rate 18% 7% 31% 24% 45% Net assets at end of period (000'S) $ 39,643 $ 35,662 $ 18,313 $ 13,049 $ 347
(a) Class C Shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) Annualized. (h) The ratios of expenses and net investment loss to average net assets, previously reported as 1.82% and (1.14)% respectively, were revised to reflect all class specific expenses in this period. See accompanying notes to financial statements. 1-800-922-6769 68 COLUMBIA ACORN INTERNATIONAL SELECT
Class A Shares Year ended December 31, --------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000(a) NET ASSET VALUE, BEGINNING OF PERIOD $ 14.45 $ 10.24 $ 12.07 $ 17.15 $ 17.71 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (b) 0.00(c) 0.03 (0.01) (0.09) (0.03) Net realized and unrealized gain (loss) 3.43 4.18 (1.82) (4.90) (0.53) --------- --------- --------- --------- --------- Total from Investment Operations 3.43 4.21 (1.83) (4.99) (0.56) --------- --------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.03) -- -- (0.01) -- From net realized gains -- -- -- (0.08) -- --------- --------- --------- --------- --------- Total Distributions Declared to Shareholders (0.03) -- -- (0.09) -- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 17.85 $ 14.45 $ 10.24 $ 12.07 $ 17.15 ========= ========= ========= ========= ========= Total Return (d) 23.76%(e) 41.11%(e) (15.16)%(e) (29.17)%(e) (3.16)%(f) --------- --------- --------- --------- --------- RATIOS TO AVERAGE NET ASSETS Expenses (g) 1.75% 1.80% 1.80% 1.80% 1.68%(h)(i) Net investment income (loss) (g) (0.03)% 0.24% (0.09)% (0.67)% (1.18)%(h)(i) Reimbursement 0.37% 0.44% 0.33% 0.23% -- Portfolio turnover rate 73% 69% 102% 82% 79% Net assets at end of period (000'S) $ 4,357 $ 2,557 $ 2,612 $ 2,861 $ 3,172
(a) Class A Shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Rounds to less than $0.01 per share. (d) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (e) Had the Advisor and/or Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (f) Not annualized. (g) The benefits derived from custody fees paid indirectly had no impact. (h) Annualized. (i) The ratios of expenses and net investment loss to average net assets, previously reported as 1.29% and (0.79)% respectively, were revised to reflect all class specific expenses in this period.
Class B Shares Year ended December 31, --------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000(a) NET ASSET VALUE, BEGINNING OF PERIOD $ 14.12 $ 10.08 $ 11.96 $ 17.13 $ 17.71 INCOME FROM INVESTMENT OPERATIONS Net investment loss (b) (0.10) (0.06) (0.08) (0.18) (0.05) Net realized and unrealized gain (loss) 3.34 4.10 (1.80) (4.90) (0.53) --------- --------- --------- --------- --------- Total from Investment Operations 3.24 4.04 (1.88) (5.08) (0.58) --------- --------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income -- -- -- (0.01) -- From net realized gains -- -- -- (0.08) -- --------- --------- --------- --------- --------- Total Distributions Declared to Shareholders -- -- -- (0.09) -- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 17.36 $ 14.12 $ 10.08 $ 11.96 $ 17.13 ========= ========= ========= ========= ========= Total Return (c) 22.95%(d) 40.08%(d) (15.72)%(d) (29.73)%(d) (3.27)%(e) --------- --------- --------- --------- --------- RATIOS TO AVERAGE NET ASSETS Expenses (f) 2.38% 2.45% 2.45% 2.45% 2.33%(g)(h) Net investment loss (f) (0.66)% (0.52)% (0.74)% (1.32)% (1.83)%(g)(h) Reimbursement 0.58% 0.44% 0.33% 0.23% -- Portfolio turnover rate 73% 69% 102% 82% 79% Net assets at end of period (000'S) $ 5,097 $ 3,162 $ 1,835 $ 2,069 $ 1,551
(a) Class B Shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Advisor and/or Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) Annualized. (h) The ratios of expenses and net investment loss to average net assets, previously reported as 1.94% and (1.44)% respectively, were revised to reflect all class specific expenses in this period.
Class C Shares Year ended December 31, --------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000(a) NET ASSET VALUE, BEGINNING OF PERIOD $ 14.14 $ 10.09 $ 11.97 $ 17.14 $ 17.71 INCOME FROM INVESTMENT OPERATIONS Net investment loss (b) (0.11) (0.05) (0.08) (0.18) (0.05) Net realized and unrealized gain (loss) 3.35 4.10 (1.80) (4.90) (0.52) --------- --------- --------- --------- --------- Total from Investment Operations 3.24 4.05 (1.88) (5.08) (0.57) --------- --------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income -- -- -- (0.01) -- From net realized gains -- -- -- (0.08) -- --------- --------- --------- --------- --------- Total Distributions Declared to Shareholders -- -- -- (0.09) -- --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 17.38 $ 14.14 $ 10.09 $ 11.97 $ 17.14 ========= ========= ========= ========= ========= Total Return (c) 22.91%(d) 40.14%(d) (15.71)%(d) (29.71)%(d) (3.22)%(e) --------- --------- --------- --------- --------- RATIOS TO AVERAGE NET ASSETS Expenses (f) 2.45% 2.45% 2.45% 2.45% 2.33%(g)(h) Net investment loss (f) (0.73)% (0.41)% (0.74)% (1.32)% (1.83)%(g)(h) Reimbursement 0.35% 0.44% 0.33% 0.23% -- Portfolio turnover rate 73% 69% 102% 82% 79% Net assets at end of period (000'S) $ 2,543 $ 3,691 $ 2,915 $ 3,885 $ 3,399
(a) Class C Shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Advisor and/or Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) Annualized. (h) The ratios of expenses and net investment loss to average net assets, previously reported as 1.94% and (1.44)% respectively, were revised to reflect all class specific expenses in this period. 69 Columbia Acorn Family of Funds >Financial Highlights continued COLUMBIA ACORN SELECT
Class A Shares Year ended December 31, --------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000(a) NET ASSET VALUE, BEGINNING OF PERIOD $ 18.01 $ 13.93 $ 15.17 $ 14.12 $ 13.47 INCOME FROM INVESTMENT OPERATIONS Net investment loss (b) (0.16) (0.20) (0.16) (0.10) (0.01) Net realized and unrealized gain (loss) 3.42 4.37 (1.08) 1.18 0.86 --------- --------- --------- --------- --------- Total from Investment Operations 3.26 4.17 (1.24) 1.08 0.85 --------- --------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income -- -- -- -- (0.01) From net realized gains (0.44) (0.09) -- (0.03) (0.19) --------- --------- --------- --------- --------- Total Distributions Declared to Shareholders (0.44) (0.09) -- (0.03) (0.20) --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 20.83 $ 18.01 $ 13.93 $ 15.17 $ 14.12 ========= ========= ========= ========= ========= Total Return (c) 18.16%(d) 29.95% (8.17)%(d) 7.65%(d) 6.32%(e) --------- --------- --------- --------- --------- RATIOS TO AVERAGE NET ASSETS Expenses 1.47%(f) 1.63%(f) 1.70%(f) 1.70% 1.61%(f)(g)(h) Net investment loss (0.86)%(f) (1.15)%(f) (1.11)%(f) (0.79)% (0.62)%(f)(g)(h) Reimbursement 0.02% -- 0.10% 0.18% -- Portfolio turnover rate 34% 16% 40% 82% 116% Net assets at end of period (000'S) $ 515,842 $ 264,679 $ 31,742 $ 11,900 $ 3,267
(a) Class A Shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Advisor and/or Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) Annualized. (h) The ratios of expenses and net investment loss to average net assets, previously reported as 0.76% and 0.23% respectively, were revised to reflect all class specific expenses in this period.
Class B Shares Year ended December 31, --------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000(a) NET ASSET VALUE, BEGINNING OF PERIOD $ 17.64 $ 13.73 $ 15.05 $ 14.10 $ 13.47 INCOME FROM INVESTMENT OPERATIONS Net investment loss (b) (0.31) (0.29) (0.25) (0.20) (0.01) Net realized and unrealized gain (loss) 3.34 4.29 (1.07) 1.18 0.84 --------- --------- --------- --------- --------- Total from Investment Operations 3.03 4.00 (1.32) 0.98 0.83 --------- --------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income -- -- -- -- (0.01) From net realized gains (0.44) (0.09) -- (0.03) (0.19) --------- --------- --------- --------- --------- Total Distributions Declared to Shareholders (0.44) (0.09) -- (0.03) (0.20) --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 20.23 $ 17.64 $ 13.73 $ 15.05 $ 14.10 ========= ========= ========= ========= ========= Total Return (c) 17.24%(d) 29.14% (8.77)%(d) 6.95%(d) 6.17%(e) --------- --------- --------- --------- --------- RATIOS TO AVERAGE NET ASSETS Expenses 2.26%(f) 2.28%(f) 2.35%(f) 2.35% 2.26%(f)(g)(h) Net investment loss (1.65)%(f) (1.80)%(f) (1.76)%(f) (1.44)% (1.27)%(f)(g)(h) Reimbursement 0.02% -- 0.10% 0.18% -- Portfolio turnover rate 34% 16% 40% 82% 116% Net assets at end of period (000'S) $ 185,545 $ 118,064 $ 33,106 $ 13,358 $ 4,249
(a) Class B Shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Advisor and/or Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) Annualized. (h) The ratios of expenses and net investment loss to average net assets, previously reported as 1.41% and (0.42)% respectively, were revised to reflect all class specific expenses in this period.
Class C Shares Year ended December 31, --------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 2002 2001 2000(a) NET ASSET VALUE, BEGINNING OF PERIOD $ 17.64 $ 13.73 $ 15.05 $ 14.10 $ 13.47 INCOME FROM INVESTMENT OPERATIONS Net investment loss (b) (0.30) (0.30) (0.25) (0.20) (0.01) Net realized and unrealized gain (loss) 3.33 4.30 (1.07) 1.18 0.84 --------- --------- --------- --------- --------- Total from Investment Operations 3.03 4.00 (1.32) 0.98 0.83 --------- --------- --------- --------- --------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income -- -- -- -- (0.01) From net realized gains (0.44) (0.09) -- (0.03) (0.19) --------- --------- --------- --------- --------- Total Distributions Declared to Shareholders (0.44) (0.09) -- (0.03) (0.20) --------- --------- --------- --------- --------- NET ASSET VALUE, END OF PERIOD $ 20.23 $ 17.64 $ 13.73 $ 15.05 $ 14.10 ========= ========= ========= ========= ========= Total Return (c) 17.24%(d) 29.14% (8.77)%(d) 6.95%(d) 6.17%(e) --------- --------- --------- --------- --------- RATIOS TO AVERAGE NET ASSETS Expenses 2.25%(f) 2.28%(f) 2.35%(f) 2.35% 2.26%(f)(g)(h) Net investment loss (1.64)%(f) (1.80)%(f) (1.76)%(f) (1.44)% (1.27)%(f)(g)(h) Reimbursement 0.02% -- 0.10% 0.18% -- Portfolio turnover rate 34% 16% 40% 82% 116% Net assets at end of period (000'S) $ 110,435 $ 64,212 $ 10,919 $ 4,945 $ 1,070
(a) Class C Shares were initially offered on October 16, 2000. Per share data reflects activity from that date. (b) Per share data was calculated using average shares outstanding during the period. (c) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Advisor and/or Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (e) Not annualized. (f) The benefits derived from custody fees paid indirectly had no impact. (g) Annualized. (h) The ratios of expenses and net investment loss to average net assets, previously reported as 1.41% and (0.42)% respectively, were revised to reflect all class specific expenses in this period. See accompanying notes to financial statements. 1-800-922-6769 70 Columbia Acorn Family of Funds >Notes to Financial Statements 1. Nature of Operations Columbia Acorn Fund, Columbia Acorn International, Columbia Acorn USA, Columbia Acorn International Select and Columbia Acorn Select (the "Funds") are each a series of Columbia Acorn Trust (the "Trust"), an open-end management investment company organized as a Massachusetts business trust. The investment objective of each Fund is to seek long-term growth of capital. The Funds may issue an unlimited number of shares. The Funds offer four classes of shares: Class A, Class B, Class C and Class Z. Class A shares are sold with a front-end sales charge. A contingent deferred sales charge ("CDSC") is assessed to Class A shares purchased without an initial sales charge on redemptions made within eighteen months on an original purchase of $1 million to $25 million. Class B shares are subject to a CDSC. Class B shares will convert to Class A shares in three, four or eight years after purchase, depending on the program under which shares are purchased. Class C shares are subject to a CDSC on redemptions made within one year after purchase. Effective January 3, 2005, Columbia Acorn International and Columbia Acorn International Select imposed a 2% redemption fee on Class A, Class B and Class C shares that are owned 60 days or less. See "Fund Policy on Trading of Fund Shares and Redemption Fees" as disclosed within the Funds' prospectus for more information. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares. Generally, you may exchange your Class Z or Class A shares of the Fund for shares of another fund at no additional charge. However, if you exchange Class Z shares of Columbia Acorn International or Columbia Acorn International Select that you have owned 60 days or less for Class Z shares of a fund distributed by Columbia Funds Distributor, Inc., that does not have a redemption fee (including Columbia Acorn Fund, Columbia Acorn USA and Columbia Acorn Select), the Fund will charge you a redemption fee of 2% of the redemption proceeds. Exchanges between Columbia Acorn International and Columbia Acorn International Select (or a fund distributed by Columbia Funds Distributor, Inc. that has a redemption fee) will not be subject to the 2% redemption fee. In addition, if you redeem shares of Columbia Acorn International or Columbia Acorn International Select that you have owned 60 days or less, the Fund will charge you a redemption fee of 2% of the redemption proceeds, with certain exceptions. See "Fund Policy on Trading of Fund Shares and Redemption Fees" as disclosed within the Funds' prospectus for more information. The financial highlights for Class Z shares are presented in a separate annual report. The annual financial statements for the Columbia Thermostat Fund, another Fund of the Trust, begins on page 78 of this report. Investment income, realized and unrealized gains and losses, and certain fund-level expenses are borne pro rata on the basis of the relative net assets of all classes, except each class bears certain expenses unique to that class such as distribution services, transfer agent, and certain other class specific expenses. Differences in class expenses may result in payment of different dividend distributions for each class. All the share classes of the Trust have equal rights with respect to voting subject to class specific arrangements. 2. Significant Accounting Policies >Security valuation Securities of the Funds are valued at marked value or, if a market quotation for a security is not readily available or is deemed not to be reliable because of events or circumstances that have occurred between the market quotation and the time as of which the security is to be valued, the security is valued at a fair value determined in accordance with procedures established by the Board of Trustees. Securities traded on securities exchanges or in over-the-counter markets in which transaction prices are reported are valued at the last sales price at the time of valuation. If a security is traded principally on the Nasdaq Stock Market Inc., the Nasdaq Official Closing Price will be applied. Securities for which there are no reported sales on the valuation date are valued at the latest bid quotation. Short-term debt obligations having a maturity of 60 days or less from the valuation date are valued on an amortized cost basis, which approximate fair value. Securities for which quotations are not available are valued at a fair value as determined in good faith by the Board of Trustees. The Trust has retained an independent statistical fair value pricing service to assist in the fair valuation process for securities principally traded in a foreign market in order to adjust for possible changes in value that may occur between the close of the foreign exchange and the time at which Fund shares are priced. If a security is valued at a "fair value", that value may be different from the last quoted market price for the security. >Repurchase agreements The Funds may engage in repurchase agreement transactions. The Funds, through their custodian, receive delivery of underlying securities collateralizing repurchase agreements. The Funds' investment advisor determines that the value of 71 Columbia Acorn Family of Funds >Notes to Financial Statements, continued the underlying securities is at all times at least equal to the resale price. In the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral may be subject to legal proceedings. >Foreign currency translations Values of investments denominated in foreign currencies are converted into U.S. dollars using the spot market rate of exchange at the time of valuation. Purchases and sales of investments and dividend and interest income are translated into U.S. dollars using the spot market rate of exchange prevailing on the respective dates of such transactions. The gain or loss resulting from changes in foreign exchange rates is included with net realized and unrealized gain or loss from investments, as appropriate. >Security transactions and investment income Security transactions are accounted for on the trade date (date the order to buy or sell is executed) and dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon as the information is available to the Funds. Interest income is recorded on the accrual basis and includes amortization of discounts on short-term debt obligations and long-term debt obligations when required for federal income tax purposes. Realized gains and losses from security transactions are reported on an identified cost basis. Awards from class action litigation may be recorded as a reduction of cost. If the Funds no longer own the applicable securities, the proceeds are recorded as realized gains. The Funds estimate components of distributions from real estate investment trusts (REITs). Distributions received in excess of income are recorded as a reduction of the cost of the related investments. If the Funds no longer own the applicable securities, any distributions received in excess of income are recorded as realized gains. >Restricted Securities Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale at the issuer's expense either upon demand by the Funds or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Board of Trustees. The Funds will not incur any registration costs upon such resale. >Use of estimates 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 amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. >Financial instruments Each Fund may purchase or sell exchange-traded financial futures contracts, which are contracts that obligate that Fund to make or take delivery of a financial instrument or the cash value of a securities index at a specified future date at a specified price. The Funds enter into such contracts to hedge a portion of their portfolio. Gains and losses are reflected as "Net Realized Gain (Loss) on Futures" in the Statements of Operations. Additionally, each Fund, except for Columbia Acorn USA and Columbia Acorn Select, may engage in portfolio hedging with respect to changes in foreign currency exchange rates by entering into forward foreign currency contracts to purchase or sell foreign currencies. The Statements of Operations reflect gains and losses as realized for closed forward foreign currency contracts and unrealized for open contracts. The Funds bear the market risk that arises from changes in the value of financial instruments and securities indices (futures contracts) or from changes in foreign currency rates (forward foreign currency contracts) and the credit risk should a counterparty fail to perform under such contracts. None of the Funds entered into any futures contracts or forward foreign currency contracts during the year ended December 31, 2004. >Fund share valuation Fund shares are sold and redeemed on a continuing basis at net asset value. Net asset value per share is determined daily as of the close of trading on the New York Stock Exchange ("Exchange") on each day the Exchange is open for trading. All income, expenses (other than the Class A, Class B and Class C 12b-1 service and distribution fees, and Class A, Class B, Class C and Class Z shares Transfer Agent fees) and realized and unrealized gains (losses) of a fund are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. Redemption fees are accounted for as an addition to paid in capital and are allocated to each class proportionately for purposes of determining the net asset value of each class. 1-800-922-6769 72 >Custody fees/credits Custody fees are reduced based on each Fund's cash balances maintained with the custodian. The Funds could have invested a portion of the assets utilized in connection with the expense offset arrangement in an income-producing asset if they had not entered into such an agreement. The amount is disclosed as a reduction of total expenses in the Statements of Operations. >Federal income taxes The Funds have complied with the provisions of the Internal Revenue Code available to regulated investment companies and, in the manner provided therein, distribute all their taxable income, as well as any net realized gain on sales of investments and foreign currency transactions reportable for federal income tax purposes. Accordingly, the Funds paid no federal income taxes and no federal income tax provision was required. >Foreign capital gains taxes Realized gains in certain countries may be subject to foreign taxes at the fund level, at rates ranging from approximately 10% to 30%. The Funds accrue for such foreign taxes on net realized and unrealized gains at the appropriate rate for each jurisdiction. >Distributions to Shareholders Distributions to shareholders are recorded on the ex-date. 3. Federal Tax Information The timing and character of 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. Reclassifications are made to the Funds' capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended December 31, 2004, permanent differences resulting primarily from differing treatments for distribution reclassifications, foreign currency transactions, passive foreign investment company ("PFIC") adjustments, foreign capital gains tax adjustments, REIT adjustments, net operating loss reclassifications and redemption based payments treated as dividend paid deduction were identified and reclassified among the components of the Funds' net assets as follows: UNDISTRIBUTED OR ACCUMULATED ACCUMULATED NET NET INVESTMENT NET REALIZED PAID IN UNREALIZED INCOME (LOSS) GAIN (LOSS) CAPITAL APPRECIATION ---------------------------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $(3,401) $(31,294) $34,695 $ -- Columbia Acorn International (115) (1,100) -- 1,215 Columbia Acorn USA 6,612 2 (6,614) -- Columbia Acorn International Select 13 (13) -- -- Columbia Acorn Select 8,958 (14,760) 5,802 -- Net investment income and net realized gains (losses), as disclosed on the Statements of Operations, and net assets were not affected by these reclassifications. The tax character of distributions paid during the years ended December 31, 2004 and December 31, 2003 was as follows: LONG- TERM ORDINARY CAPITAL DECEMBER 31, 2004 INCOME* GAINS ----------------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $30,840 $441,598 Columbia Acorn International 16,930 -- Columbia Acorn USA -- 4,748 Columbia Acorn International Select 157 -- Columbia Acorn Select -- 25,216 LONG- TERM ORDINARY CAPITAL DECEMBER 31, 2003 INCOME* GAINS ----------------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $ -- $9,917 Columbia Acorn International 5,935 -- Columbia Acorn USA -- -- Columbia Acorn International Select 19 -- Columbia Acorn Select 736 3,445 * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2004, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* ---------------------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $13,818 $195,429 $5,504,772 Columbia Acorn International 31,140 -- 700,391 Columbia Acorn USA -- 13,435 280,331 Columbia Acorn International Select 1,031 -- 14,562 Columbia Acorn Select 896 6,548 243,766 * The difference between book-basis and tax-basis net unrealized appreciation is primarily due to deferral of losses from wash sales and PFIC adjustments. 73 Columbia Acorn Family of Funds >Notes to Financial Statements, continued The following capital loss carryforwards may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: YEAR OF COLUMBIA ACORN COLUMBIA ACORN EXPIRATION INTERNATIONAL USA -------------------------------------------------------- (IN THOUSANDS) 2009 $ -- $2,529* 2010 14,102 506 2011 48,477 -- ======================================================== TOTAL $62,579 $3,035 YEAR OF COLUMBIA ACORN EXPIRATION INTERNATIONAL SELECT -------------------------------------------------------- (IN THOUSANDS) 2009 $16,135 2010 12,528 2011 2,488 ======================================================== TOTAL $31,151 * Of these carryforwards, $2,529 (expiring in 2009) remains from the Columbia Acorn USA's merger with Stein Roe Small Company Growth Fund on 7/26/2002. Utilization of Stein Roe Small Company Growth Fund's losses could be subject to limitations imposed by the Internal Revenue Code. The following capital loss carryforwards were utilized during the year ended December 31, 2004: -------------------------------------------------------- (IN THOUSANDS) Columbia Acorn International $173,711 Columbia Acorn USA 10,064 Columbia Acorn International Select 6,949 ======================================================== 4. Transactions with Affiliates Columbia Wanger Asset Management, L.P. ("Columbia WAM"), an indirect, wholly-owned subsidiary of Columbia Management Group, Inc., which in turn is a wholly-owned subsidiary of Bank of America Corporation ("BOA") furnishes continuing investment supervision to the Funds and is responsible for the overall management of the Funds' business affairs. Prior to April 1, 2004, Columbia Management Group, Inc. was a wholly-owned subsidiary of Fleet National Bank, which in turn was a wholly-owned subsidiary of FleetBoston Financial Corporation ("Fleet"). On April 1, 2004, Fleet was acquired by BOA. Under the Funds' investment management agreement, fees are accrued daily and paid monthly to Columbia WAM at the annual rates shown in the table below for each fund. COLUMBIA ACORN FUND -------------------------------------------------------- Net asset value: On the first $700 million 0.75% Next $1.3 billion 0.70% Net assets in excess of $2 billion 0.65% COLUMBIA ACORN INTERNATIONAL -------------------------------------------------------- Net asset value: On the first $100 million 1.20% Next $400 million 0.95% Net assets in excess of $500 million 0.75% COLUMBIA ACORN USA -------------------------------------------------------- Net asset value: On the first $200 million 0.95% Net assets in excess of $200 million 0.90% COLUMBIA ACORN INTERNATIONAL SELECT -------------------------------------------------------- On average daily net assets: 0.95% COLUMBIA ACORN SELECT -------------------------------------------------------- Net asset value: On the first $700 million 0.90% Net assets in excess of $700 million 0.85% Prior to August 1, 2004: On average daily net assets: 0.90% For the year ended December 31, 2004, the Funds' effective investment advisory fee rates were as follows: -------------------------------------------------------- Columbia Acorn Fund 0.66% Columbia Acorn International 0.82 Columbia Acorn USA 0.91 Columbia Acorn International Select 0.95 Columbia Acorn Select 0.89 ======================================================== In accordance with the terms of the NYAG Settlement (as defined and discussed further under Note 8 to these Financial Statements - "Legal Proceedings"), Columbia WAM waived a portion of the fees payable under the Funds' investment management agreement so that those fees are retained at the following rates as a percent of average daily net assets: COLUMBIA ACORN FUND - 0.740% - up to $700 million; 0.690% - $700 million to $2 billion; 0.640% - $2 billion to $6 billion; 0.630% - $6 billion and over; COLUMBIA ACORN INTERNATIONAL - 1.190% - up to $100 million; 0.940% - $100 million to $500 million; 0.740% - $500 million and over; COLUMBIA ACORN USA - 0.940% - up to $200 million; 0.890% - $200 million and over; COLUMBIA ACORN INTERNATIONAL SELECT - 0.940% on average daily net assets; COLUMBIA ACORN SELECT - 0.850% - up to $700 million; 0.800% - $700 million and over. The fee waiver was effective as of February 10, 2005 but applied as if it had gone into effect on December 1, 2004. The financial statements, as of December 31, 2004, are not reflective of these changes. 1-800-922-6769 74 >Expense Limit Columbia WAM has voluntarily agreed to reimburse the ordinary operating expenses (exclusive of 12b-1 service and distribution fees, interest, taxes and extraordinary expenses, if any) exceeding 1.45% of the average annual net assets for Columbia Acorn International Class A, Class B and Class C shares and 1.35% of the average annual net assets for Columbia Acorn Select Class A, Class B and Class C shares. Columbia WAM provides administrative services and receives an administration fee from the Funds at the following rates: COLUMBIA ACORN TRUST ----------------------------------------------------------- Average daily net asset value: On the first $8 billion 0.05% Next $8 billion 0.04% Average daily net asset in excess of $16 billion 0.03% For the year ended December 31, 2004 each Fund's effective administration fee rate was 0.048%. Prior to August 1, 2004, Columbia WAM was paid at the annual rate of 0.05% of each Funds' average daily net assets. Columbia Funds Distributor, Inc. ("CFDI"), an indirect, wholly-owned subsidiary of BOA, is the Funds' principal underwriter and receives no compensation on the sale of Class Z shares. For the year ended December 31, 2004, Columbia Acorn Fund, Columbia Acorn International, Columbia Acorn USA, Columbia Acorn International Select and Columbia Acorn Select have been advised that CFDI retained $1,170,055 in underwriting discounts on the sale of Class A shares and received CDSCs of $32,159, $2,713,414, $185,003, respectively, on Class A, Class B and Class C share redemptions. Each Fund has adopted a 12b-1 plan which requires it to pay CFDI a monthly service fee equal to 0.25% annually of the average daily net assets attributable to Class A, Class B and Class C shares. The 12b-1 plan also requires each Fund to pay CFDI a monthly distribution fee equal to 0.60% and 0.75%, annually, of the average daily net assets attributable to Class B and Class C shares, respectively. Prior to August 1, 2004, each Fund paid CFDI a monthly distribution fee equal to 0.10%, 0.75% and 0.75% annually of the average daily net assets attributable to Class A, Class B shares and Class C, respectively. Columbia Funds Services, Inc. (the "Transfer Agent"), an indirect, wholly-owned subsidiary of BOA, provides shareholder services to the Funds. For such services, the Transfer Agent receives a fee, paid monthly, at the annual rate of $21.00 per open account. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. Effective February 1, 2004 the Transfer Agent made the decision to waive the reimbursement for certain out-of-pocket expenses. Prior to October 1, 2004, the Transfer Agent received a fee, paid monthly, at the annual rate of $28.00 per account. Prior to February 1, 2004, the Transfer Agent was entitled to receive a monthly transfer agent fee at the annual rate of 0.07% of the average daily net assets attributable to Class A, Class B and Class C shares plus flat-rate charges based on the number of shareholder accounts and transactions for Class A, Class B, Class C and Class Z shares. Certain officers and trustees of the Trust are also officers of Columbia WAM. The Trust makes no direct payments to its officers and trustees who are affiliated with Columbia WAM. Trustees' fees and expenses paid by the Funds for the year ended December 31, 2004, including each Fund's portion of a special payment to the chairman of the board of $25,000 for extraordinary time and effort spent on board matters during 2004, were as follows: -------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $656 Columbia Acorn International 95 Columbia Acorn USA 41 Columbia Acorn International Select 2 Columbia Acorn Select 23 ======================================================== In April 2004, the Board of Trustees appointed a Chief Compliance Officer to the Trust in accordance with federal securities regulations. The Funds will pay their pro-rata share of the expenses associated with the Office of the Chief Compliance Officer. These expenses are disclosed separately as "Compliance fees" on the Statements of Operations. The Trust provides a deferred compensation plan for its trustees. Under that plan, a trustee may elect to defer all or a portion of his or her compensation. Amounts deferred are retained by the Trust and represent an unfunded obligation of the Trust. The value of amounts deferred is determined by reference to the change in value of Class Z shares of one or more series of the Trust or a money market fund as specified by the trustee. Benefits under the deferred compensation plan are payable upon retirement. An affiliate may include any company in which a fund owns five percent or more of its outstanding voting securities. On December 31, 2004, Columbia Acorn Fund, Columbia Acorn USA and Columbia Acorn Select each held five percent or more of the outstanding voting securities of one or more companies. Details of investments in those affiliated companies are presented on pages 36, 50 and 57, respectively. 75 Columbia Acorn Family of Funds >Notes to Financial Statements, continued During the year ended December 31, 2004, the Funds engaged in purchase and sale transactions with funds that have a common investment advisor (or affiliated investment advisors), common Directors/Trustees, and/or common Officers. Those transactions complied with Rule 17a-7 under the Investment Company Act of 1940 and were as follows: FUNDS PURCHASES SALES --------------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $33,441 $ 741 Columbia Acorn International 3,657 13,528 Columbia Acorn USA -- 1,963 Columbia Acorn International Select 608 4,794 Columbia Acorn Select -- 889 5. Borrowing Arrangements The Trust participates in a $150 million credit facility, which was entered into to facilitate portfolio liquidity. Interest is charged to each participating fund based on its borrowings at rate per annum equal to the Federal Funds rate plus 0.50%. In addition, a commitment fee of 0.10% per annum is accrued and apportioned among the participating funds based on their pro-rata portion of the unutilized line of credit. The commitment fee is included in "Other expenses" on the Statements of Operations. No amounts were borrowed under this facility for the year ended December 31, 2004. 6. Investment Transactions The aggregate cost of purchases and proceeds from sales other than short-term obligations for the year ended December 31, 2004 were: COLUMBIA ACORN FUND -------------------------------------------------------- (IN THOUSANDS) Investment securities Purchases $ 2,641,143 Proceeds from sales 2,226,641 ======================================================== COLUMBIA ACORN INTERNATIONAL -------------------------------------------------------- (IN THOUSANDS) Investment securities Purchases $ 688,543 Proceeds from sales 800,140 ======================================================== COLUMBIA ACORN USA -------------------------------------------------------- (IN THOUSANDS) Investment securities Purchases $ 141,569 Proceeds from sales 127,021 ======================================================== COLUMBIA ACORN INTERNATIONAL SELECT -------------------------------------------------------- (IN THOUSANDS) Investment securities Purchases $ 33,091 Proceeds from sales 31,991 ======================================================== COLUMBIA ACORN SELECT -------------------------------------------------------- (IN THOUSANDS) Investment securities Purchases $ 516,805 Proceeds from sales 297,997 ======================================================== 7. Redemption Fees For the year ended December 31, 2004, the redemption fees for the Class Z shares of Columbia Acorn International and Columbia Acorn International Select amounted to $85,858 and $3,572, respectively. 8. Legal Proceedings On March 15, 2004, Columbia Management Advisors, Inc. ("Columbia Management"), the advisor to the Columbia Funds, and CFDI (collectively with Columbia Management, "Columbia"), the distributor of the shares of the Columbia Funds, the Columbia Acorn Family of Funds and the Wanger Advisors Trust Funds (collectively, "the Columbia Family of Funds"), entered into agreements in principle with the staff of the U.S. Securities and Exchange Commission ("SEC") and the Office of the New York Attorney General ("NYAG") to resolve the proceedings brought in connection with the SEC's and NYAG's investigations of frequent trading and market timing in certain Columbia mutual funds. Columbia WAM, the advisor to the Columbia Acorn Family of Funds and the Wanger Advisors Trust Funds, was not a respondent in either proceeding nor were any of its officers or directors. On February 9, 2005, Columbia entered into an Assurance of Discontinuance (the "NYAG Settlement") with the NYAG and consented to the entry of a cease-and-desist order by the SEC (the "SEC Order" and together, the "Settlements"). The Settlements contain substantially the same terms and conditions as outlined in the agreements in principle. Although none of the Columbia Acorn Family of Funds is a party to the Settlement orders, under the terms of the Settlements and in order for Columbia Management to continue to provide administrative services to the Columbia Acorn Family of Funds, the Board of Trustees of the Trust expects to comply voluntarily with certain requirements, including: the election of an independent board chairman, which the Board had done well in advance of the regulatory proceedings; and the appointment of one or more individuals to monitor legal compliance and to add another level of assurance that the management fees to be charged to the Funds are negotiated at arm's length and are reasonable. Under the terms of the SEC Order, Columbia has agreed, among other things, to: pay $70 million in disgorgement and $70 million in civil money penalties; cease and 1-800-922-6769 76 desist from violations of the antifraud provisions and certain other provisions of the federal securities laws; maintain certain compliance and ethics oversight structures; retain an independent consultant to review Columbia's applicable supervisory, compliance, control and other policies and procedures; and retain an independent distribution consultant (see below). The NYAG Settlement also, among other things, requires Columbia and its affiliates, Banc of America Capital Management, LLC and BACAP Distributors, LLC to reduce management fees paid by the Columbia Family of Funds, Nations Funds and other related mutual funds collectively by $32 million per year for five years, for a projected total of $160 million in management fee reductions based on net assets as of March 15, 2004. Pursuant to the procedures set forth in the SEC Order, the settlement amounts will be distributed in accordance with a distribution plan to be developed by an independent distribution consultant, who is acceptable to the SEC staff and the independent trustees of the funds. The distribution plan must be based on a methodology developed in consultation with Columbia and the independent trustees of the funds and not unacceptable to the staff of the SEC. More specific information on the distribution plan will be communicated by Columbia WAM and/or its affiliates at a later date. The Trust, Columbia WAM and the Trustees of the Trust are defendants in several derivative and class action lawsuits that allege, in summary, defendants permitted investors to engage in improper trading of shares of various funds in violation of certain federal and state laws. All of these lawsuits have been consolidated with similar suits in a Multi-District Litigation proceeding in Baltimore, Maryland, and consolidated class action and derivative complaints have been filed. The Trust and Columbia WAM are also defendants in a class action lawsuit that alleges, in summary, that the Trust and Columbia WAM exposed shareholders of Columbia Acorn International Fund to trading by market timers by allegedly: (a) failing to properly evaluate daily whether a significant event affecting the value of that Fund's securities had occurred after foreign markets had closed but before the calculation of the Fund's net asset value ("NAV"); (b) failing to implement the Fund's portfolio valuation and share pricing policies and procedures; and (c) failing to know and implement applicable rules and regulations concerning the calculation of NAV. Columbia WAM and the Trustees of the Trust are also defendants in a lawsuit alleging that Columbia WAM used Fund assets to make undisclosed payments to brokers as an incentive for the brokers to market the Funds over other mutual funds to investors. The complaint alleges Columbia WAM and the Trustees of the Trust breached certain common law duties and federal laws. On January 11, 2005 a putative class action lawsuit was filed in federal district court in Massachusetts against, among others, the Trustees of the Trust and Columbia WAM. The lawsuit alleges that defendants violated common law duties to fund shareholders as well as sections of the Investment Company Act of 1940, by failing to ensure that the Trust funds and other affiliated funds participated in securities class action settlements for which the funds were eligible. Specifically, plaintiffs allege that defendants failed to submit Proof of Claims in connection with settlements of securities class action lawsuits filed against companies in which the funds held positions. The complaint seeks compensatory and punitive damages, and the disgorgement of all fees paid to the Columbia WAM and affiliated advisers. The Trust and Columbia WAM intend to defend these suits vigorously. The Trust does not believe that the pending actions will have a material adverse effect on the financial statements of any Fund, and Columbia WAM does not believe that the pending actions will have a material adverse effect on its ability to perform under its contracts with the Funds. As a result of these matters or any adverse publicity or other developments resulting from them, there may be increased redemptions or reduced sales of Fund shares, which could increase transaction costs or operating expenses, or have other adverse consequences for the Fund. In connection with the events described in detail above, various parties have filed suit against certain funds, their Boards and/or BOA (and affiliated entities). These suits are ongoing. Accordingly, an estimate of the financial impact of this litigation on any fund, if any, cannot currently be made. For the year ended December 31, 2004, Columbia Management has assumed consulting services and legal fees incurred by the Funds in connection with these matters and the amounts are as follows: -------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $1,116 Columbia Acorn International 162 Columbia Acorn USA 69 Columbia Acorn International Select 4 Columbia Acorn Select 90 ======================================================== 77 Columbia Thermostat Fund >Statement of Investments, December 31, 2004 NUMBER OF SHARES OR PRINCIPAL AMOUNT (000) VALUE (000) ------------------------------------------------------------------ >BOND FUNDS: 59.4% 6,761 Columbia Intermediate Bond Fund, Class Z $ 61,593 3,451 Columbia Federal Securities Fund, Class Z 36,995 2,795 Columbia High Yield Fund, Class Z 24,623 ------------------------------------------------------------------ TOTAL BOND FUNDS (COST: $122,197) 123,211 >STOCK FUNDS: 40.0% 2,291 Columbia Growth Stock Fund, Class Z (b) 20,683 1,134 Columbia Growth & Income Fund, Class Z 20,598 628 Columbia Acorn Fund, Class Z 16,623 466 Columbia Mid Cap Value Fund, Class Z (b) 12,465 590 Columbia Acorn Select, Class Z 12,463 ------------------------------------------------------------------ TOTAL STOCK FUNDS (COST: $66,413) 82,832 SHORT-TERM OBLIGATIONS: 0.4% $ 740 Repurchase Agreement with State Street Bank & Trust Co. dated 12/31/04, due 1/03/05 at 1.90% Collateralized by a Federal National Mortgage Association Note, maturing 1/05/05, market value $760 (repurchase proceeds: $740) 740 ------------------------------------------------------------------ (AMORTIZED COST: $740) 740 --------- TOTAL INVESTMENTS: 99.8% 206,783 (COST: $189,350) (A) CASH AND OTHER ASSETS LESS LIABILITIES: 0.2% 481 --------- TOTAL NET ASSETS: 100% $207,264 ================================================================== >Notes to Statement of Investments (in thousands) (a) At December 31, 2004, for federal income tax purposes cost of investments was $189,862 and net unrealized appreciation was $16,921 consisting of gross unrealized appreciation of $17,021 and gross unrealized depreciation of $100. (b) Non-income producing security. 1-800-922-6769 78 Columbia Thermostat Fund >Statement of Assets and Liabilities DECEMBER 31, 2004 -------------------------------------------------------------------------------------------------- (IN THOUSANDS) ASSETS Unaffiliated investments, at value (cost $740) $ 740 Affiliated investments, at value (cost: $188,610) 206,043 Cash 1 Receivable for: Fund shares sold 304 Dividends and interest 473 Expense reimbursement due from Advisor 80 -------------------------------------------------------------------------------------------------- Total Assets 207,641 LIABILITIES Payable for: Fund shares redeemed 148 Transfer agent fees 20 Custody fees 1 Legal & audit fees 18 Reports to shareholders 71 12b-1 Service & Distribution fees 105 Other liabilities 14 -------------------------------------------------------------------------------------------------- Total Liabilities 377 -------------------------------------------------------------------------------------------------- NET ASSETS $ 207,264 ================================================================================================== COMPOSITION OF NET ASSETS: Paid in capital $ 186,468 Undistributed net investment income 15 Accumulated net realized gain 3,348 Net unrealized appreciation on investments 17,433 -------------------------------------------------------------------------------------------------- NET ASSETS $ 207,264 ================================================================================================== Net asset value per share -- Class A (a) $ 13.11 (Net assets/shares) ($77,092/5,879) Maximum offering price per share -- Class A (b) $ 13.91 (Net asset value per share/front-end sales charge) ($13.11/0.9425) Net asset value and offering price per share -- Class B (a) $ 13.14 (Net assets/shares) ($78,040/5,941) Net asset value and offering price per share -- Class C (a) $ 13.13 (Net assets/shares) ($31,161/2,372) Net asset value, offering and redemption price per share -- Class Z $ 13.12 (Net assets/shares) ($20,971/1,598)
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. See accompanying notes to financial statements. 79 Columbia Thermostat Fund >Statement of Operations For the Year Ended December 31, 2004 (IN THOUSANDS) ------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends from affiliated investment company shares $ 4,834 Interest income 12 ------------------------------------------------------------------------------------------------- Total Investment Income 4,846 EXPENSES: Management fee 177 Administration fee 84 12b-1 Service and Distribution fees: Class A 225 Class B 631 Class C 276 Transfer agent fees: Class A 107 Class B 154 Class C 54 Class Z 26 Trustees' fees 4 Custody fees 15 Legal & audit fees 29 Reports to shareholders 145 Registration & blue sky fees 97 Compliance fees 3 Non-recurring costs (See Note 7) 16 Other expenses 8 ------------------------------------------------------------------------------------------------- Total expenses 2,051 Less custody fees paid indirectly --* Less fees waived by Distributor (65) Less reimbursement of expenses by Advisor (403) Less reimbursement of expenses by Transfer Agent (55) Non-recurring costs reimbursed (See Note 7) (16) ------------------------------------------------------------------------------------------------- Net Expenses 1,512 ------------------------------------------------------------------------------------------------- Net Investment Income 3,334 NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on: Affiliated investments 2,200 Distributions from affiliated investment company shares 1,492 ------------------------------------------------------------------------------------------------- Net realized gain 3,692 ------------------------------------------------------------------------------------------------- Net change in unrealized appreciation on investments 8,154 ------------------------------------------------------------------------------------------------- Net realized and unrealized gain 11,846 ------------------------------------------------------------------------------------------------- Net Increase in Net Assets from Operations $ 15,180 =================================================================================================
* Rounds to less than $500. See accompanying notes to financial statements. 1-800-922-6769 80 Columbia Thermostat Fund >Statement of Changes in Net Assets
INCREASE IN NET ASSETS Year ended Year ended December 31, December 31, ------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) 2004 2003 (a) OPERATIONS: Net investment income $ 3,334 $ 696 Net realized gain on investments and distributions from investment company shares 3,692 272 Net change in net unrealized appreciation on investments 8,154 9,219 ------------------------------------------------------------------------------------------------------------------ Net Increase from Operations 15,180 10,187 DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income -- Class A (1,488) (395) Net realized gain -- Class A (141) (21) Net investment income -- Class B (997) (108) Net realized gain -- Class B (146) (30) Net investment income -- Class C (383) (43) Net realized gain -- Class C (61) (10) Net investment income -- Class Z (450) (160) Net realized gain -- Class Z (36) (14) ------------------------------------------------------------------------------------------------------------------ Total Distributions to Shareholders (3,702) (781) SHARE TRANSACTIONS: Subscriptions -- Class A 42,302 40,815 Distributions reinvested -- Class A 1,425 373 Redemptions -- Class A (13,080) (1,441) ------------------------------------------------------------------------------------------------------------------ Net Increase -- Class A 30,647 39,747 Subscriptions -- Class B 27,802 48,741 Distributions reinvested -- Class B 1,024 125 Redemptions -- Class B (6,671) (1,176) ------------------------------------------------------------------------------------------------------------------ Net Increase -- Class B 22,155 47,690 Subscriptions -- Class C 12,939 19,668 Distributions reinvested -- Class C 378 44 Redemptions -- Class C (4,000) (1,015) ------------------------------------------------------------------------------------------------------------------ Net Increase -- Class C 9,317 18,697 Subscriptions -- Class Z 8,408 9,094 Distributions reinvested -- Class Z 470 166 Redemptions -- Class Z (3,140) (1,023) ------------------------------------------------------------------------------------------------------------------ Net Increase -- Class Z 5,738 8,237 ------------------------------------------------------------------------------------------------------------------ Net Increase from Share Transactions 67,857 114,371 ------------------------------------------------------------------------------------------------------------------ Total Increase in Net Assets 79,335 123,777 ------------------------------------------------------------------------------------------------------------------ NET ASSETS: Beginning of period 127,929 4,152 ------------------------------------------------------------------------------------------------------------------ End of period $ 207,264 $ 127,929 ================================================================================================================== UNDISTRIBUTED NET INVESTMENT INCOME $ 15 $ -- ==================================================================================================================
(a) Class A, Class B and Class D commenced operations March 3, 2003. On October 13, 2003, Class D was redesignated Class C. See accompanying notes to financial statements. 81 Columbia Thermostat Fund >Statement of Changes in Net Assets, continued
CHANGES IN SHARES OF BENEFICIAL INTEREST: December 31, December 31, ----------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) 2004 2003 (a) Subscriptions -- Class A 3,381 3,529 Shares issued in reinvestment and capital gains -- Class A 110 31 Less shares redeemed -- Class A (1,049) (123) ----------------------------------------------------------------------------------------------------------------- Net Increase -- Class A 2,442 3,437 Subscriptions -- Class B 2,213 4,268 Shares issued in reinvestment and capital gains -- Class B 79 10 Less shares redeemed -- Class B (530) (99) ----------------------------------------------------------------------------------------------------------------- Net Increase -- Class B 1,762 4,179 Subscriptions -- Class C 1,028 1,712 Shares issued in reinvestment and capital gains -- Class C 29 4 Less shares redeemed -- Class C (316) (85) ----------------------------------------------------------------------------------------------------------------- Net Increase -- Class C 741 1,631 Subscriptions -- Class Z 669 821 Shares issued in reinvestment and capital gains -- Class Z 36 14 Less shares redeemed -- Class Z (250) (91) ----------------------------------------------------------------------------------------------------------------- Net Increase -- Class Z 455 744 ----------------------------------------------------------------------------------------------------------------- Net increase in Shares of Beneficial Interest 5,400 9,991 -----------------------------------------------------------------------------------------------------------------
(a) Class A, Class B and Class D commenced operations March 3, 2003. On October 13, 2003, Class D was redesignated Class C. See accompanying notes to financial statements 1-800-922-6769 82 Columbia Thermostat Fund >Financial Highlights
Inception March 3, 2003 Year Ended Through Class A December 31, December 31, ------------ ------------ SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 NET ASSET VALUE, BEGINNING OF PERIOD $ 12.30 $ 10.10 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) 0.28 0.18 Net realized and unrealized gain 0.81 2.15 ------------ ------------ Total from Investment Operations 1.09 2.33 ------------ ------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.25) (0.13) From net realized gains (0.03) (0.00)(b) ------------ ------------ Total Distributions Declared to Shareholders (0.28) (0.13) ------------ ------------ NET ASSET VALUE, END OF PERIOD $ 13.11 $ 12.30 ============ ============ Total Return (c)(d) 8.92% 23.10%(e) ------------ ------------ RATIOS TO AVERAGE NET ASSETS Expenses (f)(g) 0.50% 0.57%(h) Net investment income (g) 2.23% 1.86%(h) Reimbursement 0.33% 0.66%(h) Portfolio turnover rate 67% 61% Net assets at end of period (000'S) $ 77,092 $ 42,271
(a) Per share data was calculated using average shares outstanding during the period. Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests. (b) Rounds to less than $0.01 per share. (c) Had the Advisor and/or Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (d) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (e) Not annualized. (f) Does not include expenses of the investment companies in which the Fund invests. (g) The benefits derived from custody fees paid indirectly had no impact. (h) Annualized.
Inception March 3, 2003 Year Ended Through Class B December 31, December 31, ------------ ------------ SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 NET ASSET VALUE, BEGINNING OF PERIOD $ 12.32 $ 10.10 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) 0.19 0.10 Net realized and unrealized gain 0.83 2.16 ------------ ------------ Total from Investment Operations 1.02 2.26 ------------ ------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.17) (0.04) From net realized gains (0.03) (0.00)(b) ------------ ------------ Total Distributions Declared to Shareholders (0.20) (0.04) ------------ ------------ NET ASSET VALUE, END OF PERIOD $ 13.14 $ 12.32 ============ ============ Total Return (c)(d) 8.27% 22.38%(e) ------------ ------------ RATIOS TO AVERAGE NET ASSETS Expenses (f)(g) 1.18% 1.32%(h) Net investment income (g) 1.55% 1.06%(h) Reimbursement 0.29% 0.66%(h) Portfolio turnover rate 67% 61% Net assets at end of period (000'S) $ 78,040 $ 51,501
(a) Per share data was calculated using average shares outstanding during the period. Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests. (b) Rounds to less than $0.01 per share. (c) Had the Advisor and/or Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (d) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (e) Not annualized. (f) Does not include expenses of the investment companies in which the Fund invests. (g) The benefits derived from custody fees paid indirectly had no impact. (h) Annualized.
Inception March 3, 2003 Year Ended Through Class C December 31, December 31, ------------ ------------ SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2004 2003 NET ASSET VALUE, BEGINNING OF PERIOD $ 12.32 $ 10.10 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) 0.19 0.11 Net realized and unrealized gain 0.81 2.15 ------------ ------------ Total from Investment Operations 1.00 2.26 ------------ ------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.16) (0.04) From net realized gains (0.03) (0.00)(b) ------------ ------------ Total Distributions Declared to Shareholders (0.19) (0.04) ------------ ------------ NET ASSET VALUE, END OF PERIOD $ 13.13 $ 12.32 ============ ============ Total Return (c)(d) 8.13% 22.38%(e) ------------ ------------ RATIOS TO AVERAGE NET ASSETS Expenses (f)(g) 1.25% 1.32%(h) Net investment income (g) 1.48% 1.10%(h) Reimbursement 0.26% 0.66%(h) Portfolio turnover rate 67% 61% Net assets at end of period (000'S) $ 31,161 $ 20,087
(a) Per share data was calculated using average shares outstanding during the period. Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the underlying investment companies in which the Fund invests. (b) Rounds to less than $0.01 per share. (c) Had the Advisor and/or Transfer Agent not reimbursed a portion of expenses, total return would have been reduced. (d) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (e) Not annualized. (f) Does not include expenses of the investment companies in which the Fund invests. (g) The benefits derived from custody fees paid indirectly had no impact. (h) Annualized. See accompanying notes to financial statements 83 Columbia Thermostat Fund >Notes to Financial Statements 1. Nature of Operations Columbia Thermostat Fund (the "Fund"), a series of Columbia Acorn Trust (the "Trust"), an open-end management investment company organized as a Massachusetts business trust, commenced operations September 25, 2002. The Fund may issue an unlimited number of shares. The Fund currently offers four classes of shares: Class A, Class B, Class C and Class Z. On October 13, 2003, Class D was redesignated Class C. Class A shares are sold with a front-end sales charge. A contingent deferred sales charge ("CDSC") may be assessed to Class A shares purchased without an initial sales charge on redemptions made within eighteen months on an original purchase of $1 million to $25 million. Class B shares are subject to a CDSC. Class B shares will convert to Class A shares in three, four or eight years after purchase, depending on the program under which shares are purchased. Class C shares are subject to a CDSC on redemptions made within one year after purchase. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares. The financial highlights for Class Z shares are presented in a separate annual report. The annual report for the other series of the Trust is also included in this report. The investment objective of the Fund is to provide long-term total return. The Fund pursues its investment objective by investing in shares of other mutual funds. As a `fund of funds', under normal circumstances, the Fund allocates at least 95% of its net assets among a selected group of stock and bond mutual funds (the "Portfolio Funds") according to the current level of the Standard & Poor's 500 Stock Index in relation to predetermined ranges set by the Fund's investment advisor. As of December 31, 2004, the Fund invested in five stock Portfolio Funds (Columbia Acorn Fund, Columbia Acorn Select Fund, Columbia Growth & Income Fund, Columbia Mid Cap Value Fund and Columbia Growth Stock Fund) and three bond Portfolio Funds (Columbia Federal Securities Fund, Columbia Intermediate Bond Fund and Columbia High Yield Fund). The Fund may also invest up to 5% of its net assets plus any cash received that day in cash, repurchase agreements, high quality short-term paper and government securities. 2. Significant Accounting Policies >Security valuation Investments in Portfolio Funds are valued at their net asset value as reported by the underlying funds. Repurchase agreements, high quality short-term paper and government securities having a maturity of 60 days or less from the valuation date are valued on an amortized cost basis, which approximates fair value. >Repurchase agreements The Fund may engage in repurchase agreement transactions. The Fund, through its custodian, receives delivery of underlying securities collateralizing each repurchase agreement. The Fund's investment advisor determines that the value of the underlying securities is at all times at least equal to the resale price. In the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral may be subject to legal proceedings. >Security transactions and investment income Portfolio Fund transactions are accounted for on the trade date (date the order to buy or sell is executed). Dividend income and realized gain distributions from other funds are recorded on the ex-dividend date. Interest income is recorded on the accrual basis and includes amortization of discounts on short-term debt obligations when required for federal income tax purposes. Realized gains and losses from security transactions are reported on an identified cost basis. Awards from class action litigation may be recorded as a reduction of cost by Portfolio Funds. If the Portfolio Fund no longer owns the applicable securities, the proceeds are recorded as realized gains. >Use of estimates 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 amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. >Fund share valuation Fund shares are sold and redeemed on a continuing basis at net asset value. Net asset value per share is determined daily as of the close of trading on the New York Stock Exchange ("Exchange") on each day the Exchange is open for trading. All income, expenses (other than Class A, Class B and Class C 12b-1 service and distribution fees, and Class A, Class B, Class C and Class Z Transfer Agent fees) and realized and unrealized gains (losses) of the Fund are allocated to each class proportionately on a daily basis for purposes of determining the net asset value of each class. 1-800-922-6769 84 >Custody fees/credits Custody fees are reduced based on the Fund's cash balance maintained with the custodian. The Fund could have invested a portion of assets utilized in connection with the expense offset arrangement in an income-producing asset if it had not entered into such an agreement. The amount is disclosed as a reduction of total expenses in the Statement of Operations. >Federal income taxes The Fund has complied with the provisions of the Internal Revenue Code available to regulated investment companies and, in the manner provided therein, distributes all of its taxable income, as well as any net realized gain on sales of Portfolio Fund shares and any distributions of net realized gains received by the Fund from its Portfolio Funds, reportable for federal income tax purposes. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required. >Distributions to Shareholders Distributions to shareholders are recorded on the ex-date. 3. Federal Tax Information The timing and character of 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. Reclassifications are made to the Fund's capital accounts for permanent tax differences to reflect income and gains available for distribution (or available capital loss carryforwards) under income tax regulations. For the year ended December 31, 2004, permanent differences resulting primarily from differing treatments for redemption based payments treated as dividend paid deductions were identified and reclassified among the components of the Fund's net assets as follows: UNDISTRIBUTED ACCUMULATED NET INVESTMENT NET REALIZED INCOME GAIN PAID IN CAPITAL -------------------------------------------------------------- (IN THOUSANDS) $(1) $(166) $167 Net investment income and net realized gains (losses), as disclosed on the Statement of Operations, and net assets were not affected by these reclassifications. The tax character of distributions paid during the year ended December 31, 2004 and December 31, 2003 was as follows: DECEMBER 31, DECEMBER 31, 2004 2003 ------------------------------------------------------------ (IN THOUSANDS) Distributions paid from: Ordinary Income* $3,645 $771 Long-Term Capital Gains 57 10 * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2004, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* -------------------------------------------------------------- (IN THOUSANDS) $2,436 $1,446 $16,921 * The difference between book-basis and tax-basis net unrealized appreciation is primarily due to deferral of losses from wash sales. 4. Transactions with Affiliates Columbia Wanger Asset Management, L.P. ("Columbia WAM"), an indirect, wholly-owned subsidiary of Columbia Management Group, Inc., which in turn is a wholly-owned subsidiary of Bank of America Corporation ("BOA") furnishes continuing investment supervision to the Fund and is responsible for the overall management of the Fund's business affairs. Prior to April 1, 2004, Columbia Management Group, Inc. was a wholly-owned subsidiary of Fleet National Bank, which in turn was a wholly-owned subsidiary of FleetBoston Financial Corporation ("Fleet"). On April 1, 2004, Fleet was acquired by BOA. Under the Fund's investment management agreement, fees are accrued daily and paid monthly to Columbia WAM at the annual rate of 0.10% of the Fund's average daily net assets. >Expense Limit Columbia WAM has agreed to contractually reimburse the direct operating expenses (exclusive of distribution and service fees, interest and fees on borrowings and expenses associated with the Fund's investment in other investment companies) exceeding 0.25% of the average annual net assets of the Fund's Class A, Class B and Class C shares. Columbia WAM has the right to recoup expense reimbursement payments made to the Fund through December 31, 2005. This will be accomplished by the payment of an expense reimbursement fee by the Fund to Columbia WAM 85 Columbia Thermostat Fund >Notes to Financial Statements, continued computed and paid monthly, with a limitation that immediately after such payment the Fund's ordinary operating expenses (excluding any distribution and service fees, interest and fees on borrowings and expenses associated with the Fund's investment in other investment companies) will not exceed 0.25% annually. Prior to August 1, 2003, Columbia WAM had agreed to voluntarily reimburse the direct operating expenses (exclusive of distribution and service fees, interest and fees on borrowings and expenses associated with the Fund's investment in other investment companies) exceeding 0.60% of the average annual net assets of the Fund's Class A, Class B and Class C shares. Columbia WAM provides administrative services and receives an administration fee from the Fund at the following annual rates: COLUMBIA ACORN TRUST ------------------------------------------------------------------- Average daily net asset value: On the first $8 billion 0.05% Next $8 billion 0.04% Average daily net asset value in excess of $16 billion 0.03% For the year ended December 31, 2004 the Fund's effective administration fee rate was 0.048%. Prior to August 1, 2004, Columbia WAM was paid at an annual rate of 0.05% of the Fund's average daily net assets. Columbia Funds Distributor, Inc. ("CFDI"), an indirect, wholly-owned subsidiary of BOA, is the Fund's principal indirect underwriter and receives no compensation on the sale of Class Z shares. For the year ended December 31, 2004, the Fund has been advised that CFDI retained $166,684 in underwriting discounts on the sale of Class A shares and received CDSCs of $43, $164,282 and $14,900 on Class A, Class B and Class C share redemptions, respectively. The Fund has adopted a 12b-1 plan which requires it to pay CFDI a monthly service fee equal to 0.25% annually of the average daily net assets attributable to Class A, Class B and Class C shares. The 12b-1 plan also requires the Fund pay CFDI a monthly distribution fee equal to 0.60% and 0.75%, annually, of the average daily net assets attributable to Class B and Class C shares, respectively. Prior to August 1, 2004, the Fund paid CFDI a monthly distribution fee equal to 0.10%, 0.75% and 0.75% annually of the average daily net assets attributable to Class A, Class B and Class C shares, respectively. Columbia Funds Services, Inc. (the "Transfer Agent"), an indirect, wholly-owned subsidiary of BOA, provides shareholder services to the Fund. For such services, the Transfer Agent receives a fee, paid monthly, at the annual rate of $21.00 per open account. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. Effective February 1, 2004 the Transfer Agent made the decision to waive the reimbursement for certain out-of-pocket expenses. Prior to October 1, 2004, the Transfer Agent received a fee, paid monthly, at the annual rate of $28.00 per open account. Prior to February 1, 2004, the Transfer Agent was entitled to receive a monthly transfer agent fee at the annual rate of 0.07% of the average daily net assets attributable to Class A, Class B and Class C shares plus flat-rate charges based on the number of shareholder accounts and transactions for Class A, Class B, Class C and Class Z shares. Certain officers and trustees of the Trust are also officers of Columbia WAM. The Trust makes no direct payments to its officers and trustees who are affiliated with Columbia WAM. Trustees' fees and expenses paid by the Fund for the year ended December 31, 2004, including the Fund's portion of a special payment to the chairman of the board of $25,000 for extraordinary time and effort spent on board matters during 2004, were $3,722. In April 2004, the Board of Trustees appointed a Chief Compliance Officer to the Trust in accordance with federal securities regulations. The Fund will pay its pro-rata share of the expenses associated with the Office of the Chief Compliance Officer. This expense is disclosed separately as "Compliance fees" on the Statement of Operations. 5. Borrowing Arrangements The Trust participates in a $150 million credit facility, which was entered into to facilitate portfolio liquidity. Interest is charged to each participating fund based on its borrowings at rate per annum equal to the Federal Funds rate plus 0.50%. In addition, a commitment fee of 0.10% per annum is accrued and apportioned among the participating funds based on their pro-rata portion of the unutilized line of credit. The commitment fee is included in "Other expenses" on the Statement of Operations. No amounts were borrowed under this facility for the year ended December 31, 2004. 6. Investment Transactions The aggregate cost of purchases and proceeds from sales other than short-term obligations for the year ended December 31, 2004 were: ----------------------------------------------------------------- (IN THOUSANDS Purchases $187,095 Proceeds from sales 118,286 ================================================================= 1-800-922-6769 86 7. Legal Proceedings On March 15, 2004, Columbia Management Advisors, Inc. ("Columbia Management"), the advisor to the Columbia Funds, and CFDI (collectively with Columbia Management, "Columbia"), the distributor of the shares of the Columbia Funds, the Columbia Acorn Family of Funds and the Wanger Advisors Trust Funds (collectively, "the Columbia Family of Funds"), entered into agreements in principle with the staff of the U.S. Securities and Exchange Commission ("SEC") and the Office of the New York Attorney General ("NYAG") to resolve the proceedings brought in connection with the SEC's and NYAG's investigations of frequent trading and market timing in certain Columbia mutual funds. Columbia WAM, the advisor to the Columbia Acorn Family of Funds and the Wanger Advisors Trust Funds, was not a respondent in either proceeding nor were any of its officers or directors. On February 9, 2005, Columbia entered into an Assurance of Discontinuance (the "NYAG Settlement") with the NYAG and consented to the entry of a cease-and-desist order by the SEC (the "SEC Order" and together, the "Settlements"). The Settlements contain substantially the same terms and conditions as outlined in the agreements in principle. Although none of the Columbia Acorn Family of Funds is a party to the Settlement orders, under the terms of the Settlements and in order for Columbia Management to continue to provide administrative services to the Columbia Acorn Family of Funds, the Board of Trustees of the Trust expects to comply voluntarily with certain requirements, including: the election of an independent board chairman, which the Board had done well in advance of the regulatory proceedings; and the appointment of one or more individuals to monitor legal compliance and to add another level of assurance that the management fees to be charged to the Funds are negotiated at arm's length and are reasonable. Under the terms of the SEC Order, Columbia has agreed, among other things, to: pay $70 million in disgorgement and $70 million in civil money penalties; cease and desist from violations of the antifraud provisions and certain other provisions of the federal securities laws; maintain certain compliance and ethics oversight structures; retain an independent consultant to review Columbia's applicable supervisory, compliance, control and other policies and procedures; and retain an independent distribution consultant (see below). The NYAG Settlement also, among other things, requires Columbia and its affiliates, Banc of America Capital Management, LLC and BACAP Distributors, LLC to reduce management fees paid by the Columbia Family of Funds, Nations Funds and other related mutual funds collectively by $32 million per year for five years, for a projected total of $160 million in management fee reductions based on net assets as of March 15, 2004. Pursuant to the procedures set forth in the SEC Order, the settlement amounts will be distributed in accordance with a distribution plan to be developed by an independent distribution consultant, who is acceptable to the SEC staff and the independent trustees of the funds. The distribution plan must be based on a methodology developed in consultation with Columbia and the independent trustees of the funds and not unacceptable to the staff of the SEC. More specific information on the distribution plan will be communicated by Columbia WAM and/or its affiliates at a later date. The Trust, Columbia WAM and the Trustees of the Trust are defendants in several derivative and class action lawsuits that allege, in summary, defendants permitted investors to engage in improper trading of shares of various funds in violation of certain federal and state laws. All of these lawsuits have been consolidated with similar suits in a Multi-District Litigation proceeding in Baltimore, Maryland, and consolidated class action and derivative complaints have been filed. The Trust and Columbia WAM are also defendants in a class action lawsuit that alleges, in summary, that the Trust and Columbia WAM exposed shareholders of Columbia Acorn International Fund to trading by market timers by allegedly: (a) failing to properly evaluate daily whether a significant event affecting the value of that Fund's securities had occurred after foreign markets had closed but before the calculation of the Fund's net asset value ("NAV"); (b) failing to implement the Fund's portfolio valuation and share pricing policies and procedures; and (c) failing to know and implement applicable rules and regulations concerning the calculation of NAV. Columbia WAM and the Trustees of the Trust are also defendants in a lawsuit alleging that Columbia WAM used Fund assets to make undisclosed payments to brokers as an incentive for the brokers to market the Funds over other mutual funds to investors. The complaint alleges Columbia WAM and the Trustees or the Trust breached certain common law duties and federal laws. On January 11, 2005 a putative class action lawsuit was filed in federal district court in Massachusetts against, among others, the Trustees of the Trust and Columbia WAM. The lawsuit alleges that defendants violated common law duties to fund shareholders as well as sections of the Investment Company Act of 1940, by failing to ensure that 87 Columbia Thermostat Fund >Notes to Financial Statements, continued the Trust funds and other affiliated funds participated in securities class action settlements for which the funds were eligible. Specifically, plaintiffs allege that defendants failed to submit Proof of Claims in connection with settlements of securities class action lawsuits filed against companies in which the funds held positions. The complaint seeks compensatory and punitive damages, and the disgorgement of all fees paid to the Columbia WAM and affiliated advisers.The Trust and Columbia WAM intend to defend these suits vigorously. The Trust does not believe that the pending actions will have a material adverse effect on the financial statements of any Fund, and Columbia WAM does not believe that the pending actions will have a material adverse effect on its ability to perform under its contracts with the Funds. As a result of these matters or any adverse publicity or other developments resulting from them, there may be increased redemptions or reduced sales of Fund shares, which could increase transaction costs or operating expenses, or have other adverse consequences for the Fund. In connection with the events described in detail above, various parties have filed suit against certain funds, their Boards and/or BOA (and affiliated entities). These suits are ongoing. Accordingly, an estimate of the financial impact of this litigation on any fund, if any, cannot currently be made. For the year ended December 31, 2004, Columbia Management has assumed $16,377 of consulting services and legal fees incurred by the Fund in connection with these matters. 1-800-922-6769 88 Report of Independent Registered Public Accounting Firm TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF COLUMBIA ACORN TRUST: In our opinion, the accompanying statements of assets and liabilities, including the statements of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Columbia Acorn Fund, Columbia Acorn International, Columbia Acorn USA, Columbia Acorn International Select, Columbia Acorn Select and Columbia Thermostat Fund (each a series of Columbia Acorn Trust, hereinafter referred to as the "Funds") at December 31, 2004, the results of their operations, the changes in their net assets and the financial highlights for the year then ended, 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 Funds' 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 securities at December 31, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The statement of changes for the year ended December 31, 2003 and the financial highlights of the Funds for the periods ended December 31, 2003 and prior were audited by other independent auditors whose reported dated February 6, 2004 expressed an unqualified opinion on those financial statements. PricewaterhouseCoopers LLP Chicago, Illinois February 14, 2005 89 Columbia Acorn Family of Funds >Unaudited Information FEDERAL INCOME TAX INFORMATION (IN THOUSANDS) COLUMBIA ACORN For the fiscal year ended December 31, 2004, the Fund designates long-term capital gains of $655,225. 100.00% of the ordinary income distributed by the Fund, for the year ended December 31, 2004, qualifies for the corporate dividends received deduction. For non-corporate shareholders 100.00%, or the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period January 1, 2004 to December 31, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. COLUMBIA ACORN INTERNATIONAL Foreign taxes paid during the fiscal year ended December 31, 2004, amounting to $3,925 ($0.05 per share) are expected to be passed through to shareholders as 100% allowable foreign tax credits on Form 1099-DIV for the year ended December 31, 2004. Gross income derived from sources within foreign countries amounted to $39,927 ($0.56 per share) for the fiscal year ended December 31, 2004. For non-corporate shareholders 100.00%, or the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period January 1, 2004 to December 31, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. COLUMBIA ACORN USA For the fiscal year ended December 31, 2004, the Fund designates long-term capital gains of $18,183. COLUMBIA ACORN INTERNATIONAL SELECT Foreign taxes paid during the fiscal year ended December 31, 2004, amounting to $87 ($0.03 per share) are expected to be passed through to shareholders as 100% allowable foreign tax credits on Form 1099-DIV for the year ended December 31, 2004. Gross income derived from sources within foreign countries amounted to $838 ($0.26 per share) for the fiscal year ended December 31, 2004. For non-corporate shareholders 100.00%, or the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period January 1, 2004 to December 31, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. COLUMBIA ACORN SELECT For the fiscal year ended December 31, 2004, the Fund designates long-term capital gains of $36,867. COLUMBIA THERMOSTAT FUND For the fiscal year ended December 31, 2004, the Fund designates long-term capital gains of $1,530. 12.29% of the ordinary income distributed by the Fund, for the year ended December 31, 2004, qualifies for the corporate dividends received deduction. For non-corporate shareholders 11.21%, or the maximum amount allowable under the Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the Fund for the period January 1, 2004 to December 31, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. 1-800-922-6769 90 Change in Independent Registered Public Accounting Firm Effective April 13, 2004, the audit committee of the Trust requested that Ernst & Young LLP ("E&Y") resign as the auditors of the Funds. Also effective July 14, 2004, upon the recommendation of the audit committee, the Trust selected PricewaterhouseCoopers LLP ("PWC") as independent registered public accounting firm to audit the books and records of each Fund for its fiscal year ending December 31, 2004. The cessation of the relationship with E&Y was based on the impairment of E&Y's independence resulting from the consummation of the merger of FleetBoston Financial Corporation and Bank of America Corporation and accordingly, E&Y's ability to provide audit services to the Funds. E&Y's report on the financial statements of each Fund for the past two years did not contain an adverse opinion or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the period E&Y was engaged, there were no disagreements with E&Y on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to E&Y's satisfaction, would have caused it to make reference to that matter in connection with its report. 91 Columbia Acorn Family of Funds Class A, B and C Share Information MINIMUM INITIAL INVESTMENT IN COLUMBIA ACORN INTERNATIONAL, COLUMBIA ACORN INTERNATIONAL SELECT, COLUMBIA ACORN SELECT, COLUMBIA THERMOSTAT FUND $1,000 $1,000 FOR AN IRA MINIMUM INITIAL INVESTMENT IN COLUMBIA ACORN FUND, COLUMBIA ACORN USA $50,000 MINIMUM SUBSEQUENT INVESTMENT IN ALL FUNDS $50 EXCHANGE FEE NONE COLUMBIA ACORN FUND CLASS A CLASS B CLASS C Management Fees 0.66% 0.66% 0.66% Distribution and Service (12b-1) Fees 0.31% 0.94% 1.00% Other Expenses 0.23% 0.35% 0.29% -------------------------------- Expense Ratio 1.20% 1.95% 1.95% COLUMBIA ACORN INTERNATIONAL CLASS A CLASS B CLASS C Management Fees 0.82% 0.82% 0.82% Distribution and Service (12b-1) Fees 0.31% 0.93% 1.00% Other Expenses 0.35% 0.52% 0.42% -------------------------------- Expense Ratio 1.48% 2.27% 2.24% COLUMBIA ACORN USA CLASS A CLASS B CLASS C Management Fees 0.91% 0.91% 0.91% Distribution and Service (12b-1) Fees 0.31% 0.94% 1.00% Other Expenses 0.29% 0.38% 0.32% -------------------------------- Expense Ratio 1.51% 2.23% 2.23% COLUMBIA ACORN INTERNATIONAL SELECT CLASS A CLASS B CLASS C Management Fees 0.95% 0.95% 0.95% Distribution and Service (12b-1) Fees 0.30% 0.93% 1.00% Other Expenses 0.50% 0.50% 0.50% -------------------------------- Expense Ratio 1.75% 2.38% 2.45% COLUMBIA ACORN SELECT CLASS A CLASS B CLASS C Management Fees 0.89% 0.89% 0.89% Distribution and Service (12b-1) Fees 0.30% 0.93% 1.00% Other Expenses 0.28% 0.44% 0.36% -------------------------------- Expense Ratio 1.47% 2.26% 2.25% COLUMBIA THERMOSTAT* CLASS A CLASS B CLASS C Management Fees 0.10% 0.10% 0.10% Distribution and Service (12b-1) Fees 0.35% 0.93% 1.00% Other Expenses 0.05% 0.15% 0.15% -------------------------------- Expense Ratio 0.50% 1.18% 1.25% Fees and expenses are for the year ended December 31, 2004 and for Columbia Acorn International Select and Columbia Thermostat Fund include the effect of Columbia Wanger Asset Management's undertaking to reimburse those funds for any ordinary operating expenses, exclusive of 12b-1 service and distribution fees, interest, taxes and extraordinary expenses, if any, exceeding 1.45% and 0.25% of their average net assets, respectively. The expense limitation for Columbia Acorn International Select is voluntary and can be terminated by either the Fund or Columbia Wanger Asset Management, L.P. on 30 days' notice. Columbia Thermostat Fund's reimbursement arrangement is contractual through April 30, 2005. The Fund's adviser and/or affiliates have contractually agreed to waive a portion of "other expenses" through April 30, 2005. EFFECTIVE AUGUST 1, 2004, EACH FUND'S CLASS A SHARE 12B-1 FEE WAS REDUCED TO 25 BASIS POINTS, RESULTING IN THE ELIMINATION OF THE 10 BASIS POINT DISTRIBUTION FEE ON CLASS A SHARES. IN ADDITION, EACH FUND'S 12B-1 FEE FOR CLASS B SHARES WAS REDUCED FROM 100 BASIS POINTS TO 85 BASIS POINTS, DECREASING THE DISTRIBUTION PORTION OF THE 12B-1 FEE TO 60 BASIS POINTS. * Does not include estimated fees and expenses of 0.86% incurred by the Fund from the underlying portfolio funds. 1-800-922-6769 92 This page intentionally left blank. 93 Board of Trustees and Management of Columbia Acorn Funds Each trustee serves a term of unlimited duration, provided that a majority of trustees always has been elected by shareholders. The trustees appoint their own successors, provided that at least two-thirds of the trustees, after such appointment, have been elected by shareholders. Shareholders may remove a trustee, with or without cause, upon the vote of two-thirds of Acorn's outstanding shares at any meeting called for that purpose. A trustee may be removed, with or without cause, upon the vote of a majority of the trustees. The names of the trustees and officers of Acorn, the date each was first elected or appointed to office, their principal business occupations during at least the last five years and other directorships they hold, are shown below. Each trustee serves in such capacity for each of the six series of Acorn. Mr. Wanger also serves as a trustee for each of the four series of the Wanger Advisors Trust. THE ADDRESS FOR THE TRUSTEES AND OFFICERS OF THE TRUST IS COLUMBIA WANGER ASSET MANAGEMENT, L.P., 227 WEST MONROE STREET, SUITE 3000, CHICAGO, ILLINOIS 60606.
NUMBER OF NAME, POSITION(S) YEAR FIRST PORTFOLIOS IN WITH COLUMBIA ACORN ELECTED OR PRINCIPAL OCCUPATION(S) FUND COMPLEX AND AGE AT APPOINTED DURING OVERSEEN BY OTHER JANUARY 1, 2005 TO OFFICE* PAST FIVE YEARS TRUSTEE/OFFICER DIRECTORSHIPS ------------------------ ----------- ----------------------------------------- --------------- -------------------------------- TRUSTEES WHO ARE NOT INTERESTED PERSONS OF COLUMBIA ACORN: MARGARET EISEN, 51, 2002 Chief Investment Officer, EAM International 6 Antigenics, Inc. Trustee LLC since 2003; former chair, Institute for (biotechnology and drugs); Financial Markets; formerly managing Global Financial Group director, DeGuardiola Advisors; formerly (venture capital fund of managing director, North American Equities at funds); Lehman Brothers/First General Motors Asset Management; prior Trust Income Opportunity Fund thereto, director of Worldwide Pension (high-yield closed-end fund). Investments for DuPont Asset Management. JEROME KAHN, JR., 70, 1987 Former president, William Harris Investors, 6 None. Trustee Inc. (investment adviser). STEVEN N. KAPLAN, 45, 1999 Neubauer Family Professor of Entrepreneurship 6 Morningstar, Inc. Trustee and Finance, Graduate School of Business, (provider of independent University of Chicago. investment research). DAVID C. KLEINMAN, 69, 1972 Adjunct professor of strategic management, 6 Sonic Foundry, Inc.(software); Trustee University of Chicago Graduate School of Irex Corporation Business; Business consultant. (insulation contracting). ALLAN B. MUCHIN, 69, 1998 Chairman emeritus, Katten Muchin Zavis 6 Alberto-Culver Company Trustee Rosenman (law firm). (toiletries) until 1/27/05. ROBERT E. NASON, 68, 1998 Consultant and private investor since 1998; 6 None. Trustee and Chairman from 1990-1998, executive partner and chief executive officer, member of the executive committee of Grant Thornton, LLP (public accounting firm) and member of the policy board of Grant Thornton International. JOHN A. WING, 69, 2002 Frank Wakely Gunsaulus Professor of Law and 6 AmerUs Life Holdings (life Trustee Finance, and chairman of the Center for the insurance); LDF, Inc. and Labe Study of Law and Financial Markets, Illinois Federal Bank (banking); Margo Institute of Technology; prior thereto, Caribe, Inc. (farming). chairman of the board and chief executive officer of ABN-AMRO Incorporated, formerly The Chicago Corporation, and chief executive officer of Market Liquidity Network, LLC. TRUSTEES WHO ARE INTERESTED PERSONS OF COLUMBIA ACORN: CHARLES P. MCQUAID, 51, 1992 President, Columbia WAM since October, 2003; 10 None. Trustee and President(1) Chief Investment Officer, Columbia WAM since September 2003; Portfolio manager since 1995 and director of research since July 1992 through December 2003, Columbia WAM; interim director of international research, Columbia WAM from October 2003 to December 2004; principal, Wanger Asset Management, L.P. ("WAM") from July 1995 to September 2000; president, Wanger Advisors Trust. RALPH WANGER, 70, 1970 Founder, former president, chief investment 10 Wanger Advisors Trust Trustee (1) officer and portfolio manager, Columbia WAM (4 portfolios). (1992-2003); former president, Columbia Acorn from April 1992 through September 2003; former president Wanger Advisors Trust (1994 through September 2003); principal, WAM from July 1992 until September 2000; president, WAM Ltd. from July 1992 to September 2000; director, Wanger Investment Company plc; director, Columbia WAM.
1-800-922-6769 94
NUMBER OF NAME, POSITION(S) YEAR FIRST PORTFOLIOS IN WITH COLUMBIA ACORN ELECTED OR PRINCIPAL OCCUPATION(S) FUND COMPLEX AND AGE AT APPOINTED DURING OVERSEEN BY OTHER JANUARY 1, 2005 TO OFFICE* PAST FIVE YEARS TRUSTEE/OFFICER DIRECTORSHIPS ------------------------ ----------- ------------------------------------------ --------------- ------------------------------- OFFICERS OF COLUMBIA ACORN: J. KEVIN CONNAUGHTON, 40, 2001 Treasurer of the Columbia Funds and of the 10 None. Assistant Treasurer Columbia All-Star Funds since December 2000 (formerly controller and chief accounting officer of the Columbia Funds and of the Columbia All-Star Funds from February 1998 to October 2000); treasurer of the Stein Roe Funds since February 2001 (formerly chief accounting officer and controller from May 2000 to February 2001); treasurer of the Galaxy Funds since September 2002; senior vice president of Columbia Funds Group since January 2001; (prior thereto, vice president of Colonial Management Associates from February 1998 to October 2000). MICHAEL G. CLARKE, 34, 2004 Chief Accounting Officer of the Columbia 10 None. Assistant Treasurer Funds, Liberty Funds, Stein Roe Funds and All-Star Funds since October 2004 (formerly Controller of the Columbia Funds, Liberty Funds, Stein Roe Funds and All-Star Funds from May 2004 to October 2004; Assistant Treasurer from June 2002 to May 2004; Vice President, Product Strategy & Development of the Liberty Funds and Stein Roe Funds from February 2001 to June 2002; Assistant Treasurer of the Liberty Funds, Stein Roe Funds and the All-Star Funds from August 1999 to February 2001. P. ZACHARY EGAN, 36, 2003 Director of international research, Columbia 6 None. Vice President WAM, since December 2004; analyst and portfolio manager, Columbia WAM since 1999; prior thereto, a research fellow with the Robert Bosch Foundation. Kenneth A. Kalina, 45, 1995 Chief compliance officer, Columbia WAM since 10 None. Assistant Treasurer May 2004; treasurer and chief financial officer, Columbia WAM since April 2000; assistant treasurer, Wanger Advisors Trust; fund controller, Columbia WAM since September 1995; director, New Americas Small Cap Fund. BRUCE H. LAUER, 47, 1995 Chief operating officer, Columbia WAM since 10 None. Vice President, April 1995; principal, WAM from January 2000 Secretary to September 2000; vice president, treasurer and Treasurer and secretary, Wanger Advisors Trust; director, Wanger Investment Company plc and New Americas Small Cap Fund. ROBERT A. MOHN, 43, 1997 Director of domestic research, Columbia WAM, 10 None. Vice President since March 2004: analyst and portfolio manager, Columbia WAM since August 1992; principal, WAM from 1995 to September 2000; vice president, Wanger Advisors Trust LOUIS J. MENDES, 40, 2003 Analyst and portfolio manager, Columbia WAM 6 None. Vice President since 2001; prior thereto, analyst and portfolio manager, Merrill Lynch TODD M. NARTER, 40, 2001 Analyst and portfolio manager, Columbia WAM 10 None. Vice President since June 1997; vice president, Wanger Advisors Trust CHRISTOPHER J. OLSON, 40, 2001 Analyst and portfolio manager, Columbia WAM 10 None. Vice President since January 2001; vice president, Wanger Advisors Trust; prior to 2001, director and portfolio strategy analyst with UBS Asset Management/Brinson Partners. BEN ANDREWS, 39, 2004 Analyst and portfolio manager of Columbia WAM 10 None. Vice President since 1998; prior thereto senior analyst at Rothschild Investment Corporation VINCENT P. PIETROPAOLO, 39, 2001 Assistant General Counsel, Bank of America 10 None. Assistant Secretary (and its predecessors) since December 1999. ROBERT SCALES, 52, 2004 Deputy Counsel, Grant Thornton LLP 2002-2004; 10 None. Chief Compliance Officer, prior thereto, Associate general counsel, UBS Senior Vice President, PaineWebber. and General Counsel
* Dates prior to April 1992 correspond to the date first elected or appointed as a director or officer of Acorn Fund Inc., the Trust's predecessor. (1) Trustee who is an "interested person" of the Trust and of Columbia WAM, as defined in the Investment Company Act of 1940, because he is an officer of the Trust and/or because he is an employee or other affiliated person of Columbia WAM. The SAI includes additional information about Fund trustees and is available, without charge, upon request by calling 1-800-345-6611. 95 Columbia Acorn -------------------------------------------------------------------------------- Family of Funds INVESTMENT ADVISER Columbia Wanger Asset Management, L.P. 227 West Monroe Street, Suite 3000 Chicago, Illinois 60606 1-800-922-6769 DISTRIBUTOR Columbia Funds Distributor, Inc. One Financial Center Boston, Massachusetts 02111-2621 TRANSFER AGENT, DIVIDEND DISBURSING AGENT Columbia Funds Services, Inc. P.O. Box 8081 Boston, Massachusetts 02266-8081 1-800-345-6611 LEGAL COUNSEL Bell, Boyd & Lloyd LLC Chicago, Illinois INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers LLP Chicago, Illinois THIS REPORT, INCLUDING THE SCHEDULES OF INVESTMENTS, IS SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF COLUMBIA ACORN TRUST. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION UNLESS PRECEDED OR ACCOMPANIED BY A PROSPECTUS. AN INVESTOR SHOULD CAREFULLY CONSIDER CHARGES AND EXPENSES BEFORE INVESTING. TO OBTAIN A PROSPECTUS CONTAINING THIS AND OTHER INFORMATION, PLEASE CALL (800) 922-6769 OR VISIT OUR WEBSITE (SHOWN BELOW). PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY. A DESCRIPTION OF THE POLICIES AND PROCEDURES THAT THE FUNDS USE TO DETERMINE HOW TO VOTE PROXIES RELATING TO THEIR PORTFOLIO SECURITIES AND A COPY OF THE FUNDS' VOTING RECORD ARE AVAILABLE (I) AT WWW.COLUMBIMANAGEMENT.COM; (II) ON THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT WWW.SEC.GOV AND (III) WITHOUT CHARGE, UPON REQUEST, BY CALLING 800-922-6769. THE FUNDS FILE A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE FIRST AND THIRD QUARTERS OF EACH FISCAL YEAR ON FORM N-Q. THE FUNDS' FORM N-Q IS AVAILABLE ON THE SEC'S WEBSITE AT WWW.SEC.GOV AND MAY BE REVIEWED AND COPIED AT THE SEC'S PUBLIC REFERENCE ROOM IN WASHINGTON, D.C. INFORMATION ON THE OPERATION OF THE PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING 1-800-SEC-0330._ Find out what's new - visit our web site at: www.columbiafunds.com Our e-mail address is: ServiceInquiries@ColumbiaManagement.com SHAREHOLDERS SHOULD NOT INCLUDE PERSONAL INFORMATION SUCH AS ACCOUNT NUMBERS, SOCIAL SECURITY NUMBERS OR TAXPAYER IDENTIFICATION NUMBERS IN E-MAIL. WE ARE UNABLE TO ACCEPT ACCOUNT TRANSACTIONS SENT VIA E-MAIL. 1-800-922-6769 96 Columbia Acorn Funds Annual Report, December 31, 2004 PRSRT STD U.S. POSTAGE PAID HOLLISTON, MA PERMIT NO. 20 [EAGLE HEAD LOGO] COLUMBIAFUNDS A MEMBER OF COLUMBIA MANAGEMENT GROUP (C)2005 COLUMBIA FUNDS DISTRIBUTOR, INC. ONE FINANCIAL CENTER, BOSTON, MA 02111-2621 800.345.6611 www.columbiafunds.com ACN-02/100U-0105 (02/05) 05/4610 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 David C. Kleinman, Robert E. Nason and John A. Wing, each of whom are members of the registrant's Board of Trustees and Audit Committee, each qualify as an audit committee financial expert. Mr. Kleinman, Mr. Nason and Mr. Wing are each independent trustees, as defined in paragraph (a)(2) of this item's instructions. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Effective July 14, 2004, the registrant engaged new independent accountants. Unless otherwise noted, fees disclosed below represent fees paid or accrued to the current and predecessor principal accountants while each was engaged by the registrant. (a) Aggregate Audit Fees billed by the principal accountant for professional services rendered during the fiscal years ended December 31, 2004 and December 31, 2003 are approximately as follows: 2004 2003 $188,000 $238,400 Audit Fees include amounts related to the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. (b) Aggregate Audit-Related Fees billed by the principal accountant for professional services rendered during the fiscal years ended December 31, 2004 and December 31, 2003 are approximately as follows: 2004 2003 $24,000 $24,000 Audit-Related Fees include amounts for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported in Audit Fees above. In both fiscal years 2004 and 2003, Audit-Related Fees include certain agreed-upon procedures performed for semi-annual shareholder reports. The percentage of Audit-Related services billed to the registrant that were approved under the "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X during the fiscal years ended December 31, 2004 and December 31, 2003 are as follows: 2004 2003 0% 0% (c) Aggregate Tax Fees billed by the principal accountant for professional services rendered during the fiscal years ended December 31, 2004 and December 31, 2003 are approximately as follows: 2004 2003 $29,000 $35,300 Tax Fees in both fiscal years 2004 and 2003 consist primarily of the review of annual tax returns and include amounts for professional services by the predecessor principal accountant for tax compliance, tax advice and tax planning. The percentage of Tax Fees billed to the registrant that were approved under the "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X during the fiscal years ended December 31, 2004 and December 31, 2003 are as follows: 2004 2003 0% 4% (d) Aggregate All Other Fees billed by the principal accountant for professional services rendered during the fiscal years ended December 31, 2004 and December 31, 2003 are as follows: 2004 2003 $0 $0 All Other Fees include amounts for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) above. The percentage of All Other Fees billed to the registrant that were approved under the "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X during the fiscal years ended December 31, 2004 and December 31, 2003 are as follows: 2004 2003 0% 0% (e)(1) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES The policy of the registrant's Audit Committee is to specifically pre-approve (i) all audit and non-audit (including audit related, tax and all other) services provided by the registrant's independent auditor to the registrant and individual funds (collectively "Fund Services") and (ii) all non-audit services provided by the registrant's independent auditor to the funds' adviser or a control affiliate of the adviser, that relate directly to the funds' operations and financial reporting (collectively "Fund-related Adviser Services"). A "control affiliate" is an entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the funds, and the term "adviser" is deemed to exclude any unaffiliated sub-adviser whose role is primarily portfolio management and is sub-contracted or overseen by another investment adviser. If such Fund Services or Fund-related Adviser Services are required during the period between the Audit Committee's regularly scheduled meetings, the Chairman of the Audit Committee has the authority to pre-approve the service, with reporting to the full Audit Committee at the next regularly scheduled meeting. The Audit Committee will waive pre-approval of Fund Services or Fund-related Adviser Services provided that the requirements under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are met. (f) Not applicable. (g) All non-audit fees billed by the registrant's accountant for services rendered to the registrant for the fiscal years ended December 31, 2004 and December 31, 2003 are disclosed in (b) through (d) of this Item. During the fiscal years ended December 31, 2004 and December 31, 2003, there were no Audit-Related Fees or Tax Fees that were approved for services to the investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. During the fiscal years ended December 31, 2004 and December 31, 2003, All Other Fees that were approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X were approximately $93,500 and $95,000, respectively. For both fiscal years, All Other Fees relate to internal controls reviews of the registrant's transfer agent performed by the current principal accountant. The percentage of Audit-Related Fees, Tax Fees and All Other Fees required to be approved under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X that were approved under the "de minimis" exception during both fiscal years ended December 31, 2004 and December 31, 2003 was zero. (h) The registrant's Audit Committee of the Board of Directors has considered whether the provision of non-audit services that were rendered to the registrant's adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the principal accountant's independence. The Audit Committee determined that the provision of such services is compatible with maintaining the principal accountant's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS The registrant's "Schedule I - Investments in securities of unaffiliated issuers" (as set forth in 17 CFR 210.12-12) is included in Item 1 of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. On September 28, 2004, the registrant adopted procedures for consideration of Trustee candidates submitted by shareholders. The Trust's Governance Committee (the "Committee") is responsible for identifying and nominating candidates for appointment as Trustees. Although the registrant's investment adviser, Trustees, or shareholders may submit suggested candidates for Independent Trustees to the Committee, neither the Committee nor the Independent Trustees as a group shall consider those candidates on a preferential basis as opposed to other possible candidates. Any shareholders may submit the name of a candidate for consideration by the Committee by submitting the recommendation to the Trust's Secretary in accordance with the procedures. A copy of these procedures, which include the information required to be submitted in a shareholder nomination, may be obtained by contacting the Secretary of the Trust, at the address of the principal executive offices of the Trust. The Secretary will forward any such recommendation to the Chairman of the Committee promptly upon receipt. Recommendations for candidates for Trustees will be evaluated, among other things, in light of whether the number of Trustees is expected to change and whether the Trustees expect any vacancies. Shareholder recommendations will be kept on file until active recruitment is underway. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officers, 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 second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. 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. (a)(3) Not applicable. (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 Acorn Trust ------------------------------------------------------------------ By (Signature and Title) /S/ Charles P. McQuaid ------------------------------------------------------ Charles P. McQuaid, President Date February 28, 2005 -------------------------------------------------------------------------- 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/ Charles P. McQuaid ------------------------------------------------------ Charles P. McQuaid, President Date February 28, 2005 -------------------------------------------------------------------------- By (Signature and Title) /S/ Bruce H. Lauer ------------------------------------------------------ Bruce H. Lauer, Treasurer Date February 28, 2005 --------------------------------------------------------------------------