N-CSR 1 wan3688283-ncsr.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: December 31, 2005 Date of reporting period: December 31, 2005 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. [IMAGE OF ACORNS] -------------------------------------------------------------------------------- COLUMBIA ACORN FAMILY OF FUNDS CLASS Z SHARES ANNUAL REPORT DECEMBER 31, 2005 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 investment process for the Columbia Acorn Family of Funds ("Acorn Funds") traces back to inception 35 years ago. Your trustees believe that this process and its underlying philosophy have been the principal drivers producing the exceptional long-term investment results. The process has remained the same despite changes in ownership of our investment adviser which is now named Columbia Wanger Asset Management ("CWAM"). CWAM is owned by Bank of America ("B of A") and is a subsidiary of B of A's Columbia Management ("CM"). The Board of Trustees of the Acorn Funds has always insisted that its investment adviser possess three pillars of competitive strength: first, the investment process referred to above; second, execution of the process by exceptionally talented investment professionals; and third, a single autonomous and creative environment in which the investment professionals can reach for optimal success. While there have been some operational changes to CWAM as ownership has changed, these three pillars of competitive strength remain substantially intact today. We are pleased to report to shareholders that the investment advisory agreement, which we approved for renewal through July 31, 2006, contains provisions directed toward the preservation of those pillars of competitive strength. In addition to renewal of the investment advisory agreement, your trustees participated in several other matters over the past year that will be of particular interest to shareholders. INCREASE IN MINIMUM INVESTMENT FOR NEW SHAREHOLDERS IN THREE FUNDS The trustees increased the minimum investment for new shareholders in Columbia Acorn Select to $50,000 and for new shareholders in Columbia Acorn Fund and Columbia Acorn USA from $50,000 to $75,000. The Acorn Funds experienced strong net cash inflows during 2005 and aggregate net assets increased over 23% which includes positive investment returns. The investment minimums for the three domestic funds were increased to protect existing shareholders by tempering net cash inflows. MANAGEMENT FEE EXPENSE REDUCTIONS The trustees approved management fee reductions initiated by CM following its settlement of its regulatory proceedings, and we negotiated a new break point in the investment advisory agreement for Columbia Acorn USA. These reductions lowered management fees by the following annualized percentages based on total net assets at December 31, 2005: Acorn Select 5.8%; Acorn USA 4.3%; Acorn Fund 2.5%; Acorn International 1.3%; Acorn International Select 1.1%. CHANGES IN INVESTMENT STRATEGIES The trustees approved an increase in the market capitalization limit for companies in which Columbia Acorn Select may invest from $15 billion to $20 billion to provide the investment manager greater flexibility in searching for new investment opportunities. We also approved a change in the stock/bond allocation table for Columbia Thermostat Fund in 2005. Further, a change in stock equity allocations among various Columbia funds was approved for Thermostat, with the intent of improving future stock investment results. COMPLIANCE OVERSIGHT Our compliance committee was our most active in 2005. Our Chief Compliance Officer, Robert Scales, is leading our compliance oversight effort and is making an extremely valuable contribution to protecting shareholder interests. He reports to the committee and to the Board of Trustees on a regular basis, providing results of his reviews and his recommendations for future action. During this past year he did an extensive evaluation and review of the management fees shareholders pay to CWAM. Extracts of his written evaluation appear in this report to shareholders on Page 85. His recommendations are currently under consideration and will be addressed by our contract committee as part of the investment advisory agreement review process this summer. INDEPENDENT DISTRIBUTION CONSULTANT ("IDC") As reported at the annual shareholders' meeting this past September, we are waiting for the IDC to make a final determination on the distribution of payments to any Acorn fund or its shareholders arising from the settlement of regulatory proceedings by B of A. We have met with the IDC to provide our findings and recommendation, and we hope to advise shareholders of the final determination this year. Unfortunately, there is no further action we can take to expedite the distribution process. CWAM We advised shareholders at the annual meeting that the road ahead for the Acorn Funds looks extremely positive. The Acorn Funds are in a new era. Ralph Wanger has retired from his advisory role at CWAM but remains a valuable contributor as a non-management trustee. The investment management baton has been passed to Chuck McQuaid who has more than 20 years of experience working with Ralph. He officially succeeded Ralph more than two years ago. Chuck has already demonstrated his effective leadership and along with the CWAM team, he has sustained an impressive record. Your trustees are confident that all shareholders will benefit in the years ahead with the three pillars of competitive strength intact and Chuck leading the way. 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 COLUMBIA ACORN FAMILY OF FUNDS ANNUAL REPORT 2005 TABLE OF CONTENTS Columbia Acorn Family of Funds Performance At A Glance 2 Squirrel Chatter II: Columbia Acorn Fund Celebrates a Decade of Outperformance 3 Understanding Your Expenses 6 COLUMBIA ACORN FUND In a Nutshell 8 At a Glance 9 Major Portfolio Changes 20 Statement of Investments 22 COLUMBIA ACORN INTERNATIONAL In a Nutshell 10 At a Glance 11 Major Portfolio Changes 34 Statement of Investments 36 Portfolio Diversification 41 COLUMBIA ACORN USA In a Nutshell 12 At a Glance 13 Major Portfolio Changes 42 Statement of Investments 43 COLUMBIA ACORN INTERNATIONAL SELECT In a Nutshell 14 At a Glance 15 Major Portfolio Changes 48 Statement of Investments 49 Portfolio Diversification 51 COLUMBIA ACORN SELECT In a Nutshell 16 At a Glance 17 Major Portfolio Changes 52 Statement of Investments 53 COLUMBIA THERMOSTAT FUND In a Nutshell 18 At a Glance 19 Statement of Investments 73 Statement of Assets and Liabilities 74 Statement of Operations 75 Statement of Changes in Net Assets 76 Financial Highlights 78 Notes to Financial Statements 79 COLUMBIA ACORN FAMILY OF FUNDS Statements of Assets and Liabilities 56 Statements of Operations 57 Statements of Changes in Net Assets 58 Financial Highlights 62 Notes to Financial Statements 66 Report of Independent Registered Public Accounting Firm 83 Unaudited Information 84 Management Fee Evaluation of the Senior Officer 85 Board Approval of the Existing Advisory Agreement 91 Board of Trustees and Management of Columbia Acorn Funds 95 Special Notice 97 Columbia Acorn Family of Funds Information 101 >2005 YEAR-END DISTRIBUTIONS The following table details the funds' year-end distributions. The record date for COLUMBIA ACORN FUND, COLUMBIA ACORN INTERNATIONAL, COLUMBIA ACORN USA and COLUMBIA ACORN SELECT was December 8, 2005. The ex-dividend date was December 9, 2005, and the payable date was December 12, 2005. For COLUMBIA THERMOSTAT FUND, the record date was December 22, 2005. The ex-dividend date was December 23, 2005, and the payable date was December 27, 2005.
Short-term Long-term Ordinary Reinvestment Capital Gains Capital Gains Income Price --------------------------------------------------------------------------------------- Columbia Acorn Fund $0.0272 $1.1500 $0.1477 $28.43 --------------------------------------------------------------------------------------- Columbia Acorn International None $1.0760 $0.2946 $32.49 --------------------------------------------------------------------------------------- Columbia Acorn USA $0.0145 $0.9905 $0.0490 $27.35 --------------------------------------------------------------------------------------- Columbia Acorn Select $0.1159 $0.4416 None $22.81 --------------------------------------------------------------------------------------- Columbia Thermostat Fund $0.0337 $0.6288 $0.4234 $12.55 ---------------------------------------------------------------------------------------
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. 1 COLUMBIA ACORN FAMILY OF FUNDS >PERFORMANCE AT A GLANCE Class Z Average Annual Total Returns through 12/31/05
NAV on 4th Life 12/31/05 Quarter* 1 year 3 years 5 years 10 years of Fund ---------------------------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN FUND (6/10/70) $28.17 3.09% 13.11% 26.04% 13.00% 15.95% 16.35% ---------------------------------------------------------------------------------------------------------------------------------- Russell 2500 1.81% 8.11% 23.00% 9.14% 11.53% NA ---------------------------------------------------------------------------------------------------------------------------------- S&P 500 2.09% 4.91% 14.39% 0.54% 9.07% 11.88% ---------------------------------------------------------------------------------------------------------------------------------- Lipper Small-Cap Core Funds Index 1.67% 7.56% 21.51% 9.19% 10.80% NA ---------------------------------------------------------------------------------------------------------------------------------- Lipper Mid-Cap Core Funds Index 2.45% 9.46% 19.95% 6.28% 11.12% NA ---------------------------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN INTERNATIONAL (9/23/92) $33.44 4.47% 21.81% 32.59% 9.06% 11.93% 13.15% ---------------------------------------------------------------------------------------------------------------------------------- S&P/Citigroup EMI Global ex-US 6.67% 21.99% 34.71% 14.20% 8.43% 9.15% ---------------------------------------------------------------------------------------------------------------------------------- MSCI EAFE 4.08% 13.54% 23.68% 4.55% 5.84% 7.70% ---------------------------------------------------------------------------------------------------------------------------------- Lipper Int'l Small-Cap Funds Index 6.23% 23.77% 35.47% 13.45% 11.95% NA ---------------------------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN USA (9/4/96) $27.03 2.68% 12.98% 26.10% 14.28% NA 14.58% ---------------------------------------------------------------------------------------------------------------------------------- Russell 2000 1.13% 4.55% 22.13% 8.22% NA 9.24% ---------------------------------------------------------------------------------------------------------------------------------- Lipper Small-Cap Core Funds Index 1.67% 7.56% 21.51% 9.19% NA 10.52% ---------------------------------------------------------------------------------------------------------------------------------- S&P 500 2.09% 4.91% 14.39% 0.54% NA 8.85% ---------------------------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN INT'L SELECT (11/23/98) $20.57 3.52% 15.98% 26.86% 4.27% NA 11.25% ---------------------------------------------------------------------------------------------------------------------------------- S&P/Citigroup World ex-US Cap Range $2-10B 6.50% 20.35% 31.14% 11.60% NA 10.83% ---------------------------------------------------------------------------------------------------------------------------------- MSCI EAFE 4.08% 13.54% 23.68% 4.55% NA 5.03% ---------------------------------------------------------------------------------------------------------------------------------- Lipper International Funds Index 4.75% 15.67% 23.10% 5.34% NA 6.43% ---------------------------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN SELECT (11/23/98) $22.77 6.66% 11.08% 19.82% 11.36% NA 14.69% ---------------------------------------------------------------------------------------------------------------------------------- S&P MidCap 400 3.34% 12.56% 21.15% 8.60% NA 12.17% ---------------------------------------------------------------------------------------------------------------------------------- Lipper Mid-Cap Growth Index 3.11% 9.58% 19.16% -0.91% NA 6.70% ---------------------------------------------------------------------------------------------------------------------------------- S&P 500 2.09% 4.91% 14.39% 0.54% NA 2.55% ---------------------------------------------------------------------------------------------------------------------------------- COLUMBIA THERMOSTAT FUND (9/25/02) $12.50 2.12% 5.50% 11.32% NA NA 11.71% ---------------------------------------------------------------------------------------------------------------------------------- S&P 500 2.09% 4.91% 14.39% NA NA 15.82% ---------------------------------------------------------------------------------------------------------------------------------- Lehman Brothers U.S. Credit Intermediate Bond Index 0.39% 1.42% 4.11% NA NA 4.73% ---------------------------------------------------------------------------------------------------------------------------------- Lipper Flexible Portfolio Funds Index 1.95% 6.34% 12.73% NA NA 13.57% ----------------------------------------------------------------------------------------------------------------------------------
* 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 AND MONTH-END UPDATES. NET ASSET VALUE (NAV) RETURNS DO NOT INCLUDE SALES CHARGES OR CONTINGENT DEFERRED SALES CHARGES (CDSC). CLASS Z SHARES ARE SOLD ONLY AT NAV WITH NO 12B-1 FEE. CLASS Z SHARES HAVE LIMITED ELIGIBILITY AND THE INVESTMENT MINIMUM REQUIREMENT MAY VARY. PLEASE SEE THE FUND'S PROSPECTUS FOR DETAILS. 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. S&P/ CITIGROUP EMI GLOBAL EX-US is the bottom 20% of institutionally investable capital of developed and emerging countries, selected by the 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. S&P/CITIGROUP WORLD EX-US CAP RANGE $2-10B is a subset of the broad market selected by the index sponsor representing the mid-cap developed market 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 BROTHERS 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. It is not possible to invest directly in an index. 2 >SQUIRREL CHATTER II: COLUMBIA ACORN FUND CELEBRATES A DECADE OF OUTPERFORMANCE UNDERSTANDING OUR INVESTMENT STYLE [PHOTO of Charles P. McQuaid] If you have been a shareholder in Columbia Acorn Fund Class Z shares for the past 10 years, you had something to celebrate at the end of 2005. Columbia Acorn Fund Z outperformed its primary small-cap benchmark, the Russell 2500, 10 years in a row. 1 The Fund's annualized 10-year return was 15.95% vs. an 11.53% gain for the Russell 2500 and a 9.07% increase for the S&P 500. 2 We are pleased that we could offer our shareholders these excellent, long-term returns. COLUMBIA ACORN FUND Z OUTPERFORMED THE RUSSELL 2500 10 YEARS STRAIGHT CALENDAR YEAR TOTAL RETURNS AS OF 12/31/2005 1-YEAR ENDING ACORN Z RUSSELL 2500 (+/-) 12/31/1996 22.55% 19.03% +3.52% 12/31/1997 24.98% 24.36% +0.62% 12/31/1998 6.02% 0.39% +5.63% 12/31/1999 33.38% 24.14% +9.24% 12/31/2000 10.06% 4.27% +5.79% 12/31/2001 6.14% 1.22% +4.92% 12/31/2002 -13.31% -17.80% +4.49% 12/31/2003 45.68% 45.51% +0.17% 12/31/2004 21.51% 18.29% +3.22% 12/31/2005 13.11% 8.11% +5.00% PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. THE RUSSELL 2500 INDEX IS A MARKET-WEIGHTED INDEX OF THE LARGEST 3,000 STOCKS HELD BY THE RUSSELL 3000 MINUS THE 500 LARGEST COMPANY STOCKS IN THAT GROUP. We believe our sensible approach, plus a lot of hard work, have been the drivers of the Fund's good performance. This column is the first of several columns that I will devote to explaining Columbia Wanger Asset Management's unique approach to investing. WHY SMALL AND MID CAPS? Acorn Fund's mission was defined at inception in 1970 by its founders Irving Harris and Ralph Wanger. The mission was simple: Invest in good quality, reasonably priced small-cap companies that have growth potential and competitive advantages, and hold on to them. When Wanger Asset Management was formed in 1992 the focus did not change. We like small companies. They are generally less complicated because big companies typically have lots of divisions while most small companies have one division. An added benefit is that sometimes these small companies are undiscovered, which may mean they are undervalued and a potentially good investment. Managers of small companies tend to focus on customers and are acutely aware of competitors. Small-cap stocks are often exciting businesses run by accessible managers, so in addition to the above virtues, they are fun for us to follow. Though we like small-caps, we don't force sales of successful stocks simply because they appreciated beyond some arbitrary small-cap definition (other small-cap managers may sell at $2 billion capitalizations, for example). The funds we manage could not make strong gains if we simply sold due to size. We let our winners run. This creates a drift upwards in weighted-average market caps in the Fund and helps to explain why Columbia Acorn Fund has straddled between small- and mid-cap classifications. Currently Morningstar identifies Columbia Acorn Fund as Small-Cap Growth while Lipper 3 and THE WALL STREET JOURNAL put the Fund in their Mid-Cap Core category. While style classifications can be helpful, we are not style purists. For example, small-cap stocks have outperformed large caps for more than five years and we think on average they are no longer cheap based on historical valuations. Our analysts have been finding more value among mid-cap names that have the same attributes we like in small caps. Consequently, the Columbia Acorn Trust board of trustees amended the Columbia Acorn Fund prospectus on May 1, 2004 to allow the Fund to invest in stocks with market capitalizations of less than $5 billion at the time of initial purchase. 4 This too helps explain why the Fund straddles the small- and mid-cap categories. 3 WHY GROWTH-AT-A-REASONABLE-PRICE? At Columbia Wanger Asset Management, we define growth investing styles using the terms Hard Core Value, Growth-at-a-Reasonable-Price (GARP) and Momentum. These terms help define the different ways that an investor can look for returns. Hard Core Value investors usually buy very cheap stocks, as measured by comparing the stock valuation to the underlying asset values. While this strategy works for a number of competitors who are very good at it, Hard Core Value is not for us. We believe that too often the stocks are very cheap because the underlying businesses are lousy. Successful investing in Hard Core Value largely depends on predicting (or hastening) events such as takeovers, spinouts or turnarounds. Until such an event occurs the stock may be a diminishing asset. In implementing our Growth-at-a-Reasonable-Price style, our 20 analysts first search for good, growing businesses. We view what we do as investing in companies rather than in stocks, and we try to analyze companies as if we were buying the whole business rather than just a fraction of ownership. We define "good, growing businesses" as companies that have sustainable competitive advantages, fine managements, growing markets, and opportunities for market-share gains. Once we've found a good business that has been growing, we follow the company closely and determine if it sells at what we believe is a "reasonable price." A stock is at a reasonable price if it sells at (or hopefully below) what we believe is its true value. Most growth companies ("growth stock" is a misnomer) are valued by the market based on price-to-earnings (PE) ratios, and comparisons between growth companies are often based on PE-to-growth (PEG) ratios. While that approach makes theoretical sense, reported earnings are often poor measures of underlying economic profits. For example, the costs of employee stock options were not required to be an accounting expense until 2006, so underlying earnings of many companies were overstated. In other cases, companies may have higher free cash flows than suggested by reported earnings. We ask our analysts to look beyond reported earnings and adjust for many factors when using PE or related dividend discount model valuations. Our analysts also use value discipline techniques, calculating potential sell-out or break-up values, when it is appropriate to do so. Often we determine that the stock of a good business that has been growing is not selling at a reasonable price. In those cases we wait--and there have been times that we've waited for years. If valuation is borderline, we can purchase an initial small position and later increase the position or sell the stock depending on fundamentals or valuation. Valuation matters because it enables our shareholders to potentially benefit in two ways: (1) from growth of the underlying business and (2) from growth of a valuation multiplier, such as a PE ratio. Market conditions also impact how many growth companies end up in the portfolio. We had below benchmark percentage ownership in technology stocks during the 1999-2000 bubble, and we sold media and telecommunications stocks (often a bit early) in 1999. At the height of the bubble in early 2000, we bought real estate investment trusts (REITs), taking Columbia Acorn Fund's ownership of REITs to a benchmark weighting. This was an unusual move for a growth-oriented fund like ours. Then when tech stocks collapsed, we bought lots of them, and they substantially helped the Fund to keep up with the 2003 rally. These common-sense moves confused some pundits who questioned whether we had changed our style. We didn't, we just kept true to GARP, as we define it, and avoided becoming what we call GASP (Growth-at-a-Stupid-Price) investors. The remaining growth style definition is Momentum. Momentum players (I hesitate to say "investors") look for stocks that have been rising, along with fast earnings growth, and preferably earnings estimate increases. Many Momentum players completely ignore valuation. (Economists label luxury goods as those where demand rises when prices increase, so momentum players are the ultimate luxury goods buyers!) Because Momentum players buy at any price when earnings are good and often sell at any price when earnings are disappointing, we often like to sell our winners to them 4 and sometimes buy their losers--at our dream prices. Momentum can work, especially in bubbles, but it's not for us. It's too far from our mission of investing in good businesses and targeting rational returns. Just as individual stocks can graduate from small to mid to large caps, they can also move from Value to Growth-at-a-Reasonable-Price and then to Momentum. We love to buy stocks in companies not yet recognized as growth businesses. If we can find good companies that we believe are mistakenly priced at Hard Core Value levels, better yet. Often our best performing stocks were those that were undiscovered when we bought them, and as they grew, became investor favorites because of their strong business models. We are often challenged (in a good way) when Columbia Acorn Fund stocks rise to Momentum valuations. The challenge then becomes when to sell. We try to resist significant selling unless we think fundamentals will deteriorate or valuations are entirely inappropriate vs. fundamentals. By most measures, including beta (a calculation of how much a fund moves relative to movements of its benchmark) and standard deviation (a calculation of volatility) vs. benchmarks, Columbia Acorn Fund has had below average risk over time. 5 The combination of outstanding returns yet below average risk defies economic theory. However, it seems intuitive that valuation affects risk. If a stock is overpriced, isn't it riskier? We believe that buying stocks consistent with our GARP style has reduced risk. Having a sensible investment style is very useful but it is not enough for long-term success. Other factors, such as our process and the people who make up our investment team, will be discussed in future columns. COLUMBIA WAM NEWS After the close of the period, we hired a new energy analyst. In January, William Doyle came on board. Bill was most recently a manager of PPM America's credit analysis team where part of his responsibilities included following the high yield energy sector. Bill's degrees include an MBA from Loyola University in Chicago and bachelor's degrees in finance and history from Illinois State University. In the past, our annual report Squirrel Chatters have included Scarlet A award winners. These awards acknowledged the outside analysts who provided some of the funds' winning stock ideas. In recent years it has become more difficult to come up with this list as our own investment team has become larger and has originated most of our best stocks. We continue to value the assistance provided by outside analysts but we are opting to discontinue the Scarlet A recognition program. /s/ Charles P. McQuaid Charles P. McQuaid PRESIDENT AND CHIEF INVESTMENT OFFICER COLUMBIA WANGER ASSET MANAGEMENT, L.P. ________________________________________________________________________________ 1 The Russell 2500 was not the primary benchmark for Columbia Acorn Fund for the entire, 10-year period. 2 The S&P 500 is a broad, market-weighted average of U.S. blue-chip company stock performance. 3 Lipper, Inc., a widely respected data provider in the industry. 4 This market cap adjustment was also applied to Columbia Acorn USA on the same date. Prior to the adjustment, Columbia Acorn Fund and Columbia Acorn USA invested in stocks with market capitalizations of less than $2 billion at the time of initial purchase. 5 Columbia Acorn Fund's beta relative to the Russell 2500 Index as of 12/31/05 was 0.86 for the 10-year period. The views expressed in Squirrel Chatter II are those of the author. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia Acorn Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia Acorn Fund. References to specific company securities should not be construed as a recommendation or investment advice. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. MID- AND 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. 5 >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 ongoing 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 Columbia Acorn 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 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 $1,000, which is invested at the beginning of the period and held for the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the "actual" column is calculated using each fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column assumes that the return each year is 5% before expenses and then applies each fund's actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you paid during the reporting period. See the "Compare with other funds" information for details on using the hypothetical data. >July 1, 2005 - December 31, 2005
ACCOUNT VALUE AT ACCOUNT VALUE AT THE BEGINNING OF THE END OF EXPENSES PAID FUND'S THE PERIOD ($) 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 1,100.52 1,021.58 3.81 3.67 0.72 ------------------------------------------------------------------------------------------------------------------------ Columbia Acorn International 1,000.00 1,000.00 1,182.99 1,020.32 5.34 4.94 0.97 ------------------------------------------------------------------------------------------------------------------------ Columbia Acorn USA 1,000.00 1,000.00 1,070.98 1,020.27 5.12 4.99 0.98 ------------------------------------------------------------------------------------------------------------------------ Columbia Acorn International Select 1,000.00 1,000.00 1,153.00 1,017.90 7.87 7.37 1.45 ------------------------------------------------------------------------------------------------------------------------ Columbia Acorn Select 1,000.00 1,000.00 1,112.42 1,020.21 5.27 5.04 0.99 ------------------------------------------------------------------------------------------------------------------------ Columbia Thermostat Fund 1,000.00 1,000.00 1,039.88 1,023.95 1.29 1.28 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 fund's most recent fiscal half-year and divided by 365. 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 12/31/05. COMPARE WITH OTHER FUNDS Since all mutual funds 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. 6 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 Management Services, Inc., your account balance is available online at 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. 7 COLUMBIA ACORN FUND >IN A NUTSHELL [PHOTOA of Charles P. McQuaid] [PHOTO of Robert A. Mohn] PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. Columbia Acorn Fund gained 13.11% in 2005, an even 5.00% ahead of the Russell 2500, its most comparable benchmark, and 8.20% ahead of the large-cap S&P 500 Index. During the fourth quarter, the Fund was up 3.09%, modestly ahead of all of its benchmarks. Energy stocks boosted results for the year. Southwestern Energy and Ultra Petroleum more than doubled, while Talisman Energy, Range Resources, UK-based Tullow Oil, XTO Energy and Western Gas Resources gushed profits of at least 60% each. All of the Fund's energy winners benefited from both higher prices and increased production. The winnings should help take some of the sting out of our shareholders' higher gas bills. We trimmed several stocks in this sector and ended the year with 8.1% of the Fund in energy, modestly more than the Russell 2500's weighting of 6.3%. Other excellent performers for the year included oil-pipe makers Vallourec, based in France, and Tenaris, an Argentinean multinational. Vallourec delivered a 284% gain and Tenaris about half as much due to increased demand for their products. A number of non-energy related stocks also helped performance. Human resources service provider Administaff jumped 238% while women's specialty retailer Chico's FAS rang up a 93% gain, both due to excellent earnings. Troublesome stocks for the year included Seachange International, sinking 54%, Helen of Troy, losing 52%, and RSA Security, dropping 46%, all on disappointing results. Fourth quarter results were driven by a rebound in retailers coupled with good stock picking. Last summer retailers appeared oversold when many analysts predicted a slowdown due to high energy costs and consumer debt, plus a concern about possibly peaking home prices. Our consumer analyst, Susie Hultquist, did her homework and believed that the Fund's retail stocks would be okay. Christopher & Banks, Abercrombie & Fitch and Ann Taylor Stores each marked up gains of at least 30% for the quarter. Other fine stock picks in the quarter included casino operator Pinnacle Entertainment, winning 35% on optimism that it will wisely reinvest insurance proceeds from its Biloxi casino, and portable computer maker Symbol Technologies, up 33% on better than expected earnings plus victorious patent litigation. Electronics contract manufacturing company Plexus and video editing equipment maker Avid Technology produced gains of over 30% each, again due to fine earnings. Detractors included Martek Biosciences, off 30% on disappointing earnings and fears of competition, and Dendrite International, down 28% on contract delays. Columbia Acorn Fund's international stocks rose 27.29% for the year, significantly helping performance, and gained 3.36% during the quarter. The Fund's international weighting dropped slightly during the fourth quarter to 15.6% at year-end. /s/ Charles P. McQuaid Charles P. McQuaid LEAD PORTFOLIO MANAGER /s/ Robert A. Mohn Robert A. Mohn CO-PORTFOLIO MANAGER 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 12/31/05, THE FUND'S POSITIONS IN THE STOCKS MENTIONED WERE: SOUTHWESTERN ENERGY, 0.4%; ULTRA PETROLEUM, 0.9%; TALISMAN ENERGY, 0.8%; RANGE RESOURCES, 0.2%; TULLOW OIL, 0.4%; XTO ENERGY, 0.7%; WESTERN GAS RESOURCES, 0.9%; VALLOUREC, 0.4%; TENARIS, 0.4%; ADMINISTAFF, 0.3%; CHICO'S FAS, 1.4%; SEACHANGE INTERNATIONAL, 0.1%; HELEN OF TROY, 0.1%; RSA SECURITY, 0.2%; CHRISTOPHER & BANKS, 0.4%: ABERCROMBIE & FITCH, 0.8%; ANN TAYLOR STORES, 0.3%; PINNACLE ENTERTAINMENT, 0.3%; SYMBOL TECHNOLOGIES, 0.2%; PLEXUS, 0.3%; AVID TECHNOLOGY, 0.6%; MARTEK BIOSCIENCES, 0.1%; DENDRITE INTERNATIONAL, 0.2%. 8 COLUMBIA ACORN FUND >AT A GLANCE TICKER SYMBOL: ACRNX PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (CLASS Z) -------------------------------------------------------------------------------- >through December 31, 2005 ------------------------------------- INCEPTION 6/10/70 1 YEAR 5 YEARS 10 YEARS ------------------------------------- Returns before taxes 13.11% 13.00% 15.95% ---------------------------------------------------------------- Returns after taxes 12.11 12.56 14.11 on distributions ---------------------------------------------------------------- Returns after taxes 9.81 11.31 13.33 on distributions and sale of fund shares ---------------------------------------------------------------- Russell 2500 (pretax) 8.11 9.14 11.53 ---------------------------------------------------------------- S&P 500 (pretax) 4.91 0.54 9.07 ---------------------------------------------------------------- PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. 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 tax impact of 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, 2005 [PIE CHART] Industrial Goods/Services 16.2% Finance 12.3% Other* 10.6% Energy/Minerals 9.3% Health Care 9.3% Information 22.2% Computer Related Hardware 7.1% Media 2.6% Software/Services 8.9% Telecommunications 3.6% Consumer Goods/Services 20.1% * Other includes short-term obligations, cash and other assets less liabilities of 6.1%. Foreign equities within the portfolio were 15.57% diversified by country as follows: 5.94% Europe ex-Ireland and UK; 2.75% Ireland and UK; 1.99% Canada; 2.03% Latin America and Emerging Markets; 1.35% Asia ex-Japan; 1.13% Japan; 0.38% Australia/New Zealand. -------------------------------------------------------------------------------- THE GROWTH OF A $75,000 INVESTMENT IN COLUMBIA ACORN FUND (CLASS Z) -------------------------------------------------------------------------------- >June 10, 1970 through December 31, 2005 This graph compares the results of $75,000 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, and to an initial $238,325 investment in the Russell 2500, an index of the 2,500 smallest U.S. companies, on the index's December 31, 1978 inception date. The indexes are unmanaged and returns for both 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. PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. NAV ON 12/31/05: $28.17 TOTAL NET ASSETS OF THE FUND: $16,391.3 MILLION Columbia Acorn Fund: S&P 500: Russell 2500: Date $16,380,575 $4,058,960 $9,580,758 ------------ --------------- ---------- -------------- 6/10/1970 75000 75000 6/30/1970 72712 73649 78879 79312 84173 83108 9/30/1970 90171 86109 89371 85393 91271 89716 12/31/1970 101900 95072 112150 99185 118783 100338 3/31/1971 127654 104293 136729 108347 129570 104114 6/30/1971 130480 104461 129671 100417 132301 104312 9/30/1971 131786 103845 123873 99781 117583 99801 12/31/1971 133714 108674 139894 110910 147366 113981 3/31/1972 150894 114924 155045 115700 156187 117985 6/30/1972 154215 115690 146411 116236 143474 120529 9/30/1972 142216 120221 141901 121641 148089 127504 12/31/1972 145257 129312 137026 127385 126626 122893 3/31/1973 124226 122993 112912 115302 102284 116365 6/30/1973 102284 115898 114109 120608 109163 116494 9/30/1973 126188 121473 131019 121671 111579 108178 12/31/1973 110774 110314 113330 109529 113911 109450 3/31/1974 112632 107204 103682 103359 96940 100238 6/30/1974 93802 99096 87887 92746 79662 83824 9/30/1974 72730 74165 90119 86636 85772 82403 12/31/1974 80132 81121 92786 91435 96717 97267 3/31/1975 97670 99742 102315 104819 111963 109817 6/30/1975 119586 115064 113296 107651 106681 105753 9/30/1975 102351 102454 106200 109151 106681 112232 12/31/1975 104636 111318 122142 124871 134782 123818 3/31/1976 142196 127991 142074 126997 145963 125586 6/30/1976 153742 131151 148472 130525 148962 130286 9/30/1976 155455 133645 149452 131161 159130 130624 12/31/1976 172850 137957 180684 131429 174266 129034 3/31/1977 179326 127683 183646 128209 187348 125696 6/30/1977 199566 131906 198311 130266 193335 128031 9/30/1977 192215 128229 184999 123231 200551 127126 12/31/1977 203785 128080 191466 120727 193354 118283 3/31/1978 200655 121761 216894 132740 225706 133963 6/30/1978 225706 132124 241124 139825 266191 144028 9/30/1978 260593 143571 213895 131051 231200 133863 12/31/1978 238325 136496 238325 250178 142548 256333 244379 137967 249751 3/31/1979 272821 146194 272105 273787 147128 277942 277929 143919 274341 6/30/1979 300986 150179 290113 311289 152196 298558 336393 160980 321658 9/30/1979 339740 161665 321037 315473 151312 289741 342111 158506 312840 12/31/1979 358428 161894 329731 378586 171959 353327 379518 171950 346372 3/31/1980 316938 155227 288995 334175 162411 307997 355449 170767 333456 6/30/1980 368337 176172 348359 390950 188424 383382 406746 190332 403128 9/30/1980 425227 195936 416044 434073 199901 425483 463454 221194 455662 12/31/1980 469456 214517 442746 460538 205545 438150 458436 209112 443739 3/31/1981 488391 217478 479879 490844 213275 489814 499778 213822 504096 6/30/1981 481384 212480 495155 462660 212917 484722 434502 200626 452060 9/30/1981 405986 190739 418652 432007 201033 448458 442165 209330 464355 12/31/1981 435036 203965 455910 418916 201302 438523 407978 190044 419149 3/31/1982 401598 189050 415175 414359 197595 436288 407249 190859 423620 6/30/1982 402692 187997 411573 395592 184648 405612 417850 207065 446595 9/30/1982 424396 209648 461871 469473 233774 527693 506694 243223 570291 12/31/1982 511557 247903 577618 539993 257124 609784 566180 263017 643564 3/31/1983 581852 272734 666167 603475 294217 710256 637994 291663 752978 6/30/1983 658329 303011 782784 642027 294068 760305 629146 298490 741180 9/30/1983 640416 302603 760305 617674 299106 716962 639410 305415 753102 12/31/1983 640416 303826 737454 621269 302126 716465 597103 291494 674737 3/31/1984 602236 296542 680077 601594 299354 675482 579780 282790 641081 6/30/1984 595627 288931 660951 586979 285344 634126 656811 316862 711498 9/30/1984 657892 316932 709386 659838 318154 701935 655514 314597 692496 12/31/1984 667837 322884 706903 740958 348043 788745 753392 352305 805760 3/31/1985 748096 352534 794458 748786 352206 787876 792995 372556 823146 6/30/1985 803303 378388 839167 814685 377842 854070 807484 374612 849351 9/30/1985 773568 362897 803400 807716 379660 835442 860914 405694 895302 12/31/1985 878569 425328 932560 898860 427703 949202 948906 459668 1018750 3/31/1986 995008 485314 1073770 1012020 479849 1084320 1043820 505376 1133380 6/30/1986 1060720 513921 1142070 1010870 485175 1048430 1042360 521155 1100720 9/30/1986 990034 478070 1030670 1011860 505634 1071900 1023760 518223 1072520 12/31/1986 1026320 504710 1044210 1106730 572675 1167160 1183980 595300 1252730 3/31/1987 1202240 612480 1274340 1162910 607035 1241300 1191840 612301 1245520 6/30/1987 1237070 643223 1281910 1282350 675805 1330350 1349080 701023 1371580 9/30/1987 1353890 685652 1344750 1013160 537987 964229 998168 493700 919271 12/31/1987 1071920 531210 995401 1102670 553557 1039120 1191610 579362 1126550 3/31/1988 1195250 561457 1154990 1227320 567667 1168150 1210460 572576 1151510 6/30/1988 1274600 598857 1233350 1283580 596582 1214600 1258920 576331 1186660 9/30/1988 1301570 600884 1223170 1311240 617617 1217460 1292580 608814 1182680 12/31/1988 1337780 619436 1221680 1394440 664795 1285020 1422770 648231 1291600 3/31/1989 1441900 663355 1316070 1507020 697794 1378530 1560740 726023 1438400 6/30/1989 1531670 721910 1415920 1619580 787083 1482480 1660660 802474 1526940 9/30/1989 1698700 799215 1519370 1600190 780664 1440380 1631760 796582 1451810 12/31/1989 1670110 815709 1459010 1561930 760950 1337300 1581390 770747 1374810 3/31/1990 1629250 791176 1418520 1582170 771433 1366240 1695010 846651 1474160 6/30/1990 1722640 840938 1474290 1697850 838245 1421380 1469270 762480 1250370 9/30/1990 1313110 725368 1150270 1282190 722277 1095500 1333070 768969 1188890 12/31/1990 1377560 790391 1241920 1459610 824811 1341030 1578880 883794 1477640 3/31/1991 1642750 905197 1558740 1695620 907343 1555380 1775560 946483 1627040 6/30/1991 1699000 903120 1556130 1777510 945221 1628910 1844820 967607 1690130 9/30/1991 1846530 951421 1690380 1904900 964209 1728880 1850790 925358 1659950 12/31/1991 2029810 1031190 1824260 2138680 1011970 1914550 2216630 1025130 1965100 3/31/1992 2200950 1005140 1901880 2134320 1034660 1864130 2143470 1039730 1881020 6/30/1992 2091210 1024260 1815320 2169850 1066100 1882880 2135100 1044290 1833330 9/30/1992 2172920 1056580 1864130 2287710 1060200 1920140 2421280 1096300 2046560 12/31/1992 2521580 1109460 2117850 2630080 1119040 2168650 2622790 1134290 2138220 3/31/1993 2764570 1158220 2218070 2695280 1130230 2154980 2917300 1160460 2241670 6/30/1993 2950580 1163860 2265020 2935600 1159170 2279550 3129340 1203160 2380520 9/30/1993 3220710 1193950 2425480 3343290 1218630 2454540 3217030 1207020 2375430 12/31/1993 3336670 1221610 2468450 3353410 1263140 2546560 3312750 1228860 2537370 3/31/1994 3152490 1175280 2413550 3178800 1190350 2427590 3142920 1209890 2402620 6/30/1994 3035290 1180230 2327860 3133360 1218990 2390950 3277940 1268960 2520230 9/30/1994 3236910 1237930 2494650 3224840 1265740 2499000 3099320 1219640 2390700 12/31/1994 3088130 1237740 2442610 3030100 1269830 2437770 3128500 1319330 2560100 3/31/1995 3173910 1358260 2622940 3209230 1398250 2669640 3307630 1454130 2726140 6/30/1995 3441340 1487910 2856920 3608570 1537250 3025450 3646820 1541120 3073880 9/30/1995 3720780 1606160 3131380 3565220 1600420 3033400 3667220 1670670 3163050 12/31/1995 3730550 1702850 3216950 3790900 1760810 3239800 3939020 1777140 3337420 3/31/1996 4015830 1794240 3405350 4229790 1820700 3562830 4380650 1867650 3659570 6/30/1996 4295620 1874770 3547180 4074070 1791950 3287490 4229910 1829750 3476520 9/30/1996 4385750 1932730 3627160 4363480 1986040 3603320 4485930 2136160 3777430 12/31/1996 4571770 2093830 3829220 4732880 2224640 3935030 4672080 2233140 3876540 3/31/1997 4459300 2149960 3701050 4483620 2278310 3747880 4839270 2417020 4092880 6/30/1997 5061170 2525310 4260170 5320440 2726230 4509800 5345100 2573510 4572640 9/30/1997 5755080 2714450 4871570 5585540 2623800 4652620 5585540 2745260 4673480 12/31/1997 5713890 2792400 4761900 5613000 2823290 4689130 6023300 3026920 5029660 3/31/1998 6399960 3181930 5250230 6494130 3213930 5270100 6248620 3158690 5025440 6/30/1998 6382330 3286990 5031400 6020750 3252000 4685780 4922340 2781830 3801900 9/30/1998 5137250 2960040 4071890 5396500 3200820 4294440 5618230 3394800 4507190 12/31/1998 6057640 3590430 4780280 6054040 3740570 4772090 5780820 3624310 4458500 3/31/1999 5841940 3769320 4553880 6320080 3915290 4961230 6420740 3822830 5038360 6/30/1999 6763830 4035000 5300530 6862070 3909000 5196330 6661950 3889670 5033760 9/30/1999 6625570 3783030 4958870 6825680 4022430 5067420 7309590 4104190 5353560 12/31/1999 8079420 4345920 5934400 7883210 4127560 5797920 8467470 4049430 6635220 3/31/2000 8114300 4445580 6533670 7835240 4311830 6182290 7669560 4223370 5885670 6/30/2000 7965780 4327480 6272310 7998170 4259830 6112600 8581030 4524430 6638960 9/30/2000 8724430 4285570 6422960 8502390 4267450 6246720 8055040 3931000 5696990 12/31/2000 8892060 3950240 6187640 9057400 4090390 6390980 8830060 3717420 5979450 3/31/2001 8432220 3481930 5651410 9176240 3752510 6150510 9563750 3777650 6335510 6/30/2001 9699270 3685700 6425460 9515470 3649420 6195680 9137370 3420960 5992660 9/30/2001 7898050 3144710 5217150 8234140 3204680 5486920 8869550 3450500 5930670 12/31/2001 9437670 3480720 6263130 9347940 3429930 6185390 9231820 3363780 6077090 3/31/2002 9907440 3490290 6497250 9886330 3278680 6480730 9590740 3254530 6290780 6/30/2002 9105130 3022680 5936270 8028350 2787080 5227840 8096970 2805380 5243650 9/30/2002 7616640 2500490 4828210 7938620 2720570 4985570 8450620 2880700 5392590 12/31/2002 8181420 2711470 5148600 7991400 2640440 5011800 7864720 2600820 4891370 3/31/2003 7965010 2626070 4938000 8656480 2842380 5378080 9274040 2992140 5907010 6/30/2003 9559070 3030310 6019860 10007700 3083730 6343450 10535600 3143880 6636980 9/30/2003 10414200 3110490 6546700 11264000 3286450 7063980 11628200 3315370 7329900 12/31/2003 11918900 3489250 7491690 12352100 3553280 7765020 12589800 3602670 7885090 3/31/2004 12780000 3548320 7932480 12325700 3492620 7551460 12547600 3540550 7705590 6/30/2004 12990900 3609390 7959090 12329700 3489930 7495970 12319100 3504050 7476810 9/30/2004 12879800 3542000 7758810 13202500 3596110 7935770 14032900 3741620 8528310 12/31/2004 14482500 3868940 8862220 14170400 3774630 8564490 14570100 3854070 8758340 3/31/2005 14301800 3785820 8583900 13715900 3714020 8197820 14400300 3832190 8693870 6/30/2005 14884500 3837630 8972060 15717900 3980350 9502340 15640100 3944030 9360600 9/30/2005 15890100 3975980 9410510 15506700 3909690 9118270 16273500 4057570 9558650 12/31/2005 16380600 4058960 9580760 * A $75,000 investment in Columbia Acorn Fund at inception appreciated to $238,325 on December 31, 1978, the inception date of the Russell 2500. For comparison with the Russell 2500, we assigned the index the same value as the Fund at index inception. -------------------------------------------------------------------------------- COLUMBIA ACORN FUND TOP 10 HOLDINGS (AS A % OF NET ASSETS) -------------------------------------------------------------------------------- 1. Chico's FAS 1.4% WOMEN'S SPECIALTY RETAIL 2. Coach 1.2% DESIGNER & RETAILER OF BRANDED LEATHER ACCESSORIES 3. Expeditors International of Washington 1.1% INTERNATIONAL FREIGHT FORWARDER 4. AmeriCredit 1.0% AUTO LENDING 5. Western Gas 0.9% OIL & COAL SEAM GAS PRODUCER 6. Ultra Petroleum 0.9% NATURAL GAS PRODUCER 7. Watsco 0.8% HVAC DISTRIBUTION 8. ITT Educational Services 0.8% POSTSECONDARY DEGREE PROGRAM 9. Talisman Energy 0.8% OIL & GAS PRODUCER 10. HNI 0.8% OFFICE FURNITURE & FIREPLACES Portfolio characteristics and holdings are subject to change periodically and may not be representative of current characteristics and holdings. -------------------------------------------------------------------------------- 9 COLUMBIA ACORN INTERNATIONAL >IN A NUTSHELL [PHOTO of P.Zachary Egan] [PHOTO of Louis J. Mendes III] PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. Columbia Acorn International ended 2005 up 21.81%, trailing the 21.99% gain of the S&P/Citigroup EMI Global ex-US Index by a very narrow margin. For the fourth quarter, the Fund gained 4.47% vs. 6.67% for the index. Fund underperformance in the final three months was largely due to an underweight in a rallying Japanese market. As we have noted in previous quarters, provided we can find ideas that meet our return requirements and other investment criteria, we intend to continue adding to the Fund's weighting in Japanese holdings. We believe Japanese market fundamentals are improving and valuations are generally reasonable. Columbia Acorn International continued to benefit from a number of winners in the energy sector. Perusahaan Gas Negara, an Indonesian pipeline operator, posted a 69% return in the quarter, and was up 240% for the year owing to an Indonesian government decision to deregulate natural gas prices earlier than expected. Vallourec (France) and Tenaris (an Argentinean multinational), both seamless tube manufacturers supplying energy producers, were up nearly 284% and 144%, respectively, on strong volumes and favorable pricing. Canadian oil and gas producer Talisman Energy gained 99% and the UK's Tullow Oil increased 72%. Overall, the Fund's energy stocks gained 65% over the 12-month period, well ahead of the benchmark index's 47% gain in the sector. Winners outside of the energy sector included Japanese parking lot operator Park 24, that was up 68% in the quarter and 102% in the year. While Japan was among the best performing markets in 2005, Park 24 was also a beneficiary of favorable regulatory changes affecting its core parking-lot business. Some disappointments included Mexican airport operator Grupo Aeroportaurio Del Sureste that fell 19% in the quarter as investors considered how damage to the Cancun region caused by hurricane Wilma would impact tourism. Laggards for the year included Business Post Group, a UK parcel and express mail service company, that fell 51% on declining volumes and rising costs. Hong Kong's Global Bio-Chem Technology Group, a refiner of corn-based commodities, dropped 32% on price weakness in some key commodities. Japan's Funai Electric, a consumer electronics manufacturer, traded down 32% as rising raw material costs weighed on profitability. Small-cap international stocks have had a very good run over the last few years. Share price appreciation has been driven by a combination of improving company earnings and higher valuations assigned by the market to those earnings. As a consequence, this group of stocks does not appear to be cheap. We nonetheless continue to find what we believe to be good companies around the world with attractive fundamentals not yet fully reflected in their share prices. /s/ P.Zachary Egan P.Zachary Egan CO-PORTFOLIO MANAGER /s/ Louis J. Mendes III Louis J. Mendes III CO-PORTFOLIO MANAGER 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 12/31/05, THE FUND'S POSITIONS IN THE STOCKS MENTIONED WERE: PERUSAHAAN GAS NEGARA, 0.7%; VALLOUREC, 1.0%; TENARIS, 0.4%; TALISMAN ENERGY, 0.7%; TULLOW OIL, 1.0%; PARK 24, 1.1%; GRUPO AEROPORTAURIO DEL SURESTE, 0.6%; BUSINESS POST GROUP, 0.0%; GLOBAL BIO-CHEM TECHNOLOGY GROUP, 0.5%; FUNAI ELECTRIC, 0.0%. 10 COLUMBIA ACORN INTERNATIONAL >AT A GLANCE TICKER SYMBOL: ACINX PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (CLASS Z) -------------------------------------------------------------------------------- >through December 31, 2005 -------------------------------------- INCEPTION 9/23/92 1 YEAR 5 YEARS 10 YEARS -------------------------------------- Returns before taxes 21.81% 9.06% 11.93% ----------------------------------------------------------------- Returns after taxes 20.96 8.78 10.94 on distributions ----------------------------------------------------------------- Returns after taxes 15.54 7.84 10.21 on distributions and sale of fund shares ----------------------------------------------------------------- S&P/Citigroup EMI 21.99 14.20 8.43 Global ex-US (pretax) ----------------------------------------------------------------- PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. 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 tax impact of 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, 2005 [PIE CHART] Finance 15.5% Information Technology 14.0% Other* 9.7% Energy/Minerals 10.5% Health Care 6.5% Industrial Goods/Services 25.4% Consumer Goods/Services 18.4% * Other includes short-term obligations, cash and other assets less liabilities of 3.4%. -------------------------------------------------------------------------------- THE GROWTH OF A $10,000 INVESTMENT IN COLUMBIA ACORN INTERNATIONAL -------------------------------------------------------------------------------- >September 23, 1992 through December 31, 2005 This graph compares the results of $10,000 invested in Columbia Acorn International at inception on September 23, 1992 to the S&P/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. PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. NAV AS OF 12/31/05: $33.44 TOTAL NET ASSETS OF THE FUND: $2,892.6 MILLION [LINE GRAPH] S&P/CITIGROUP COLUMBIA ACORN EMI GLOBAL DATE INTERNATIONAL: EX-US: ---------- --------------- ------------- 9/23/1992 10000 10000 9/30/1992 10010 10113 10380 9490 10570 9510 12/31/1992 10690 9646 10780 9732 11460 10079 12000 11093 12450 12111 12910 12754 6/30/1993 12920 12264 12920 12642 13760 13294 13910 13016 14560 12970 14620 11886 12/31/1993 15940 12650 16630 13915 16570 14012 15850 13783 15960 14196 15870 13990 6/30/1994 15550 14283 15980 14452 16481 14616 16491 14199 16522 14439 15606 13606 12/31/1994 15334 13689 14640 13132 14550 12907 14811 13417 15264 13820 15505 13634 6/30/1995 15727 13479 16582 14236 16411 13886 16824 13985 16300 13581 16069 13694 12/31/1995 16703 14224 17357 14547 17881 14726 18203 15033 18787 15811 19341 15688 6/30/1996 19593 15692 18968 15075 19240 15227 19362 15309 19553 15213 20088 15459 12/31/1996 20153 15202 20636 14981 20893 15285 20585 15095 20287 14894 21170 15768 6/30/1997 21808 16173 21951 16017 20788 15314 21660 15561 20487 14801 20269 14112 12/31/1997 20190 13816 20476 14250 22123 15327 23857 16068 24351 16198 24769 16336 6/30/1998 24335 15760 24491 15660 21368 13602 20428 13301 21111 14217 22309 14707 12/31/1998 23305 15019 23842 14914 23126 14635 23574 15268 24984 16201 25141 15801 6/30/1999 27222 16416 28191 16947 29002 17244 29486 17166 30759 17009 35365 17621 12/31/1999 41761 18820 41607 18462 48298 19172 46808 19257 41359 17993 38286 17617 6/30/2000 40171 18686 39669 18067 40563 18585 38494 17631 35630 16564 32730 15834 12/31/2000 33402 16452 34915 16759 32408 16108 29285 14860 30419 15833 30223 15801 6/30/2001 28747 15265 27591 14818 27035 14778 23354 12853 24467 13375 25850 13925 12/31/2001 26350 14040 25708 13786 25636 14016 26977 14930 27862 15240 27748 15728 6/30/2002 26646 15104 23854 13823 23496 13740 21406 12472 21492 12754 22150 13230 12/31/2002 22107 13073 21562 12853 20988 12624 20686 12501 22567 13679 24433 14845 6/30/2003 25134 15399 25681 15948 26835 16710 27844 17474 29979 18746 30800 19087 12/31/2003 32675 20265 33641 20993 34910 21717 34924 22249 34175 21502 34290 21505 6/30/2004 35543 22195 34625 21412 34786 21643 36243 22450 37555 23138 40411 24959 12/31/2004 42305 26198 42699 26445 45016 27733 43675 27036 42334 26187 42436 26372 6/30/2005 43561 26929 46119 28001 47494 28763 49328 29961 47199 28874 48544 30065 12/31/2005 51532 31959 -------------------------------------------------------------------------------- COLUMBIA ACORN INTERNATIONAL TOP 10 HOLDINGS (AS A % OF NET ASSETS) -------------------------------------------------------------------------------- 1. Anglo Irish Bank (Ireland) 1.8% SMALL BUSINESS & MIDDLE MARKET BANKING 2.Rhoen-Klinikum (Germany) 1.6% HOSPITAL MANAGEMENT 3. Fugro (Netherlands) 1.4% SURVEY & GPS SERVICES 4. Hexagon (Sweden) 1.3% MEASUREMENT EQUIPMENT & POLYMERS 5. Housing Development Finance (India) 1.2% PREMIER MORTGAGE LENDER IN INDIA 6. Jupiter Telecommunications (Japan) 1.2% LARGEST CABLE SERVICE PROVIDER IN JAPAN 7. SES Global (France) 1.2% SATELLITE BROADCASTING SERVICES 8. Neopost (France) 1.1% POSTAGE METER MACHINES 9. Billabong International (Australia) 1.1% ACTION SPORTS APPAREL BRAND MANAGER 10. Paragon Group (United Kingdom) 1.1% BUY-TO-LET FINANCE COMPANY Portfolio characteristics and holdings are subject to change periodically and may not be representative of current characteristics and holdings. -------------------------------------------------------------------------------- 11 COLUMBIA ACORN USA >IN A NUTSHELL [PHOTO of Robert A. Mohn] PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. Columbia Acorn USA gained 2.68% in the quarter, outperforming the 1.13% increase of the Russell 2000. For the year, the Fund was up 12.98%, almost tripling the 4.55% annual increase of the Russell 2000. After dropping in the third quarter, retail stocks came back strong in the fourth quarter. Teen retailer Abercrombie & Fitch was up 31% in the three months on strong same-store sales. Christopher & Banks and Ann Taylor Stores were also up over 30% for the quarter. For the year, the Fund's consumer stocks as a whole were up over 4% compared to a 2% decline in the benchmark index for the sector. Rebounding technology stocks also paid off in the quarter. Credit card processor Global Payments gained 20% and was up nearly 60% for the year on strong growth and on news it is planning to expand overseas. Software developer Novell gained 19% in the quarter and Symbol Technologies, a maker of mobile computers and barcode scanners, gained 32%. Outside the technology sector, ITT Educational Services put in another good quarter, gaining 20% on strong enrollment growth. The worst performing sector for the Fund in the quarter was the industrial sector due largely to two stocks: Esco Technologies and Chicago Bridge & Iron. Esco, a manufacturer of automated meter readers, has been a big winner for the Fund over the last two years but was off 11% in the quarter as revenues came in short. Chicago Bridge & Iron, a construction company for refineries and liquid natural gas terminals, was unable to release third quarter earnings due to an accounting issue. The stock fell 19% in the quarter. Annual winners included Quicksilver Resources, a coal seam gas producer that gained nearly 71% as energy prices increased. Crown Castle International, an owner of communication towers, gained 62% on strong growth. On the downside for the year, Petco Animal Supplies fell 44%. The stock declined due to weaker than expected sales and elevated distribution costs. Seachange International, a developer of systems used for video on demand, was also off in the year falling 55% as cable and telephone customers delayed new video-on-demand launches. Looking forward into 2006 we will continue to search for what we believe to be the best small-cap stocks to add to the portfolio. /s/ Robert A. Mohn Robert A. Mohn LEAD PORTFOLIO MANAGER 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 12/31/05, THE FUND'S POSITIONS IN THE STOCKS MENTIONED WERE: ABERCROMBIE & FITCH, 2.1%; CHRISTOPHER & BANKS, 0.8%; ANN TAYLOR STORES, 0.6%; GLOBAL PAYMENTS, 1.6%; NOVELL, 1.3%; SYMBOL TECHNOLOGIES, 0.6%; ITT EDUCATIONAL SERVICES, 2,0%; ESCO TECHNOLOGIES, 2.1%; CHICAGO BRIDGE & IRON, 1.2%; QUICKSILVER RESOURCES, 1.8%; CROWN CASTLE INTERNATIONAL, 2.2%; PETCO ANIMAL SUPPLIES, 0.8%; SEACHANGE INTERNATIONAL, 0.3%. 12 COLUMBIA ACORN USA >AT A GLANCE TICKER SYMBOL: AUSAX PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (CLASS Z) -------------------------------------------------------------------------------- >through December 31, 2005 -------------------------------------- LIFE OF INCEPTION 9/4/96 1 YEAR 5 YEARS FUND -------------------------------------- Returns before taxes 12.98% 14.28% 14.58% ----------------------------------------------------------------- Returns after taxes 12.11 13.99 13.84 on distributions ----------------------------------------------------------------- Returns after taxes 9.56 12.49 12.75 on distributions and sale of fund shares ----------------------------------------------------------------- Russell 2000 (pretax) 4.55 8.22 9.24 ----------------------------------------------------------------- PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. 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 tax impact of 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, 2005 [PIE CHART] Consumer Goods/Services 17.1% Health Care 13.3% Other* 12.4% Energy/Minerals 10.5% Industrial Goods/Services 9.7% Finance 8.0% Information 29.0% * Other includes short-term obligations, cash and other assets less liabilities of 9.9%. -------------------------------------------------------------------------------- THE GROWTH OF A $75,000 INVESTMENT IN COLUMBIA ACORN USA (CLASS Z) -------------------------------------------------------------------------------- >September 4, 1996 through December 31, 2005 This graph compares the results of $75,000 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. PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. NAV AS OF 12/31/05: $27.03 TOTAL NET ASSETS OF THE FUND: $1,221.5 MILLION [LINE GRAPH] DATE COLUMBIA ACORN USA: RUSSELL 2000: ---------- ------------------ ------------- 9/4/1996 75000 75000 9/30/1996 80400 78060 81075 76857 84450 80024 12/31/1996 87375 82121 91575 83763 89400 81732 3/31/1997 86100 77875 85650 78092 93825 86780 6/30/1997 99900 90499 105000 94710 107625 96877 9/30/1997 115050 103968 113550 99401 113775 98758 12/31/1997 115598 100486 113075 98900 122403 106214 3/31/1998 130507 110594 134941 111206 129207 105217 6/30/1998 131438 105438 124439 96902 104520 78086 9/30/1998 106135 84197 109903 87631 115518 92222 12/31/1998 122288 97928 118322 99230 111712 91193 3/31/1999 112621 92616 120718 100916 125510 102390 6/30/1999 132377 107020 135359 104083 126164 100231 9/30/1999 126495 100253 133951 100659 141075 106670 12/31/1999 150443 118745 142898 116838 149006 136131 3/31/2000 148646 127156 131761 119505 123947 112540 6/30/2000 126255 122350 125612 118414 133239 127449 9/30/2000 132320 123703 132412 118181 124693 106049 12/31/2000 136914 115157 145552 121153 145276 113203 3/31/2001 141784 107666 158968 116088 167881 118942 6/30/2001 172567 123049 174405 116388 169627 112629 9/30/2001 145092 97468 145460 103172 154097 111159 12/31/2001 163277 118020 165234 116793 159642 113592 3/31/2002 173248 122721 175858 123840 165979 118343 6/30/2002 156007 112472 134759 95485 132802 95242 9/30/2002 122923 88402 128795 91236 139978 99379 12/31/2002 133082 93845 131125 91248 129354 88491 3/31/2003 129633 89630 142308 98129 157219 108659 6/30/2003 159735 110626 167284 117548 176510 122937 9/30/2003 172410 120668 190117 130801 194310 135443 12/31/2003 195802 138191 205960 144195 206892 145487 3/31/2004 205494 146843 200461 139356 208476 141574 6/30/2004 215093 147537 201952 137603 199063 136895 9/30/2004 206705 143322 212577 146143 227954 158819 12/31/2004 236173 163520 232799 156698 237297 159352 3/31/2005 236173 154790 226520 145926 239078 155477 6/30/2005 249126 161473 259771 171704 257680 168520 9/30/2005 259866 169049 252167 163800 265094 171752 12/31/2005 266821 170967 -------------------------------------------------------------------------------- COLUMBIA ACORN USA TOP 10 HOLDINGS (AS A % OF NET ASSETS) -------------------------------------------------------------------------------- 1. AmeriCredit 2.4% AUTO LENDING 2. Crown Castle International 2.2% COMMUNICATION TOWERS 3. Abercrombie & Fitch 2.1% TEEN APPAREL RETAILER 4. Esco Technologies 2.1% AUTOMATIC ELECTRIC METER READERS 5. ITT Educational Services 2.0% POSTSECONDARY DEGREE PROGRAMS 6. Edwards Lifesciences 2.0% HEART VALVES 7. Alltel 1.8% CELLULAR & WIRELINE TELEPHONE SERVICES 8. Quicksilver Resources 1.8% NATURAL GAS & COAL SEAM GAS PRODUCER 9. Micros Systems 1.8% INFORMATION SYSTEMS FOR RESTAURANTS & HOTELS 10. Scotts Miracle-Gro 1.7% CONSUMER LAWN & GARDEN PRODUCTS Portfolio characteristics and holdings are subject to change periodically and may not be representative of current characteristics and holdings. -------------------------------------------------------------------------------- 13 COLUMBIA ACORN INTERNATIONAL SELECT >IN A NUTSHELL [PHOTO of Christopher J. Olson] PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. Columbia Acorn International Select ended the fourth quarter up 3.52% vs. a 6.50% gain for the S&P/Citigroup World ex-US Cap Range $2-10B Index. For the year, the Fund was up 15.98% while the index gained 20.35%. An underweight in Japan and a pull back in energy stock performance in the fourth quarter hurt the Fund's relative performance for both periods. Five of the Fund's top 10 performing stocks in the quarter were based in Japan. The Japanese market rallied in the fourth quarter as foreign investors, motivated by signs of an improving economy, poured money into that market. A new holding to the Fund, mall developer Aeon Mall, increased 42%. Beverage distributor Ito En gained 30%. Industrial lighting company Ushio rose 13%. Daito Trust Construction, an apartment developer, gained 19%. Lastly, Hiroshima Bank increased 21% in the three month period. While the quarter was all about Japan, the year was all about energy. Argentinean multinational Tenaris, a steel pipe manufacturer, topped the annual charts with a 144% gain. Canada's Talisman Energy, an oil and gas producer, increased 100% in 2005. Outside the energy sector, UK freight forwarder Exel increased 65% in the year and the Fund's investment in Hong Kong exchange operator Hong Kong Exchanges & Clearing increased 61%. Tenaris gets a second mention as a quarterly loser. The stock came down with the energy sector in the fourth quarter, dropping 16%. Australian beer brewer and distributor Lion Nathan was off 13% in the quarter due to concerns about slower growth in its business. Losers for the year included Compass Group, a UK concession and contract caterer, off 25% due to pricing competition in the UK market. Global Bio-Chem Technology Group, a Hong Kong refiner of corn-based commodities, fell more than 32% in the year due to weakness in some of its commodity prices. Japanese electronics manufacturer Funai Electric was also off 32% due to increases in raw material costs. Looking forward to 2006, we will continue to work to increase the Fund's weighting in Japan. To achieve this goal, we are in the process of hiring an analyst to enhance our coverage of Japan. Elsewhere we will continue to follow our bottom-up investment approach to find what we believe to be the best stocks for your portfolio. On December 7, 2005, I was named lead portfolio manager of Columbia Acorn International Select. I have been a co-portfolio manager on the Fund since September of 2001. /s/ Christopher J. Olson Christopher J. Olson LEAD PORTFOLIO MANAGER 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 12/31/05, THE FUND'S POSITIONS IN THE STOCKS MENTIONED WERE: AEON MALL, 2.3%; ITO EN, 2.4%; USHIO, 3.6%; DAITO TRUST CONSTRUCTION, 4.1%; HIROSHIMA BANK, 1.2%; TENARIS, 2.4%; TALISMAN ENERGY, 1.5%; EXEL, 0.0%; HONG KONG EXCHANGES & CLEARING, 3.0%; LION NATHAN, 0.0%; COMPASS GROUP, 0.0%; GLOBAL BIO-CHEM TECHNOLOGY GROUP, 0.9%; FUNAI ELECTRIC, 0.0%. 14 COLUMBIA ACORN INTERNATIONAL SELECT >AT A GLANCE TICKER SYMBOL: ACFFX PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (CLASS Z) >through December 31, 2005 -------------------------------------- LIFE OF INCEPTION 11/23/98 1 YEAR 5 YEARS FUND -------------------------------------- Returns before taxes 15.98% 4.27% 11.25% ----------------------------------------------------------------- Returns after taxes 15.83 4.25 11.18 on distributions ----------------------------------------------------------------- Returns after taxes 10.81 3.72 9.95 on distributions and sale of fund shares ----------------------------------------------------------------- S&P/Citigroup World 20.35 11.60 10.83 ex-US Cap Range $2-10B (pretax) ----------------------------------------------------------------- PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. 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 tax impact of 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, 2005 [PIE CHART] Consumer Goods/Services 20.3% Finance 15.0% Other* 9.1% Information Technology 15.3% Energy/Minerals 5.4% Health Care 8.7% Industrial Goods/Services 26.2% * Other includes short-term obligations, cash and other assets less liabilities of 4.4%. -------------------------------------------------------------------------------- THE GROWTH OF A $10,000 INVESTMENT IN COLUMBIA ACORN INTERNATIONAL SELECT (CLASS Z) -------------------------------------------------------------------------------- >November 23, 1998 through December 31, 2005 This graph compares the results of $10,000 invested in Columbia Acorn International Select at inception on November 23, 1998 to the S&P/ 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. PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. NAV ON 12/31/05: $20.57 TOTAL NET ASSETS OF THE FUND: $95.0 MILLION [LINE GRAPH] S&P/CITIGROUP COLUMBIA ACORN WORLD EX-US DATE INTERNATIONAL SELECT: CAP RANGE $2-10B: ---------- --------------------- ----------------- 11/23/1998 10000 10000 11/30/1998 10140 10045 12/31/1998 11000 10339 11790 10310 11590 10052 3/31/1999 11980 10449 12240 11032 12170 10567 6/30/1999 13110 10953 13511 11362 13771 11490 9/30/1999 13621 11530 14132 11535 16999 11864 12/31/1999 19975 12772 19665 12154 24245 12311 3/31/2000 23093 12680 21258 12172 18923 11976 6/30/2000 19853 12611 19469 12203 20266 12586 9/30/2000 19237 12168 18480 11791 16128 11440 12/31/2000 17309 11998 17874 11939 15826 11505 3/31/2001 13706 10607 14413 11391 14382 11293 6/30/2001 13763 10999 13062 10723 12778 10626 9/30/2001 10625 9392 11305 9769 11925 10118 12/31/2001 12280 10140 11650 9841 11508 9991 3/31/2002 11915 10562 12290 10756 12433 11097 6/30/2002 12047 10712 10746 9753 10950 9730 9/30/2002 10147 8859 10127 9017 10381 9476 12/31/2002 10452 9209 9944 8978 9528 8810 3/31/2003 9629 8660 10533 9425 11447 10101 6/30/2003 11527 10389 11710 10806 12218 11429 9/30/2003 12675 11900 13621 12819 13905 12927 12/31/2003 14820 13781 15094 14071 15745 14410 3/31/2004 15847 14970 15532 14460 15552 14420 6/30/2004 15958 14786 15591 14226 15591 14357 9/30/2004 16244 14818 16724 15317 17775 16528 12/31/2004 18398 17257 18266 17165 19246 17899 3/31/2005 18684 17445 18051 16941 18072 17043 6/30/2005 18506 17395 19294 17969 20020 18582 9/30/2005 20611 19502 19813 18812 20051 19575 12/31/2005 21337 20770 -------------------------------------------------------------------------------- COLUMBIA ACORN INTERNATIONAL SELECT TOP 10 HOLDINGS (AS A % OF NET ASSETS) -------------------------------------------------------------------------------- 1. Jupiter Telecommunications (Japan) 4.2% LARGEST CABLE SERVICE PROVIDER IN JAPAN 2. Daito Trust Construction (Japan) 4.1% APARTMENT BUILDER 3. Gambro (Sweden) 4.1% PRODUCTS FOR RENAL & BLOOD CARE 4. Anglo Irish Bank (Ireland) 3.9% SMALL BUSINESS & MIDDLE MARKET BANKING 5. Shimano (Japan) 3.6% BICYCLE COMPONENTS & FISHING TACKLE 6. Ushio (Japan) 3.6% INDUSTRIAL LIGHT SOURCES 7. Northern Rock (United Kingdom) 3.5% LOWEST COST MORTGAGE BANK IN UK 8. Neopost (France) 3.5% POSTAGE METER MACHINES 9. SES Global (France) 3.4% SATELLITE BROADCASTING SERVICES 10. Hoya (Japan) 3.3% OPTO-ELECTRICAL COMPONENTS & EYEGLASS LENSES Portfolio characteristics and holdings are subject to change periodically and may not be representative of current characteristics and holdings. -------------------------------------------------------------------------------- 15 COLUMBIA ACORN SELECT >IN A NUTSHELL [PHOTO of Ben Andrews] PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. Columbia Acorn Select gained 6.66% in the fourth quarter beating its benchmark S&P MidCap 400's gain of 3.34%. The S&P 500 was up 2.09% in the quarter. For the year the Fund trailed the S&P MidCap 400 by 1.48%. Columbia Acorn Select was up 11.08% and the S&P MidCap 400 was up 12.56% for the year. The S&P 500 was up 4.91% in 2005. The Fund's fourth quarter performance was driven by a number of stocks. The top four performers (Abercrombie & Fitch, ITT Educational Services, Avid Technology and Janus Capital) generated $62 million of gains and propelled the Fund higher by approximately 4.25%. For the year, the Fund's top four dollar gainers were Tellabs, Abercrombie & Fitch, American Tower, and ITT Educational Services, which added 6.6% to the Fund's annual return. The Fund had only one big loser this year, security software developer McAfee. The stock was sold in the second quarter and cost the Fund $21 million or 2.2% of performance. Columbia Acorn Select purchased its first raw material stocks (beyond energy) in the quarter. Throughout Columbia Wanger's history, we have not focused on commodities because we felt the majority of commodity companies could not differentiate themselves enough for us to find a superior business model. To make money in commodities one has to rely on price appreciation and, when supply and demand are in line, prices are often flat to down. A year-and-a-half ago, Columbia Wanger hired its first raw materials analyst, Fritz Kaegi. We recognized that a number of commodity industries had not added new supply capacity in more than 10 years. As global demand has increased, many commodity companies have started to deplete their excess capacity, leaving them with tight supply and putting upward pressure on prices. September and October of 2005 were rough months for these stocks and the sell-off that occurred gave us our entry point. Columbia Acorn Select invested in Potash and UrAsia Energy, which focus on the crop nutrient market and the uranium market, respectively. We believe we are just a few years into what could be a long-term cycle of outperformance in commodities. However, the sector can be volatile. Potash's stock, for example, fell 35% from August through October and this drastic decline was not triggered by any major event. We do not anticipate adding a large commodities weighting to the Fund but it does seem to be the right time to broaden the Fund's portfolio to include some exposure to this sector. In the quarter we purchased the two new stocks mentioned above and sold one, CDW. CDW, a technology reseller, was sold because we became increasingly uncertain about the company's ability to meet our growth projections over the next year. For 2006, the Fund's focus is simple: To continue to make money for the Fund's shareholders and to beat the mid-cap benchmark. /s/ Ben Andrews Ben Andrews LEAD PORTFOLIO MANAGER 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 12/31/05, THE FUND'S POSITIONS IN THE STOCKS MENTIONED WERE: ABERCROMBIE & FITCH, 5.1%; ITT EDUCATIONAL SERVICES, 5.4%; AVID TECHNOLOGY, 3.2%; JANUS CAPITAL, 2.6%; TELLABS, 5.9%; AMERICAN TOWER, 3.6%; MCAFEE, 0.0%; POTASH, 0.9%; URASIA ENERGY, 3.0%; CDW, 0.0%. 16 COLUMBIA ACORN SELECT >AT A GLANCE TICKER SYMBOL: ACTWX -------------------------------------------------------------------------------- PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (CLASS Z) -------------------------------------------------------------------------------- >through December 31, 2005 --------------------------------- INCEPTION 11/23/98 LIFE OF 1 YEAR 5 YEARS FUND --------------------------------- Returns before taxes 11.08% 11.36% 14.69% --------------------------------------------------------------- Returns after taxes 10.58 11.15 14.16 on distributions --------------------------------------------------------------- Returns after taxes 7.84 9.91 12.84 on distributions and sale of fund shares --------------------------------------------------------------- S&P MidCap 400 12.56 8.60 12.17 (pretax) --------------------------------------------------------------- PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. 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 tax impact of 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, 2005 [PIE CHART] Consumer Goods/Services 27.5% Other* 7.2% Finance 15.3% Industrial Goods/Services 9.3% Health Care 5.0% Energy/Minerals 8.3% Information 27.4% * Other includes short-term obligations, cash and other assets less liabilities of 5.2%. -------------------------------------------------------------------------------- THE GROWTH OF A $50,000 INVESTMENT IN COLUMBIA ACORN SELECT (CLASS Z) -------------------------------------------------------------------------------- >November 23, 1998 through December 31, 2005 This graph compares the results of $50,000 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. PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. NAV ON 12/31/05: $22.77 TOTAL NET ASSETS OF THE FUND: $1,787.3 MILLION [LINE GRAPH ] Columbia S&P Date Acorn Select: MidCap 400: ---------- ------------- ----------- 11/23/1998 50000 50000 11/30/1998 50150 49556 12/31/1998 53550 55544 55000 53381 53550 50586 3/31/1999 57400 51999 63550 56101 63650 56344 6/30/1999 65200 59361 65950 58099 60300 56108 9/30/1999 60550 54375 64850 57146 66250 60146 12/31/1999 69240 63721 67370 61926 67774 66260 3/31/2000 70857 71805 67319 69298 65500 68433 6/30/2000 71599 69439 69657 70535 77156 78411 9/30/2000 78991 77874 79638 75233 71908 69554 12/31/2000 77326 74876 79570 76543 74918 72175 3/31/2001 72018 66809 77271 74179 81485 75906 6/30/2001 80117 75600 79351 74474 75629 72038 9/30/2001 71033 63077 72565 65868 80117 70767 12/31/2001 83513 74423 81868 74037 80113 74128 3/31/2002 82909 79427 78413 79055 80716 77722 6/30/2002 79345 72034 74300 65056 76110 65383 9/30/2002 72601 60116 76603 62720 80442 66349 12/31/2002 76987 63623 76658 61763 76878 60292 3/31/2003 78413 60801 82909 65215 87406 70620 6/30/2003 89709 71520 94041 74057 97934 77417 9/30/2003 95795 76231 99305 81996 98592 84852 12/31/2003 100555 86284 103317 88154 106024 90271 3/31/2004 105969 90654 102930 87678 104588 89497 6/30/2004 108013 91534 103317 87263 102488 87035 9/30/2004 104754 89612 108842 91046 115527 96468 12/31/2004 119233 100507 115057 97942 113534 101227 3/31/2005 112913 100107 108850 96216 114154 102010 6/30/2005 119063 104375 124286 109858 121504 108633 9/30/2005 124173 109468 123775 107116 131043 112350 12/31/2005 132442 113127 -------------------------------------------------------------------------------- COLUMBIA ACORN SELECT TOP 10 HOLDINGS (AS A % OF NET ASSETS) -------------------------------------------------------------------------------- 1. Tellabs 5.9% TELECOMMUNICATIONS EQUIPMENT 2. ITT Educational Services 5.4% POSTSECONDARY DEGREE PROGRAMS 3. Abercrombie & Fitch 5.1% TEEN APPAREL RETAILER 4. Safeway 4.5% RETAIL FOOD & DRUG STORES 5. American Tower 3.6% COMMUNICATION TOWERS IN USA & MEXICO 6. Pride International 3.3% OFFSHORE DRILLING CONTRACTOR 7. Avid Technology 3.2% DIGITAL NONLINEAR EDITING SOFTWARE & SYSTEMS 8. Harley-Davidson 3.1% MOTORCYCLES & RELATED MERCHANDISE 9. TCF Financial 3.0% GREAT LAKES BANK 10. Skillsoft Publishing 3.0% PROVIDER OF WEB-BASED LEARNING SOLUTIONS (E-LEARNING) Portfolio characteristics and holdings are subject to change periodically and may not be representative of current characteristics and holdings. -------------------------------------------------------------------------------- 17 COLUMBIA THERMOSTAT FUND >IN A NUTSHELL [PHOTO OMITTED] PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. Columbia Thermostat Fund gained 2.12% in the fourth quarter and was up 5.50% for the year. Fund performance topped the S&P 500 and the Lehman Brothers U.S. Credit Intermediate Bond Index for both periods. Columbia Thermostat Fund's strategy is to achieve returns that fall between the stock and bond index but we're pleased to see that the Fund beat both. The Lipper Flexible Portfolio Funds Index was up 1.95% in the quarter but pulled ahead of Fund returns for the year with a 6.34% gain. Both income and stock funds made positive contributions to the portfolio for the quarter and for the year. As mentioned last quarter, we added an international equity component to the portfolio in early September and international markets showed continued strength through the end of the year. Columbia Acorn International posted a 4.47% gain in the quarter. The portfolio's top performer for the quarter was Columbia Acorn Select, up 6.66%. The Fund's small- and mid-cap equity funds outperformed its large-cap equity funds for both time periods. As noted in the table, the Fund hit three reallocation triggers in the quarter. In October, the Fund's stock exposure increased while in November it was reduced twice. In 2004 the S&P 500 had a 1-year gain of 10.88% and Columbia Thermostat Fund was up 9.17%. In 2005, the S&P 500 increased 4.91% and the Fund gained 5.50%. Thermostat was designed to keep a portion of your portfolio at an even temperature despite ongoing market volatility and the data suggests that it has succeeded. We thank you for your investment in the Fund. -------------------------------------------------------------------------------- RESULTS OF THE FUNDS OWNED IN COLUMBIA THERMOSTAT FUND AT DECEMBER 31, 2005 Equities 4TH 1-YEAR WEIGHTINGS IN QUARTER RETURN TO FUND CATEGORY RETURNS 12/31/05 ---------------------------------------------------------------------------- Columbia 15% 3.09% 13.11% Acorn Fund ---------------------------------------------------------------------------- Columbia 10% 6.66% 11.08% Acorn Select ---------------------------------------------------------------------------- Columbia Large 15% 2.33% 9.15% Cap Value Fund ---------------------------------------------------------------------------- Columbia Acorn 15% 4.47% 21.81% International ---------------------------------------------------------------------------- Columbia Dividend 20% 2.00% 6.62% Income Fund ---------------------------------------------------------------------------- Columbia Large Cap 25% 2.32% 6.70% Enhanced Core Fund ---------------------------------------------------------------------------- WEIGHTED AVERAGE EQUITY RETURN 100% 3.20% 7.94% ---------------------------------------------------------------------------- Fixed Income 4TH 1-YEAR WEIGHTINGS INQUARTER RETURN TO FUND CATEGORY RETURNS 12/31/05 ---------------------------------------------------------------------------- Columbia Federal 30% 0.55% 2.48% Securities Fund ---------------------------------------------------------------------------- Columbia 50% 0.71% 2.40% Intermediate Bond Fund ---------------------------------------------------------------------------- Columbia 20% 1.26% 2.68% Conservative High Yield Fund ---------------------------------------------------------------------------- WEIGHTED AVERAGE INCOME RETURN 100% 0.77% 2.50% ---------------------------------------------------------------------------- COLUMBIA THERMOSTAT FUND REBALANCING IN THE FOURTH QUARTER ---------------------------------------------------------------------------- OCTOBER 6, 2005: 55% stock, 45% bond NOVEMBER 7, 2005: 50% stock, 50% bond NOVEMBER 22, 2005: 45% stock, 55% bond ---------------------------------------------------------------------------- /s/ Charles P. McQuaid Charles P. McQuaid LEAD 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. 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. 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. 18 COLUMBIA THERMOSTAT FUND >AT A GLANCE TICKER SYMBOL: COTZX PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (CLASS Z) -------------------------------------------------------------------------------- >through December 31, 2005 ---------------------------------------------------------------- INCEPTION 9/25/02 LIFE OF 1 YEAR 3 YEARS FUND ---------------------------------------------------------------- Returns before taxes 5.50% 11.32 11.71% ---------------------------------------------------------------- Returns after taxes 3.14 10.07 10.55 on distributions ---------------------------------------------------------------- Returns after taxes 4.83 9.24 9.64 on distributions and sale of fund shares ---------------------------------------------------------------- S&P 500 (pretax) 4.91 14.39 15.82 ---------------------------------------------------------------- Lehman Brothers U.S. 1.42 4.11 4.73 Credit Intermediate Bond Index (pretax) ---------------------------------------------------------------- Lipper Flexible 6.34 12.73 13.57 Portfolio Funds Index (pretax) ---------------------------------------------------------------- PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. 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 tax impact of 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 THERMOSTAT FUND PORTFOLIO WEIGHTINGS -------------------------------------------------------------------------------- >as a % of assets in each investment category, as of December 31, 2005 STOCK MUTUAL FUNDS [PIE CHART] Columbia Large Cap Value Fund 15% Columbia Acorn International 15% Columbia Acorn Select 10% Columbia Large Cap Enhanced Core Fund 25% Columbia Dividend Income Fund 20% Columbia Acorn Fund 15% BOND MUTUAL FUNDS [PIE CHART] Columbia Federal Securities Fund 30% Columbia Intermediate Bond Fund 50% Columbia Conservative High Yield Fund 20% -------------------------------------------------------------------------------- THE GROWTH OF A $10,000 INVESTMENT IN COLUMBIA THERMOSTAT FUND (CLASS Z) -------------------------------------------------------------------------------- >September 25, 2002 through December 31, 2005 This graph compares the results of $10,000 invested in Columbia Thermostat Fund at inception on September 25, 2002 to three indexes. The S&P 500 is a broad, market-weighted average of U.S. blue-chip company stock performance. The Lehman Brothers 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 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 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. PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. NAV ON 12/31/05: $12.50 TOTAL NET ASSETS OF THE FUND: $203.4 MILLION [LINE GRAPH] Columbia Lehman Brothers Lipper Thermostat U.S. Credit Flexible Date Fund: S&P 500: Intermediate Bond: Portfolio: ---------- ----------- -------- ----------------- ---------- 9/25/2002 10000 10000 10000 10000 9/30/2002 9850 9956 10043 10003 10220 10832 9962 10512 10700 11469 10045 10959 12/31/2002 10410 10796 10307 10579 10260 10513 10335 10398 10100 10355 10517 10294 3/31/2003 10190 10456 10539 10360 10710 11317 10684 10952 11200 11913 10957 11490 6/30/2003 11348 12065 10963 11609 11418 12278 10626 11663 11648 12517 10659 11902 9/30/2003 11618 12384 10976 11912 12018 13085 10878 12380 12149 13200 10911 12510 12/31/2003 12471 13892 11019 13015 12643 14147 11108 13202 12785 14344 11231 13380 3/31/2004 12835 14128 11330 13323 12572 13906 11041 12989 12612 14097 10971 13079 6/30/2004 12813 14371 11011 13308 12620 13895 11123 12952 12701 13951 11339 13014 9/30/2004 12863 14102 11381 13225 13076 14318 11468 13407 13391 14897 11367 13885 12/31/2004 13614 15404 11469 14252 13520 15029 11502 14024 13645 15345 11440 14288 3/31/2005 13458 15073 11335 14035 13344 14787 11460 13778 13676 15258 11581 14096 6/30/2005 13810 15279 11648 14200 14043 15848 11555 14654 14053 15703 11701 14654 9/30/2005 14064 15830 11587 14866 13884 15566 11500 14663 14212 16155 11555 15015 12/31/2005 14362 16161 11632 15156 -------------------------------------------------------------------------------- COLUMBIA THERMOSTAT FUND ASSET ALLOCATION -------------------------------------------------------------------------------- >as a % of net assets, as of December 31, 2005 [PIE CHART] Bond Mutual Funds 55.3% Short-term obligations, Cash and 0.2% other Assets less Liabilities Stock Mutual Funds 44.5% -------------------------------------------------------------------------------- 19 COLUMBIA ACORN FUND >MAJOR PORTFOLIO CHANGES IN THE FOURTH QUARTER (UNAUDITED) NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 ADDITIONS ------------------------------------------------------------------------------- INFORMATION Agile Software 0 1,000,000 Amphenol 495,000 980,000 Ceridian 2,120,000 2,235,000 Cnet Networks 1,500,000 2,500,000 Concur Technologies 0 434,000 Discovery Holding 4,000,000 4,015,000 Dobson Communications 0 7,000,000 Flir Systems 0 900,000 Gemstar TV Guide International 0 4,000,000 Integrated Device Technology 1,963,000 2,563,000 Jabil Circuit 1,955,000 2,020,000 Jupiter Telecommunications (Japan) 36,000 60,000 Liberty Global, Series C 1,700,000 1,800,000 Lions Gate Entertainment 2,768,000 3,000,000 Logitech (Switzerland) 0 300,000 Netgear 625,000 900,000 Nice Systems (Israel) 350,000 588,000 Novatek Microelectronics (Taiwan) 2,954,000 5,254,000 Parametric Technology 2,131,000 3,000,000 Phoenixtec Power (Taiwan) 10,987,000 11,999,000 Plexus 1,861,000 1,961,000 PRIMEDIA 1,700,000 2,500,000 Radiant Systems 440,000 575,000 Salem Communications 1,291,000 1,541,000 Shuffle Master 1,675,000 2,430,000 Spanish Broadcasting 1,200,000 2,400,000 Symbol Technologies 2,100,000 2,560,000 Tellabs 9,540,000 9,800,000 Time Warner Telecom 1,500,000 3,500,000 Universo Online (Brazil) 0 170,200 Varian 428,000 670,000 ------------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Abercrombie & Fitch 1,630,000 2,000,000 Alliance Gaming 3,690,000 3,900,000 Carter's 515,000 559,000 Cheesecake Factory 700,000 800,000 Electro Rent 0 305,000 Fleetwood Enterprises 2,500,000 3,229,000 Four Seasons Hotels (Canada) 815,000 915,000 IAWS (Ireland) 1,381,000 1,900,000 Kerzner International 0 260,000 LaQuinta 3,512,000 4,989,000 Lincoln Technical Institute 0 276,000 Michaels Stores 3,350,000 3,560,000 Petco Animal Supplies 1,445,000 1,755,000 Pier 1 Imports 0 135,000 Polaris Industries 1,056,000 1,130,000 Prestige Brands 1,300,000 1,886,000 RC2 1,370,000 1,795,000 NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 ------------------------------------------------------------------------------- CONSUMER GOODS/SERVICES--CONTINUED Red Robin Gourmet 24,900 523,000 Rite Aid 0 3,835,000 Rona (Canada) 0 1,050,000 SCP Pool 1,689,000 1,820,000 Sonic 390,000 1,266,000 Speedway Motorsports 1,320,000 1,416,000 Station Casinos 745,000 885,000 Winnebago 170,000 360,000 ------------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES Aviall 600,000 1,000,000 Clarcor 3,200,000 3,222,000 Donaldson 2,200,000 2,500,000 Esco Technologies 2,100,000 2,200,000 Genlyte Group 1,791,000 1,900,000 Hexagon (Sweden) 120,000 176,600 Hughes Supply 1,200,000 1,400,000 Kingspan Group (Ireland) 0 1,100,000 Koninklijke Ten Cate (Netherlands) 0 105,000 Mine Safety Appliances 1,640,000 1,800,000 Pentair 1,400,000 1,950,000 TAL International Group 0 655,000 Toro 400,000 522,000 Watts Water Technologies 554,000 900,000 ------------------------------------------------------------------------------- FINANCE AmeriCredit 5,831,000 6,481,000 Associated Banc-Corp 2,822,000 3,297,000 Assurant 715,000 830,000 BOK Financial 2,114,000 2,334,000 CityBank Lynnwood 510,000 586,000 Eaton Vance 2,590,000 2,990,000 Endurance Specialty Holdings 560,000 940,000 First Financial BankShares 267,000 406,000 First Mutual Bancshares 242,000 297,000 Northern Rock (United Kingdom) 0 2,850,000 Nuveen Investments 1,630,000 1,657,000 Republic 1,438,000 1,581,000 StanCorp Financial 420,000 520,000 (INCLUDES THE EFFECT OF A 2 FOR 1 STOCK SPLIT) S Y Bancorp 221,000 275,000 West Bancorporation 551,000 647,000 ------------------------------------------------------------------------------- HEALTH CARE Arena Pharmaceuticals 1,415,000 1,429,000 CYTYC 1,550,000 1,560,000 Datascope 630,000 930,000 Gambro (Sweden) 3,470,000 4,260,000 Human Genome Sciences 0 1,650,000 Incyte 3,600,000 3,935,000 20 NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 Additions (continued) ------------------------------------------------------------------------------- HEALTH CARE--CONTINUED Ligand Pharmaceuticals 2,200,000 2,380,000 Nektar Therapeutics 1,055,000 1,360,000 Neurocrine Biosciences 880,000 913,000 NPS Pharmaceuticals 1,176,000 1,600,000 Par Pharmaceuticals 500,000 576,000 PRA International 0 158,000 PSS World Medical 0 650,000 Serologicals 1,200,000 1,607,000 Synthes (Switzerland) 125,000 175,000 United Surgical Partners 0 600,000 Vital Signs 206,000 450,000 ------------------------------------------------------------------------------- ENERGY/MINERALS Jubilee Gold Mines (Australia) 0 2,900,000 UrAsia Energy (Canada) 0 13,100,000 ------------------------------------------------------------------------------- OTHER INDUSTRIES American Campus Communities 87,000 900,000 Brandywine Realty 55,000 670,000 Diamondrock Hospitality 144A 303,000 1,991,000 Gaylord Entertainment 475,000 1,050,000 Heartland Express 1,557,000 1,980,000 Highland Hospitality 2,552,000 4,002,000 JB Hunt 256,000 355,000 Kite Realty Group 1,400,000 1,720,000 Mills 620,000 870,000 Waste Connections 1,500,000 1,700,000 Sales ------------------------------------------------------------------------------- INFORMATION Analysts International 1,272,000 0 ASE Test (Taiwan) 1,045,000 0 Avnet 2,325,000 2,100,000 Avocent 1,070,000 877,000 CDW 655,000 575,000 Commonwealth Telephone 700,000 500,000 Fair Isaac 1,316,000 916,000 Insight Communications 2,430,000 0 Intermec (formerly known as Unova) 0 1,240,000 International Game Technology 5,775,000 4,120,000 JDA Software Group 2,200,000 1,500,000 Maximus 460,000 0 MRO Software 1,602,000 1,168,000 Saga Communications 829,000 692,000 Sunplus Technology (Taiwan) 5,397,000 0 Sybase 1,521,000 1,000,000 Telephone and Data Systems, Cl. S 600,000 300,000 NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 Sales (continued) ------------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Aeropostale 2,070,000 1,040,000 AFC Enterprises 1,656,000 1,600,000 American Woodmark 844,000 591,000 Argosy Gaming 875,000 0 Brookstone 958,000 0 Fast Retailing (Japan) 300,000 0 Funai Electric (Japan) 133,000 0 Intrawest (Canada) 1,217,000 1,044,000 Kappa Create (Japan) 137,000 0 Lion Nathan (Australia) 3,000,000 0 NBTY 850,000 342,000 Steven Madden 328,000 0 Whole Foods Market 230,000 0 ------------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES Clark 378,000 205,000 Exel (United Kingdom) 1,300,000 0 Imerys (France) 300,000 200,000 Tenaris (Argentina) 600,000 550,000 Tetra Tech 2,000,000 1,700,000 Wienerberger (Austria) 550,000 425,000 ------------------------------------------------------------------------------- FINANCE Den Norske Bank (Norway) 1,670,000 0 Glacier Bancorp 2,734,000 2,720,000 ------------------------------------------------------------------------------- HEALTH CARE Diagnostic Products 1,240,000 1,040,000 Martek Biosciences 1,160,000 650,000 Omega Pharma (Belgium) 236,000 0 Techne 686,000 486,000 ------------------------------------------------------------------------------- ENERGY/MINERALS Atmos Energy 1,206,000 966,000 Oneok 1,700,000 435,000 PetroKazakhstan (Canada) 500,000 0 Talisman Energy (Canada) 3,000,000 2,500,000 Tipperary 2,320,000 0 Ultra Petroleum 3,400,000 2,700,000 XTO Energy 4,500,000 2,500,000 ------------------------------------------------------------------------------- OTHER INDUSTRIES Grupo Aeroportaurio Del Sureste (Mexico) 720,000 560,000 Kobenhavns Lufthavne (Denmark) 70,000 0 21 COLUMBIA ACORN FUND >STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- COMMON STOCKS AND OTHER EQUITY-LIKE SECURITIES: 93.9% ------------------------------------------------------------------------------- INFORMATION: 22.2% SOFTWARE/SERVICES >BUSINESS SOFTWARE: 3.3% 11,500,000 Novell (b) $ 101,545 DIRECTORY, OPERATING SYSTEM & IDENTITY MANAGEMENT SOFTWARE 1,800,000 Avid Technology (b) 98,568 DIGITAL NONLINEAR EDITING SOFTWARE & SYSTEMS 1,700,000 Kronos (b)(c) 71,162 LABOR MANAGEMENT SOLUTIONS 1,425,000 Micros Systems (b) 68,856 INFORMATION SYSTEMS FOR RESTAURANTS & HOTELS 1,360,000 Witness Systems (b) 26,751 CUSTOMER EXPERIENCE MANAGEMENT SOFTWARE 1,500,000 JDA Software Group (b)(c) 25,515 APPLICATIONS/SOFTWARE & SERVICES FOR RETAILERS 3,000,000 Lawson Software (b) 22,050 ENTERPRISE RESOURCE PLANNING (ERP) SOFTWARE 1,000,000 Sybase (b) 21,860 DATABASE SOFTWARE 6,000,000 Actuate (b)(c) 18,840 INFORMATION DELIVERY SOFTWARE & SOLUTIONS 3,000,000 Parametric Technology (b) 18,300 ENGINEERING SOFTWARE & SERVICES 928,000 SSA Global Technologies (b) 16,880 ENTERPRISE RESOURCE PLANNING (ERP) SOFTWARE 1,168,000 MRO Software (b) 16,399 ENTERPRISE MAINTENANCE SOFTWARE 5,000,000 Indus International (b)(c) 15,700 600,000 Indus International (c) 1,884 ENTERPRISE ASSET MANAGEMENT SOFTWARE 575,000 Radiant Systems (b) 6,992 POINT OF SALE SYSTEMS FOR CONVENIENCE STORES 1,000,000 Agile Software (b) 5,980 SOFTWARE THAT DISSEMINATES PRODUCT DESIGN CHANGES THORUGH COMPANY 434,000 Concur Technologies (b) 5,594 WEB ENABLED ENTERPRISE APPLICATIONS 1,250,000 ClickSoftware Technologies (b) 2,288 SERVICE CHAIN OPTIMIZATION SOFTWARE ------------------------------------------------------------------------------- 545,164 >BUSINESS INFORMATION/BUSINESS SERVICES/PUBLISHING: 1.8% 1,200,000 Getty Images (b) 107,124 PHOTOGRAPHS FOR PUBLICATIONS & ELECTRONIC MEDIA 2,235,000 Ceridian (b) 55,540 HR SERVICES & PAYMENT PROCESSING 916,000 Fair Isaac 40,460 CREDIT SCORING & DECISION ANALYTIC SOFTWARE 1,836,000 Navigant Consulting (b) 40,355 FINANCIAL CONSULTING FIRM NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- 2,685,000 InfoUSA (b) $ 29,347 BUSINESS DATA FOR SALES LEADS 500,000 Navteq (b) 21,935 MAP DATA FOR ELECTRONIC DEVICES 2,500,000 PRIMEDIA (b) 4,025 SPECIALTY MAGAZINES & OTHER PUBLICATIONS ------------------------------------------------------------------------------- 298,786 >TRANSACTION PROCESSORS: 1.2% 2,814,000 Global Payments 131,161 CREDIT CARD PROCESSOR 9,000,000 Hong Kong Exchanges & Clearing (Hong Kong) 37,318 HONG KONG EQUITY & DERIVATIVES OPERATOR 600,000 Cubic 11,976 REVENUE COLLECTION & DEFENSE SYSTEMS 1,250,000 Pegasus Systems (b)(c) 11,212 TRANSACTION PROCESSOR FOR HOTEL INDUSTRY ------------------------------------------------------------------------------- 191,667 >INTERNET: 1.0% 9,500,000 Skillsoft Publishing (b)(c) 52,250 PROVIDER OF WEB-BASED LEARNING SOLUTIONS (E-LEARNING) 2,500,000 Cnet Networks (b) 36,725 INTERNET ADVERTISING ON NICHE WEBSITES 2,000,000 ValueClick (b) 36,220 INTERNET ADVERTISING 3,000,000 RSA Security (b) 33,690 ENTERPRISE SECURITY SOFTWARE 1,879,808 Vital Stream, Cl. C (b) 3,478 STREAMING SERVICES FOR THE INTERNET 170,200 Universo Online (Brazil) (b) 1,434 LARGEST INTERNET PORTAL IN BRAZIL ------------------------------------------------------------------------------- 163,797 >ELECTRONICS DISTRIBUTION: 0.8% 2,100,000 Avnet (b) 50,274 ELECTRONIC COMPONENTS DISTRIBUTION 575,000 CDW 33,103 TECHNOLOGY RESELLER 680,000 Tech Data (b) 26,982 I/T DISTRIBUTOR 710,000 Agilysys 12,936 I/T DISTRIBUTOR ------------------------------------------------------------------------------- 123,295 >COMPUTER SERVICES: 0.5% 4,000,000 Bearing Point (b) 31,440 BUSINESS CONSULTING & TECHNOLOGY STRATEGY 5,000,000 Igate Capital (b)(c) 24,300 I/T & BPO OUTSOURCING SERVICES 4,600,000 AnswerThink Consulting (b)(c) 19,550 I/T INTEGRATION & BEST PRACTICE RESEARCH 2,000,000 Ciber (b) 13,200 SOFTWARE SERVICES & STAFFING 1,025,000 New Horizons Worldwide (b)(c) 717 COMPUTER TRAINING SERVICES ------------------------------------------------------------------------------- 89,207 22 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >CONSUMER SOFTWARE: 0.3% 1,925,000 Activision (b) $ 26,450 ENTERTAINMENT SOFTWARE 1,050,000 THQ (b) 25,042 ENTERTAINMENT SOFTWARE ------------------------------------------------------------------------------- 51,492 COMPUTER RELATED HARDWARE >COMPUTER HARDWARE/RELATED SYSTEMS: 2.9% 980,000 Amphenol 43,375 ELECTRONIC CONNECTORS 1,240,000 Intermec (formerly known as Unova) (b) 41,912 BAR CODE & WIRELESS LAN SYSTEMS 371,900 Neopost (France) 37,293 POSTAGE METER MACHINES 2,560,000 Symbol Technologies 32,819 MOBILE COMPUTERS & BARCODE SCANNERS 1,173,000 Belden CDT 28,656 SPECIALTY CABLE 588,000 Nice Systems (Israel) (b) 28,318 AUDIO & VIDEO RECORDING SOLUTIONS 9,761,000 Advantech (Tawain) 27,654 EMBEDDED COMPUTERS 660,000 Rogers (b) 25,859 PCB LAMINATES & HIGH PERFORMANCE FOAMS 230,000 Wincor Nixdorf (Germany) 24,335 RETAIL POS SYSTEMS & ATM MACHINES 1,360,000 II VI (b) 24,303 LASER COMPONENTS 877,000 Avocent (b) 23,846 COMPUTER CONTROL SWITCHES 530,000 Zebra Technologies (b) 22,710 BAR CODE PRINTERS 1,870,000 CTS (c) 20,682 ELECTRONIC COMPONENTS, SENSORS & EMS 900,000 Netgear (b) 17,325 NETWORKING PRODUCTS FOR SMALL BUSINESS & HOME 625,000 Excel Technologies (b)(c) 14,863 LASER SYSTEMS & ELECTRO-OPTICAL COMPONENTS 1,875,000 Seachange International (c) 14,812 SYSTEMS FOR VIDEO ON DEMAND & AD INSERTION 375,000 Diebold 14,250 AUTOMATED TELLER MACHINES 300,000 Logitech (Switzerland) (b) 14,098 BRANDED PERIPHERAL COMPUTER DEVICES 11,999,000 Phoenixtec Power (Taiwan) 13,086 UNINTERRUPTABLE POWER SUPPLIES 5,000,000 Concurrent Computer (b)(c) 9,450 VIDEO ON DEMAND SYSTEMS & SERVICES ------------------------------------------------------------------------------- 479,646 >SEMICONDUCTORS/RELATED EQUIPMENT: 1.3% 2,563,000 Integrated Device Technology (b) 33,780 COMMUNICATIONS SEMICONDUCTORS 3,490,000 Entegris (b) 32,876 SEMICONDUCTOR WAFER SHIPPING & HANDLING PRODUCTS NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- 5,254,000 Novatek Microelectronics (Taiwan) $ 30,890 LCD RELATED IC DESIGNER 565,000 Supertex (b) 25,001 MIXED-SIGNAL SEMICONDUCTORS 915,000 Littelfuse (b) 24,934 LITTLE FUSES 1,235,000 Semtech (b) 22,551 ANALOG SEMICONDUCTORS 1,905,000 IXYS (b)(c) 22,269 POWER SEMICONDUCTORS 1,950,000 AMIS Holdings (b) 20,768 ANALOG & MIXED - SIGNAL SEMICONDUCTORS ------------------------------------------------------------------------------- 213,069 >GAMING EQUIPMENT: 1.2% 4,120,000 International Game Technology 126,814 SLOT MACHINES & PROGRESSIVE JACKPOTS 2,430,000 Shuffle Master (b)(c) 61,090 CARD SHUFFLERS & CASINO GAMES ------------------------------------------------------------------------------- 187,904 >INSTRUMENTATION: 1.0% 750,000 Mettler Toledo (b) 41,400 LABORATORY EQUIPMENT 1,000,000 Trimble Navigation (b) 35,490 GPS-BASED INSTRUMENTS 711,000 Dionex (b) 34,896 ION & LIQUID CHROMATOGRAPHY 670,000 Varian (b) 26,659 ANALYTICAL INSTRUMENTS 2,300,000 Spectris (United Kingdom) 25,069 ELECTRONIC INSTRUMENTATION & CONTROLS ------------------------------------------------------------------------------- 163,514 >CONTRACT MANUFACTURING: 0.7% 2,020,000 Jabil Circuit (b) 74,922 ELECTRONIC MANUFACTURING SERVICES 1,961,000 Plexus (b) 44,593 ELECTRONIC MANUFACTURING SERVICES ------------------------------------------------------------------------------- 119,515 TELECOMMUNICATIONS >TELECOMMUNICATION SERVICES: 2.8% 4,500,000 Crown Castle International (b) 121,095 COMMUNICATION TOWERS 1,600,000 Alltel 100,960 CELLULAR & WIRELINE TELEPHONE SERVICES 3,500,000 American Tower (b) 94,850 COMMUNICATION TOWERS IN USA & MEXICO 7,000,000 Dobson Communications (b) 52,500 RURAL & SMALL CITY CELLULAR TELEPHONE SERVICES 3,500,000 Time Warner Telecom (b) 34,475 COMPETITIVE LOCAL EXCHANGE CARRIER 780,000 Telephone and Data Systems 28,103 300,000 Telephone and Data Systems, Cl. S 10,383 CELLULAR & WIRELINE TELEPHONE SERVICES 500,000 Commonwealth Telephone 16,885 RURAL PHONE FRANCHISES & COMPETING TELCO ------------------------------------------------------------------------------- 459,251 23 COLUMBIA ACORN FUND >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >TELECOMMUNICATIONS EQUIPMENT: 0.8% 9,800,000 Tellabs (b) $ 106,820 TELECOMMUNICATIONS EQUIPMENT 1,750,000 Andrew (b) 18,778 WIRELESS INFRASTRUCTURE EQUIPMENT 1,510,000 Symmetricom (b) 12,790 NETWORK TIMING & SYNCHRONIZATION DEVICES ------------------------------------------------------------------------------- 138,388 MEDIA >TELEVISION PROGRAMMING/CATV: 1.6% 4,015,000 Discovery Holding (b) 60,827 CATV PROGRAMMING 60,000 Jupiter Telecommunications (Japan) (b) 47,874 LARGEST CABLE SERVICE PROVIDER IN JAPAN 1,705,000 Liberty Global, Series A (b) 38,362 1,800,000 Liberty Global, Series C (b) 38,160 CATV HOLDING COMPANY 3,000,000 Lions Gate Entertainment (b) 23,040 FILM & TV STUDIO 2,618,000 Liberty Media (b) 20,604 CATV PROGRAMMING & MEDIA COMPANY HOLDINGS 4,000,000 Gemstar TV Guide International (b) 10,440 TV PROGRAM GUIDES & CATV PROGRAMMING 337,800 Alliance Atlantis Communication (Canada) (b) 9,932 CATV CHANNELS, TV/MOVIE PRODUCTION/DISTRIBUTION 1,250,000 Mediacom Communications (b) 6,863 CABLE TELEVISION FRANCHISES 500,000 Outdoor Channel (b) 6,750 CABLE TELEVISION PROGRAMMING ------------------------------------------------------------------------------- 262,852 >TV/SATELLITE BROADCASTING: 0.6% 2,750,000 SES Global (France) 48,152 SATELLITE BROADCASTING SERVICES 2,500,000 Entravision Communications (b) 17,800 SPANISH LANGUAGE TV, RADIO & OUTDOOR 1,750,000 Gray Television 17,185 MID MARKET AFFILIATED TV STATIONS 270,000 Metropole TV (France) 7,480 TELEVISION BROADCASTER ------------------------------------------------------------------------------- 90,617 >RADIO BROADCASTING: 0.4% 1,541,000 Salem Communications (b)(c) 26,952 RADIO STATIONS FOR RELIGIOUS PROGRAMMING 1,500,000 Cumulus Media, Cl. A (b) 18,615 RADIO STATIONS IN SMALL CITIES 2,400,000 Spanish Broadcasting (b) 12,264 SPANISH LANGUAGE RADIO STATIONS 692,000 Saga Communications (b) 7,522 RADIO STATIONS IN SMALL & MID-SIZED CITIES ------------------------------------------------------------------------------- 65,353 ----------- INFORMATION: TOTAL 3,643,517 ------------------------------------------------------------------------------- NUMBER OF SHARES OR PRINCIPAL AMOUNT (000) VALUE (000) ------------------------------------------------------------------------------- CONSUMER GOODS/SERVICES: 20.1% SERVICES >RETAIL: 5.9% 5,090,000 Chico's FAS (b) $ 223,604 WOMEN'S SPECIALTY RETAIL 2,000,000 Abercrombie & Fitch 130,360 TEEN APPAREL RETAILER 3,560,000 Michaels Stores 125,917 CRAFT & HOBBY SPECIALTY RETAILER 3,743,000 Christopher & Banks (c) 70,294 WOMEN'S APPAREL RETAILER 1,400,000 Williams Sonoma (b) 60,410 HOME GOODS & FURNISHING RETAILER 1,520,000 Sports Authority (b)(c) 47,318 SPORTING GOODS STORES 1,852,000 Urban Outfitters (b) 46,874 APPAREL & HOME SPECIALTY RETAILER 1,223,000 Ann Taylor Stores (b) 42,218 WOMEN'S APPAREL RETAILER 1,755,000 Petco Animal Supplies (b) 38,522 PET SUPPLIES & SERVICES 775,000 Genesco (b) 30,062 MULTI-CONCEPT BRANDED FOOTWEAR RETAILER 1,300,000 Borders Group 28,171 BOOKSTORES 1,040,000 Aeropostale (b) 27,352 MALL BASED TEEN RETAILER 1,072,000 Zale (b) 26,961 SPECIALTY RETAILER OF JEWELRY 3,500,000 Edgars Consolidated Stores (South Africa) 19,448 LEADING RETAIL CONGLOMERATE 1,050,000 Rona (Canada) (b) 19,375 LEADING CANADIAN DIY RETAILER 1,062,000 Gaiam (b)(c) 14,348 HEALTHY LIVING CATALOGS & E-COMMERCE 3,835,000 Rite Aid (b) 13,346 DRUG STORES 270,000 Hot Topic (b) 3,848 MUSIC INSPIRED RETAILER OF APPAREL, ACCESSORIES & GIFTS 135,000 Pier 1 Imports 1,179 IMPORTED FURNITURE & TCHOTCHKES $ 6,000 Gadzooks 5% Convertible 10/07/08 (d) 0 TEEN APPAREL RETAILER ------------------------------------------------------------------------------- 969,607 >CONSUMER SERVICES: 1.8% 2,250,000 ITT Educational Services (b) 132,997 POSTSECONDARY DEGREE PROGRAMS 775,000 Weight Watchers (b) 38,308 WEIGHT LOSS PROGRAMS 1,440,000 Coinstar (b)(c) 32,875 OWNER/OPERATOR OF COIN COUNTING MACHINES 870,000 Park 24 (Japan) 31,131 PARKING LOT OPERATOR 620,000 Regis Corp Minnesota 23,913 HAIR SALONS 24 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >CONSUMER SERVICES--CONTINUED 1,530,000 Central Parking $ 20,992 OWNER, OPERATOR & MANAGER OF PARKING LOTS & GARAGES 1,850,000 Princeton Review (b)(c) 9,527 COLLEGE PREPARATION COURSES 276,000 Lincoln Technical Institute (b) 3,936 TECH EDUCATION TRAINING IN AUTO, HEALTH & SKILLED TRADES ------------------------------------------------------------------------------- 293,679 >TRAVEL: 1.4% 2,110,000 Vail Resorts (b) 69,693 OWNER/OPERATOR OF SKI RESORTS 4,989,000 LaQuinta (b) 55,577 OWNER/FRANCHISER OF MID-PRICED HOTELS 915,000 Four Seasons Hotels (Canada) 45,521 LUXURY HOTEL OPERATOR 1,044,000 Intrawest (Canada) 29,934 OWNER/OPERATOR OF SKI RESORTS 260,000 Kerzner International (Bahamas) (b) 17,875 DESTINATION RESORTS & CASINOS 1,045,000 Navigant International (b)(c) 11,338 CORPORATE TRAVEL AGENCY ------------------------------------------------------------------------------- 229,938 >CASINOS: 1.1% 885,000 Station Casinos 60,003 CASINOS & RIVERBOATS 3,900,000 Alliance Gaming (b)(c) 50,778 DIVERSIFIED GAMING COMPANY 1,898,000 Pinnacle Entertainment (b) 46,900 REGIONAL RIVERBOAT CASINOS 4,500,000 Sky City Entertainment (New Zealand) 14,412 CASINO/ENTERTAINMENT COMPLEX 226,000 Lakes Entertainment (b) 1,503 NATIVE AMERICAN CASINO DEVELOPMENT ------------------------------------------------------------------------------- 173,596 >ENTERTAINMENT/LEISURE PRODUCTS: 1.0% 1,795,000 RC2 (b)(c) 63,758 COLLECTIBLES, TOYS & INFANT PRODUCTS 1,025,000 International Speedway Motors 49,097 LARGEST MOTORSPORT RACETRACK OWNER & OPERATOR 1,416,000 Speedway Motorsports 49,093 MOTORSPORT RACETRACK OWNER & OPERATOR 500,000 Callaway Golf 6,920 PREMIUM GOLF CLUBS & BALLS ------------------------------------------------------------------------------- 168,868 >RESTAURANTS: 0.7% 1,266,000 Sonic (b) 37,347 DRIVE-IN RESTAURANTS 800,000 Cheesecake Factory (b) 29,912 CASUAL DINING RESTAURANTS 523,000 Red Robin Gourmet (b) 26,652 CASUAL DINING RESTAURANTS 1,600,000 AFC Enterprises (b)(c) 24,192 POPEYES RESTAURANTS ------------------------------------------------------------------------------- 118,103 ------------------------------------------------------------------------------- NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >GAMING: 0.2% 690,000 Intralot (Greece) $ 12,090 LOTTERY & GAMING SYSTEMS & SERVICES 780,000 Paddy Power (Ireland) 11,174 IRISH BETTING SERVICES ------------------------------------------------------------------------------- 23,264 >CRUISE LINES: 0.1% 400,000 Carnival 21,388 LARGEST CRUISE LINE ------------------------------------------------------------------------------- GOODS >FURNITURE/TEXTILES: 2.0% 2,400,000 HNI 131,832 OFFICE FURNITURE & FIREPLACES 765,000 Mohawk Industries (b) 66,540 CARPET & FLOORING 2,068,000 Herman Miller 58,297 OFFICE FURNITURE 1,850,000 Nobia (Sweden) 37,491 KITCHEN CABINET MANUFACTURING & DISTRIBUTION 1,435,000 Knoll 24,553 OFFICE FURNITURE 591,000 American Woodmark 14,651 KITCHEN CABINET MANUFACTURER ------------------------------------------------------------------------------- 333,364 >APPAREL: 2.0% 5,980,000 Coach (b) 199,373 DESIGNER & RETAILER OF BRANDED LEATHER ACCESSORIES 844,000 Oxford Industries 46,167 BRANDED & PRIVATE LABEL APPAREL 559,000 Carter's (b) 32,897 CHILDREN'S BRANDED APPAREL 3,000,000 Billabong International (Australia) 31,934 ACTION SPORTS APPAREL BRAND MANAGER 400,000 Columbia Sportswear (b) 19,092 ACTIVE OUTDOOR APPAREL, FOOTWEAR & ACCESSORIES ------------------------------------------------------------------------------- 329,463 >NONDURABLES: 1.2% 1,790,000 Scotts Miracle-Gro 80,980 CONSUMER LAWN & GARDEN PRODUCTS 1,820,000 SCP Pool 67,740 DISTRIBUTOR OF SWIMMING POOL SUPPLIES & EQUIPMENT 630,000 Natura Cosmeticos (Brazil) 27,752 DIRECT RETAILER OF COSMETICS 1,886,000 Prestige Brands (b) 23,575 OTC, HOUSEHOLD & PERSONAL CARE PRODUCTS ------------------------------------------------------------------------------- 200,047 >LEISURE VEHICLES: 1.0% 1,751,000 Harley-Davidson 90,159 MOTORCYCLES & RELATED MERCHANDISE 1,130,000 Polaris Industries 56,726 LEISURE VEHICLES & RELATED PRODUCTS 360,000 Winnebago 11,981 PREMIER MOTORHOME MAKER 2,850,000 Ducati Motor (Italy) (b) 3,118 MOTORCYCLES & RELATED MERCHANDISE ------------------------------------------------------------------------------- 161,984 25 COLUMBIA ACORN FUND >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >DURABLE GOODS: 1.0% 465,000 Hyundai Mobis (South Korea) $ 42,233 AUTO PARTS 3,229,000 Fleetwood Enterprises (b)(c) 39,878 RV & MANUFACTURED HOME MAKER 14,999,300 Techtronic Industries (Hong Kong) 35,691 POWER TOOLS & MOTORIZED APPLIANCES 1,316,000 Helen of Troy (b) 21,201 HAIRDRYERS & CURLING IRONS 780,000 Shimano (Japan) 20,503 BICYCLE COMPONENTS & FISHING TACKLE ------------------------------------------------------------------------------- 159,506 >FOOD & BEVERAGES: 0.7% 725,000 Orkla (Norway) 30,023 MATERIALS, BRANDED CONSUMER GOODS & MEDIA 1,900,000 IAWS (Ireland) 27,330 BAKED GOODS 995,000 Kerry (Ireland) 22,040 CONSUMER FOODS & FOOD INGREDIENTS 35,000,000 Global Bio-Chem Technology Group (China) 15,348 REFINER OF CORN-BASED COMMODITIES 1,800,000 Davide Campari (Italy) 13,319 SPIRITS & WINE 342,000 NBTY (b) 5,557 VITAMINS & SUPPLEMENTS ------------------------------------------------------------------------------- 113,617 ----------- CONSUMER GOODS/SERVICES: TOTAL 3,296,424 ------------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES: 16.2% >MACHINERY: 2.8% 2,200,000 Esco Technologies (b)(c) 97,878 FILTRATION & TEST EQUIPMENT 2,250,000 Ametek 95,715 AEROSPACE/INDUSTRIAL INSTRUMENTS 1,950,000 Pentair 67,314 PUMPS, WATER TREATMENT & TOOLS 1,500,000 Nordson 60,765 DISPENSING SYSTEMS FOR ADHESIVES & COATINGS 1,140,000 Gardner Denver (b) 56,202 AIR COMPRESSORS, BLOWERS & PUMPS 1,100,000 Kaydon 35,354 SPECIALIZED FRICTION & MOTION CONTROL PRODUCTS 522,000 Toro 22,848 TURF MAINTENANCE EQUIPMENT 212,000 Oshkosh Truck 9,453 SPECIALTY TRUCK MANUFACTURER 150,000 Tennant 7,800 NON-RESIDENTIAL FLOOR CLEANING EQUIPMENT ------------------------------------------------------------------------------- 453,329 >INDUSTRIAL GOODS: 2.4% 1,900,000 Genlyte Group (b)(c) 101,783 COMMERCIAL LIGHTING FIXTURES 3,222,000 Clarcor (c) 95,726 MOBILE & INDUSTRIAL FILTERS NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- 2,500,000 Donaldson $ 79,500 INDUSTRIAL AIR FILTRATION 1,800,000 Mine Safety Appliances 65,178 SAFETY EQUIPMENT 876,000 Drew Industries (b) 24,694 RV & MFG HOME COMPONENTS 900,000 Flir Systems (b) 20,097 INFRA RED CAMERAS 3,000,000 Electric City (b)(c) 1,800 ELECTRICITY CONSERVATION DEVICES ------------------------------------------------------------------------------- 388,778 >INDUSTRIAL DISTRIBUTION: 2.1% 2,286,000 Watsco (c) 136,726 HVAC DISTRIBUTION 1,925,000 Airgas 63,333 INDUSTRIAL GAS DISTRIBUTOR 1,400,000 Hughes Supply 50,190 INDUSTRIAL DISTRIBUTION 3,800,000 Grafton Group (Ireland) 41,389 BUILDING MATERIALS WHOLESALING & DIY RETAILING 1,000,000 Aviall (b) 28,800 AIRCRAFT REPLACEMENT PARTS DISTRIBUTOR 1,031,000 Nuco2 (b)(c) 28,744 BULK CO2 GAS DISTRIBUTION TO RESTAURANTS ------------------------------------------------------------------------------- 349,182 >LOGISTICS: 2.1% 2,750,000 Expeditors International of Washington 185,653 INTERNATIONAL FREIGHT FORWARDER 900,000 UTI Worldwide 83,556 GLOBAL LOGISTICS & FREIGHT FORWARDING 2,000,000 Forward Air (c) 73,300 FREIGHT TRANSPORTATION BETWEEN AIRPORTS ------------------------------------------------------------------------------- 342,509 >CONSTRUCTION: 1.5% 1,107,000 Florida Rock Industries 54,309 CONCRETE & AGGREGATES 1,450,000 Simpson 52,707 WALL JOINT MAKER 42,500 Geberit International (Switzerland) 33,636 PLUMBING SUPPLIES 635,000 Bilfinger Berger (Germany) 30,297 CONSTRUCTION & RELATED SERVICES 380,000 Daito Trust Construction (Japan) 19,655 APARTMENT BUILDER 425,000 Wienerberger (Austria) 16,924 BRICKS & CLAY ROOFING TILES 1,100,000 Kingspan Group (Ireland) 13,869 BUILDING INSULATION & ENVIRONMENTAL CONTAINERS 3,000,000 Consorcio (Mexico) 13,120 AFFORDABLE HOUSING BUILDER 90,000 Ciments Francais (France) 11,699 LEADING FRENCH & EMERGING MARKETS CEMENT PRODUCER ------------------------------------------------------------------------------- 246,216 26 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >STEEL: 1.4% 128,000 Vallourec (France) $ 70,466 SEAMLESS TUBES 2,860,000 Gibraltar Industries (c) 65,608 STEEL PROCESSING 550,000 Tenaris (Argentina) 62,975 SEAMLESS TUBES 1,964,000 Worthington Industries 37,728 STEEL PROCESSING ------------------------------------------------------------------------------- 236,777 >SPECIALTY CHEMICALS & INDUSTRIAL MATERIALS: 1.2% 3,150,000 Spartech (c) 69,142 PLASTICS DISTRIBUTION & COMPOUNDING 650,000 Novozymes (Denmark) 35,584 INDUSTRIAL ENZYMES 35,000 Sika (Switzerland) 29,032 CHEMICALS FOR CONSTRUCTION & INDUSTRIAL APPLICATION 200,000 Imerys (France) 14,467 INDUSTRIAL MINERALS PRODUCER 20,000 Givaudan (Switzerland) 13,554 INDUSTRIAL FRAGRANCES & FLAVORS 260,000 Carbone Lorraine (France) (b) 11,882 ADVANCED INDUSTRIAL MATERIALS 105,000 Koninklijke Ten Cate (Netherlands) 10,691 ADVANCED TEXTILES & INDUSTRIAL FABRICS 750,000 Ultrapar (Brazil) 10,421 SPECIALTY CHEMICALS & LIQUID PROPANE GAS DISTRIBUTION ------------------------------------------------------------------------------- 194,773 >OUTSOURCING SERVICES & TRAINING: 1.1% 1,300,000 Administaff 54,665 PROFESSIONAL EMPLOYER ORGANIZATION 1,600,000 Labor Ready (b) 33,312 TEMPORARY MANUAL LABOR 2,481,000 Quanta Services (b) 32,675 ELECTRICAL & TELECOM CONSTRUCTION SERVICES 740,000 United Services Group (Netherlands) 31,364 TEMPORARY STAFFING SERVICES 565,000 Meitec (Japan) 18,301 R&D STAFFING SERVICES 600,000 GP Strategies (b) 4,896 TRAINING PROGRAMS ------------------------------------------------------------------------------- 175,213 >OTHER INDUSTRIAL SERVICES: 0.5% 825,000 Mobile Mini (b)(c) 39,105 LEASES PORTABLE STORAGE UNITS 35,000 Schindler (Switzerland) 13,877 ELEVATOR MANUFACTURER & SERVICE PROVIDER 655,000 Tal International (b) 13,526 LEASES INTERMODAL FREIGHT CONTAINERS 300,000 IM Tech (Netherlands) 9,767 ENGINEERING & TECHNICAL SERVICES 185,000 Jaakko Poyry (Finland) 6,978 ENGINEERING CONSULTANTS IN FORESTRY, ENERGY 205,000 Clark 2,716 EXECUTIVE COMPENSATION & BENEFITS CONSULTING ------------------------------------------------------------------------------- 85,969 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >WATER: 0.5% 1,080,000 Pall $ 29,009 FILTRATION & FLUIDS CLARIFICATION 900,000 Watts Water Technologies 27,261 WATER, VALVES, REGULATORS & FILTRATION 1,700,000 Tetra Tech (b) 26,639 RESOURCE MANAGEMENT & INFRASTRUCTURE CONSULTING ------------------------------------------------------------------------------- 82,909 >CONGLOMERATES: 0.4% 755,000 Aalberts Industrie (Netherlands) 40,089 FLOW CONTROL & HEAT TREATMENT 277,500 Pargesa (Switzerland) 23,694 INDUSTRIAL & MEDIA HOLDINGS 176,600 Hexagon (Sweden) 5,268 MEASUREMENT EQUIPMENT & POLYMERS ------------------------------------------------------------------------------- 69,051 >ELECTRICAL COMPONENTS: 0.2% 1,125,000 Ushio (Japan) 26,280 INDUSTRIAL LIGHT SOURCES ------------------------------------------------------------------------------- ----------- INDUSTRIAL GOODS/SERVICES: TOTAL 2,650,986 ------------------------------------------------------------------------------- FINANCE: 12.3% >BANKS: 4.6% 3,297,000 Associated Banc-Corp 107,317 MIDWEST BANK 2,334,000 BOK Financial 106,034 SOUTHWEST MIDDLE MARKET BANK 3,502,000 TCF Financial 95,044 GREAT LAKES BANK 5,607,000 Anglo Irish Bank (Ireland) 85,101 SMALL BUSINESS & MIDDLE MARKET BANKING 2,720,000 Glacier Bancorp (c) 81,736 MOUNTAIN STATES BANK 2,850,000 Northern Rock (United Kingdom) 46,239 LOWEST COST MORTGAGE BANK IN UK 250,000 Komercni Banka (Czech Republic) 34,990 LEADING CZECH UNIVERSAL BANK 1,320,000 West Coast Bancorp (c) 34,914 PORTLAND SMALL BUSINESS LENDER 1,850,000 Depfa Bank (Germany) 27,356 INVESTMENT BANKER TO PUBLIC AUTHORITIES 756,000 Chittenden 21,024 VERMONT & WESTERN MASSACHUSETTS BANK 586,000 CityBank Lynnwood (c) 20,844 NORTH SEATTLE REAL ESTATE LENDER 1,581,000 Republic 18,814 MICHIGAN BANK 641,000 Great Southern Bancorp 17,698 MISSOURI REAL ESTATE LENDER 406,000 First Financial BankShares 14,234 WEST TEXAS BANK 647,000 West Bancorporation 12,099 DES MOINES COMMERCIAL BANK 297,000 First Mutual Bancshares (c) 7,704 SEATTLE COMMUNITY BANK 27 COLUMBIA ACORN FUND >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >BANKS--CONTINUED 367,000 Sterling Bancorp $ 7,241 NEW YORK CITY NICHE LENDER 265,000 Independent Bank 7,216 MICHIGAN BANK 275,000 S Y Bancorp 6,880 LOUISVILLE BANK 382,000 Cascade Financial 6,782 SEATTLE COMMUNITY BANK ------------------------------------------------------------------------------- 759,267 >INSURANCE: 2.8% 575,000 Philadelphia Consolidated Holding (b) 55,597 SPECIALTY INSURANCE 1,119,000 Leucadia National 53,108 INSURANCE HOLDING COMPANY 1,530,000 HCC Insurance Holdings 45,410 SPECIALTY INSURANCE 995,000 Protective Life 43,551 LIFE INSURANCE 1,700,000 Scottish Re Group 41,735 LIFE REINSURANCE 710,000 Selective Insurance Group 37,701 COMMERCIAL & PERSONAL LINES INSURANCE 830,000 Assurant 36,097 SPECIALTY INSURANCE 109,000 Markel (b) 34,558 SPECIALTY INSURANCE 940,000 Endurance Specialty Holdings 33,699 COMMERCIAL LINES INSURANCE/REINSURANCE 1,550,000 United America Indemnity (b) 28,458 SPECIALTY INSURANCE 570,000 RLI 28,426 SPECIALTY INSURANCE 520,000 StanCorp Financial 25,974 GROUP LIFE & DISABILITY INSURANCE ------------------------------------------------------------------------------- 464,314 >FINANCE COMPANIES: 1.7% 6,481,000 AmeriCredit (b) 166,108 AUTO LENDING 1,700,000 World Acceptance (b)(c) 48,450 PERSONAL LOANS 1,100,000 Intermediate Capital (United Kingdom) 26,363 EUROPEAN PROVIDER OF MEZZANINE CAPITAL 1,950,000 Paragon Group (United Kingdom) 21,774 UK BUY-TO-LET FINANCE COMPANY 1,000,000 Northgate (United Kingdom) 16,749 LIGHT COMMERCIAL VEHICLE RENTAL SPECIALIST 305,000 Electro Rent (b) 4,548 TEST & MEASUREMENT EQUIPMENT RENTALS ------------------------------------------------------------------------------- 283,992 >SAVINGS & LOANS: 1.5% 4,016,000 Peoples Bank Bridgeport 124,737 CONNECTICUT SAVINGS & LOAN 1,700,000 Housing Development Finance (India) 45,641 PREMIER MORTGAGE LENDER IN INDIA 1,178,000 Anchor Bancorp Wisconsin (c) 35,741 WISCONSIN THRIFT NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- 1,285,000 Washington Federal $ 29,542 OLD FASHIONED THRIFT 200,000 Bankinter (Spain) 11,098 MORTGAGE LENDER 360,000 Provident Bancorp 3,964 NEW YORK STATE THRIFT ------------------------------------------------------------------------------- 250,723 >MONEY MANAGEMENT: 1.5% 2,355,000 SEI Investments 87,135 MUTUAL FUND ADMINISTRATION & INVESTMENT MANAGEMENT 2,990,000 Eaton Vance 81,806 SPECIALTY MUTUAL FUNDS 1,657,000 Nuveen Investments 70,621 SPECIALTY MUTUAL FUNDS ------------------------------------------------------------------------------- 239,562 >BROKERAGE: 0.2% 690,000 Investment Technology Group (b) 24,454 ELECTRONIC TRADING ------------------------------------------------------------------------------- ----------- FINANCE: TOTAL 2,022,312 ------------------------------------------------------------------------------- HEALTH CARE: 9.3% >MEDICAL EQUIPMENT/LABORATORY SUPPLIES: 2.9% 1,629,000 Edwards Lifesciences (b) 67,783 HEART VALVES 1,040,000 Diagnostic Products 50,492 IMMUNODIAGNOSTIC KITS 1,560,000 CYTYC (b) 44,039 CONSUMABLES RELATED TO WOMEN'S HEALTH 475,000 Essilor International (France) 38,352 EYEGLASS LENSES 1,180,000 Intermagnetics General (b) 37,642 MRI EQUIPMENT 930,000 Datascope (c) 30,737 MEDICAL DEVICES 714,000 ICU Medical (b)(c) 27,996 INTRAVENOUS THERAPY PRODUCTS 905,000 Arrow International 26,236 DISPOSABLE CATHETERS 583,000 Orthofix International (b) 23,256 BONE FIXATION & STIMULATION DEVICES 552,000 Advanced Medical Optics (b) 23,074 MEDICAL DEVICES FOR EYE CARE 875,000 Viasys Healthcare (b) 22,487 RESPIRATORY & NEUROLOGY MEDICAL EQUIPMENT 390,000 Hogy Medical (Japan) 21,065 DISPOSABLE SURGICAL PRODUCTS 175,000 Synthes (Switzerland) 19,657 PRODUCTS FOR ORTHOPEDIC SURGERY 450,000 Vital Signs 19,269 ANESTHESIA, RESPIRATORY & SLEEP PRODUCTS 350,000 Haemonetics (b) 17,101 BLOOD & PLASMA COLLECTION EQUIPMENT 650,000 PSS World Medical (b) 9,646 MEDICAL SUPPLIES DISTRIBUTOR ------------------------------------------------------------------------------- 478,832 28 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >BIOTECHNOLOGY/DRUG DELIVERY: 2.9% 913,000 Neurocrine Biosciences (b) $ 57,272 DRUGS FOR SLEEP, DIABETES, MS & ENDOMETRIOSIS 3,230,000 Exelixis (b) 30,427 TREATMENTS FOR CANCER & METABOLIC DISORDERS 2,000,000 Medarex (b) 27,700 HUMANIZED ANTIBODIES 2,380,000 Ligand Pharmaceuticals (b) 26,537 DRUGS FOR PAIN, CANCER, OSTEOPOROSIS & DIABETES 1,500,000 Tanox (b) 24,555 DRUGS FOR ASTHMA & HIV 1,179,000 AtheroGenics (b) 23,592 DRUGS FOR ATHEROSCLEROSIS 2,400,000 Pozen (b)(c) 23,016 DRUGS FOR MIGRAINES 1,360,000 Nektar Therapeutics (b) 22,386 DRUG DELIVERY TECHNOLOGIES 3,935,000 Incyte (b) 21,013 DRUG DEVELOPMENT 1,429,000 Arena Pharmaceuticals (b) 20,320 NOVEL DRUG TARGETING TECHNOLOGY 1,355,000 DOV Pharmaceuticals (b)(c) 19,891 DRUGS FOR INSOMNIA, ANXIETY, PAIN & DEPRESSION 1,600,000 NPS Pharmaceuticals (b) 18,944 DRUGS FOR OSTEOPOROSIS & HYPERPARATHYROIDISM 800,000 Momenta Pharmaceuticals (b) 17,632 SUGAR ANALYSIS TECHNOLOGY FOR DRUG DESIGN 650,000 Martek Biosciences (b) 15,996 FATTY ACIDS FOR BABY FORMULA & OTHER FOODS 1,900,000 Decode Genetics (b) 15,694 DRUGS FOR HEART ATTACK, ASTHMA & VASCULAR DISEASE 1,000,000 Renovis (b) 15,300 DRUG TO MINIMIZE NEUROLOGICAL DAMAGE FROM STROKES 1,650,000 Human Genome Sciences (b) 14,124 DRUG DISCOVERY/DEVELOPMENT 1,750,000 Genitope (c) 13,913 CANCER VACCINE 2,000,000 Cytokinetics (b)(c) 13,080 DRUGS FOR CANCER & HEART FAILURE 3,100,000 Lexicon Genetics (b) 11,315 DRUG DISCOVERY 2,300,000 Seattle Genetics (b)(c) 10,856 ANTIBODY-BASED THERAPIES FOR CANCER 1,265,000 Maxygen (b) 9,500 MOLECULAR BREEDING 975,000 Rigel Pharmaceuticals (b) 8,151 DRUGS FOR HAY FEVER, ASTHMA, HEPATITIS & CANCER 1,100,000 La Jolla Pharmaceuticals (b)(c) 4,070 LUPUS TREATMENT 1,249,999 Perlegen Sciences (d) 3,375 LARGE SCALE GENE SEQUENCING 1,875,000 Locus Discovery, Series D, Pfd. (d) 2,813 HIGH THROUGHPUT RATIONAL DRUG DESIGN 359,944 Microdose (d) 166 DRUG INHALERS ------------------------------------------------------------------------------- 471,638 >SERVICES: 2.8% 2,491,000 Lincare Holdings (b) 104,398 HOME HEALTH CARE SERVICES NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- 1,232,000 Coventry Health Care (b) $ 70,175 PPO NETWORK 1,595,000 Charles River Laboratories (b) 67,580 PHARMACEUTICAL RESEARCH 2,592,000 NDCHealth Group (c) 49,844 HEALTH CLAIMS PROCESSING & DRUG MARKETING SERVICES 4,260,000 Gambro (Sweden) 46,517 PRODUCTS FOR RENAL & BLOOD CARE 510,000 OPG Groep (Netherlands) 36,408 HEALTHCARE SUPPLIES & PHARMACIES 1,607,000 Serologicals (b) 31,722 BLOOD COLLECTION & ANTIBODY PRODUCTION 2,033,000 Dendrite International (b) 29,296 SOFTWARE FOR PHARMACEUTICAL SALES FORCE 600,000 United Surgical Partners (b) 19,290 OUTPATIENT SURGERY CENTER 158,000 PRA International (b) 4,448 CONTRACT RESEARCH ORGANIZATION ------------------------------------------------------------------------------- 459,678 >MEDICAL SUPPLIES: 0.3% 486,000 Techne (b) 27,289 CYTOKINES, ANTIBODIES, OTHER REAGENTS FOR LIFE SCIENCES 650,000 Owens & Minor 17,894 DISTRIBUTION OF MEDICAL SUPPLIES ------------------------------------------------------------------------------- 45,183 >HOSPITAL MANAGEMENT: 0.2% 1,000,000 Rhoen-Klinikum (Germany) 38,062 HOSPITAL MANAGEMENT ------------------------------------------------------------------------------- >PHARMACEUTICALS: 0.2% 576,000 Par Pharmaceuticals (b) 18,052 GENERICS 4,100,000 United Drug (Ireland) 17,717 IRISH PHARMACEUTICAL WHOLESALER & OUTSOURCER ------------------------------------------------------------------------------- 35,769 ----------- HEALTH CARE: TOTAL 1,529,162 ------------------------------------------------------------------------------- ENERGY/MINERALS: 9.3% >OIL/GAS PRODUCERS: 5.3% 3,200,000 Western Gas Resources 150,688 OIL & COAL SEAM GAS PRODUCER 2,700,000 Ultra Petroleum (b) 150,660 NATURAL GAS PRODUCER 2,500,000 Talisman Energy (Canada) 132,479 OIL & GAS PRODUCER 2,500,000 XTO Energy 109,850 NATURAL GAS PRODUCER 2,400,000 Equitable Resources 88,056 NATURAL GAS PRODUCER & UTILITY 2,000,000 Southwestern Energy 71,880 NATURAL GAS PRODUCER 13,500,000 Tullow Oil (United Kingdom) 62,712 OIL & GAS PRODUCER 1,500,000 Range Resources 39,510 OIL & GAS PRODUCER 1,200,000 McMoran Exploration (b) 23,724 NATURAL GAS PRODUCERS & DEVELOPER 700,000 Denbury Resources (b) 15,946 OIL PRODUCER USING CO2 INJECTION 29 COLUMBIA ACORN FUND >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >OIL/GAS PRODUCERS--CONTINUED 3,200,000 Vaalco Energy (b)(c) $ 13,568 OIL & GAS PRODUCER ------------------------------------------------------------------------------- 859,073 >OIL SERVICES: 2.8% 2,350,000 FMC Technologies (b) 100,862 OIL & GAS WELL HEAD MANUFACTURER 2,300,000 Pride International (b) 70,725 OFFSHORE DRILLING CONTRACTOR 1,365,000 Fugro (Netherlands) 43,843 SURVEY & GPS SERVICES 750,000 Carbo Ceramics 42,390 NATURAL GAS WELL STIMULANTS 1,600,000 Chicago Bridge & Iron 40,336 ENGINEERING & CONSTRUCTION FOR PETROCHEMICALS 5,000,000 Newpark Resources (b)(c) 38,150 DRILLING FLUID SERVICES TO OIL & GAS INDUSTRY 2,000,000 Saipem (Italy) 32,818 OFFSHORE CONSTRUCTION & DRILLING 2,400,000 Key Energy Services (b) 32,328 OIL & GAS WELL WORKOVER SERVICES 1,350,000 Enerflex Systems (Canada) (c) 31,170 NATURAL GAS COMPRESSOR 700,000 Veritas DGC (b) 24,843 GEOPHYSICAL CONTRACTOR 168,000 Pioneer Drilling (b) 3,012 OIL & GAS WELL DRILLER ------------------------------------------------------------------------------- 460,477 >MINING: 0.9% 1,440,000 Xstrata (United Kingdom) 33,694 DIVERSIFIED MINING HOLDING COMPANY 275,000 Sociedad Quimica Y Minera de Chile (Chile) 30,030 PRODUCER OF SPECIALTY FERTILIZERS, LITHIUM & IODINE 900,000 Falconbridge (Canada) 26,711 DIVERSIFIED MINING HOLDING COMPANY 13,100,000 UrAsia Energy (Canada) 24,454 URANIUM MINING IN KAZAKHSTAN 2,900,000 Jubilee Gold Mines (Australia) 15,987 NICKEL MINING IN AUSTRALIA 1,000,000 Ivanhoe Mines (Canada) (b) 7,183 COPPER MINING IN MONGOLIA ------------------------------------------------------------------------------- 138,059 >DISTRIBUTION/MARKETING/REFINING: 0.2% 966,000 Atmos Energy 25,271 NATURAL GAS UTILITY 435,000 Oneok 11,584 NATURAL GAS UTILITY, MARKETING & PROCESSING ------------------------------------------------------------------------------- 36,855 >AGRICULTURAL COMMODITIES: 0.1% 550,000 Aracruz Celulose (Brazil) 22,006 BRAZILIAN HARDWOOD PULP PRODUCER ------------------------------------------------------------------------------- ----------- ENERGY/MINERALS: TOTAL 1,516,470 ------------------------------------------------------------------------------- NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- OTHER INDUSTRIES: 4.5% >REAL ESTATE: 3.2% 1,320,000 General Growth Properties $ 62,027 REGIONAL SHOPPING MALLS 1,398,000 Forest City Enterprises, Cl. B 52,970 COMMERCIAL & RESIDENTIAL PROPERTY DEVELOPER 650,000 SL Green Realty 49,653 MANHATTAN OFFICE BUILDINGS 1,050,000 Gaylord Entertainment (b) 45,770 CONVENTION HOTELS 4,002,000 Highland Hospitality (c) 44,222 HOTEL OWNER 635,000 Macerich Company 42,634 REGIONAL SHOPPING MALLS 870,000 Mills 36,488 REGIONAL SHOPPING MALLS 575,000 Federal Realty Investment Trust 34,874 SHOPPING CENTERS 1,375,000 Crescent Real Estate Equities 27,253 CLASS A OFFICE BUILDINGS 1,720,000 Kite Realty Group (c) 26,608 COMMUNITY SHOPPING CENTERS 1,991,000 Diamondrock Hospitality 23,812 1,000,000 Diamondrock Hospitality 144A (d) 11,960 HOTEL OWNER 900,000 American Campus Communities (c) 22,320 STUDENT HOUSING/APARTMENTS 670,000 Brandywine Realty 18,700 OFFICE BUILDINGS 400,000 Parkway Properties 16,056 OFFICE BUILDINGS 1,355,000 Sponda (Finland) 12,753 OFFICE & WAREHOUSE PROPERTY COMPANY 37,407 Security Capital European Realty (Luxembourg) (d) 539 SELF STORAGE PROPERTIES ------------------------------------------------------------------------------- 528,639 >TRANSPORTATION: 0.5% 1,980,000 Heartland Express 40,174 REGIONAL TRUCKER 560,000 Grupo Aeroportaurio Del Sureste (Mexico) 18,110 CANCUN & COZUMEL AIRPORT OPERATOR 18,000,000 Comfort Del Gro (Singapore) 17,322 TAXI & MASS TRANSIT SERVICE 355,000 JB Hunt 8,037 TRUCKING CONGLOMERATE ------------------------------------------------------------------------------- 83,643 >REGULATED UTILITIES: 0.4% 1,650,000 Northeast Utilities 32,488 REGULATED ELECTRIC UTILITY 989,800 Red Electrica (Spain) 30,655 SPANISH POWER GRID ------------------------------------------------------------------------------- 63,143 30 NUMBER OF SHARES OR PRINCIPAL AMOUNT (000) VALUE (000) ------------------------------------------------------------------------------- >WASTE MANAGEMENT: 0.4% 1,700,000 Waste Connections (b) $ 58,582 SOLID WASTE MANAGEMENT ------------------------------------------------------------------------------- ----------- OTHER INDUSTRIES TOTAL 734,007 ------------------------------------------------------------------------------- Total Common Stocks and Other ----------- EQUITY-LIKE SECURITIES: 93.9% (e) 15,392,878 (COST: $8,967,326) ------------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS: 6.0% $123,000 Countrywide Financial Funding 4.15% - 4.34% Due 1/6/06 - 2/9/06 122,624 120,000 Virginia Electric & Power 4.30% - 4.32% Due 1/26/06 - 1/31/06 119,623 119,000 Credit Suisse First Boston 4.14% - 4.16% Due 1/12/06 - 1/17/06 118,822 80,000 Prudential Funding 4.24% - 4.25% Due 1/19/06 - 1/23/06 79,811 75,000 Citigroup Funding 4.24% - 4.27% Due 1/18/06 - 1/30/06 74,795 73,000 Toyota Credit 4.27% - 4.31% Due 2/3/06 - 2/6/06 72,700 64,000 American General Finance 4.13% Due 1/3/06 - 1/4/06 63,982 40,000 Pfizer Investment Capital (f) 4.10% Due 1/9/06 39,964 40,000 State Street Boston Corp 4.10% Due 1/10/06 39,959 40,000 Siemens Capital Corp 4.115% Due 1/11/06 39,954 40,000 Verizon Global Funding (f) 4.33% Due 2/8/06 39,817 35,000 Concentrate Manufacturing (f) 4.27% Due 2/2/06 34,867 30,000 American Express Credit Corp 4.15% Due 1/5/06 29,986 30,000 General Electric Capital Services 4.26% Due 1/24/06 29,918 28,000 Aluminum Company America 4.28% Due 1/25/06 27,920 25,000 Toyota Motor Credit 4.26% Due 2/1/06 24,908 16,000 General Electric Capital Corporate 4.25% Due 2/10/06 15,924 PRINCIPAL AMOUNT (000) VALUE (000) ------------------------------------------------------------------------------- $ 4,458 Repurchase Agreement with State Street Bank & Trust dated 12/30/05, due 1/3/06 at 3.75% collateralized by Federal Home Loan Mortgage Discount Notes, maturing 5/2/06 market value $4,550 (repurchase proceeds: $4,460) $ 4,458 ------------------------------------------------------------------------------- (AMORTIZED COST: $980,032) 980,032 ----------- TOTAL INVESTMENTS: 99.9% 16,372,910 (COST: $9,947,358)(a) ----------- CASH AND OTHER ASSETS LESS LIABILITIES: 0.1% 18,414 ----------- TOTAL NET ASSETS: 100% $16,391,324 ------------------------------------------------------------------------------- 31 COLUMBIA ACORN FUND >STATEMENT OF INVESTMENTS, CONTINUED ------------------------------------------------------------------------------- >Notes to Statement of Investments (in thousands) (a) At December 31, 2005, for federal income tax purposes cost of investments was $9,982,149 and net unrealized appreciation was $6,390,761 consisting of gross unrealized appreciation of $6,721,158 and gross unrealized depreciation of $330,397. (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, 2005, the Fund held five percent or more of the outstanding voting securities of the following companies: AnswerThink Consulting 10.42% Datascope 6.28% Christopher & Banks 10.39 Clarcor 6.21 Actuate 9.95 Genitope 6.16 Spartech 9.85 Salem Communications 6.08 New Horizons Worldwide 9.80 Kite Realty Group 6.02 Gibraltar Industries 9.63 Pegasus Systems 6.01 Indus International 9.60 Enerflex Systems 5.97 Igate Capital 9.50 Electric City 5.90 World Acceptance 9.28 DOV Pharmaceuticals 5.87 West Coast Bancorp 8.95 Sports Authority 5.75 Skillsoft Publishing 8.85 CityBank Lynwood 5.72 RC2 8.67 IXYS 5.68 Esco Technologies 8.60 Newpark Resources 5.66 Glacier Bancorp 8.47 Vaalco Energy 5.62 Watsco 8.28 Coinstar 5.62 Pozen 8.27 AFC Enterprises 5.61 Highland Hospitality 7.75 First Mutual Bancshares 5.54 Concurrent Computer 7.50 Seattle Genetics 5.42 Alliance Gaming 7.48 Mobile Mini 5.42 La Jolla Pharmaceuticals 7.41 Anchor Bancorp Wisconsin 5.37 NDCHealth Group 7.15 Kronos 5.33 Cytokinetics 6.97 Gaiam 5.24 Shuffle Master 6.97 American Campus Communities 5.23 Genlyte Group 6.80 JDA Software Group 5.20 Navigant International 6.73 CTS 5.18 Nuco2 6.73 Excel Technologies 5.18 Princeton Review 6.70 ICU Medical 5.14 Seachange International 6.58 Fleetwood Enterprises 5.08 Forward Air 6.39 The aggregate cost and value of these companies at December 31, 2005, was $1,461,876 and $2,084,199, respectively. Investments in affiliate companies represent 12.7% of total net assets at December 31, 2005. Investment activity and income amounts relating to affiliates during the twelve months ended December 31, 2005 were as follows: Dividend Income $ 16,279 Net realized gain or loss 2,494 Change in unrealized gain or loss 102,408 Purchases 365,595 Proceeds from sales 39,464 In addition, additional purchases of existing portfolio holdings that were not considered affiliates in prior years, resulted in the fund owning more than 5% of the outstanding shares of certain issues at December 31, 2005. Therefore, the cost and market value affiliate disclosure amounts include both acquisitions of new investments in affiliates during the period, as well as prior period investment holdings that became affiliates during the current period. 32 (d) Denotes a restricted security, which is subject to restrictions on resale under federal securities laws. These securities, except for Diamondrock Hospitality, are valued in good faith by the Board of Trustees. At December 31, 2005, these securities (in thousands) amounted to $18,853, which represents 0.12% of total net assets. Additional information on these securities is as follows:
ACQUISITION SHARES/ SECURITY DATES PAR (000) COST (000) VALUE (000) ----------------------------------------------------------------------------------------------- Diamondrock Hospitality 144A 06/29/04 1,000,000 $ 10,000 $11,960 Gadzooks 5% Convertible 10/07/08 10/08/03 $6,000 6,000 0 Locus Discovery, Series D, Pfd. 09/05/01 1,875,000 7,500 2,813 Microdose 11/24/00 359,944 2,005 166 Perlegen Sciences 03/30/01 1,249,999 4,500 3,375 Security Capital European Realty 08/20/98-11/12/99 37,407 748 539 --------- ---------- $ 30,753 $18,853 ========= ==========
(e) On December 31, 2005, the market value of foreign securities (in thousands) represents 15.57% of total net assets. The Fund's foreign portfolio was diversified as follows: VALUE PERCENT ------------------------------------------------------------------------------- Canada $ 326,759 1.99% France 239,791 1.46 United Kingdom 232,600 1.42 Ireland 218,620 1.33 Japan 184,809 1.13 Netherlands 172,162 1.05 Switzerland 147,548 0.90 Germany 120,050 0.73 Sweden 89,276 0.55 Hong Kong 73,009 0.45 Taiwan 71,630 0.44 Argentina 62,975 0.39 Brazil 61,613 0.38 Italy 49,255 0.30 Australia 47,921 0.29 India 45,641 0.28 South Korea 42,233 0.26 VALUE PERCENT ------------------------------------------------------------------------------- Spain $ 41,753 0.26% Denmark 35,584 0.22 Czeck Republic 34,990 0.21 Mexico 31,230 0.19 Chile 30,030 0.18 Norway 30,023 0.18 Israel 28,318 0.17 Finland 19,731 0.12 South Africa 19,448 0.12 Bahamas 17,875 0.11 Singapore 17,322 0.11 Austria 16,924 0.10 China 15,348 0.09 New Zealand 14,412 0.09 Greece 12,090 0.07 Luxembourg 539 0.00 ---------- ------- Total Foreign Portfolio $2,551,509 15.57% ========== ======= (f) 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, 2005, these securities amounted to $114,648, which represents 0.7% of net assets. 33 COLUMBIA ACORN INTERNATIONAL >MAJOR PORTFOLIO CHANGES IN THE FOURTH QUARTER (UNAUDITED) NUMBER OF SHARES ----------------------------- 09/30/05 12/31/05 Additions ------------------------------------------------------------------------------- EUROPE >UNITED KINGDOM/IRELAND Bloomsbury Publishing 1,500,000 2,000,000 IAWS (Ireland) 1,690,000 2,000,000 Kingspan Group (Ireland) 0 880,000 Northern Rock 0 1,850,000 Novolipetsk Steel Works 0 775,000 RPS Group 3,800,000 6,000,000 Taylor Nelson 3,850,000 4,200,000 United Drug (Ireland) 6,000,000 6,500,000 >FRANCE April Group 636,501 700,000 Carbone Lorraine 303,000 340,000 Norbert Dentressangle 144,000 280,000 Rubis 40,000 271,833 Trigano 4,000 104,943 (INCLUDES THE EFFECT OF A 2 FOR 1 STOCK SPLIT) >GERMANY CTS Eventim 300,000 523,655 (INCLUDES THE EFFECT OF A 2 FOR 1 STOCK SPLIT) Grenkeleasing 222,000 260,000 Porsche 0 17,500 Vossloh 200,000 260,000 >SWITZERLAND Logitech 0 275,000 Synthes 110,000 135,000 >SWEDEN Gambro 1,112,000 1,492,000 Sweco 194,000 324,000 >ITALY Banca Italease 0 320,000 NUMBER OF SHARES ----------------------------- 09/30/05 12/31/05 ASIA ------------------------------------------------------------------------------- >JAPAN Aeon Mall 0 440,700 Chiba Bank 1,400,000 2,000,000 Jupiter Telecommunications 15,000 43,500 Kintetsu World Express 0 321,100 Nagaileben 0 156,000 Shimano 450,000 900,000 T. Hasegawa 0 104,000 Toyo Technica 906,000 918,000 Ushio 750,000 1,272,000 USS 0 350,000 Yusen Air & Sea Service 0 125,000 >TAIWAN Bank of Kaohsiung 8,470,000 17,000,000 Novatek Microelectronics 2,044,000 3,244,000 Springsoft Systems 5,686,000 7,186,000 ------------------------------------------------------------------------------- OTHER COUNTRIES >CANADA Railpower Technologies 0 432,000 Railpower Technologies 144A 0 2,036,000 Rona 0 790,000 >AUSTRALIA/NEW ZEALAND ABC Learning Center 2,000,000 3,980,100 Jubilee Gold Mines 0 2,000,000 Sky City Entertainment (New Zealand) 4,000,000 5,000,000 >SOUTH AFRICA Edgars Conolidated Stores 3,500,000 4,000,000 ------------------------------------------------------------------------------- LATIN AMERICA >BRAZIL Caemi Mine 8,800,000 10,600,000 Diagnosticos 200,000 364,800 Suzano 943,000 1,800,000 Universo Online 0 223,400 34 NUMBER OF SHARES ----------------------------- 09/30/05 12/31/05 Sales ------------------------------------------------------------------------------- EUROPE >UNITED KINGDOM Business Post 1,175,000 0 Exel 1,750,000 0 William Hill 1,650,000 0 >FRANCE/BELGIUM Imerys 360,000 240,000 Omega Pharma (Belgium) 184,000 0 Vallourec 70,000 50,000 >DENMARK Kobenhavn Lufthavne 35,000 0 ------------------------------------------------------------------------------- ASIA >JAPAN Funai Electric 110,000 0 Kappa Create 142,000 0 >TAIWAN ASE Test 881,000 0 Chicony Electronic 10,620,000 0 Sunplus Technology 3,258,000 0 >HONG KONG/CHINA Hainan Meilan Airport (China) 9,800,000 0 Lerado Group 27,476,000 2,670,000 Ngai Lik Industrial 11,330,000 0 >SOUTH KOREA S&T 200,000 0 >SINGAPORE LMA International 20,000,000 11,564,000 >INDONESIA Perusahaan Gas Negara 45,000,000 30,000,500 NUMBER OF SHARES ----------------------------- 09/30/05 12/31/05 ------------------------------------------------------------------------------- OTHER COUNTRIES >CANADA Intrawest 102,000 0 PetroKazakhstan 153,100 0 Talisman Energy 595,000 385,000 >AUSTRALIA Lion Nathan 3,000,000 0 Pacific Brands 3,800,000 0 ------------------------------------------------------------------------------- LATIN AMERICA >MEXICO Grupo Aeroportaurio Del Sureste 660,000 500,000 >ARGENTINA Tenaris 316,000 110,000 35 COLUMBIA ACORN INTERNATIONAL >STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- COMMON STOCKS: 96.6% ------------------------------------------------------------------------------- EUROPE: 58.7% >UNITED KINGDOM/IRELAND: 17.7% 3,438,000 ANGLO IRISH BANK (IRELAND) $ 52,181 SMALL BUSINESS & MIDDLE MARKET BANKING 2,800,000 PARAGON GROUP 31,265 BUY-TO-LET FINANCE COMPANY 1,850,000 NORTHERN ROCK 30,015 LOWEST COST MORTGAGE BANK IN UK 6,370,000 TULLOW OIL 29,591 OIL & GAS PRODUCER 2,000,000 IAWS (IRELAND) 28,769 BAKED GOODS 6,500,000 UNITED DRUG (IRELAND) 28,088 IRISH PHARMACEUTICAL WHOLESALER & OUTSOURCER 2,840,000 EXPRO INTERNATIONAL 27,851 OFFSHORE OIL FIELD SERVICES 1,700,000 KENSINGTON 27,055 NON-CONFORMING MORTGAGE COMPANY 2,350,000 GRAFTON GROUP (IRELAND) 25,596 BUILDING MATERIALS WHOLESALING & DIY RETAILING 900,000 INTERMEDIATE CAPITAL 21,570 EUROPEAN PROVIDER OF MEZZANINE CAPITAL 795,000 KERRY (IRELAND) 17,610 CONSUMER FOODS & FOOD INGREDIENTS 750,000 XSTRATA 17,549 DIVERSIFIED MINING HOLDING COMPANY 6,000,000 COBHAM 17,497 AEROSPACE COMPONENTS 975,000 NORTHGATE 16,330 LIGHT COMMERCIAL VEHICLE RENTAL SPECIALIST 4,200,000 TAYLOR NELSON 16,241 MARKET RESEARCH 6,000,000 RPS GROUP 16,104 ENVIRONMENTAL CONSULTING & PLANNING 1,800,000 ULSTER TELEVISION 13,162 IRISH TELEVISION & RADIO STATION OPERATOR 1,200,000 SPECTRIS 13,079 ELECTRONIC INSTRUMENTATION & CONTROLS 2,450,000 WORKSPACE GROUP 13,067 REAL ESTATE 2,200,000 BBA GROUP 12,434 AVIATION SUPPORT SERVICES & NON-WOVEN MATERIALS 2,000,000 BLOOMSBURY PUBLISHING 11,579 BOOK PUBLISHER 880,000 KINGSPAN GROUP (IRELAND) 11,095 BUILDING INSULATION & ENVIRONMENTAL CONTAINERS 775,000 NOVOLIPETSK STEEL WORKS (b) 11,082 VERTICALLY INTEGRATED STEEL PRODUCER 720,000 PADDY POWER (IRELAND) 10,314 IRISH BETTING SERVICES 600,000 CAMBRIDGE ANTIBODY (b) 7,211 LEADER IN HUMAN MONOCLONAL ANTIBODIES 450,000 VIRIDIAN 6,925 NORTHERN IRELAND ELECTRIC UTILITY ------------------------------------------------------------------------------- 513,260 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >FRANCE: 10.2% 1,980,000 SES GLOBAL $ 34,670 SATELLITE BROADCASTING SERVICES 327,500 NEOPOST 32,840 POSTAGE METER MACHINES 700,000 APRIL GROUP 28,923 INSURANCE POLICY CONSTRUCTION 50,000 VALLOUREC 27,526 SEAMLESS TUBES 390,000 ILIAD 24,148 HIGH SPEED INTERNET SERVICE PROVIDER 170,000 CIMENTS FRANCAIS 22,099 LEADING FRENCH & EMERGING MARKETS CEMENT PRODUCER 271,833 RUBIS 19,985 TANK STORAGE & LPG SUPPLIER 240,000 IMERYS 17,361 INDUSTRIAL MINERALS PRODUCER 280,000 NORBERT DENTRESSANGLE 16,488 TRANSPORT 200,000 ESSILOR INTERNATIONAL 16,148 EYEGLASS LENSES 340,000 CARBONE LORRAINE (b) 15,537 ADVANCED INDUSTRIAL MATERIALS 170,000 PIERRE & VACANCES 13,857 VACATION APARTMENT LETS 450,000 METROPOLE TV 12,466 TELEVISION BROADCASTER 94,000 BACOU DALLOZ 8,096 SAFETY EQUIPMENT 104,943 TRIGANO 4,674 LEISURE VEHICLES & CAMPING EQUIPMENT ------------------------------------------------------------------------------- 294,818 >GERMANY/AUSTRIA: 8.5% 1,230,000 RHOEN-KLINIKUM 46,817 HOSPITAL MANAGEMENT 275,000 WINCOR NIXDORF 29,096 RETAIL POS SYSTEMS & ATM MACHINES 500,000 BILFINGER BERGER 23,856 CONSTRUCTION & RELATED SERVICES 1,275,000 DEPFA BANK 18,853 INVESTMENT BANKER TO PUBLIC AUTHORITIES 175,000 DEUTSCHE BOERSE 17,934 TRADING, CLEARING & SETTLEMENT SERVICES FOR FINANCIAL MARKETS 450,000 HUGO BOSS DESIGNS 15,823 FASHION APPAREL 260,000 GRENKELEASING 14,867 FINANCING FOR IT EQUIPMENT 415,000 GFK 13,904 MARKET RESEARCH SERVICES 523,655 CTS EVENTIM (b) 12,777 EVENT TICKET SALES 260,000 VOSSLOH 12,651 RAIL INFRASTRUCTURE & DIESEL LOCOMOTIVES 17,500 PORSCHE 12,575 SPECIALTY AUTOMOBILE MANUFACTURER 300,000 WIENERBERGER (AUSTRIA) 11,946 BRICKS & CLAY ROOFING TILES 36 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >GERMANY/AUSTRIA--CONTINUED 870,000 TAKKT $ 9,785 MAIL ORDER RETAILER OF OFFICE & WAREHOUSE DURABLES 260,000 DEUTSCHE BETEILIGUNGS 4,294 PRIVATE EQUITY INVESTMENT MANAGEMENT ------------------------------------------------------------------------------- 245,178 >NETHERLANDS: 7.3% 1,245,000 FUGRO 39,988 SURVEY & GPS SERVICES 550,000 AALBERTS INDUSTRIES 29,204 FLOW CONTROL & HEAT TREATMENT 684,000 UNITED SERVICES GROUP 28,990 TEMPORARY STAFFING SERVICES 237,000 KONINKLIJKE TEN CATE 24,130 ADVANCED TEXTILES & INDUSTRIAL FABRICS 327,000 OPG GROEP 23,344 HEALTHCARE SUPPLIES & PHARMACIES 330,000 SMIT INTERNATIONAL 21,566 HARBOR & OFFSHORE TOWAGE & MARINE SERVICES 475,000 SLIGRO FOOD GROUP 19,840 FOOD SERVICE & WHOLESALING 400,000 IM TECH 13,023 ENGINEERING & TECHNICAL SERVICES 890,000 UNIT 4 AGGRESSO (b) 12,813 BUSINESS & SECURITY SOFTWARE ------------------------------------------------------------------------------- 212,898 >SWITZERLAND: 4.9% 95,000 KUEHNE & NAGEL 26,785 FREIGHT FORWARDING/LOGISTICS 30,000 GEBERIT INTERNATIONAL 23,743 PLUMBING SUPPLIES 24,000 SIKA 19,908 CHEMICALS FOR CONSTRUCTION & INDUSTRIAL APPLICATION 135,000 SYNTHES 15,164 PRODUCTS FOR ORTHOPEDIC SURGERY 275,000 LOGITECH (b) 12,923 BRANDED PERIPHERAL COMPUTER DEVICES 150,000 PARGESA 12,808 INDUSTRIAL & MEDIA CONGLOMERATE 30,000 SCHINDLER 11,895 ELEVATOR MANUFACTURER & SERVICE PROVIDER 15,000 GIVAUDAN 10,165 INDUSTRIAL FRAGRANCES & FLAVORS 130,000 BKW ENERGIE 8,706 ELECTRIC UTILITY ------------------------------------------------------------------------------- 142,097 >SWEDEN: 2.8% 1,230,000 HEXAGON 36,693 MEASUREMENT EQUIPMENT & POLYMERS 905,000 NOBIA 18,340 KITCHEN CABINET MANUFACTURING & DISTRIBUTION 1,492,000 GAMBRO 16,292 PRODUCTS FOR RENAL & BLOOD CARE 324,000 SWECO 8,544 NORDIC INFRASTRUCTURE/ENVIRONMENT CONSULTING ------------------------------------------------------------------------------- 79,869 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >SPAIN: 1.4% 620,000 RED ELECTRICA $19,202 SPANISH POWER GRID 1,000,000 ABENGOA 14,692 ENGINEERING & CONSTRUCTION 120,000 BANKINTER 6,659 MORTGAGE LENDER ------------------------------------------------------------------------------- 40,553 >ITALY: 1.4% 2,120,000 DAVIDE CAMPARI 15,687 SPIRITS & WINE 170,000 AMPLIFON 11,472 HEARING AID RETAILER 320,000 BANCA ITALEASE (b) 8,157 ITALIAN LEASING & FACTORING LEADER 4,600,000 DUCATI MOTOR (b) 5,032 MOTORCYCLES & RELATED MERCHANDISE ------------------------------------------------------------------------------- 40,348 >RUSSIA: 0.9% 700,000 RBC INFORMATION SYSTEMS (b) 18,760 FINANCIAL INFORMATION, MEDIA & IT SERVICES 370,000 MECHEL STEEL GROUP 8,943 COKING COAL ------------------------------------------------------------------------------- 27,703 >CZECH REPUBLIC: 0.9% 183,000 KOMERCNI BANKA 25,613 LEADING CZECH UNIVERSAL BANK ------------------------------------------------------------------------------- >FINLAND: 0.9% 439,000 JAAKKO POYRY 16,559 ENGINEERING CONSULTANTS IN FORESTRY, ENERGY 950,000 SPONDA 8,941 OFFICE & WAREHOUSE PROPERTY COMPANY ------------------------------------------------------------------------------- 25,500 >NORWAY: 0.6% 221,000 ORKLA 9,152 MATERIALS, BRANDED CONSUMER GOODS & MEDIA 470,000 EKORNES 8,652 NICHE FURNITURE MANUFACTURER ------------------------------------------------------------------------------- 17,804 >GREECE: 0.6% 930,000 INTRALOT 16,295 LOTTERY & GAMING SYSTEMS/SERVICES ------------------------------------------------------------------------------- >DENMARK: 0.4% 200,000 NOVOZYMES 10,949 INDUSTRIAL ENZYMES ------------------------------------------------------------------------------- >POLAND: 0.2% 132,000 CENTRAL EUROPEAN DISTRIBUTION (b) 5,298 SPIRITS & WINE DISTRIBUTION ------------------------------------------------------------------------------- ----------- EUROPE: TOTAL 1,698,183 ------------------------------------------------------------------------------- 37 COLUMBIA ACORN INTERNATIONAL >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- ASIA: 23.7% >JAPAN: 14.4% 43,500 JUPITER TELECOMMUNICATIONS (b) $ 34,709 LARGEST CABLE SERVICE PROVIDER IN JAPAN 868,000 PARK 24 31,059 PARKING LOT OPERATOR 1,272,000 USHIO 29,714 INDUSTRIAL LIGHT SOURCES 481,000 DAITO TRUST CONSTRUCTION 24,879 APARTMENT BUILDER 2,900,000 BANK OF YOKOHAMA 23,729 REGIONAL BANK 900,000 SHIMANO 23,657 BICYCLE COMPONENTS & FISHING TACKLE 350,000 USS 22,317 USED CAR AUCTIONEER 220,000 FAST RETAILING 21,508 APPAREL RETAILER 359,000 ITO EN 21,491 BOTTLED TEA & OTHER BEVERAGES 440,700 AEON MALL 21,487 SUBURBAN SHOPPING MALL DEVELOPER, OWNER & OPERATOR 338,000 HOGY MEDICAL 18,256 DISPOSABLE SURGICAL PRODUCTS 710,000 SATO 17,338 BAR CODE PRINTERS & SUPPLIES 2,000,000 CHIBA BANK 16,772 REGIONAL BANK 475,000 MEITEC 15,386 R&D STAFFING SERVICES 918,000 TOYO TECHNICA 14,603 VALUE ADDED RESELLER OF IMPORTED INSTRUMENTATION 2,248,000 HIROSHIMA BANK 14,525 REGIONAL BANK 2,960 RISA PARTNERS 13,930 NPL & REAL ESTATE RELATED INVESTMENT 1,500,000 FUKUOKA BANK 12,833 REGIONAL BANK 450,200 AIN PHARMACIEZ 8,952 DISPENSING PHARMACY/DRUGSTORE OPERATOR 321,100 KINTETSU WORLD EXPRESS 8,522 AIRFREIGHT LOGISTICS 625 JAPAN PURE CHEMICAL 8,108 PRECIOUS METAL PLATING CHEMICALS FOR ELECTRONICS 125,000 YUSEN AIR & SEA SERVICE 6,285 AIRFREIGHT LOGISTICS 156,000 NAGAILEBEN 3,810 MEDICAL/HEALTHCARE RELATED CLOTHES 104,000 T.HASEGAWA 1,548 INDUSTRIAL FLAVORS & FRAGRANCES ------------------------------------------------------------------------------- 415,418 >TAIWAN: 3.2% 18,300,000 PHOENIXTEC POWER 19,958 UNINTERRUPTABLE POWER SUPPLIES 6,822,000 ADVANTECH 19,327 EMBEDDED COMPUTERS 3,244,000 NOVATEK MICROELECTRONICS 19,073 LCD RELATED IC DESIGNER NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- 7,186,000 SPRINGSOFT SYSTEMS $ 11,777 ELECTRONIC DESIGN AUTOMATION SOFTWARE 5,565,000 WAH LEE INDUSTRIAL 10,884 DISTRIBUTOR OF CHEMICALS, MATERIALS & EQUIPMENT 17,000,000 BANK OF KAOHSIUNG 9,374 COMMERCIAL BANKING 3,040,000 TAIWAN FU HSING 3,426 DOOR LOCK MANUFACTURER ------------------------------------------------------------------------------- 93,819 >HONG KONG/CHINA: 2.1% 6,000,000 HONG KONG EXCHANGES & CLEARING 24,879 HONG KONG EQUITY & DERIVATIVES OPERATOR 6,500,000 TECHTRONIC INDUSTRIES 15,467 POWER TOOLS & MOTORIZED APPLIANCES 35,000,000 GLOBAL BIO-CHEM TECHNOLOGY GROUP (CHINA) 15,348 REFINER OF CORN-BASED COMMODITIES 20,000,000 LINMARK 5,481 GLOBAL SOURCING AGENT OF CONSUMER GOODS 2,670,000 LERADO GROUP 158 BABY STROLLERS & INFANT CAR SEATS MANUFACTURER ------------------------------------------------------------------------------- 61,333 >SOUTH KOREA: 1.2% 250,000 HYUNDAI MOBIS 22,706 AUTO PARTS 100,000 SAMSUNG FIRE & MARINE 12,575 NON-LIFE INSURANCE ------------------------------------------------------------------------------- 35,281 >INDIA: 1.2% 1,300,000 HOUSING DEVELOPMENT FINANCE 34,902 PREMIER MORTGAGE LENDER IN INDIA ------------------------------------------------------------------------------- >SINGAPORE: 0.9% 20,000,000 COMFORT DEL GRO 19,246 TAXI & MASS TRANSIT SERVICE 11,564,000 LMA INTERNATIONAL (b) 5,182 MEDICAL EQUIPMENT & SUPPLIES ------------------------------------------------------------------------------- 24,428 >INDONESIA: 0.7% 30,000,500 PERUSAHAAN GAS NEGARA 20,953 GAS PIPELINE OPERATOR ------------------------------------------------------------------------------- ----------- ASIA: TOTAL 686,134 ------------------------------------------------------------------------------- OTHER COUNTRIES: 8.2% >CANADA: 3.8% 385,000 TALISMAN ENERGY 20,402 OIL & GAS PRODUCER 1,190,000 SHAWCOR 15,929 OIL & GAS PIPELINE PRODUCTS 790,000 RONA (b) 14,577 LEADING CANADIAN DIY RETAILER 400,000 FALCONBRIDGE 11,871 DIVERSIFIED MINING HOLDING COMPANY 2,036,000 RAILPOWER TECHNOLOGIES 144A (b)(c) 11,315 432,000 RAILPOWER TECHNOLOGIES 2,401 HYBRID LOCOMOTIVES 38 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >CANADA--CONTINUED 1,100,000 KINROSS GOLD (b) $ 10,163 GOLD MINING 5,300,000 URASIA ENERGY 9,894 URANIUM MINING IN KAZAKHSTAN 2,000,000 NORTHERN ORION RESOURCES (b) 6,521 COPPER & GOLD IN ARGENTINA 850,000 IVANHOE MINES (b) 6,106 COPPER MINING IN MONGOLIA 4,900 ALLIANCE ATLANTIS COMMUNICATION (b) 144 CATV CHANNELS, TV/MOVIE PRODUCTION/DISTRIBUTION ------------------------------------------------------------------------------- 109,323 >AUSTRALIA/NEW ZEALAND: 3.6% 3,000,000 BILLABONG INTERNATIONAL 31,934 ACTION SPORTS APPAREL BRAND MANAGER 3,980,100 ABC LEARNING CENTER 21,008 CHILDCARE CENTERS 350,000 PERPETUAL TRUSTEES 17,448 MUTUAL FUND MANAGER 5,000,000 SKY CITY ENTERTAINMENT (NEW ZEALAND) 16,013 CASINO/ENTERTAINMENT COMPLEX 2,000,000 JUBILEE GOLD MINES (AUSTRALIA) 11,026 NICKEL MINING IN AUSTRALIA 530,000 MAJOR DRILLING GROUP INTERNATIONAL (b) 8,020 MINING EXPLORATION DRILLER ------------------------------------------------------------------------------- 105,449 >SOUTH AFRICA: 0.8% 4,000,000 EDGARS CONSOLIDATED STORES 22,227 LEADING RETAIL CONGLOMERATE ------------------------------------------------------------------------------- ----------- OTHER COUNTRIES: TOTAL 236,999 ------------------------------------------------------------------------------- LATIN AMERICA: 6.0% >BRAZIL: 3.3% 640,000 NATURA COSMETICOS 28,193 DIRECT RETAILER OF COSMETICS 10,600,000 CAEMI MINE 15,320 IRON ORE/KAOLIN PRODUCER 280,000 AMERICA LATINA LOGISTICS 11,853 RAIL OPERATOR IN BRAZIL & ARGENTINA 1,000,000 PORTO SEGURO (b) 10,667 AUTO & LIFE INSURANCE 1,800,000 SUZANO 9,022 PULP & PAPER PRODUCER 500,000 ULTRAPAR 6,947 SPECIALTY CHEMICALS & LIQUID PROPANE GAS DISTRIBUTION 364,800 DIAGNOSTICOS (b) 6,770 MEDICAL DIAGNOSTIC SERVICES 375,000 OBRASCON HUARTE (b) 4,055 TOLLROADS 223,400 UNIVERSO ONLINE (b) 1,882 LARGEST INTERNET PORTAL IN BRAZIL ------------------------------------------------------------------------------- 94,709 NUMBER OF SHARES OR PRINCIPAL AMOUNT (000) VALUE (000) ------------------------------------------------------------------------------- >MEXICO: 1.4% 500,000 GRUPO AEROPORTAURIO DEL SURESTE $16,170 CANCUN & COZUMEL AIRPORT OPERATOR 3,000,000 CONSORCIO ARA 13,120 AFFORDABLE HOUSING BUILDER 1,400,000 URBI DESARROLLO (b) 9,678 AFFORDABLE HOUSING BUILDER ------------------------------------------------------------------------------- 38,968 >CHILE: 0.9% 160,000 SOCIEDAD QUIMICA Y MINERA DE CHILE 17,472 PRODUCER OF SPECIALTY FERTILIZERS, LITHIUM & IODINE 300,000 CORPBANCA 8,295 CONSUMER & SME BANKING ------------------------------------------------------------------------------- 25,767 >ARGENTINA: 0.4% 110,000 TENARIS 12,595 SEAMLESS TUBES ------------------------------------------------------------------------------- ----------- LATIN AMERICA: TOTAL 172,039 ----------- TOTAL COMMON STOCKS: 96.6% 2,793,355 (COST: $1,818,614) ------------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS: 3.0% $ 56,000 COUNTRYWIDE FINANCIAL CORP 4.32% - 4.34% DUE 1/3/06 - 1/4/06 55,983 27,000 GENERAL ELECTRIC CAPITAL CORPORATE 4.10% DUE 1/9/06 26,975 3,884 REPURCHASE AGREEMENT WITH STATE STREET BANK & TRUST DATED 12/30/05, DUE 1/3/06AT 3.75% COLLATERALIZED BY US TREASURY BOND, MATURING 8/28/15 MARKET VALUE $4,613 (REPURCHASE PROCEEDS: $3,886) 3,884 ------------------------------------------------------------------------------- (AMORTIZED COST: $86,842) 86,842 ----------- TOTAL INVESTMENTS: 99.6% 2,880,197 (COST: $1,905,456) (a)(d) CASH AND OTHER ASSETS LESS LIABILITIES: 0.4% 12,380 ----------- TOTAL NET ASSETS - 100% $ 2,892,577 ------------------------------------------------------------------------------- 39 COLUMBIA ACORN INTERNATIONAL >STATEMENT OF INVESTMENTS, CONTINUED ________________________________________________________________________________ >Notes to Statement of Investments (in thousands) (a) At December 31, 2005, for federal income tax purposes cost of investments was $1,926,874 and net unrealized appreciation was $953,323 consisting of gross unrealized appreciation of $993,522 and gross unrealized depreciation of $40,199. (b) Non-income producing security. (c) Denotes a restricted security, which is subject to restrictions on resale under federal securities laws. At December 31, 2005, this security (in thousands) amounted to $11,315 which represents 0.39% of total net assets. Additional information on this security is as follows:
ACQUISITION SECURITY DATES SHARES COST (000) VALUE (000) ------------------------------------------------------------------------------------- Railpower Technologies 144A 11/10/05 - 11/18/05 2,036,000 $ 9,220 $ 11,315
(d) On December 31, 2005, the Fund's total investments were denominated in currencies as follows: % OF TOTAL CURRENCY VALUE NET ASSETS ----------------------------------------------------------------------------- Euro $ 1,049,244 36.3% Japanese Yen 415,418 14.4 British Pounds 328,526 11.3 US Dollar 185,458 6.4 Other currencies less than 5% of total net assets 901,551 31.2 ----------- ---------- $ 2,880,197 99.6% =========== ========== 40 COLUMBIA ACORN INTERNATIONAL >PORTFOLIO DIVERSIFICATION At December 31, 2005, the Fund's portfolio investments as a percent of net assets was diversified as follows: VALUE (000) PERCENT ------------------------------------------------------------------------------- >INDUSTRIAL GOODS/SERVICES Construction $ 121,044 4.2% Other Industrial Services 99,709 3.4 Conglomerates 93,397 3.2 Industrial Materials 89,519 3.1 Machinery 76,545 2.6 Specialty Chemicals 75,097 2.6 Outsourcing & Training Services 56,810 2.0 Steel 51,203 1.8 Electrical Components 47,211 1.6 Industrial Distribution 25,596 0.9 ------------------------------------------------------------------------------- 736,131 25.4 >CONSUMER GOODS/SERVICES Retail 100,223 3.5 Food 66,219 2.3 Other Consumer Services 66,082 2.3 Durables Goods 56,731 2.0 Apparels 53,238 1.8 Nondurables 37,345 1.3 Beverage 37,178 1.3 Consumer Goods Distribution 27,615 1.0 Furniture & Textiles 26,992 0.9 Gaming 26,609 0.9 Casinos 16,013 0.5 Entertainment 12,777 0.4 Leisure Products 4,674 0.2 ------------------------------------------------------------------------------- 531,696 18.4 >FINANCE Banks 212,190 7.3 Other Finance Companies 119,244 4.1 Insurance 52,165 1.8 Savings & Loans 41,561 1.5 Money Management 21,742 0.8 ------------------------------------------------------------------------------- 446,902 15.5 VALUE (000) PERCENT ------------------------------------------------------------------------------- >INFORMATION TECHNOLOGY Computer Hardware & Related Equipment $ 81,304 2.8% Business Information & Marketing Services 46,249 1.6 Financial Processors 42,813 1.5 Cable Television 34,709 1.2 Satellite Broadcasting 34,670 1.2 Instrumentation 27,682 1.0 Internet Related 26,030 0.9 Television Broadcasting 25,628 0.9 Business Software 24,590 0.8 Semiconductors & Related Equipment 19,073 0.7 Computer Services 18,760 0.6 Publishing 11,579 0.4 Electronics Distribution 10,884 0.4 Television Programming 144 0.0 ------------------------------------------------------------------------------- 404,115 14.0 >ENERGY/MINERALS Mining 87,230 3.0 Oil Services 83,768 2.9 Oil/Gas Producers 49,993 1.7 Refining/Marketing/Distribution 40,938 1.4 Non-Ferrous Metals 18,183 0.6 Agricultural Commodities 15,348 0.6 Other Resources 9,022 0.3 ------------------------------------------------------------------------------- 304,482 10.5 >HEALTH CARE Hospital Management 46,817 1.6 Services 39,636 1.4 Medical Equipment 36,494 1.3 Hospital/ Laboratory Supplies 28,836 1.0 Pharmaceuticals 28,088 1.0 Biotechnology/ Drug Delivery 7,211 0.2 ------------------------------------------------------------------------------- 187,082 6.5 >OTHER INDUSTRIES Transportation 89,378 3.1 Real Estate 58,736 2.0 Regulated Utilities 34,833 1.2 ------------------------------------------------------------------------------- 182,947 6.3 ------------------------------- TOTAL COMMON STOCKS 2,793,355 96.6 SHORT-TERM OBLIGATIONS 86,842 3.0 ------------------------------- TOTAL INVESTMENTS 2,880,197 99.6 CASH AND OTHER ASSETS LESS LIABILITIES 12,380 0.4 ------------------------------- NET ASSETS $ 2,892,577 100.0% =============================================================================== 41 COLUMBIA ACORN USA >MAJOR PORTFOLIO CHANGES IN THE FOURTH QUARTER (UNAUDITED) NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 Additions ------------------------------------------------------------------------------- INFORMATION American Tower 490,000 506,000 Amphenol 95,000 122,800 Avid Technology 0 32,400 Cnet Networks 0 300,000 Discovery Holding 0 140,000 Dobson Communications 0 893,000 Gemstar TV Guide International 0 880,000 Integrated Device Technology 474,890 683,490 Netgear 0 90,000 Nice Systems (Israel) 29,300 76,400 Parametric Technology 248,500 818,000 Shuffle Master 0 98,500 Spanish Broadcasting 695,000 705,500 Symbol Technologies 570,000 584,000 Time Warner Telecom 300,000 666,000 ------------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Abercrombie & Fitch 350,000 398,000 Ann Taylor Stores 212,500 224,500 Carter's 20,300 40,100 Chico's FAS 230,000 253,000 Christopher & Banks 393,750 486,250 Coach 168,000 222,200 Petco Animal Supplies 360,000 428,000 Polaris Industries 10,400 106,000 Sonic 53,300 208,100 Speedway Motorsports 0 195,500 ------------------------------------------------------------------------------- HEALTH CARE Lincare Holdings 246,800 291,800 Serologicals 405,000 547,400 United Surgical Partners 0 35,000 ------------------------------------------------------------------------------- ENERGY/MINERALS Pride International 300,000 311,000 ------------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES Donaldson 94,000 134,800 Esco Technologies 564,000 580,300 Genlyte Group 347,200 376,000 Pentair 414,000 573,600 Spartech 337,500 357,500 UTI Worldwide 0 21,000 ------------------------------------------------------------------------------- FINANCE AmeriCredit 1,091,500 1,121,500 Associated Banc-Corp 50,000 94,000 Endurance Specialty Holdings 0 75,000 HCC Insurance Holdings 645,000 664,500 NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 ------------------------------------------------------------------------------- OTHER INDUSTRIES American Campus Communities 8,500 90,000 Diamondrock Hospitality 0 130,600 Heartland Express 361,700 465,900 Highland Hospitality 35,000 235,000 Kite Realty Group 0 150,000 Mills 0 55,000 Sales ------------------------------------------------------------------------------- INFORMATION Commonwealth Telephone 233,800 128,800 JDA Software 974,000 724,000 Maximus 60,000 0 MRO Software 385,900 282,800 ------------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Aeropostale 395,750 200,000 American Woodmark 60,000 30,000 Brookstone 141,200 0 Coinstar 435,000 0 Steven Madden 62,000 0 ------------------------------------------------------------------------------- HEALTH CARE Diagnostic Products 221,300 191,200 Lexicon Genetics 300,000 0 Techne 222,800 158,300 ------------------------------------------------------------------------------- ENERGY/MINERALS Atmos Energy 193,000 155,000 Chicago Bridge & Iron 635,000 585,000 Oneok 245,000 50,250 42 COLUMBIA ACORN USA >STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- COMMON STOCKS: 90.1% ------------------------------------------------------------------------------- INFORMATION: 29.0% >BUSINESS/CONSUMER SOFTWARE: 6.6% 455,200 Micros Systems (b) $ 21,995 INFORMATION SYSTEMS FOR RESTAURANTS & HOTELS 1,850,000 Novell (b) 16,335 DIRECTORY, OPERATING SYSTEM & IDENTITY MANAGEMENT SOFTWARE 724,000 JDA Software (b) 12,315 APPLICATIONS/SOFTWARE & SERVICES FOR RETAILERS 270,650 Kronos (b) 11,329 LABOR MANAGEMENT SOLUTIONS 405,800 SSA Global Technologies (b) 7,381 ENTERPRISE RESOURCE PLANNING (ERP) SOFTWARE 818,000 Parametric Technology (b) 4,990 ENGINEERING SOFTWARE & SERVICES 282,800 MRO Software (b) 3,970 ENTERPRISE MAINTENANCE SOFTWARE 32,400 Avid Technology (b) 1,774 DIGITAL NONLINEAR EDITING SOFTWARE & SYSTEMS 48,400 Witness Systems (b) 952 CUSTOMER EXPERIENCE MANAGEMENT SOFTWARE ------------------------------------------------------------------------------- 81,041 >TELECOMMUNICATION SERVICES: 6.6% 1,005,000 Crown Castle International (b) 27,045 COMMUNICATION TOWERS 356,605 Alltel 22,502 CELLULAR & WIRELINE TELEPHONE SERVICES 506,000 American Tower (b) 13,713 COMMUNICATION TOWERS IN USA & MEXICO 893,000 Dobson Communications (b) 6,697 RURAL & SMALL CITY CELLULAR TELEPHONE SERVICES 666,000 Time Warner Telecom (b) 6,560 COMPETITIVE LOCAL EXCHANGE CARRIER 128,800 Commonwealth Telephone 4,350 RURAL PHONE FRANCHISES & COMPETING TELCO ------------------------------------------------------------------------------- 80,867 >COMPUTER HARDWARE/ SEMICONDUCTORS/RELATED EQUIPMENT: 4.6% 683,490 Integrated Device Technology (b) 9,008 COMMUNICATIONS SEMICONDUCTORS 260,000 Intermec (formerly known as Unova) (b) 8,788 BAR CODE & WIRELESS LAN SYSTEMS 584,000 Symbol Technologies 7,487 MOBILE COMPUTERS & BARCODE SCANNERS 670,000 Entegris (b) 6,311 SEMICONDUCTOR WAGER SHIPPING & HANDLING PRODUCTS 122,800 Amphenol 5,435 ELECTRONIC CONNECTORS 99,000 Zebra Technologies (b) 4,242 BAR CODE PRINTERS 76,400 Nice Systems (b) 3,679 AUDIO & VIDEO RECORDING SOLUTIONS 424,100 Seachange International (b) 3,350 SYSTEMS FOR VIDEO ON DEMAND & AD INSERTION 100,000 Belden CDT 2,443 SPECIALTY CABLE NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- 70,000 Littelfuse (b) $ 1,907 LITTLE FUSES 90,000 Netgear (b) 1,732 NETWORKING PRODUCTS FOR SMALL BUSINESS & HOME 40,000 Rogers (b) 1,567 PCB LAMINATES & HIGH PERFORMANCE FOAMS ------------------------------------------------------------------------------- 55,949 >BUSINESS INFORMATION/BUSINESS SERVICES/PUBLISHING: 2.0% 530,000 Ceridian (b) 13,170 HR SERVICES & PAYMENT PROCESSING 104,800 Getty Images (b) 9,355 PHOTOGRAPHS FOR PUBLICATIONS & ELECTRONIC MEDIA 98,300 Navigant Consulting (b) 2,161 FINANCIAL CONSULTING FIRM ------------------------------------------------------------------------------- 24,686 >TELECOMMUNICATIONS EQUIPMENT: 1.9% 1,610,000 Tellabs (b) 17,549 TELECOMMUNICATIONS EQUIPMENT 310,000 Andrew (b) 3,326 WIRELESS INFRASTRUCTURE EQUIPMENT 323,500 Symmetricom (b) 2,740 NETWORK TIMING & SYNCHRONIZATION DEVICES ------------------------------------------------------------------------------- 23,615 >TRANSACTION PROCESSORS: 1.7% 423,280 Global Payments 19,729 CREDIT CARD PROCESSOR 143,100 Pegasus Systems (b) 1,284 TRANSACTION PROCESSOR FOR HOTEL INDUSTRY ------------------------------------------------------------------------------- 21,013 >BROADCASTING: 1.7% 511,100 Salem Communications (b) 8,939 RADIO STATIONS FOR RELIGIOUS PROGRAMMING 955,000 Entravision Communications (b) 6,800 SPANISH LANGUAGE TV, RADIO & OUTDOOR 705,500 Spanish Broadcasting (b) 3,605 SPANISH LANGUAGE RADIO STATIONS 138,500 Gray Television 1,360 MID MARKET AFFILIATED TV STATIONS ------------------------------------------------------------------------------- 20,704 >INSTRUMENTATION: 0.9% 140,000 Mettler Toledo (b) 7,728 LABORATORY EQUIPMENT 90,000 Trimble Navigation (b) 3,194 GPS-BASED INSTRUMENTS ------------------------------------------------------------------------------- 10,922 >INTERNET: 0.8% 285,000 ValueClick (b) 5,161 INTERNET ADVERTISING 300,000 Cnet Networks (b) 4,407 INTERNET ADVERTISING ON NICHE WEBSITES ------------------------------------------------------------------------------- 9,568 43 COLUMBIA ACORN USA >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >COMPUTER SERVICES: 0.8% 1,005,500 AnswerThink Consulting (b) $ 4,273 I/T INTEGRATION & BEST PRACTICE RESEARCH 786,000 RCM Technologies (b)(c) 4,009 TECHNOLOGY ENGINEERING SERVICES 235,000 Igate Capital (b) 1,142 I/T & BPO OUTSOURCING SERVICES ------------------------------------------------------------------------------- 9,424 >TELEVISION PROGRAMMING/CATV: 0.7% 460,000 Lions Gate Entertainment (b) 3,533 FILM & TV STUDIO 880,000 Gemstar TV Guide International (b) 2,297 TV PROGRAM GUIDES & CATV PROGRAMMING 140,000 Discovery Holding (b) 2,121 CATV PROGRAMMING ------------------------------------------------------------------------------- 7,951 >ELECTRONICS DISTRIBUTION: 0.3% 60,000 CDW 3,454 TECHNOLOGY RESELLER ------------------------------------------------------------------------------- >CONTRACT MANUFACTURING: 0.2% 131,100 Plexus (b) 2,981 ELECTRONIC MANUFACTURING SERVICES ------------------------------------------------------------------------------- >GAMING EQUIPMENT: 0.2% 98,500 Shuffle Master (b) 2,476 CARD SHUFFLERS & CASINO GAMES ------------------------------------------------------------------------------- ----------- INFORMATION: TOTAL 354,651 ------------------------------------------------------------------------------- CONSUMER GOODS/SERVICES: 17.1% >RETAIL: 6.8% 398,000 Abercrombie & Fitch 25,942 TEEN APPAREL RETAILER 253,000 Chico's FAS (b) 11,114 WOMEN'S SPECIALTY RETAILER 428,000 Petco Animal Supplies (b) 9,395 PET SUPPLIES & SERVICES 486,250 Christopher & Banks 9,132 WOMEN'S APPAREL RETAILER 224,500 Ann Taylor Stores (b) 7,750 WOMEN'S APPAREL RETAILER 203,000 Michaels Stores 7,180 CRAFT & HOBBY SPECIALTY RETAILER 200,000 Aeropostale (b) 5,260 MALL BASED TEEN RETAILER 95,000 Genesco (b) 3,685 MULTI-CONCEPT BRANDED FOOTWEAR RETAILER 105,000 Sports Authority (b) 3,269 SPORTING GOODS STORES ------------------------------------------------------------------------------- 82,727 >CONSUMER SERVICES: 2.7% 416,000 ITT Educational Services (b) 24,590 POSTSECONDARY DEGREE PROGRAM 387,700 Central Parking 5,319 OWNER, OPERATOR & MANAGER OF PARKING LOTS & GARAGES NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- 60,000 Weight Watchers (b) $ 2,966 WEIGHT LOSS PROGRAMS ------------------------------------------------------------------------------- 32,875 >ENTERTAINMENT/LEISURE PRODUCTS: 2.4% 301,300 International Speedway Motors 14,432 LARGEST MOTORSPORT RACETRACK OWNER & OPERATOR 195,500 Speedway Motorsports 6,778 MOTORSPORT RACETRACK OWNER & OPERATOR 106,000 Polaris Industries 5,321 LEISURE VEHICLES & RELATED PRODUCTS 195,000 Callaway Golf 2,699 PREMIUM GOLF CLUBS & BALLS ------------------------------------------------------------------------------- 29,230 >NONDURABLES: 1.8% 461,400 Scotts Miracle-Gro 20,874 CONSUMER LAWN & GARDEN PRODUCTS 100,000 Prestige Brands 1,250 OTC, HOUSEHOLD & PERSONAL CARE PRODUCTS ------------------------------------------------------------------------------- 22,124 >APPAREL: 1.7% 199,200 Oxford Industries 10,896 BRANDED & PRIVATE LABEL APPAREL 222,200 Coach 7,408 DESIGNER & RETAILER OF BRANDED LEATHER ACCESSORIES 40,100 Carter's 2,360 CHILDREN'S BRANDED APPAREL ------------------------------------------------------------------------------- 20,664 >FURNITURE: 0.9% 106,000 HNI 5,823 OFFICE FURNITURE & FIREPLACES 90,000 Herman Miller 2,537 OFFICE FURNITURE 20,000 Mohawk Industries 1,740 CARPET & FLOORING 30,000 American Woodmark 744 KITCHEN CABINET MANUFACTURER ------------------------------------------------------------------------------- 10,844 >RESTAURANTS: 0.5% 208,100 Sonic 6,139 DRIVE-IN RESTAURANTS -------------------------------------------------------------------------------- >CASINOS: 0.2% 200,000 Alliance Gaming 2,604 DIVERSIFIED GAMING COMPANY ------------------------------------------------------------------------------- >TRAVEL: 0.1% 12,400 Kerzner International 852 DESTINATION RESORTS & CASINOS -------------------------------------------------------------------------------- >FOOD & BEVERAGES: 0.0% 15,000 NBTY 244 VITAMINS & SUPPLEMENTS -------------------------------------------------------------------------------- ----------- CONSUMER GOODS/SERVICES: TOTAL 208,303 ------------------------------------------------------------------------------- 44 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- HEALTH CARE: 13.3% >SERVICES: 4.8% 303,000 Charles River Laboratories (b) $ 12,838 PHARMACEUTICAL RESEARCH 291,800 Lincare Holdings (b) 12,229 HOME HEALTH CARE SERVICES 199,875 Coventry Health Care (b) 11,385 PPO NETWORK 547,400 Serologicals (b) 10,806 BLOOD COLLECTION & ANTIBODY PRODUCTION 430,800 NDCHealth Group 8,284 HEALTH CLAIMS PROCESSING & DRUG MARKETING SERVICES 100,000 Dendrite International (b) 1,441 SOFTWARE FOR PHARMACEUTICAL SALES FORCE 35,000 United Surgical Partners (b) 1,125 OUTPATIENT SURGERY CENTER 31,500 Pra International (b) 887 CONTRACT RESEARCH ORGANIZATION ------------------------------------------------------------------------------- 58,995 >MEDICAL EQUIPMENT: 4.4% 577,400 Edwards Lifesciences (b) 24,026 HEART VALVES 191,200 Diagnostic Products 9,283 IMMUNODIAGNOSTIC KITS 220,000 Viasys Healthcare (b) 5,654 RESPIRATORY & NEUROLOGY MEDICAL EQUIPMENT 115,700 ICU Medical (b) 4,537 INTRAVENOUS THERAPY PRODUCTS 94,171 Advanced Medical Optics (b) 3,936 MEDICAL DEVICES FOR EYE CARE 110,000 Intermagnetics General 3,509 MRI EQUIPMENT 104,000 Arrow International 3,015 DISPOSABLE CATHETERS ------------------------------------------------------------------------------- 53,960 >BIOTECHNOLOGY/DRUG DELIVERY: 2.8% 192,000 Neurocrine Biosciences (b) 12,044 DRUGS FOR SLEEP, DIABETES, MS & ENDOMETRIOSIS 360,000 Nektar Therapeutics (b) 5,926 DRUG DELIVERY TECHNOLOGIES 263,000 AtheroGenics (b) 5,263 DRUGS FOR ATHEROSCLEROSIS, RHEUMATOID ARTHRITIS, ASTHMA 455,000 Ligand Pharmaceuticals (b) 5,073 DRUGS FOR PAIN, CANCER, OSTEOPOROSIS & DIABETES 235,000 Exelixis (b) 2,214 TREATMENTS FOR CANCER & METABOLIC DISORDERS 100,000 Momenta Pharmaceuticals (b) 2,204 SUGAR ANALYSIS TECHNOLOGY FOR DRUG DESIGN 375,000 Locus Discovery, Series D. Pfd. (d) 562 HIGH THROUGHPUT RATIONAL DRUG DESIGN 363,636 Metabolex, Series F (d) 99 DRUGS FOR DIABETES ------------------------------------------------------------------------------- 33,385 >MEDICAL SUPPLIES: 0.7% 158,300 Techne (b) 8,888 CYTOKINES, ANTIBODIES, OTHER REAGENTS FOR LIFE SCIENCES ------------------------------------------------------------------------------- NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >PHARMACEUTICALS: 0.6% 245,500 Par Pharmaceuticals (b) $ 7,694 GENERICS ------------------------------------------------------------------------------- ----------- HEALTH CARE: TOTAL 162,922 ------------------------------------------------------------------------------- ENERGY/MINERALS: 10.5% >OIL SERVICES: 5.9% 401,700 FMC Technologies (b) 17,241 OIL & GAS WELL HEAD MANUFACTURER 585,000 Chicago Bridge & Iron 14,748 ENGINEERING & CONSTRUCTION FOR PETROCHEMICALS 311,000 Pride International (b) 9,563 OFFSHORE DRILLING CONTRACTOR 1,001,000 Newpark Resources (b) 7,638 DRILLING FLUID SERVICES TO OIL & GAS INDUSTRY 242,000 Layne Christensen (b) 6,154 WATER/MINERAL DRILLER & COAL SEAM GAS PRODUCER 355,000 Hanover Compressor (b) 5,009 NATURAL GAS COMPRESSOR RENTAL 266,800 Pioneer Drilling (b) 4,784 OIL & GAS WELL DRILLER 76,500 Carbo Ceramics 4,324 NATURAL GAS WELL STIMULANTS 155,000 Key Energy Services (b) 2,088 OIL & GAS WELL WORKOVER SERVICES ------------------------------------------------------------------------------- 71,549 >OIL & GAS PRODUCERS: 4.2% 525,000 Quicksilver Resources (b) 22,055 NATURAL GAS & COAL SEAM GAS PRODUCER 282,600 Western Gas Resources 13,308 OIL & COAL SEAM GAS PRODUCER 208,400 Southwestern Energy (b) 7,490 NATURAL GAS PRODUCER 111,200 Equitable Resources 4,080 NATURAL GAS PRODUCER & UTILITY 450,000 Vaalco Energy (b) 1,908 OIL & GAS PRODUCER 92,000 McMoran Exploration (b) 1,819 NATURAL GAS PRODUCERS & DEVELOPER ------------------------------------------------------------------------------- 50,660 >DISTRIBUTION/MARKETING/REFINING: 0.4% 155,000 Atmos Energy 4,055 NATURAL GAS UTILITY 50,250 Oneok 1,338 NATURAL GAS UTILITY, MARKETING & PROCESSING ------------------------------------------------------------------------------- 5,393 ----------- ENERGY/MINERALS: TOTAL 127,602 ------------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES: 9.7% >MACHINERY: 5.5% 580,300 Esco Technologies (b) 25,818 AUTOMATIC ELECTRIC METER READERS 573,600 Pentair 19,801 PUMPS, WATER TREATMENT & TOOLS 373,600 Nordson 15,135 DISPENSING SYSTEMS FOR ADHESIVES & COATINGS 45 COLUMBIA ACORN USA >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >MACHINERY--CONTINUED 110,000 Ametek $ 4,679 AEROSPACE/INDUSTRIAL INSTRUMENTS 50,000 Kaydon 1,607 SPECIALIZED FRICTION & MOTION CONTROL PRODUCTS ------------------------------------------------------------------------------- 67,040 >INDUSTRIAL GOODS: 2.0% 376,000 Genlyte Group (b) 20,142 COMMERCIAL LIGHTING FIXTURES 134,800 Donaldson 4,287 INDUSTRIAL AIR FILTRATION ------------------------------------------------------------------------------- 24,429 >CONSTRUCTION: 0.7% 169,050 Florida Rock Industries 8,294 CONCRETE & AGGREGATES ------------------------------------------------------------------------------- >SPECIALTY CHEMICALS/INDUSTRIAL MATERIALS: 0.6% 357,500 Spartech 7,847 PLASTICS DISTRIBUTION & COMPOUNDING ------------------------------------------------------------------------------- >OUTSOURCING SERVICES: 0.4% 400,000 Quanta Services (b) 5,268 ELECTRICAL & TELECOM CONSTRUCTION SERVICES ------------------------------------------------------------------------------- >INDUSTRIAL DISTRIBUTION: 0.3% 113,000 Nuco2 (b) 3,150 BULK CO2 GAS DISTRIBUTION TO RESTAURANTS ------------------------------------------------------------------------------- >LOGISTICS: 0.2% 21,000 UTI Worldwide 1,950 GLOBAL LOGISTICS & FREIGHT FORWARDING ------------------------------------------------------------------------------- >INDUSTRIAL SERVICES: 0.0% 13,200 Clark 175 EXECUTIVE COMPENSATION & BENEFITS CONSULTING ------------------------------------------------------------------------------- ----------- INDUSTRIAL GOODS/SERVICES: TOTAL 118,153 ------------------------------------------------------------------------------- FINANCE: 8.0% >FINANCE COMPANIES: 3.5% 1,121,500 AmeriCredit (b) 28,744 AUTO LENDING 520,200 World Acceptance (b) 14,826 PERSONAL LOANS ------------------------------------------------------------------------------- 43,570 >INSURANCE: 2.6% 664,500 HCC Insurance Holdings 19,722 SPECIALTY INSURANCE 14,000 Markel (b) 4,439 SPECIALTY INSURANCE 35,000 Philadelphia Consolidated Holding 3,384 SPECIALTY INSURANCE 75,000 Endurance Specialty Holdings 2,689 COMMERCIAL LINES INSURANCE/REINSURANCE 91,000 United America Indemnity (b) 1,671 SPECIALTY INSURANCE ------------------------------------------------------------------------------- 31,905 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >BANKS: 1.6% 272,000 TCF Financial $ 7,382 GREAT LAKES BANK 197,656 Chittenden 5,497 VERMONT & WESTERN MASSACHUSETTS BANK 94,000 Associated Banc-Corp 3,060 MIDWEST BANK 74,016 Greene City Bancshares 2,025 TENNESSEE BANK 20,000 First Financial BankShares 701 WEST TEXAS BANK 30,000 West Bancorporation 561 DES MOINES COMMERCIAL BANK ------------------------------------------------------------------------------- 19,226 >SAVINGS & LOAN: 0.3% 116,400 Anchor Bancorp Wisconsin 3,532 WISCONSIN THRIFT ------------------------------------------------------------------------------- ----------- FINANCE: TOTAL 98,233 ------------------------------------------------------------------------------- OTHER INDUSTRIES: 2.5% >REAL ESTATE: 1.1% 235,000 Highland Hospitality 2,597 HOTEL OWNER 150,000 Kite Realty Group 2,320 COMMUNITY SHOPPING CENTERS 55,000 Mills 2,307 REGIONAL SHOPPING MALLS 90,000 American Campus Communities 2,232 STUDENT HOUSING/APARTMENTS 110,500 Crescent Real Estate Equities 2,190 CLASS A OFFICE BUILDINGS 130,600 Diamondrock Hospitality 1,562 HOTEL OWNER ------------------------------------------------------------------------------- 13,208 >TRANSPORTATION: 0.8% 465,900 Heartland Express 9,453 REGIONAL DRY VAN TRUCKER ------------------------------------------------------------------------------- >WASTE MANAGEMENT: 0.5% 187,250 Waste Connections (b) 6,453 SOLID WASTE MANAGEMENT ------------------------------------------------------------------------------- >REGULATED UTILITIES: 0.1% 97,500 Northeast Utilities 1,920 REGULATED ELECTRIC UTILITY ------------------------------------------------------------------------------- ----------- OTHER INDUSTRIES: TOTAL 31,034 TOTAL COMMON STOCKS: 90.1% ----------- (COST: $744,763) 1,100,898 46 PRINCIPAL AMOUNT (000) VALUE (000) ------------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS: 9.4% $ 52,000 Countrywide Financial Funding 4.30% - 4.35% Due 1/3/06 - 1/4/06 $ 51,984 30,000 American General Finance 4.30% Due 1/3/06 - 1/5/06 29,986 30,000 Marshall + Ilsley 4.21% Due 1/6/06 29,983 2,930 Repurchase Agreement with State Street Bank & Trust dated 12/30/05, due 1/3/06 at 3.75% collateralized by US Treasury Bonds, maturing 2/15/26 market value $2,994 (repurchase proceeds: $2,930) 2,930 ------------------------------------------------------------------------------- (AMORTIZED COST: $114,822) 114,883 ----------- TOTAL INVESTMENTS: 99.5% 1,215,781 (COST: $859,585) (a) CASH AND OTHER ASSETS LESS LIABILITIES: 0.5% 5,713 ----------- TOTAL NET ASSETS: 100% $ 1,221,494 =============================================================================== -------------------------------------------------------------------------------- > Notes to Statement of Investments (in thousands) (a) At December 31, 2005, for federal income tax purposes cost of investments was $859,886 and net unrealized appreciation was $355,895 consisting of gross unrealized appreciation of $392,931 and gross unrealized depreciation of $37,036. (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, 2005, the Fund held five percent or more of the outstanding voting securities of the following companies: RCM Technologies 6.79% The aggregate cost and value of this company at December 31, 2005, was $5,636 and $4,009, respectively. Investments in affiliate companies represent 0.33% of total net assets at December 31, 2005. Investment activity and income amounts relating to affiliates during the twelve months ended December 31, 2005, were as follows: Dividend Income $ 0 Net realized gain or loss 0 Change in unrealized gain or loss 55 Purchases 0 Proceeds from sales 0 (d) Denotes a restricted security, which is subject to restrictions on resale under federal securities laws. These securities are valued in good faith by the Board of Trustees. At December 31, 2005, these securities (in thousands) amounted to $661 which represents 0.05% of total net assets. Additional information on these securities is as follows: ACQUISITION SECURITY DATES SHARES COST (000) VALUE (000) ------------------------------------------------------------------------------- Locus Discovery, Series D, Pfd. 09/05/01 375,000 $ 1,500 $ 562 Metabolex, Series F 05/11/00 363,636 2,000 99 ---------- ---------- $ 3,500 $ 661 ========== ========== 47 COLUMBIA ACORN INTERNATIONAL SELECT >MAJOR PORTFOLIO CHANGES IN THE FOURTH QUARTER (UNAUDITED) NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 Additions ------------------------------------------------------------------------------- EUROPE >UNITED KINGDOM/IRELAND Grafton Group (Ireland) 105,000 125,000 IAWS (Ireland) 160,600 220,000 Northern Rock 0 205,000 >SWITZERLAND Synthes 14,500 25,000 >FRANCE SES Global 170,000 182,000 >SWEDEN Gambro 56,000 354,000 >DENMARK Novozymes 15,000 50,000 >SPAIN Red Electra 73,000 88,000 >NORWAY Orkla 26,000 47,000 ------------------------------------------------------------------------------- ASIA >JAPAN Aeon Mall 0 44,100 Daito Trust Construction 48,000 76,000 Hoya 64,800 88,500 Ito En 34,000 38,000 Jupiter Telecommunications 2,000 5,000 Shimano 68,000 130,000 Ushio 77,000 145,000 USS 0 29,000 >HONG KONG Hong Kong Exchanges & Clearing 650,000 680,000 ------------------------------------------------------------------------------- OTHER COUNTRIES >CANADA Kinross Gold 300,000 311,000 Rona 0 90,000 NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 Sales ------------------------------------------------------------------------------- EUROPE >UNITED KINGDOM/IRELAND British Sky Broadcasting 80,000 0 Cobham 170,000 0 Compass Group 400,000 0 Exel 192,000 0 Kerry (Ireland) 25,000 0 William Hill 150,000 0 >FRANCE/BELGIUM Belgacom (Belgium) 34,000 0 Imerys 27,000 18,000 >GERMANY Rhoen-Klinikum 24,000 0 >NORWAY Den Norske Bank 157,500 0 ------------------------------------------------------------------------------- ASIA >JAPAN Funai Electric 11,000 0 >SINGAPORE Comfort Del Gro 1,600,000 1,000,000 ------------------------------------------------------------------------------- OTHER COUNTRIES >CANADA Talisman Energy 47,000 26,000 >AUSTRALIA Lion Nathan 330,000 0 ------------------------------------------------------------------------------- LATIN AMERICA >ARGENTINA Tenaris 37,000 20,100 48 COLUMBIA ACORN INTERNATIONAL SELECT >STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- COMMON STOCKS: 95.6% ------------------------------------------------------------------------------- EUROPE: 54.6% >UNITED KINGDOM/IRELAND: 13.2% 245,175 Anglo Irish Bank (Ireland) $ 3,721 SMALL BUSINESS & MIDDLE MARKET BANKING 205,000 Northern Rock 3,326 LOWEST COST MORTGAGE BANK IN UK 220,000 IAWS (Ireland) 3,165 BAKED GOODS 125,000 Grafton Group (Ireland) 1,362 BUILDING MATERIALS WHOLESALING & DIY RETAILING 40,000 Intermediate Capital 959 EUROPEAN PROVIDER OF MEZZANINE CAPITAL ------------------------------------------------------------------------------- 12,533 >SWITZERLAND: 12.8% 10,200 Kuehne & Nagel 2,876 FREIGHT FORWARDING/LOGISTICS 25,000 Synthes 2,808 PRODUCTS FOR ORTHOPEDIC SURGERY 14,000 Swatch Group 2,078 WATCH & ELECTRONICS MANUFACTURER 2,400 Geberit International 1,899 PLUMBING SUPPLIES 2,300 Schindler 912 ELEVATOR MANUFACTURER & SERVICE PROVIDER 1,200 Givaudan 813 INDUSTRIAL FRAGRANCES & FLAVORS 12,100 BKW Energie 810 ELECTRIC UTILITY ------------------------------------------------------------------------------- 12,196 >FRANCE/BELGIUM: 9.9% 33,000 Neopost 3,309 POSTAGE METER MACHINES 182,000 SES Global 3,187 SATELLITE BROADCASTING SERVICES 20,000 Essilor International 1,615 EYEGLASS LENSES 18,000 Imerys 1,302 INDUSTRIAL MINERALS PRODUCER ------------------------------------------------------------------------------- 9,413 >GERMANY: 4.3% 132,000 Depfa Bank 1,952 INVESTMENT BANKER TO PUBLIC AUTHORITIES 13,000 Deutsche Boerse 1,332 TRADING, CLEARING & SETTLEMENT SERVICES FOR FINANCIAL MARKETS 1,100 Porsche 790 SPECIALTY AUTOMOBILE MANUFACTURER ------------------------------------------------------------------------------- 4,074 >SWEDEN: 4.1% 354,000 Gambro 3,866 PRODUCTS FOR RENAL & BLOOD CARE ------------------------------------------------------------------------------- >DENMARK: 2.9% 50,000 Novozymes 2,737 INDUSTRIAL ENZYMES ------------------------------------------------------------------------------- NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >SPAIN: 2.9% 88,000 Red Electrica $ 2,725 SPANISH POWER GRID ------------------------------------------------------------------------------- >CZECH REPUBLIC: 2.5% 16,840 Komercni Banka 2,357 LEADING CZECH UNIVERSAL BANK ------------------------------------------------------------------------------- >NORWAY: 2.0% 47,000 Orkla 1,946 MATERIALS, BRANDED CONSUMER GOODS & MEDIA ------------------------------------------------------------------------------- ----------- EUROPE: TOTAL 51,847 ------------------------------------------------------------------------------- ASIA: 32.4% >JAPAN: 27.5% 5,000 Jupiter Telecommunications (b) 3,990 LARGEST CABLE SERVICE PROVIDER IN JAPAN 76,000 Daito Trust Construction 3,931 APARTMENT BUILDER 130,000 Shimano 3,417 BICYCLE COMPONENTS & FISHING TACKLE 145,000 Ushio 3,387 INDUSTRIAL LIGHT SOURCES 88,500 Hoya 3,182 OPTO-ELECTRICAL COMPONENTS & EYEGLASS LENSES 38,000 Ito En 2,275 BOTTLED TEA & OTHER BEVERAGES 44,100 Aeon Mall 2,150 SUBURBAN SHOPPING MALL DEVELOPER, OWNER & OPERATOR 29,000 USS 1,849 USED CAR AUCTIONEER 181,800 Hiroshima Bank 1,175 REGIONAL BANK 94,000 Bank of Yokohama 769 REGIONAL BANK ------------------------------------------------------------------------------- 26,125 >HONG KONG/CHINA: 3.9% 680,000 Hong Kong Exchanges & Clearing 2,820 HONG KONG EQUITY & DERIVATIVES OPERATOR 2,000,000 Global Bio-Chem Technology Group (China) 877 REFINER OF CORN-BASED COMMODITIES ------------------------------------------------------------------------------- 3,697 >SINGAPORE: 1.0% 1,000,000 Comfort Del Gro 962 TAXI & MASS TRANSIT SERVICE ------------------------------------------------------------------------------- ----------- ASIA: TOTAL 30,784 ------------------------------------------------------------------------------- 49 COLUMBIA ACORN INTERNATIONAL SELECT >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- OTHER COUNTRIES: 6.2% >CANADA: 6.2% 311,000 Kinross Gold (b) $ 2,873 GOLD MINING 90,000 Rona (b) 1,661 LEADING CANADIAN DIY RETAILER 26,000 Talisman Energy 1,378 OIL & GAS PRODUCER ------------------------------------------------------------------------------- 5,912 ----------- OTHER COUNTRIES: TOTAL 5,912 ------------------------------------------------------------------------------- LATIN AMERICA: 2.4% >ARGENTINA: 2.4% 20,100 Tenaris 2,301 SEAMLESS TUBES ------------------------------------------------------------------------------- ----------- LATIN AMERICA: TOTAL 2,301 ----------- TOTAL COMMON STOCKS: 95.6% 90,844 (COST: $69,540) PRINCIPAL AMOUNT (000) VALUE (000) ------------------------------------------------------------------------------- SHORT-TERM OBLIGATION: 3.3% $ 3,087 Repurchase Agreement with State Street Bank & Trust dated 12/30/05, due 1/3/06 at 3.75% collateralized by US Treasury Bond, maturing 2/15/26 market value $3,151 (repurchase proceeds: $3,088) $ 3,087 ------------------------------------------------------------------------------- (COST: $3,087) 3,087 ----------- TOTAL INVESTMENTS: 98.9% 93,931 (COST: $72,627) (a)(c) CASH AND OTHER ASSETS LESS LIABILITIES: 1.1% 1,068 ----------- TOTAL NET ASSETS: 100% $ 94,999 =============================================================================== -------------------------------------------------------------------------------- > Notes to Statement of Investments (in thousands) (a) At December 31, 2005, for federal income tax purposes cost of investments was $73,401 and net unrealized appreciation was $20,530 consisting of gross unrealized appreciation of $22,311 and gross unrealized depreciation of $1,781. (b) Non-income producing security. (c) On December 31, 2005, the Fund's total investments were denominated in currencies as follows: % OF TOTAL CURRENCY VALUE NET ASSETS =========================================================== Japanese Yen $26,124 27.5% Euro 24,460 25.8 Swiss Franc 12,196 12.8 Canadian Dollar 5,912 6.2 US Dollar 5,389 5.7 Other currencies less than 5% of total net assets 19,850 20.9 -------- ------- $93,931 98.9% ======== ======= 50 COLUMBIA ACORN INTERNATIONAL SELECT >PORTFOLIO DIVERSIFICATION At December 31, 2005, the Fund's portfolio investments as a percent of net assets was diversified as follows: VALUE (000) PERCENT ------------------------------------------------------------------------------- >INDUSTRIAL GOODS/SERVICES Construction $ 5,830 6.2% Other Industrial Services 3,788 4.0 Speciality Chemicals 3,550 3.7 Electrical Components 3,387 3.6 Machinery 3,309 3.5 Steel 2,301 2.4 Industrial Distribution 1,362 1.4 Industrial Materials 1,302 1.4 ------------------------------------------------------------------------------- 24,829 26.2 >CONSUMER GOODS/SERVICES Durables Goods 6,285 6.6 Retail 3,811 4.0 Food 3,165 3.3 Beverage 2,275 2.4 Nondurables 1,946 2.1 Consumer Goods Distribution 1,849 1.9 ------------------------------------------------------------------------------- 19,331 20.3 >FINANCE Banks 13,300 14.0 Other Finance Companies 959 1.0 ------------------------------------------------------------------------------- 14,259 15.0 VALUE (000) PERCENT ------------------------------------------------------------------------------- >INFORMATION TECHNOLOGY Financial Processors $ 4,152 4.4% Cable Television 3,990 4.2 Satellite Broadcasting 3,187 3.4 Computer Hardware & Related Equipment 3,182 3.3 ------------------------------------------------------------------------------- 14,511 15.3 >HEALTH CARE Medical Equipment 4,423 4.6 Services 3,866 4.1 ------------------------------------------------------------------------------- 8,289 8.7 >ENERGY/MINERALS Non-Ferrous Metals 2,873 3.0 Oil/Gas Producers 1,378 1.5 Agricultural Commodities 877 0.9 ------------------------------------------------------------------------------- 5,128 5.4 >OTHER INDUSTRIES Regulated Utilities 3,535 3.7 Transportation 962 1.0 ------------------------------------------------------------------------------- 4,497 4.7 ------------------------------- TOTAL COMMON STOCKS 90,844 95.6 SHORT-TERM OBLIGATION 3,087 3.3 ------------------------------- TOTAL INVESTMENTS 93,931 98.9 CASH AND OTHER ASSETS LESS LIABILITIES 1,068 1.1 ------------------------------- NET ASSETS $ 94,999 100.0% =============================================================================== 51 COLUMBIA ACORN SELECT >MAJOR PORTFOLIO CHANGES IN THE FOURTH QUARTER (UNAUDITED)~ NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 Additions ------------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Abercrombie & Fitch 1,375,000 1,400,000 Harley-Davidson 1,050,000 1,075,000 ITT Educational Services 1,600,000 1,625,000 Safeway 3,275,000 3,400,000 ------------------------------------------------------------------------------- INFORMATION Avid Technology 842,000 1,030,000 Discovery Holding 2,075,000 2,200,000 Liberty Global, Series A 896,350 1,200,000 Liberty Global, Series C 896,350 1,000,000 Tellabs 9,275,000 9,750,000 Tribune Company 775,000 825,000 ------------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES Mine Safety Appliances 1,081,200 1,125,000 Worthington Industries 2,112,500 2,150,000 ------------------------------------------------------------------------------- ENERGY/MINERALS Potash 0 200,000 Pride International 1,854,000 1,900,000 UrAsia Energy (Canada) 0 29,000,000 ------------------------------------------------------------------------------- HEALTH CARE Coventry Health Care 795,000 900,000 (INCLUDES THE EFFECT OF A 3 FOR 2 STOCK SPLIT) NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 Sales ------------------------------------------------------------------------------- INFORMATION AnswerThink Consulting 1,606,186 1,367,000 CDW 690,000 0 52 COLUMBIA ACORN SELECT >STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- COMMON STOCKS: 94.8% ------------------------------------------------------------------------------- CONSUMER GOODS/SERVICES: 27.5% >RETAIL: 11.9% 1,400,000 Abercrombie & Fitch $ 91,252 TEEN APPAREL RETAILER 3,400,000 Safeway 80,444 RETAIL FOOD & DRUG STORES 845,000 Costco 41,802 WAREHOUSE SUPERSTORES ------------------------------------------------------------------------------- 213,498 >CONSUMER SERVICES: 7.4% 1,625,000 ITT Educational Services (b) 96,054 POSTSECONDARY DEGREE PROGRAMS 728,000 Weight Watchers (b) 35,985 WEIGHT LOSS PROGRAM ------------------------------------------------------------------------------- 132,039 >LEISURE VEHICLES: 3.1% 1,075,000 Harley-Davidson 55,352 MOTORCYCLES & RELATED MERCHANDISE ------------------------------------------------------------------------------- >FURNITURE & MANUFACTURERS: 2.6% 1,400,000 Coach (b) 46,676 DESIGNER & RETAILER OF BRANDED LEATHER ACCESSORIES ------------------------------------------------------------------------------- >ENTERTAINMENT: 1.8% 670,000 International Speedway Motors 32,093 LARGEST MOTORSPORT RACETRACK OWNER & OPERATOR ------------------------------------------------------------------------------- >TRAVEL: 0.7% 544,000 Expedia (b) 13,034 ONLINE TRAVEL SERVICES COMPANY ------------------------------------------------------------------------------- ----------- CONSUMER GOODS/SERVICES: TOTAL 492,692 ------------------------------------------------------------------------------- INFORMATION: 27.4% >TELECOMMUNICATIONS EQUIPMENT: 6.0% 9,750,000 Tellabs (b) 106,275 TELECOMMUNICATIONS EQUIPMENT ------------------------------------------------------------------------------- >BUSINESS SOFTWARE: 5.6% 1,030,000 Avid Technology (b) 56,403 DIGITAL NONLINEAR EDITING SOFTWARE & SYSTEMS 5,000,000 Novell (b) 44,150 DIRECTORY, OPERATING SYSTEM & IDENTITY MANAGEMENT SOFTWARE ------------------------------------------------------------------------------- 100,553 >TELEVISION PROGRAMMING/CATV: 4.5% 2,200,000 Discovery Holding (b) 33,330 CATV PROGRAMMING 1,200,000 Liberty Global, Series C (b) 25,440 1,000,000 Liberty Global, Series A (b) 22,500 CATV HOLDING COMPANY ------------------------------------------------------------------------------- 81,270 NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >INTERNET: 3.8% 9,600,000 Skillsoft Publishing (b)(c) $ 52,800 PROVIDER OF WEB-BASED LEARNING SOLUTIONS (E-LEARNING) 544,000 IAC/Interactive Corp (b) 15,401 DOMINATE INTERNET MIDDLEMAN ------------------------------------------------------------------------------- 68,201 >MOBILE COMMUNICATIONS: 3.6% 2,350,000 American Tower (b) 63,685 COMMUNICATION TOWERS IN USA & MEXICO ------------------------------------------------------------------------------- >INSTRUMENTATION: 2.2% 1,400,000 Tektronix 39,494 ANALYTICAL INSTRUMENTS ------------------------------------------------------------------------------- >PUBLISHING: 1.4% 825,000 Tribune Company 24,964 NEWSPAPERS & TV STATIONS ------------------------------------------------------------------------------- >COMPUTER SERVICES: 0.3% 1,367,000 AnswerThink Consulting (b) 5,810 I/T INTEGRATION & BEST PRACTICE RESEARCH -------------------------------------------------------------------------------- ----------- INFORMATION: TOTAL 490,252 ------------------------------------------------------------------------------- FINANCE: 15.3% >MONEY MANAGEMENT: 6.4% 2,500,000 Janus Capital 46,575 MANAGES MUTUAL FUNDS 975,000 Nuveen Investments 41,555 SPECIALTY MUTUAL FUNDS 729,500 SEI Investments 26,991 MUTUAL FUND ADMINISTRATION & INVESTMENT MANAGEMENT ------------------------------------------------------------------------------- 115,121 >INSURANCE: 4.5% 1,800,000 Conseco (b) 41,706 LIFE, LONG TERM CARE & MEDICAL SUPPLEMENT INSURANCE 120,000 Markel (b) 38,046 SPECIALTY INSURANCE ------------------------------------------------------------------------------- 79,752 >BANKS: 4.4% 1,970,000 TCF Financial 53,466 GREAT LAKES BANK 750,000 Associated Banc-Corp 24,413 MIDWEST BANK ------------------------------------------------------------------------------- 77,879 FINANCE: TOTAL 272,752 ------------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES: 9.3% >LOGISTICS: 2.5% 661,000 Expeditors International of Washington 44,624 INTERNATIONAL FREIGHT FORWARDER ------------------------------------------------------------------------------- 53 COLUMBIA ACORN SELECT >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ------------------------------------------------------------------------------- >STEEL: 2.3% 2,150,000 Worthington Industries $ 41,301 STEEL PROCESSING ------------------------------------------------------------------------------- >INDUSTRIAL GOODS: 2.3% 1,125,000 Mine Safety Appliances 40,736 SAFETY EQUIPMENT ------------------------------------------------------------------------------- >OUTSOURCING SERVICES & TRAINING: 2.2% 3,030,000 Quanta Services (b) 39,905 ELECTRICAL & TELECOM CONSTRUCTION SERVICES ------------------------------------------------------------------------------- ----------- INDUSTRIAL GOODS/SERVICES: TOTAL 166,566 -------------------------------------------------------------------------------- ENERGY & MINERALS: 8.3% >OIL SERVICES: 4.3% 1,900,000 Pride International (b) 58,425 OFFSHORE DRILLING CONTRACTOR 450,000 FMC Technologies (b) 19,314 OIL & GAS WELL HEAD MANUFACTURER ------------------------------------------------------------------------------- 77,739 >MINING: 4.0% 29,000,000 UrAsia Energy (Canada) (b)(c) 54,136 URANIUM MINING IN KAZAKHSTAN 200,000 Potash 16,044 WORLD'S LARGES PRODUCER OF POTASH ------------------------------------------------------------------------------- 70,180 ----------- ENERGY & MINERALS: TOTAL 147,919 ------------------------------------------------------------------------------- HEALTH CARE: 5.0% >SERVICES: 5.0% 900,000 Coventry Health Care (b) 51,264 PPO NETWORK 910,000 Lincare Holdings (b) 38,138 HOME HEALTH CARE SERVICES ------------------------------------------------------------------------------- HEALTH CARE: TOTAL 89,402 ------------------------------------------------------------------------------- NUMBER OF SHARES OR PRINCIPAL AMOUNT (000) VALUE (000) ------------------------------------------------------------------------------- OTHER INDUSTRIES: 2.0% >WASTE MANAGEMENT: 2.0% 1,175,000 Waste Management $ 35,661 US GARBAGE COLLECTION & DISPOSAL ------------------------------------------------------------------------------- ----------- OTHER INDUSTRIES: TOTAL 35,661 ----------- TOTAL COMMON STOCKS: 94.8% 1,695,244 (COST: $1,310,279) SHORT-TERM OBLIGATIONS: 5.2% $ 62,000 Countrywide Financial Funding 4.32% - 4.34% Due 1/3/06 - 1/4/06 61,981 28,000 General Electric Capital Corporate 4.10% Due 1/9/06 27,975 2,428 Repurchase Agreement with State Street Bank & Trust dated 12/30/05, due 1/3/06 at 3.75% collateralized by Federal Home Loan Mortgage Discount Notes, maturing 5/2/06 market value $,2488 (repurchase proceeds: $2,439) 2,428 ------------------------------------------------------------------------------- (AMORTIZED COST: $92,384) 92,384 ----------- TOTAL INVESTMENTS: 100.0% 1,787,628 (COST: $1,402,663) (A) CASH AND OTHER ASSETS LESS LIABILITIES: (0.0)%* (313) ----------- TOTAL NET ASSETS: 100% $ 1,787,315 =============================================================================== > Notes to Statement of Investments (in thousands) (a) At December 31, 2005, for federal income tax purposes cost of investments was $1,412,718 and net unrealized appreciation was $374,910 consisting of gross unrealized appreciation of $393,232 and gross unrealized depreciation of $18,322. (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, 2005, the Fund held five percent or more of the outstanding voting securities of the following companies: Skillsoft Publishing 8.95% UrAsia Energy 6.91 The aggregate cost and value of these companies at December 31, 2005, was $104,847 and $106,936 respectively. Investments in affiliate companies represent 5.98% of total net assets at December 31, 2005. Investment activity and income amounts relating to affiliates during the twelve months ended December 31, 2005, were as follows: Dividend Income $ 0 Net realized gain or loss 0 Change in unrealized gain or loss (977) Purchases 57,347 Proceeds from sales 3,612 * Rounds to less than 0.1%. 54 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 55 COLUMBIA ACORN FAMILY OF FUNDS >STATEMENTS OF ASSETS AND LIABILITIES
COLUMBIA COLUMBIA COLUMBIA ACORN ACORN ACORN DECEMBER 31, 2005 FUND INTERNATIONAL USA ------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) ASSETS: Unaffiliated investments, at cost $ 8,485,482 $ 1,905,456 $ 853,949 Affiliated investments, at cost (See Note 4) 1,461,876 -- 5,636 ------------------------------------------------------------------------------------------------------------------ Unaffiliated investments, at value $ 14,288,711 $ 2,880,197 $ 1,211,772 Affiliated investments, at value (See Note 4) 2,084,199 -- 4,009 Cash 172 -- 14 Foreign currency (cost: Columbia Acorn Fund $3,077; Columbia Acorn International $7,924; Columbia Acorn International Select $15) 3,119 8,096 -- Receivable for: Investments sold 13,085 2,232 376 Fund shares sold 40,960 7,998 6,198 Dividends and interest 11,596 2,995 413 Foreign tax reclaims 374 240 4 Expense reimbursement due from Adviser 166 16 22 Deferred Trustees' Compensation Investments 1,683 493 119 ------------------------------------------------------------------------------------------------------------------ Total Assets 16,444,065 2,902,267 1,222,927 LIABILITIES: Payable for: Investments purchased 23,416 7,288 369 Fund shares redeemed 22,733 1,108 660 Administration fee 8 2 --* 12b-1 Service & Distribution fees 2,934 116 127 Reports to shareholders 789 197 75 Deferred Trustees' fees 1,683 493 119 Transfer agent fees 538 102 40 Trustees' fees 1 --* 1 Audit fee 33 33 16 Custody fees 315 320 6 Other liabilities 291 31 20 ------------------------------------------------------------------------------------------------------------------ Total Liabilities 52,741 9,690 1,433 ------------------------------------------------------------------------------------------------------------------ NET ASSETS $ 16,391,324 $ 2,892,577 $ 1,221,494 ================================================================================================================== COMPOSITION OF NET ASSETS: Paid in capital $ 9,810,781 $ 1,880,784 $ 862,822 Overdistributed net investment income (Accumulated net investment loss) (34,063) (14,604) (119) Accumulated net realized gain (loss) 189,024 51,516 2,595 Net unrealized appreciation (depreciation) on: Investments 6,425,552 974,741 356,196 Foreign currency translations 30 143 -- Foreign capital gains tax -- (3) -- ------------------------------------------------------------------------------------------------------------------ NET ASSETS $ 16,391,324 $ 2,892,577 $ 1,221,494 ================================================================================================================== Net asset value per share -- Class A (a) $ 27.57 $ 33.20 $ 26.52 (Net assets/shares) ($3,349,461/121,494) ($142,204/4,284) ($168,922/6,371) Maximum offering price per share -- Class A (b) $ 29.25 $ 35.23 $ 28.14 (Net asset value per share/front-end sales charge) ($27.57/0.9425) ($33.20/0.9425) ($26.52/0.9425) Net asset value and offering price per share -- Class B (a) $ 26.61 $ 32.71 $ 25.61 (Net assets/shares) ($1,422,580/53,454) ($73,572/2,249) ($73,168/2,857) Net asset value and offering price per share -- Class C (a) $ 26.58 $ 32.68 $ 25.59 (Net assets/shares) ($1,220,339/45,913) ($47,325/1,448) ($42,844/1,674) Net asset value and offering price per share -- Class Z (c) $ 28.17 $ 33.44 $ 27.03 (Net assets/shares) ($10,398,944/369,169) ($2,629,476/78,642) ($936,560/34,650) COLUMBIA COLUMBIA ACORN ACORN DECEMBER 31, 2005 INTERNATIONAL SELECT SELECT ------------------------------------------------------------------------------------------- (IN THOUSANDS) ASSETS: Unaffiliated investments, at cost $ 72,627 $ 1,297,816 Affiliated investments, at cost (See Note 4) -- 104,847 ------------------------------------------------------------------------------------------- Unaffiliated investments, at value $ 93,931 $ 1,680,692 Affiliated investments, at value (See Note 4) -- 106,936 Cash 1 1 Foreign currency (cost: Columbia Acorn Fund $3,077; Columbia Acorn International $7,924; Columbia Acorn International Select $15) 15 -- Receivable for: Investments sold 761 -- Fund shares sold 376 2,928 Dividends and interest 70 251 Foreign tax reclaims 5 -- Expense reimbursement due from Adviser 15 38 Deferred Trustees' Compensation Investments -- -- ------------------------------------------------------------------------------------------- Total Assets 95,174 1,790,846 LIABILITIES: Payable for: Investments purchased -- -- Fund shares redeemed 86 2,655 Administration fee --* --* 12b-1 Service & Distribution fees 9 451 Reports to shareholders 26 177 Deferred Trustees' fees 12 47 Transfer agent fees 7 130 Trustees' fees --* 8 Audit fee 17 17 Custody fees 12 4 Other liabilities 6 42 ------------------------------------------------------------------------------------------- Total Liabilities 175 3,531 ------------------------------------------------------------------------------------------- NET ASSETS $ 94,999 $ 1,787,315 =========================================================================================== COMPOSITION OF NET ASSETS: Paid in capital $ 99,908 $ 1,403,075 Overdistributed net investment income (Accumulated net investment loss) (603) (7,548) Accumulated net realized gain (loss) (25,609) 6,823 Net unrealized appreciation (depreciation) on: Investments 21,304 384,965 Foreign currency translations (1) --* Foreign capital gains tax -- -- ------------------------------------------------------------------------------------------- NET ASSETS $ 94,999 $ 1,787,315 =========================================================================================== Net asset value per share -- Class A (a) $ 20.36 $ 22.47 (Net assets/shares) ($10,219/502) ($744,178/33,118) Maximum offering price per share -- Class A (b) $ 21.60 $ 23.84 (Net asset value per share/front-end sales charge) ($20.36/0.9425) ($22.47/0.9425) Net asset value and offering price per share -- Class B (a) $ 19.80 $ 21.71 (Net assets/shares) ($6,594/333) ($206,441/9,511) Net asset value and offering price per share -- Class C (a) $ 19.80 $ 21.69 (Net assets/shares) ($4,083/206) ($149,160/6,878) Net asset value and offering price per share -- Class Z (c) $ 20.57 $ 22.77 (Net assets/shares) ($74,103/3,602) ($687,536/30,193)
(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. 56 COLUMBIA ACORN FAMILY OF FUNDS >STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2005
COLUMBIA COLUMBIA COLUMBIA COLUMBIA ACORN COLUMBIA ACORN ACORN ACORN INTERNATIONAL ACORN (IN THOUSANDS) FUND INTERNATIONAL USA SELECT SELECT ----------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividend income $ 145,247 $ 50,628 $ 9,697 $ 1,613 $ 8,672 Dividend income from affiliates (See Note 4) 16,279 -- -- -- -- Interest income 35,518 3,052 3,315 122 3,867 ----------------------------------------------------------------------------------------------------------------------------- 197,044 53,680 13,012 1,735 12,539 Foreign taxes withheld (4,337) (4,050) (12) (112) -- ----------------------------------------------------------------------------------------------------------------------------- Total Investment Income 192,707 49,630 13,000 1,623 12,539 EXPENSES: Management fee 94,919 18,911 8,995 708 12,411 Administration fee 6,207 1,005 425 32 632 12b-1 Service and Distribution fees: Class A 7,280 242 328 17 1,569 Class B 11,707 531 604 50 1,630 Class C 11,160 366 408 32 1,280 Transfer agent fees: Class A 2,085 110 116 12 621 Class B 2,232 144 129 20 432 Class C 1,259 58 52 8 216 Class Z 2,702 1,263 263 64 459 Custody fees 1,930 1,798 36 69 39 Trustees' fees 602 109 46 18 90 Registration & blue sky fees 266 175 127 83 202 Reports to shareholders 1,716 382 178 61 547 Compliance fees 423 67 28 2 41 Non-recurring costs (See Note 9) 1,244 201 85 6 127 Other expenses 791 219 107 69 132 ----------------------------------------------------------------------------------------------------------------------------- Total expenses 146,523 25,581 11,927 1,251 20,428 Less custody fees paid indirectly (52) (2) (4) --* (18) Less reimbursement of expenses by Investment Adviser (See Note 4) -- -- -- (31) -- Less fees waived by Investment Adviser (See Note 4) (395) (39) (16) (1) (117) Less reimbursement of expenses by Transfer Agent (1,848) (379) (122) (21) (294) Non-recurring costs reimbursed (See Note 9) (1,244) (201) (85) (6) (127) ----------------------------------------------------------------------------------------------------------------------------- Net Expenses 142,984 24,960 11,700 1,192 19,872 ----------------------------------------------------------------------------------------------------------------------------- Net Investment Income (Loss) 49,723 24,670 1,300 431 (7,333) NET REALIZED AND UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS: Net realized gain (loss) on: Unaffiliated investments 888,923 204,393 49,825 5,542 46,214 Affiliated investments (See Note 4) 2,494 -- -- -- -- Foreign currency transactions (858) (1,226) -- (46) -- ----------------------------------------------------------------------------------------------------------------------------- Net realized gain 890,559 203,167 49,825 5,496 46,214 ----------------------------------------------------------------------------------------------------------------------------- Net change in net unrealized appreciation (depreciation) on: Unaffiliated investments 1,642,314 259,156 75,557 5,776 132,119 Affiliated investments (See Note 4) (743,008) -- 55 -- 8,843 Foreign currency translations (360) (293) -- (3) -- Foreign capital gains tax -- (3) -- -- -- ----------------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) 898,946 258,860 75,612 5,773 140,962 ============================================================================================================================= Net realized and unrealized gain 1,789,505 462,027 125,437 11,269 187,176 ----------------------------------------------------------------------------------------------------------------------------- Net Increase in Net Assets resulting from Operations $ 1,839,228 $ 486,697 $ 126,737 $ 11,700 $ 179,843 =============================================================================================================================
* Rounds to less than $500. See accompanying notes to financial statements. 57 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) 2005 2004 2005 2004 OPERATIONS: Net investment income (loss) $ 49,723 $ (13,051) $ 24,670 $ 16,703 Net realized gain on investments and foreign currency transactions 890,559 693,184 203,167 175,881 Net change in net unrealized appreciation (depreciation) on investments, foreign currency translations and foreign capital gains tax 898,946 1,701,999 258,860 276,935 ------------------------------------------------------------------------------------------------------------------ Net Increase from Operations 1,839,228 2,382,132 486,697 469,519 DISTRIBUTIONS DECLARED TO SHAREHOLDERS FROM: Net investment income - Class A (8,157) -- (1,772) (374) Net realized gain - Class A (177,617) (89,952) (4,275) -- Net investment income - Class B -- -- (280) (75) Net realized gain - Class B (81,483) (49,011) (2,334) -- Net investment income - Class C -- -- (171) (42) Net realized gain - Class C (68,235) (37,671) (1,462) -- Net investment income - Class Z (52,311) (5,620) (51,974) (16,439) Net realized gain - Class Z (547,733) (290,184) (81,064) -- ------------------------------------------------------------------------------------------------------------------ Total Distribution to Shareholders (935,536) (472,438) (143,332) (16,930) SHARE TRANSACTIONS: Subscriptions - Class A 912,797 703,271 66,630 19,736 Distributions reinvested - Class A 167,704 81,405 4,900 306 Redemptions - Class A (579,536) (453,387) (14,669) (17,531) ------------------------------------------------------------------------------------------------------------------ Net Increase - Class A 500,965 331,289 56,861 2,511 Subscriptions - Class B 49,025 90,732 17,173 10,422 Distributions reinvested - Class B 74,120 44,616 2,310 66 Redemptions - Class B (174,945) (146,696) (10,198) (7,152) ------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) - Class B (51,800) (11,348) 9,285 3,336 Subscriptions - Class C 171,533 145,878 15,891 8,030 Distributions reinvested - Class C 54,677 30,636 1,302 35 Redemptions - Class C (149,119) (136,434) (6,051) (6,936) ------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) - Class C 77,091 40,080 11,142 1,129 Subscriptions - Class Z 1,686,601 1,596,519 577,455 206,434 Distributions reinvested - Class Z 513,385 254,191 103,732 14,669 Redemptions - Class Z (1,080,069) (1,447,781) (284,340) (284,074) ------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) - Class Z 1,119,917 402,929 396,847 (62,971) ------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) from Share Transactions 1,646,173 762,950 474,135 (55,995) ------------------------------------------------------------------------------------------------------------------ Redemption Fees -- -- 65 86 ------------------------------------------------------------------------------------------------------------------ Total Increase in Net Assets 2,549,865 2,672,644 817,565 396,680 NET ASSETS: Beginning of period 13,841,459 11,168,815 2,075,012 1,678,332 ------------------------------------------------------------------------------------------------------------------ End of period $ 16,391,324 $ 13,841,459 $ 2,892,577 $ 2,075,012 ================================================================================================================== UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME OR (ACCUMULATED NET INVESTMENT LOSS) $ (34,063) $ (20,921) $ (14,604) $ 16,151 ==================================================================================================================
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) 2005 2004 2005 2004 OPERATIONS: Net investment income (loss) $ 1,300 $ (6,571) $ 431 $ 51 Net realized gain on investments and foreign currency transactions 49,825 28,245 5,496 7,208 Net change in net unrealized appreciation (depreciation) on investments, foreign currency translations and foreign capital gains tax 75,612 121,948 5,773 2,762 ------------------------------------------------------------------------------------------------------------------ Net Increase from Operations 126,737 143,622 11,700 10,021 DISTRIBUTIONS DECLARED TO SHAREHOLDERS FROM: Net investment income - Class A -- -- (79) (6) Net realized gain - Class A (7,747) (622) -- -- Net investment income - Class B -- -- (46) -- Net realized gain - Class B (3,824) (415) -- -- Net investment income - Class C -- -- (24) -- Net realized gain - Class C (2,282) (224) -- -- Net investment income - Class Z (1,613) -- (888) (151) Net realized gain - Class Z (43,227) (3,487) -- -- ------------------------------------------------------------------------------------------------------------------ Total Distribution to Shareholders (58,693) (4,748) (1,037) (157) SHARE TRANSACTIONS: Subscriptions - Class A 66,241 27,362 5,743 1,860 Distributions reinvested - Class A 6,880 572 71 5 Redemptions - Class A (25,265) (22,954) (1,004) (763) ------------------------------------------------------------------------------------------------------------------ Net Increase - Class A 47,856 4,980 4,810 1,102 Subscriptions - Class B 4,001 4,936 2,123 1,664 Distributions reinvested - Class B 3,491 375 41 -- Redemptions - Class B (11,124) (10,452) (1,480) (586) ------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) - Class B (3,632) (5,141) 684 1,078 Subscriptions - Class C 8,047 5,707 1,655 786 Distributions reinvested - Class C 1,878 187 20 -- Redemptions - Class C (9,090) (8,114) (599) (2,429) ------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) - Class C 835 (2,220) 1,076 (1,643) Subscriptions - Class Z 302,588 199,048 25,890 11,787 Distributions reinvested - Class Z 40,433 3,134 582 146 Redemptions - Class Z (105,312) (161,267) (7,003) (7,456) ------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) - Class Z 237,709 40,915 19,469 4,477 ------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) from Share Transactions 282,768 38,534 26,039 5,014 ------------------------------------------------------------------------------------------------------------------ Redemption Fees -- -- 9 4 ------------------------------------------------------------------------------------------------------------------ Total Increase in Net Assets 350,812 177,408 36,711 14,882 NET ASSETS: Beginning of period 870,682 693,274 58,288 43,406 ------------------------------------------------------------------------------------------------------------------ End of period $ 1,221,494 $ 870,682 $ 94,999 $ 58,288 ================================================================================================================== UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME OR (ACCUMULATED NET INVESTMENT LOSS) $ (119) $ (103) $ (603) $ 49 ================================================================================================================== COLUMBIA ACORN SELECT Year ended Year ended INCREASE (DECREASE) IN NET ASSETS December 31, December 31, --------------------------------------------------------------------------------- (IN THOUSANDS) 2005 2004 OPERATIONS: Net investment income (loss) $ (7,333) $ (8,994) Net realized gain on investments and foreign currency transactions 46,214 47,420 Net change in net unrealized appreciation (depreciation) on investments, foreign currency translations and foreign capital gains tax 140,962 133,791 --------------------------------------------------------------------------------- Net Increase from Operations 179,843 172,217 DISTRIBUTIONS DECLARED TO SHAREHOLDERS FROM: Net investment income - Class A -- -- Net realized gain - Class A (19,098) (10,300) Net investment income - Class B -- -- Net realized gain - Class B (5,029) (3,895) Net investment income - Class C -- -- Net realized gain - Class C (3,559) (2,321) Net investment income - Class Z -- -- Net realized gain - Class Z (19,071) (8,700) --------------------------------------------------------------------------------- Total Distribution to Shareholders (46,757) (25,216) SHARE TRANSACTIONS: Subscriptions - Class A 296,611 274,350 Distributions reinvested - Class A 17,770 9,614 Redemptions - Class A (143,717) (91,343) --------------------------------------------------------------------------------- Net Increase - Class A 170,664 192,621 Subscriptions - Class B 28,258 61,755 Distributions reinvested - Class B 4,510 3,496 Redemptions - Class B (26,292) (19,113) --------------------------------------------------------------------------------- Net Increase (Decrease) - Class B 6,476 46,138 Subscriptions - Class C 48,457 49,173 Distributions reinvested - Class C 2,903 1,934 Redemptions - Class C (23,251) (17,236) --------------------------------------------------------------------------------- Net Increase (Decrease) - Class C 28,109 33,871 Subscriptions - Class Z 333,604 204,740 Distributions reinvested - Class Z 13,462 6,716 Redemptions - Class Z (155,173) (114,619) --------------------------------------------------------------------------------- Net Increase (Decrease) - Class Z 191,893 96,837 --------------------------------------------------------------------------------- Net Increase (Decrease) from Share Transactions 397,142 369,467 --------------------------------------------------------------------------------- Redemption Fees -- -- --------------------------------------------------------------------------------- Total Increase in Net Assets 530,228 516,468 NET ASSETS: Beginning of period 1,257,087 740,619 --------------------------------------------------------------------------------- End of period $ 1,787,315 $ 1,257,087 ================================================================================= UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME OR (ACCUMULATED NET INVESTMENT LOSS) $ (7,548) $ (57) =================================================================================
See accompanying notes to financial statements. 58-59 Spread COLUMBIA ACORN FAMILY OF FUNDS >STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
COLUMBIA COLUMBIA ACORN COLUMBIA ACORN FUND INTERNATIONAL ACORN USA Year ended Year ended Year ended Year ended Year ended Year ended CHANGES IN SHARES OF BENEFICIAL INTEREST: December 31, December 31, December 31, December 31, December 31, December 31, ----------------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) 2005 2004 2005 2004 2005 2004 Subscriptions - Class A 34,302 29,671 2,150 809 2,559 1,239 Shares issued in reinvestment and capital gains - Class A 6,137 3,255 155 13 260 24 Less shares redeemed - Class A (21,923) (19,230) (476) (722) (990) (1,043) ----------------------------------------------------------------------------------------------------------------------------------- Net Increase - Class A 18,516 13,696 1,829 100 1,829 220 Subscriptions - Class B 1,922 3,928 574 438 161 229 Shares issued in reinvestment and capital gains - Class B 2,814 1,836 73 3 137 16 Less shares redeemed - Class B (6,826) (6,388) (341) (301) (451) (485) ----------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class B (2,090) (624) 306 140 (153) (240) Subscriptions - Class C 6,667 6,282 524 333 321 261 Shares issued in reinvestment and capital gains - Class C 2,077 1,261 41 2 74 8 Less shares redeemed - Class C (5,835) (5,916) (201) (293) (363) (379) ----------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class C 2,909 1,627 364 42 32 (110) Subscriptions - Class Z 62,182 66,041 18,615 8,246 11,555 8,912 Shares issued in reinvestment and capital gains - Class Z 18,385 9,967 3,274 624 1,500 128 Less shares redeemed - Class Z (39,912) (60,621) (9,349) (11,723) (4,040) (7,291) ----------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class Z 40,655 15,387 12,540 (2,853) 9,015 1,749 ----------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Shares of Beneficial Interest 59,990 30,086 15,039 (2,571) 10,723 1,619 ----------------------------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN COLUMBIA INTERNATIONAL SELECT ACORN 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) 2005 2004 2005 2004 Subscriptions - Class A 307 116 14,487 14,418 Shares issued in reinvestment and capital gains - Class A 4 --* 802 473 Less shares redeemed - Class A (53) (49) (6,938) (4,824) ---------------------------------------------------------------------------------------------------- Net Increase - Class A 258 67 8,351 10,067 Subscriptions - Class B 118 108 1,441 3,336 Shares issued in reinvestment and capital gains - Class B 2 -- 211 177 Less shares redeemed - Class B (81) (38) (1,313) (1,035) ---------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class B 39 70 339 2,478 Subscriptions - Class C 92 52 2,455 2,649 Shares issued in reinvestment and capital gains - Class C 1 -- 136 98 Less shares redeemed - Class C (33) (167) (1,172) (929) ---------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class C 60 (115) 1,419 1,818 Subscriptions - Class Z 1,378 707 15,890 10,606 Shares issued in reinvestment and capital gains - Class Z 33 10 601 326 Less shares redeemed - Class Z (378) (479) (7,371) (5,997) ---------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class Z 1,033 238 9,120 4,935 ---------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Shares of Beneficial Interest 1,390 260 19,229 19,298 ----------------------------------------------------------------------------------------------------
* Rounds to less than 500 shares. See accompanying notes to financial statements. 60-61 Spread COLUMBIA ACORN FAMILY OF FUNDS >FINANCIAL HIGHLIGHTS
COLUMBIA ACORN FUND Class Z Year ended December 31, --------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 26.45 $ 22.56 $ 15.50 $ 17.88 $ 17.21 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) 0.15 0.04 0.03 0.02 0.05 Net realized and unrealized gain (loss) 3.28 4.78 7.05 (2.40) 1.01 --------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 3.43 4.82 7.08 (2.38) 1.06 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.15) (0.02) -- -- (0.04) From net realized gains (1.56) (0.91) (0.02) -- (0.35) --------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (1.71) (0.93) (0.02) -- (0.39) ================================================================================================================================= NET ASSET VALUE, END OF PERIOD $ 28.17 $ 26.45 $ 22.56 $ 15.50 $ 17.88 ================================================================================================================================= Total Return (b) 13.11%(c) 21.51%(c) 45.68% (13.31)% 6.14% ================================================================================================================================= RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (d) 0.74% 0.81% 0.80% 0.82% 0.82% Net investment income (d) 0.57% 0.18% 0.17% 0.15% 0.28% Waiver/reimbursement 0.02% 0.02% -- -- -- Portfolio turnover rate 16% 20% 10% 13% 20% Net assets at end of period (in millions) $ 10,399 $ 8,689 $ 7,065 $ 4,022 $ 4,220
(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 Investment Adviser and/or Transfer Agent not waived and/or 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 Year ended December 31, --------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 29.03 $ 22.66 $ 15.40 $ 18.47 $ 23.85 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) 0.34 0.25 0.21 0.14 0.12 Net realized and unrealized gain (loss) 5.87 6.37 7.13 (3.10) (5.11) --------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 6.21 6.62 7.34 (2.96) (4.99) --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.72) (0.25) (0.08) (0.11) -- From net realized gains (1.08) -- -- -- (0.39) --------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (1.80) (0.25) (0.08) (0.11) (0.39) ================================================================================================================================= REDEMPTION FEES Redemption fees added to paid in capital 0.00(a)(b) 0.00(a)(b) -- -- -- ================================================================================================================================= NET ASSET VALUE, END OF PERIOD $ 33.44 $ 29.03 $ 22.66 $ 15.40 $ 18.47 ================================================================================================================================= Total Return (c) 21.81%(d) 29.47%(d) 47.80% (16.10)% (21.11)% ================================================================================================================================= RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (e) 0.99% 1.08% 1.05% 1.06% 1.06% Net investment income (e) 1.09% 1.01% 1.19% 0.80% 0.62% Waiver/reimbursement 0.02% 0.02% -- -- -- Portfolio turnover rate 27% 40% 40% 52% 45% Net assets at end of period (in millions) $ 2,629 $ 1,919 $ 1,563 $ 1,241 $ 1,613
(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 Investment Adviser and/or Transfer Agent not waived and/or 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 Year ended December 31, --------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 25.20 $ 21.01 $ 14.28 $ 17.52 $ 14.90 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (a) 0.07 (0.15) (0.13) (0.10) (0.08) Net realized and unrealized gain (loss) 3.18 4.48 6.86 (3.14) 2.94 --------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 3.25 4.33 6.73 (3.24) 2.86 --------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.05) -- -- -- -- From net realized gains (1.37) (0.14) -- -- (0.24) --------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (1.42) (0.14) -- -- (0.24) ================================================================================================================================= NET ASSET VALUE, END OF PERIOD $ 27.03 $ 25.20 $ 21.01 $ 14.28 $ 17.52 ================================================================================================================================= Total Return (b) 12.98%(c) 20.62%(c) 47.13% (18.49)% 19.25% ================================================================================================================================= RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (d) 1.01% 1.09% 1.11% 1.17% 1.17% Net investment income (loss) (d) 0.28% (0.66)% (0.72)% (0.64)% (0.46)% Waiver/reimbursement 0.01% 0.02% -- -- -- Portfolio turnover rate 13% 18% 7% 31% 24% Net assets at end of period (in millions) $ 937 $ 646 $ 502 $ 235 $ 229
(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 Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact. See accompanying notes to financial statements 62-63 Spraed COLUMBIA ACORN FAMILY OF FUNDS >FINANCIAL HIGHLIGHTS, CONTINUED
COLUMBIA ACORN INTERNATIONAL SELECT Class Z Year ended December 31, --------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 18.02 $ 14.58 $ 10.29 $ 12.09 $ 17.15 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (a) 0.13 0.04 0.06 0.03 (0.05) Net realized and unrealized gain (loss) 2.70 3.47 4.24 (1.83) (4.92) -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 2.83 3.51 4.30 (1.80) (4.97) -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.28) (0.07) (0.01) -- (0.01) From net realized gains -- -- -- -- (0.08) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (0.28) (0.07) (0.01) -- (0.09) ================================================================================================================================ REDEMPTION FEES Redemption fees added to paid in capital 0.00(a)(b) 0.00(a)(b) -- -- -- ================================================================================================================================ NET ASSET VALUE, END OF PERIOD $ 20.57 $ 18.02 $ 14.58 $ 10.29 $ 12.09 ================================================================================================================================ Total Return (c)(d) 15.98% 24.14% 41.79% (14.89)% (29.05)% ================================================================================================================================ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (e) 1.45% 1.45% 1.45% 1.45% 1.45% Net investment income (loss) (e) 0.72% 0.27% 0.56% 0.26% (0.32)% Waiver/reimbursement 0.04% 0.29% 0.42% 0.33% 0.01% Portfolio turnover rate 39% 73% 69% 102% 82% Net assets at end of period (in millions) $ 74 $ 46 $ 34 $ 26 $ 37
(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 Investment Adviser and/or Transfer Agent not waived and/or 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 Year ended December 31, -------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 21.13 $ 18.20 $ 14.04 $ 15.23 $ 14.13 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (0.03) (0.10) (0.10) (0.10) (0.05) Net realized and unrealized gain (loss) 2.35 3.47 4.39 (1.09) 1.18 -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 2.32 3.37 4.29 (1.19) 1.13 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income -- -- -- -- -- From net realized gains (0.68) (0.44) (0.13) -- (0.03) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (0.68) (0.44) (0.13) -- (0.03) ================================================================================================================================ NET ASSET VALUE, END OF PERIOD $ 22.77 $ 21.13 $ 18.20 $ 14.04 $ 15.23 ================================================================================================================================ Total Return (b) 11.08%(c) 18.58%(c) 30.61% (7.81)%(c) 8.00%(c) ================================================================================================================================ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses 0.99%(d) 1.13%(d) 1.12%(d) 1.26%(d) 1.35% Net investment loss (0.16)%(d) (0.52)%(d) (0.63)%(d) (0.67)%(d) (0.44)% Waiver/reimbursement 0.03% 0.02% -- 0.01% 0.03% Portfolio turnover rate 19% 34% 16% 40% 82% Net assets at end of period (in millions) $ 688 $ 445 $ 294 $ 93 $ 70
(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 Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact. See accompanying notes to financial statements 64-65 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 impose 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 shares of the Fund for shares of another fund distributed by Columbia Management Distributors, Inc. 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, the Fund will charge you a redemption fee of 2% of the redemption proceeds. 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 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 73 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. >Repurchase agreements The Funds may engage in repurchase agreement transactions. The Funds, through their custodians, receive delivery of underlying securities collateralizing repurchase agreements. The Funds' investment adviser determines that the value of the underlying securities is at all times 66 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" on 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, 2005. >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 (the "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 67 COLUMBIA ACORN FAMILY OF FUNDS >NOTES TO FINANCIAL STATEMENTS, CONTINUED 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 on 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 15%. 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. >Indemnification In the normal course of business, each Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnities. A Fund's maximum exposure under these arrangements is unknown, as this would involve future claims against the Fund. Also, under the Trust's organizational documents, the Trustees and Officers of the Trust are indemnified against certain liabilities that may arise out of their duties to the Trust. However, based on experience, the Funds expect the risk of loss due to these warranties and indemnities to be minimal. 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 GAAP. 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, 2005, permanent book and tax basis differences resulting primarily from differing treatments for distribution reclassifications, foreign currency transactions, passive foreign investment company ("PFIC") adjustments, foreign capital gains tax adjustments and REIT adjustments were identified and reclassified among the components of the Funds' net assets as follows: OVERDISTRIBUTED NET INVESTMENT INCOME OR ACCUMULATED ACCUMULATED NET NET REALIZED PAID-IN INVESTMENT LOSS GAIN/LOSS CAPITAL -------------------------------------------------------------------------------- Columbia Acorn Fund $ (2,397) $ (33,273) $ 35,670 Columbia Acorn International (1,228) 1,228 -- Columbia Acorn USA 297 (297) -- Columbia Acorn International Select (46) 46 -- Columbia Acorn Select (158) 158 -- 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 years ended December 31, 2005 and December 31, 2004 was as follows: DECEMBER 31, 2005 LONG-TERM ORDINARY CAPITAL INCOME* GAINS ------------------------------------------------------------------------ (IN THOUSANDS) Columbia Acorn Fund $ 89,415 $ 846,121 Columbia Acorn International 54,197 89,135 Columbia Acorn USA 1,825 56,868 Columbia Acorn International Select 1,037 -- Columbia Acorn Select 7,041 39,716 DECEMBER 31, 2004 LONG-TERM ORDINARY CAPITAL 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 * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2005, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED NET UNDISTRIBUTED LONG-TERM UNREALIZED ORDINARY CAPITAL APPRECIATION INCOME GAINS (DEPRECIATION)* ------------------------------------------------------------------------ (IN THOUSANDS) Columbia Acorn Fund $ -- $ 191,435 $ 6,390,761 Columbia Acorn International 6,502 52,297 953,053 Columbia Acorn USA -- 5,425 355,895 Columbia Acorn International Select 187 -- 20,529 Columbia Acorn Select 9,422 -- 374,910 * The differences between book-basis and tax-basis net unrealized appreciation/depreciation are primarily due to deferral of losses from wash sales and PFIC adjustments. 68 The following capital loss carryforwards, determined as of December 31, 2005, 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 USA INTERNATIONAL SELECT --------------------------------------------------------------------------- (IN THOUSANDS) 2009 $ 2,023* $ 10,593 2010 506* 12,528 2011 -- 2,488 --------------------------------------------------------------------------- TOTAL $ 2,529 $ 25,609 * 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, 2005: ___________________ (IN THOUSANDS) Columbia Acorn International $ 62,579 Columbia Acorn USA 7,025 Columbia Acorn International Select 5,542 4. Transactions with Affiliates Columbia Wanger Asset Management, L.P. ("Columbia WAM"), a wholly owned subsidiary of Columbia Management Group, Inc., which in turn is an indirect, 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. Effective September 28, 2005, under the Fund's investment management agreement, fees are accrued daily and paid monthly to Columbia WAM at the annual rates shown in the table below for Columbia Acorn USA: Net asset value: On the first $200 million 0.94% Next $300 million 0.89% Net assets in excess of $500 million 0.84% Effective March 8, 2005, 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 0.74% Next $1.3 billion 0.69% Next $4 billion 0.64% Net assets in excess of $6 billion 0.63% COLUMBIA ACORN INTERNATIONAL --------------------------------------------------------------------- Net asset value: On the first $100 million 1.19% Next $400 million 0.94% Net assets in excess of $500 million 0.74% COLUMBIA ACORN USA --------------------------------------------------------------------- Net asset value: On the first $200 million 0.94% Net assets in excess of $200 million 0.89% COLUMBIA ACORN INTERNATIONAL SELECT --------------------------------------------------------------------- On average daily net assets: 0.94% COLUMBIA ACORN SELECT --------------------------------------------------------------------- Net asset value: On the first $700 million 0.85% Net assets in excess of $700 million 0.80% Prior to March 8, 2005, 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% In accordance with the terms of the Assurance of Discontinuance with the New York Attorney General (as defined and discussed further under Note 9 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 - 0.74% - up to $700 million; 0.69% - $700 million to $2 billion; 69 COLUMBIA ACORN FAMILY OF FUNDS >NOTES TO FINANCIAL STATEMENTS, CONTINUED 0.64% - $2 billion to $6 billion; 0.63% - $6 billion and over; COLUMBIA ACORN INTERNATIONAL - 1.19% - up to $100 million; 0.94% - $100 million to $500 million; 0.74% - $500 million and over; COLUMBIA ACORN USA - 0.94% up to $200 million; 0.89% - 200 million and over; COLUMBIA ACORN INTERNATIONAL SELECT - 0.94% on average daily net assets; COLUMBIA ACORN SELECT - 0.85% - up to $700 million; 0.80% - $700 million and over. The fee waiver was effective as of March 8, 2005 but applied as if it had gone into effect on December 1, 2004. Fees waived in accordance with the terms of the NYAG settlement are as follows for the year ended December 31, 2005: ------------------------------------------------------------------------------ (IN THOUSANDS) Columbia Acorn Fund $ 395 Columbia Acorn International 39 Columbia Acorn USA 16 Columbia Acorn International Select 1 Columbia Acorn Select 117 ============================================================================== For the year ended December 31, 2005, the Funds' effective investment advisory fee rates were as follows: ------------------------------------------------------------------------------- Columbia Acorn Fund 0.64% Columbia Acorn International 0.79% Columbia Acorn USA 0.89% Columbia Acorn International Select 0.94% Columbia Acorn Select 0.82% =============================================================================== >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. Expenses reimbursed by Columbia WAM for Columbia Acorn International Select for the year ended December 31, 2005 were $30,833. 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, 2005 each Fund's effective administration fee rate was 0.042%. Columbia Management Distributors, Inc. (formerly Columbia Funds Distributor, Inc.) ("CMDI"), a 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 CMDI a service and distribution fee on the net assets attributable to Class A, Class B and Class C shares. Columbia Management Services, Inc. (formerly Columbia Funds Services, Inc.) (the "Transfer Agent"), a wholly owned subsidiary of BOA, provides shareholder services to the Funds and has contracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. 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. The Transfer Agent has agreed to waive the reimbursement for certain out-of-pocket expenses. Expenses reimbursed by the Transfer Agent for the year ended December 31, 2005 were as follows: ------------------------------------------------------------------------------ (IN THOUSANDS) Columbia Acorn Fund $ 1,848 Columbia Acorn International 379 Columbia Acorn USA 122 Columbia Acorn International Select 21 Columbia Acorn Select 294 ============================================================================== 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, 2005 were as follows: ------------------------------------------------------------------------------ (IN THOUSANDS) Columbia Acorn Fund $ 602 Columbia Acorn International 109 Columbia Acorn USA 46 Columbia Acorn International Select 18 Columbia Acorn Select 90 ============================================================================== The Board of Trustees appointed a Chief Compliance Officer to the Trust in accordance with federal securities regulations. The Funds, along with other affiliated 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 70 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, 2005, 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 32, 47 and 54, respectively. During the year ended December 31, 2005 the Funds engaged in purchase and sale transactions with funds that have a common investment adviser (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: PURCHASES SALES --------------------------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $ 3,046 $ 1,713 Columbia Acorn International 5,602 623 Columbia Acorn USA -- 311 Columbia Acorn International Select 6,139 92 Columbia Acorn Select -- 912 5. Borrowing Arrangements The Trust participates in a $150 million credit facility, that was entered into to facilitate portfolio liquidity. Interest is charged to each participating fund based on its borrowings at a 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, 2005. 6. Investment Transactions The aggregate cost of purchases and proceeds from sales other than short-term obligations for the year ended December 31, 2005 were: COLUMBIA ACORN FUND ------------------------------------------------------------------------------ (IN THOUSANDS) Investment securities Purchases $ 3,451,637 Proceeds from sales 2,262,146 ============================================================================== COLUMBIA ACORN INTERNATIONAL ------------------------------------------------------------------------------ (IN THOUSANDS) Investment securities Purchases $ 1,029,877 Proceeds from sales 628,469 ============================================================================== COLUMBIA ACORN USA ------------------------------------------------------------------------------ (IN THOUSANDS) Investment securities Purchases $ 319,226 Proceeds from sales 119,923 ============================================================================== COLUMBIA ACORN INTERNATIONAL SELECT ------------------------------------------------------------------------------ (IN THOUSANDS) Investment securities Purchases $ 54,877 Proceeds from sales 27,790 ============================================================================== COLUMBIA ACORN SELECT ------------------------------------------------------------------------------ (IN THOUSANDS) Investment securities Purchases $ 737,121 Proceeds from sales 266,327 ============================================================================== 7. Redemption Fees For the year ended December 31, 2005, the redemption fees for the Columbia Acorn International and Columbia Acorn International Select amounted to $65,351 and $9,133, respectively and are accounted for as additions to paid in capital. 8. Other During the year ended December 31, 2005, and as a result of an error, Columbia Acorn Select purchased shares of AnswerThink that were subsequently sold at a loss of $194,031. The Fund was reimbursed by Columbia WAM for the full amount of the loss. 9. Legal Proceedings The Trust, Columbia WAM and the Trustees of the Trust are named as defendants in class and derivative complaints that have been consolidated in a Multi-District Action in the federal district court for the District of Maryland. These lawsuits contend that defendants permitted certain investors to market time their trades in certain Columbia Acorn Funds. The Multi-District Action is ongoing. However, all claims against Columbia Acorn Trust and the independent trustees of Columbia Acorn Trust have been dismissed. Columbia WAM, the Columbia Acorn Funds and the Trustees of the Trust are also defendants in a consolidated lawsuit filed in the federal district court of Massachusetts 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 71 COLUMBIA ACORN FAMILY OF FUNDS >NOTES TO FINANCIAL STATEMENTS, CONTINUED Columbia WAM and the Trustees of the Trust breached certain common law duties and federal laws. All claims against all defendants in this lawsuit have been dismissed. However, the plaintiffs have filed a notice of appeal with the First Circuit Court of Appeals. 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. The Seventh Circuit ruled that the plaintiffs' state law claims were preempted under federal law resulting in the dismissal of plaintiffs' complaint. However, plaintiffs are in the process of appealing that decision before the United States Supreme Court. On March 21, 2005, a class action complaint was filed against the Columbia Acorn Trust and Columbia WAM seeking to rescind the Contingent Deferred Sales Charges assessed upon redemption of Class B shares of Columbia Acorn Funds due to the alleged market timing of the Columbia Acorn Funds. In addition to the rescission of sales charges, plaintiffs seek recovery of actual damages, attorneys' fees and cost. The case has been transferred to the Multi-District Action in the federal district court of Maryland. The Trust and Columbia WAM intend to defend these suits vigorously. 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. However, based on currently available information, the Columbia Acorn Trust believes that the likelihood that these lawsuits will have a material adverse impact on any Fund is remote, and Columbia WAM believes that the lawsuits are not likely to materially affect its ability to provide investment management services to the Funds. For the year ended December 31, 2005, 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 $ 1,244 Columbia Acorn International 201 Columbia Acorn USA 85 Columbia Acorn International Select 6 Columbia Acorn Select 127 ============================================================================== 72 COLUMBIA THERMOSTAT FUND >STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 NUMBER OF SHARES OR PRINCIPAL AMOUNT (000) VALUE (000) ------------------------------------------------------------------------------ >BOND FUNDS: 55.3% 6,320,154 Columbia Intermediate Bond Fund, Class Z $ 56,186 3,200,946 Columbia Federal Securities Fund, Class Z 33,674 2,646,607 Columbia Conservative High Yield Fund, Class Z 22,470 ------------------------------------------------------------------------------ TOTAL BOND FUNDS (COST: $113,091) 112,330 >STOCK FUNDS: 44.5% 1,657,847 Columbia Large Cap Enhanced Core Fund, Class Z 22,464 1,486,026 Columbia Dividend Income Fund, Class Z 18,070 412,119 Columbia Acorn International, Class Z 13,781 484,364 Columbia Acorn Fund, Class Z 13,644 979,072 Columbia Large Cap Value Fund, Class Z 13,531 397,883 Columbia Acorn Select, Class Z 9,060 ------------------------------------------------------------------------------ TOTAL STOCK FUNDS (COST: $82,765) 90,550 SHORT-TERM OBLIGATION: 0.3% $ 674 Repurchase Agreement with State Street Bank & Trust dated 12/30/06, due 1/3/06 at 3.75% collateralized by Federal Home Loan Mortgage Discount Notes, maturing 5/2/06 market value $689 (repurchase proceeds: $674) 674 ------------------------------------------------------------------------------ (COST: $674) 674 ---------- TOTAL INVESTMENTS: 100.1% 203,554 (COST: $196,530) (A) CASH AND OTHER ASSETS LESS LIABILITIES: (0.1)% (198) ---------- TOTAL NET ASSETS - 100% $ 203,356 ============================================================================== >Notes to Statement of Investments (in thousands) (a) At December 31, 2005, for federal income tax purposes cost of investments was $197,047 and net unrealized appreciation was $6,507 consisting of gross unrealized appreciation of $7,814 and gross unrealized depreciation of $1,307. 73 COLUMBIA THERMOSTAT FUND >STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2005 ------------------------------------------------------------------------------------ (IN THOUSANDS) ASSETS: Unaffiliated investments, at value (cost: $674) $ 674 Affiliated investments, at value (cost: $195,856) 202,880 Cash --* Receivable for: Fund shares sold 329 Dividends and interest 507 Expense reimbursement due from Investment Adviser 72 ------------------------------------------------------------------------------------ Total Assets 204,462 LIABILITIES: Payable for: Investments purchased 507 Fund shares redeemed 414 Distributions --* Transfer agent fees 25 Trustees' fees 1 Custody fees 1 Reports to shareholders 39 12b-1 Service & Distribution fees 102 Other liabilities 17 ------------------------------------------------------------------------------------ Total Liabilities 1,106 ------------------------------------------------------------------------------------ NET ASSETS $ 203,356 ==================================================================================== COMPOSITION OF NET ASSETS: Paid in capital $ 193,069 Undistributed net investment income 142 Accumulated net realized gain 3,121 Net unrealized appreciation on investments 7,024 ------------------------------------------------------------------------------------ NET ASSETS $ 203,356 ==================================================================================== Net asset value per share - Class A (a) $ 12.49 (Net assets/shares) ($71,034/5,687) Maximum offering price per share - Class A (b) $ 13.25 (Net asset value per share/front-end sales charge) ($12.49/0.9425) Net asset value and offering price per share - Class B (a) $ 12.51 (Net assets/shares) ($78,444/6,270) Net asset value and offering price per share - Class C (a) $ 12.51 (Net assets/shares) ($28,316/2,263) Net asset value, offering and redemption price per share - Class Z $ 12.50 (Net assets/shares) ($25,562/2,044)
* Rounds to less than $500. (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. 74 COLUMBIA THERMOSTAT FUND >STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2005
(IN THOUSANDS) ----------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividends from affiliated investment company shares $ 7,123 Interest income 25 ----------------------------------------------------------------------------------------- Total Investment Income 7,148 EXPENSES: Management fee 205 Administration fee 87 12b-1 Service and Distribution fees: Class A 182 Class B 670 Class C 299 Transfer agent fees: Class A 99 Class B 139 Class C 50 Class Z 23 Trustees' fees 11 Custody fees 5 Reports to shareholders 114 Compliance fees 6 Non-recurring costs (See Note 7) 17 Other expenses 121 ----------------------------------------------------------------------------------------- Total expenses 2,028 Less custody fees paid indirectly --* Less reimbursement of expenses by Investment Adviser (300) Less reimbursement of expenses by Transfer Agent (47) Non-recurring costs reimbursed (See Note 7) (17) ----------------------------------------------------------------------------------------- Net Expenses 1,664 ----------------------------------------------------------------------------------------- Net Investment Income 5,484 NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on: Affiliated investments 13,060 Distributions from affiliated investment company shares 1,640 ----------------------------------------------------------------------------------------- Net realized gain 14,700 Net change in unrealized appreciation (depreciation) on affiliated investments (10,409) ----------------------------------------------------------------------------------------- Net realized and unrealized gain 4,291 ----------------------------------------------------------------------------------------- Net Increase in Net Assets from Operations $ 9,775 =========================================================================================
* Rounds to less than $500. See accompanying notes to financial statements. 75 COLUMBIA THERMOSTAT FUND >STATEMENT OF CHANGES IN NET ASSETS
Year ended Year ended INCREASE (DECREASE) IN NET ASSETS December 31, December 31, --------------------------------------------------------------------------------------- (IN THOUSANDS) 2005 2004 OPERATIONS: Net investment income $ 5,484 $ 3,334 Net realized gain on affiliated investments and distributions from affiliated investment company shares 14,700 3,692 Net change in net unrealized appreciation (depreciation) on affiliated investments (10,409) 8,154 --------------------------------------------------------------------------------------- Net Increase from Operations 9,775 15,180 DISTRIBUTIONS DECLARED TO SHAREHOLDERS FROM: Net investment income -- Class A (2,069) (1,488) Net realized gain -- Class A (4,875) (141) Net investment income -- Class B (1,831) (997) Net realized gain -- Class B (5,382) (146) Net investment income -- Class C (617) (383) Net realized gain -- Class C (1,972) (61) Net investment income -- Class Z (797) (450) Net realized gain -- Class Z (1,697) (36) --------------------------------------------------------------------------------------- Total Distributions to Shareholders (19,240) (3,702) SHARE TRANSACTIONS: Subscriptions -- Class A 15,104 42,302 Distributions reinvested -- Class A 6,273 1,425 Redemptions -- Class A (24,089) (13,080) --------------------------------------------------------------------------------------- Net Increase (Decrease) -- Class A (2,712) 30,647 Subscriptions -- Class B 8,919 27,802 Distributions reinvested -- Class B 6,512 1,024 Redemptions -- Class B (11,391) (6,671) --------------------------------------------------------------------------------------- Net Increase -- Class B 4,040 22,155 Subscriptions -- Class C 5,664 12,939 Distributions reinvested -- Class C 2,303 378 Redemptions -- Class C (9,480) (4,000) --------------------------------------------------------------------------------------- Net Increase (Decrease) -- Class C (1,513) 9,317 Subscriptions -- Class Z 5,843 8,408 Distributions reinvested -- Class Z 2,384 470 Redemptions -- Class Z (2,485) (3,140) --------------------------------------------------------------------------------------- Net Increase -- Class Z 5,742 5,738 --------------------------------------------------------------------------------------- Net Increase from Share Transactions 5,557 67,857 --------------------------------------------------------------------------------------- Total Increase (Decrease) in Net Assets (3,908) 79,335 --------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 207,264 127,929 --------------------------------------------------------------------------------------- End of period $ 203,356 $ 207,264 ======================================================================================= UNDISTRIBUTED NET INVESTMENT INCOME $ 142 $ 15 =======================================================================================
See accompanying notes to financial statements. 76 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) 2005 2004 Subscriptions -- Class A 1,151 3,381 Shares issued in reinvestment and capital gains -- Class A 497 110 Less shares redeemed -- Class A (1,840) (1,049) ------------------------------------------------------------------------------------------------ Net Increase (Decrease) -- Class A (192) 2,442 Subscriptions -- Class B 684 2,213 Shares issued in reinvestment and capital gains -- Class B 515 79 Less shares redeemed -- Class B (870) (530) ------------------------------------------------------------------------------------------------ Net Increase -- Class B 329 1,762 Subscriptions -- Class C 434 1,028 Shares issued in reinvestment and capital gains -- Class C 182 29 Less shares redeemed -- Class C (725) (316) ------------------------------------------------------------------------------------------------ Net Increase (Decrease) -- Class C (109) 741 Subscriptions -- Class Z 446 669 Shares issued in reinvestment and capital gains -- Class Z 189 36 Less shares redeemed -- Class Z (189) (250) ------------------------------------------------------------------------------------------------ Net Increase -- Class Z 446 455 ------------------------------------------------------------------------------------------------ Net Increase in Shares of Beneficial Interest 474 5,400 ------------------------------------------------------------------------------------------------
See accompanying notes to financial statements. 77 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 2005 2004 2003 2002 NET ASSET VALUE, BEGINNING OF PERIOD $13.12 $12.31 $10.41 $10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) 0.43 0.31 0.19 0.04 Net realized and unrealized gain 0.28 0.82 1.87 0.37 ---------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 0.71 1.13 2.06 0.41 ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.42) (0.29) (0.16) -- From net realized gains (0.91) (0.03) (0.00)(b) -- ---------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (1.33) (0.32) (0.16) -- ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $12.50 $13.12 $12.31 $10.41 ====================================================================================================================== Total Return (c)(d) 5.50% 9.17% 19.79% 4.10%(e) ====================================================================================================================== RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (f) 0.25%(g) 0.25%(g) 0.38%(g) 0.62%(h)(i) Net investment income 3.28%(g) 2.48%(g) 1.64%(g) 1.41%(h)(i) Reimbursement 0.11% 0.21% 0.88% 19.94%(h) Portfolio turnover rate 96% 67% 61% 11%(e) Net assets at end of period (IN MILLIONS) $ 26 $ 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 Investment Adviser 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 the Fund 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. 78 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. 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. 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, 2005, the Fund invested in six stock Portfolio Funds (Columbia Acorn Fund, Columbia Acorn Select Fund, Columbia Large Cap Value Fund, Columbia Acorn International, Columbia Dividend Income Fund and Columbia Large Cap Enhanced Core Fund) and three bond Portfolio Funds (Columbia Federal Securities Fund, Columbia Intermediate Bond Fund and Columbia Conservative 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. 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 Investments in Portfolio Funds are valued at their net asset value as reported by the underlying funds. 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 adviser 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. 79 COLUMBIA THERMOSTAT FUND >NOTES TO FINANCIAL STATEMENTS, CONTINUED >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 (the "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. >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 on 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. >Indemnification In the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnities. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims against the Fund. Also, under the Trust's organizational documents, the Trustees and Officers of the Trust are indemnified against certain liabilities that may arise out of their duties to the Trust. However, based on experience, the Fund expects the risk of loss due to these warranties and indemnities to be minimal. 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 GAAP. 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, 2005, permanent book and tax basis differences resulting primarily from 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 ------------------------------------------------------------------ $(43) $(1,001) $1,044 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 years ended December 31, 2005 and December 31, 2004 was as follows: DECEMBER 31, DECEMBER 31, 2005 2004 ------------------------------------------------------------------ (IN THOUSANDS) Distributions paid from: Ordinary Income* $8,262 $ 3,645 Long-Term Capital Gains 10,978 57 * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2005, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* -------------------------------------------------------------------- $219 $3,573 $6,507 * The differences between book-basis and tax-basis net unrealized appreciation are primarily due to deferral of losses from wash sales. 4. Transactions with Affiliates Columbia Wanger Asset Management, L.P. ("Columbia WAM"), a wholly owned subsidiary of Columbia Management Group, Inc., which in turn is an indirect, 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. 80 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. Fees reimbursed amounted to $300,426 for the year ended December 31, 2005. Columbia WAM had the right to recoup expense reimbursement payments made to the Fund through December 31, 2005. No expenses were recouped through December 31, 2005. 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, 2005, the Fund's effective administration fee rate was 0.042%. Columbia Management Distributors, Inc. (formerly Columbia Funds Distributor, Inc.) ("CMDI"), a wholly owned subsidiary of BOA, is the Funds' 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 CMDI a service and distribution fee on net assets attributable to Class A, Class B and Class C shares. Columbia Management Services, Inc. (formerly Columbia Funds Services, Inc.) (the "Transfer Agent"), a wholly owned subsidiary of BOA, provides shareholder services to the Fund and has contracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. 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. The Transfer Agent has agreed to waive the reimbursement for certain out-of-pocket expenses. 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, 2005 were $11,411. The Board of Trustees appointed a Chief Compliance Officer to the Trust in accordance with federal securities regulations. The Fund, along with other affiliated funds, 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 a 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, 2005. 6. Investment Transactions The aggregate cost of purchases and proceeds from sales other than short-term obligations for the year ended December 31, 2005 were: -------------------------------------------------------------------------------- (IN THOUSANDS) Purchases $ 197,083 Proceeds from sales 202,897 ================================================================================ 7. Legal Proceedings The Trust, Columbia WAM and the Trustees of the Trust are named as defendants in class and derivative complaints which have been consolidated in a Multi-District Action in the federal district court for the District of Maryland. These lawsuits contend that defendants permitted certain investors to market time their trades in certain Columbia Acorn Funds. The Multi-District Action is ongoing. However, all claims against Columbia Acorn Trust and independent trustees of Columbia Acorn Trust have been dismissed. Columbia WAM, the Columbia Acorn Funds and the Trustees of the Trust are also defendants in a consolidated lawsuit filed in the federal district court of Massachusetts alleging that Columbia WAM used Fund 81 COLUMBIA THERMOSTAT FUND >NOTES TO FINANCIAL STATEMENTS, CONTINUED 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. All claims against all defendants in this lawsuit have been dismissed. However, the plaintiffs have filed a notice of appeal with the First Circuit Court of Appeals. 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. The Seventh Circuit ruled that the plaintiffs' state law claims were preempted under federal law resulting in the dismissal of plaintiffs' complaint. However, plaintiffs are in the process of appealing that decision before the United States Supreme Court. On March 21, 2005, a class action complaint was filed against the Columbia Acorn Trust and Columbia WAM seeking to rescind the Contingent Deferred Sales Charges assessed upon redemption of Class B shares of Columbia Acorn Funds due to the alleged market timing of the Columbia Acorn Funds. In addition to the rescission of sales charges, plaintiffs seek recovery of actual damages, attorneys' fees and cost. The case has been transferred to the Multi-District Action in the federal district court of Maryland. The Trust and Columbia WAM intend to defend these suits vigorously. 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. However, based on currently available information, the Columbia Acorn Trust believes that the likelihood that these lawsuits will have a material adverse impact on any Fund is remote, and Columbia WAM believes that the lawsuits are not likely to materially affect its ability to provide investment management services to the Funds. For the year ended December 31, 2005, Columbia Management has assumed $17,329 of consulting services and legal fees incurred by the Fund in connection with these matters. 82 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,changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Columbia Acorn Fund, Columbia Acorn International Fund, Columbia Acorn USA, Columbia Acorn International Select, Columbia Acorn Select and Columbia Acorn Thermostat Fund (each a series of Columbia Acorn Trust, hereinafter referred to as the "Funds") at December 31, 2005, the results of each of their operations for the year then ended, the changes in each of their net assets and the financial highlights for the two years in the period 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, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the Funds for the periods ended December 31, 2003 and prior were audited by other independent auditors whose report dated February 6, 2004 expressed an unqualified opinion on those financial statements. PricewaterhouseCoopers LLP Chicago, Illinois February 22, 2006 83 COLUMBIA ACORN FAMILY OF FUNDS >UNAUDITED INFORMATION FEDERAL INCOME TAX INFORMATION (IN THOUSANDS) COLUMBIA ACORN FUND For the fiscal year ended December 31, 2005, the Fund designates long-term capital gains of $877,787. 100.00% of the ordinary income distributed by the Fund, for the year ended December 31, 2005, 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, 2005 to December 31, 2005 may represent qualified dividend income. Final information will be provided in your 2005 1099-Div Form. COLUMBIA ACORN INTERNATIONAL For the fiscal year ended December 31, 2005, the Fund designates long-term capital gains of $141,432. Foreign taxes paid during the fiscal year ended December 31, 2005, amounting to $4,028 ($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, 2005. 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, 2005 to December 31, 2005 may represent qualified dividend income. Final information will be provided in your 2005 1099-Div Form. Gross income derived from sources within foreign countries amounted to $50,628 ($0.58 per share) for the fiscal year ended December 31, 2005. COLUMBIA ACORN USA For the fiscal year ended December 31, 2005, the Fund designates long-term capital gains of $48,858. 100.00% of the ordinary income distributed by the Fund, for the year ended December 31, 2005, 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, 2005 to December 31, 2005 may represent qualified dividend income. Final information will be provided in your 2005 1099-Div Form. COLUMBIA ACORN INTERNATIONAL SELECT Foreign taxes paid during the fiscal year ended December 31, 2005, amounting to $112 ($0.02 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, 2005. Gross income derived from sources within foreign countries amounted to $1,614 ($0.35 per share) for the fiscal year ended December 31, 2005. 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, 2005 to December 31, 2005 may represent qualified dividend income. Final information will be provided in your 2005 1099-Div Form. COLUMBIA ACORN SELECT For the fiscal year ended December 31, 2005, the Fund designates long-term capital gains of $33,169. 100.00% of the ordinary income distributed by the Fund, for the year ended December 31, 2005, 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, 2005 to December 31, 2005 may represent qualified dividend income. Final information will be provided in your 2005 1099-Div Form. COLUMBIA THERMOSTAT FUND For the fiscal year ended December 31, 2005, the Fund designates long-term capital gains of $14,090. 84 [Excerpts from:] COLUMBIA ACORN TRUST Management Fee Evaluation of the Senior Officer Prepared Pursuant to the New York Attorney General's Assurance of Discontinuance July 2005 85 INTRODUCTION The New York Attorney General's Assurance of Discontinuance ("Order") entered into by Columbia Management Advisors, Inc. ("CMAI") and Columbia Management Distributor, Inc., ("CMDI" and collectively with "CMAI", "CM") in February 2005, allows CMAI to manage or advise a mutual fund, including the Acorn Trust's family of funds (the "Acorn Funds" or "Acorn" or "Trust"), only if the trustees of the Acorn Funds appoint a "Senior Officer" to perform specified duties and responsibilities. One of these responsibilities includes "managing the process by which proposed management fees (including but not limited to, advisory fees) to be charged the Acorn Funds are negotiated so that they are negotiated in a manner that is at arms' length and reasonable and consistent with this Assurance of Discontinuance." The Order also provides that the Board of Trustees of the Acorn Funds ("Board") must determine the reasonableness of proposed "management fees" by using either an annual competitive bidding process supervised by the Senior Officer or Independent Fee Consultant, or by obtaining "an annual independent written evaluation prepared by or under the direction of the Senior Officer or the Independent Fee Consultant." "Management fees" are only part of the costs and expenses paid by mutual fund shareholders. The expenses can vary depending upon the class of shares held but usually include: (1) investment management or advisory fees to compensate analysts and portfolio managers for stock research and portfolio management, as well as the cost of operating a trading desk; (2) administrative expenses incurred to prepare registration statements and tax returns, calculate the Funds' net asset values, maintain effective compliance procedures and perform recordkeeping services; (3) transfer agency costs for establishing accounts, accepting and disbursing funds, as well as overseeing trading in Fund shares; (4) custodial expenses incurred to hold the securities purchased by the Funds; and (5) distribution expenses, including commissions paid to brokers that sell the Fund shares to investors. Columbia Wanger Asset Management, L.P. ("CWAM"), the adviser to the Acorn Funds, has proposed that the Trust enter into separate agreements governing the first two categories listed above: an advisory agreement governing portfolio management, and an administration agreement governing certain administration and clerical services. Together the fees paid under these two agreements are referred to as "management fees." Other fund expenses are governed by separate agreements, in particular agreements with two CWAM affiliates: CMDI, the broker-dealer that underwrites and distributes the Acorn Funds' shares, and Columbia Funds Services, Inc. ("CFSI"), the Funds' transfer agent. In conformity with the terms of the Order, this evaluation, therefore, addresses only the advisory and administrative contracts between CWAM and the Trust, and does not extend to the other agreements. According to the Order, the Senior Officer's evaluation must consider at least the following: (1) Management fees (including components thereof) charged to institutional and other clients of CWAM for like services; (2) Management fees (including any components thereof) charged by other mutual fund companies for like services; (3) Costs to CWAM and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit; (4) Profit margins of CWAM and its affiliates from supplying such services; (5) Possible economies of scale as the Acorn Funds grow larger; and (6) The nature and quality of CWAM's services, including the performance of each Acorn Fund. 86 On November 16, 2004, the Board appointed me, Robert Scales, Senior Officer under the Order. The Board also determined not to pursue a competitive bidding process and instead, charged me with the responsibility of evaluating the Acorn Funds' proposed advisory and administrative fee contracts with CWAM in conformity with the requirements of the Order. This Report is an annual evaluation required under the Order. In discharging their responsibilities, the independent Trustees have also consulted independent, outside counsel. * * * This evaluation was performed in cooperation and regular communication with the Investment Advisory Committee of the Board of Trustees. PROCESS AND INDEPENDENCE The objectives of the Order are to insure the independent evaluation of the advisory fees paid by the Acorn Funds as well as to insure that all relevant factors are considered. In my view, the contract renewal process has been conducted at arms-length and with independence in gathering, considering and evaluating relevant data. For example, the selection of fund peer groups is critical in assessing a fund's relative performance and cost. I have required Lipper and Morningstar Inc. to prepare their reports without input or commentary from CWAM; the engagement letters with them reflect this requirement. As a result, the peer groups reflected in the Morningstar Inc. and Lipper reports were determined independently. After submission of the reports, I asked CWAM to comment on them to avoid errors and to establish a clear record of CWAM's views on which funds, in its judgment, constitute an appropriate peer group. Similarly, I discussed CWAM's profitability analysis with its management but also sought the independent views of Ernst & Young, an outside consultant, on the reasonableness of CWAM's cost allocation methodology and on the adequacy of the financial data it provided. The evaluation of CWAM's profitability was performed in the context of the limited industry data available. My evaluation of the advisory contract was shaped by my experience as Acorn's Chief Compliance Officer ("CCO"). As CCO, I report solely to the Board and have no reporting obligation to or employment relationship with CM or its affiliates, except for administrative purposes. This too contributes to the independence of this evaluation. I have made several comments on compliance matters in evaluating the quality of service provided by CWAM and CM. Finally, this Report, its supporting materials and the data contained in other materials submitted to the Investment Advisory Committee of the Board, in my view, provide a thorough factual basis upon which the Board, in consultation with independent counsel as it deems appropriate, may conduct management fee negotiations that are in the best interests of the Acorn Funds' shareholders. 87 * * * VI. CONCLUSIONS My review of the data and other material above leads to the following conclusions with respect to the factors identified in the Order. 1. Performance. The Acorn Funds generally have achieved outstanding performance. The Acorn Fund, Acorn USA and Acorn Select all rank very favorably against their peers. The international funds have good recent performance records, but weaker long-term performance relative to the other, domestic Acorn Funds. Recent management changes have been followed by improved performance. The Acorn Funds typically achieve their performance with less risk than their competitors. 2. Management Fees relative to Peers. The management fee rankings of the Funds - particularly on the basis of a combined advisory and administrative fee basis - are generally above the respective medians and, hence, more favorable to shareholders than their peer group funds. Management fees do vary by Fund, with the Acorn Fund the least expensive and the Acorn USA Fund the most expensive. Acorn USA is the only fund that both Lipper and Morningstar Inc. ranked below the median. 3. Administrative Fees. The Acorn Funds' administrative fee, which is uniform across all Funds, is at a level comparable to that of its peers, provides for appropriate services to the Funds, and affords breakpoints that lower the fee as assets increase. 4. Management Fees relative to Institutional and Other Mutual Fund Accounts. CWAM's focus is on its mutual funds. It does not actively seek to manage separate or institutional accounts. The few institutional accounts it does manage vary in rate structures. Some pay advisory fees commensurate with or higher than the Acorn Funds. In a few instances, however, institutional accounts pay lower advisory fees than do the Acorn Funds. One particular institutional account is significant in size and has been under CWAM's management for over 25 years. Finally, in two instances, the Acorn Funds pay slightly higher fees than do similar funds sold through insurance companies. 5. Costs to CWAM and its Affiliates. CWAM's costs do not appear excessive, and, in my view, it uses appropriate methodologies to allocate overhead costs. CWAM's affiliates do not appear to profit indirectly from CWAM's advisory agreement with the Acorn Funds. 6. Profit Margins. CWAM's firm-wide profit margins are at the upper end of the industry, though these comparisons are hampered by limited industry data. High profit margins are not unexpected for firms that manage large, successful funds and have provided outstanding investment performance for investors. CMAI, the Funds' administrator, currently experiences losses rather than profits in connection with its activities relating to the Acorn Funds. 7. Economies of Scale. Economies of scale do exist at CWAM and will expand as the assets of the Acorn Funds get larger. They are, however, only partially reflected in the management fee schedule for the Funds. If the Acorn Funds' assets continue to grow, under the Funds' current fee schedules, shareholders might not benefit in a manner generally commensurate with CWAM's increased profits. 88 8. Nature and quality of services. This category includes a variety of considerations that are difficult to quantify, yet can have a significant bearing on the performance of the Acorn Funds. Several areas merit comment. a. Continuity of Management. It is critical that capable and experienced portfolio managers remain committed to the Funds and are able to hire and retain analysts to assist them. CWAM must have in place appropriate incentive plans that align its management's interests with those of investors. Further, CWAM must maintain the independence of its investment process, supported by effective information technology. b. Compliance. CWAM has a reasonably designed compliance program and a variety of related services that are valuable to shareholders, such as systems to ensure best execution of portfolio transactions and the daily review of security prices to ensure accuracy of the Acorn Funds' NAV. c. Administrative Services. The Acorn Funds benefit from a variety of administrative services that are performed by CWAM and CMAI, including preparation of registration statements, calculation of NAV's, accounting services, shareholder services, and other functions. In my opinion, these conclusions, taken together, support the reasonableness of the proposed advisory and administrative fees. In reaching my evaluation, I weighed heavily the factors of performance and management fees relative to those paid by competing funds. In this respect, the Acorn Funds provide excellent performance at costs that generally fall below industry medians. VII. RECOMMENDATIONS The Trustees should consider the following proposals to address the issues identified in this Report. Some of these recommendations require the collection and evaluation of more data. This work cannot be accomplished effectively before the expiration of the existing advisory contract on July 31, 2005. Therefore, I recommend that the Trustees consider extending the existing contract pending consideration of these recommendations. These recommendations do not purport to offer the only avenues to address the opinions and conclusions I have expressed in this Report. Economies of scale, for example, can be addressed in a variety of ways in a management contract. Sound business judgment will guide how any particular area is addressed with due consideration given to all the factors that must be weighed in reaching an advisory agreement that best serves the Acorn Fund shareholders. I believe the Trustees should consider the following: 1. Restructure the advisory fee beyond the current breakpoint schedule to reflect more fully economies of scale. The Trustees might consider several ways to accomplish this objective, including instituting a two-tier fee structure that incorporates a complex- or CWAM-wide fee (including assets held in separate accounts) and a fund specific fee, with each containing breakpoints to reflect their separate economies of scale. Another approach is to consider uniform breakpoints for all Acorn Funds, including breakpoints above current asset levels. 2. Condition contract renewal on submission of an employment agreement or management incentive plan designed to ensure the continued employment of senior management, under terms that align management's incentives with the interests of the Acorn Funds' shareholders. Any incentive plan should be designed to 89 permit CWAM to attract and retain the highest caliber investment professionals and to support them with effective and reliable information technology systems. 3. Review with CWAM its anticipated capacity limitations and the degree to which increased staffing and effective incentives may address those issues. Robert P. Scales July 20, 2005 90 BOARD APPROVAL OF THE EXISTING ADVISORY AGREEMENTS The Investment Advisory Agreement Committee (the "Committee") of the board of trustees meets on at least an annual basis and as otherwise necessary or advisable to review the advisory agreement (the "Agreement") of the Columbia Acorn Funds (the "Funds") and determines whether to recommend that the full board approve the continuation of the Agreement for an additional term. The Committee is comprised of at least three trustees, each of whom is an independent trustee. After the Committee has made its recommendation, the full board, including the independent trustees, determines whether to approve the continuation of the Agreement. In addition, the board, including the independent trustees, considers matters bearing on the Agreement at most of their other meetings throughout the year and meets at least quarterly with the portfolio managers employed by Columbia Wanger Asset Management, L.P. ("CWAM"), the Funds' investment adviser. The trustees receive all materials that they or CWAM believe to be reasonably necessary for them to evaluate the Agreement and determine whether to approve the continuation of the Agreement. Those materials generally include, among other items, (i) information on the investment performance of the Funds and the performance of peer groups of funds and of the Funds' performance benchmarks, (ii) information on the Funds' advisory fees and other expenses, including information comparing the Funds' expenses to those of peer groups of funds and information about any applicable expense caps and fee "breakpoints," (iii) share sales and redemption data, (iv) information about the profitability to CWAM and its affiliates of their relationships with the Funds and potential "fall-out" or ancillary benefits that CWAM and its affiliates may receive as a result of their relationships with the Funds and (v) information obtained through CWAM's response to a questionnaire prepared at the request of the trustees by Bell, Boyd & Lloyd LLC, independent counsel to Columbia Acorn Trust (the "Trust") and to the independent trustees. The trustees may also consider other information such as (i) CWAM's financial results and financial condition, (ii) each Fund's investment objective and strategies and the size, education and experience of CWAM's investment staffs and their use of technology, external research and trading cost measurement tools, (iii) the allocation of the Funds' brokerage, if any, including allocations to brokers affiliated with CWAM, and the use of "soft" commission dollars to pay Fund expenses or to pay for research products and services, (iv) the resources devoted to, and the record of compliance with, the Funds' investment policies and restrictions, policies on personal securities transactions and other compliance policies, (v) the response of CWAM and its affiliates to various legal and regulatory proceedings since 2003 and (vi) the economic outlook generally and for the mutual fund industry in particular. In addition, the trustees conferred with, and reviewed the Management Fee Evaluation prepared by, the Trust's Senior Officer, who was appointed by the trustees as contemplated by the Assurance of Discontinuance dated February 9, 2005 among affiliates of CWAM and the Office of the New York Attorney General. A summary of the Management Fee Evaluation is included in this report. Throughout the process, the trustees have the opportunity to ask questions of and request additional materials from CWAM. On July 20, 2005 the board of trustees most recently approved the continuation of the Agreement through October 31, 2005, and on September 27, 2005 the board approved an amended and restated Agreement (the "Amended Agreement") for an initial term ending on July 31, 2006. The board actions followed Committee meetings held in February, May, June and August 2005. The board determined in the first instance to continue the Agreement through October (rather than for a full year period) pending the resolution of the compensation and incentive plan for key CWAM employees, whose employment agreements were to terminate in December, 2005. Those matters were resolved prior to September 27. In considering whether to approve the continuation of the Agreement and to approve the amended and restated Agreement, the trustees, including the independent trustees, did not identify any single factor as determinative, and each weighed the various factors as he or she deemed appropriate. The trustees considered the following matters in connection with their continuation of the Agreement and, except as noted in connection with their approval of the Amended Agreement (collectively with the Agreement, the "Agreements"). NATURE, QUALITY AND EXTENT OF SERVICES. The trustees reviewed the nature, quality and extent of CWAM's services to the Funds, taking into account the investment objective and strategy of each Fund and the knowledge gained from the board's regular meetings with management on at least a quarterly basis. In addition, the trustees reviewed CWAM's resources and key personnel, especially those who provide investment management services to the Funds. At the September 27, 2005 meeting, the trustees considered the 91 BOARD APPROVAL OF THE EXISTING ADVISORY AGREEMENTS, CONTINUED fact that Columbia Management Group, Inc. ("CM") and CWAM had agreed on a new compensation and incentive plan for key CWAM employees. The trustees also considered other services provided to the Funds by CWAM, such as managing the execution of portfolio transactions and the selection of broker-dealers for those transactions, providing support services for the board and board committees, communicating with shareholders and overseeing the activities of other service providers, including monitoring compliance with various Fund policies and procedures and with applicable securities laws and regulations. The trustees concluded that the nature and extent of the services provided by CWAM to each Fund were appropriate and consistent with the terms of the Agreements, that the quality of those services had been consistent with or superior to quality norms in the industry and that the Funds were likely to benefit from the continued provision of those services. They also concluded that CWAM had sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated its continuing ability to attract and retain well-qualified personnel. PERFORMANCE OF THE FUNDS. The trustees considered the short-term and longer-term performance of each Fund. They reviewed information comparing each Fund's performance with the performance of the Fund's benchmark and with the performance of comparable funds and peer groups identified by Lipper Inc. ("Lipper") and Morningstar Associates, LLC ("Morningstar"). They noted that the four domestic Funds, including Columbia Acorn Fund, Columbia Acorn USA ("Acorn USA"), Columbia Acorn Select and Columbia Thermostat, have each outperformed their respective benchmarks and Lipper and Morningstar peers. The trustees discussed the performance of the two international Funds, Columbia Acorn International and Columbia Acorn International Select, noting that while the Funds underperformed their benchmarks for the three- and five-year periods, each Fund's performance had improved over the past two years. The trustees concluded that although past performance is not necessarily indicative of future results, the Funds' improving performance record and investment process enhancements were important factors in the trustees' evaluation of the quality of services provided by CWAM under the Agreement. COSTS OF SERVICES AND PROFITS REALIZED BY CWAM. The trustees examined information on fees and expenses of each Fund in comparison to information for other comparable funds as provided by Lipper and Morningstar. They considered that both the contractual rates of advisory fees and the actual advisory fees for most of the Funds were lower than the median advisory fees of the respective peer groups. The trustees also considered that the expense ratio of each Fund was also lower than the median expense ratio of the respective peer group. They discussed the contractual rates of advisory fees and actual advisory fees of Acorn USA, which were slightly above the median advisory fees of the peer groups. The trustees noted that, although Acorn USA's fees were above the median fees, Acorn USA has had superb long-term performance, ranking first within its Lipper peer group for the three, four and five-year periods. At the July 20, 2005 board meeting, the trustees concluded that they should continue to evaluate the investment advisory fee rates for Acorn USA, which culminated in the September 27, 2005 board approval of the Amended Agreement, which provides a new breakpoint for Columbia Acorn USA's fee schedule, reducing fees by 0.05% on net assets in excess of $500 million. The trustees reviewed information on the profitability of CWAM in serving as each Fund's investment adviser and of CWAM and its affiliates in all of their relationships with each Fund, as well as an explanation of the methodology utilized in allocating various expenses among the Funds and other business units. The trustees considered the methodology used by CWAM in determining compensation payable to portfolio managers and the very competitive environment for investment management talent. The trustees recognized that profitability comparisons among fund managers are difficult because very little comparative information is publicly available and profitability of any manager is affected by numerous factors, including the organizational structure of the particular manager, the types of funds and other accounts it manages, possible other lines of business, the methodology for allocating expenses and the manager's capital structure and cost of capital. However, based on the information available and taking those factors into account, the trustees concluded that the profitability of CWAM regarding each Fund in relation to the services rendered was not unreasonable. The trustees also reviewed CWAM's advisory fees for its institutional separate accounts. Although in most instances its institutional separate account fees for various investment strategies were lower than the advisory fees charged to the Funds with corresponding strategies, the trustees noted that CWAM performs significant additional 92 services for the Funds that it does not provide to those other clients, including administrative services, oversight of the Funds' other service providers, trustee support, regulatory compliance and numerous other services. Finally, the trustees considered the financial condition of CWAM, which they found to be sound. The trustees concluded that the advisory fees and other compensation payable by the Funds to CWAM and its affiliates were reasonable in relation to the nature and quality of the services to be provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies and the fees CWAM charges to other clients. The trustees noted, however, that they would continue to evaluate the Funds' investment advisory fee rates. The trustees also concluded that the Funds' estimated overall expense ratios, taking into account quality of services provided by CWAM and the investment performance of the Funds, were reasonable. ECONOMIES OF SCALE. The trustees noted that the advisory fee schedule for each Fund except Columbia Acorn International Select and Columbia Thermostat Fund contains one or more breakpoints that reduce the fee rate on assets above specified levels. The trustees received and discussed information concerning whether CWAM realizes economies of scale as a Fund's assets increase. The trustees concluded that the fee schedule for each Fund currently in effect represents a sharing of economies of scale at current asset levels but concluded to continue their periodic consideration of the Funds' fee structures and economies of scale. OTHER BENEFITS TO CWAM. The trustees also considered benefits that accrue to CWAM and its affiliates from their relationship with the Funds. The trustees concluded that, other than the services to be provided by CWAM and its affiliates pursuant to the Agreement and the fees payable by the Funds therefor, the Funds and CWAM may potentially benefit from their relationship with each other in other ways. Recognizing that affiliates of CWAM serve the Funds as distributor and transfer agent and receive compensation from the Funds for those services, the trustees determined that such compensation was not unreasonable. The trustees also considered CWAM's use of commissions to be paid by the Funds on their portfolio brokerage transactions to obtain proprietary research products and services benefiting the Funds and/or other clients of CWAM. The trustees concluded that CWAM's use of "soft" commission dollars to obtain research products and services was consistent with regulatory requirements and is beneficial to the Funds. They concluded that, although CWAM derives or may derive additional benefits through the use of soft dollars from the Funds' portfolio transactions, the Funds also benefit from the receipt of research products and services to be acquired through commissions paid on the portfolio transactions of other clients of CWAM. They also concluded that the Funds' success could attract other business to CWAM or its other clients' accounts and that CWAM's success could enhance its ability to serve the Funds. NEW TERMS OF THE AMENDED AGREEMENT. As previously mentioned, the trustees negotiated a new breakpoint for Columbia Acorn USA's fee schedule, reducing fees by 0.05% on net assets in excess of $500 million. That new breakpoint is reflected in the Amended Agreement. In addition, the Amended Agreement includes representations by CWAM that are substantially similar to those contained in a letter agreement between the Trust and CM that expired on July 31, 2005. The Amended Agreement provides that: (1) CWAM will endeavor to preserve the autonomy of the Trust; (2) CWAM remain a wholly owned subsidiary of CMG (or any successor company) as a Chicago-based management firm; (3) CWAM will maintain the investment philosophy and research that the Chicago-based management deems appropriate, research activities separate and dedicated solely to CWAM and its own domestic and international trading activities; (4) CWAM will use its best efforts to maintain information systems that will provide timely and uninterrupted operating information and data consistent with all regulatory and compliance requirements; (5) CWAM's Chicago-based management will have the responsibility and considerable latitude to recruit and compensate (on a competitive basis) investment management personnel and to control travel budgets for analysts consistent with its operational and strategic plans while subject to the approval of CM; and (6) CWAM acknowledges the importance that the Board and its compliance committee place on full legal and regulatory compliance by CM, CWAM, and all other Trust service providers and their personnel (collectively, "Providers") and agrees to (i) cooperate fully with the Board, the compliance committee and the Chief Compliance Officer ("CCO") of the Trust with all inquiries by the Trust concerning such compliance by the Providers and (ii) communicate proactively with the Board, the compliance committee and the CCO of the Trust concerning material compliance matters and any instance of legal or regulatory non-compliance by the 93 BOARD APPROVAL OF THE EXISTING ADVISORY AGREEMENTS, CONTINUED Providers of which CWAM is aware and that CWAM deems to be material. Such cooperation and communication by CWAM will be done after receipt of an inquiry or upon learning of any such legal or regulatory non-compliance. Lastly, the Amended Agreement provides that the principal investment management focus and responsibilities of CWAM's portfolio managers and analysts will be dedicated to the Trust and Wanger Advisors Trust. After full consideration of the above factors as well as other factors that were instructive in analyzing the Agreement, the trustees, including all of the independent trustees, concluded that the continuation of the Agreement was in the best interest of each Fund. On July 20, 2005, the trustees continued the Agreement through October 31, 2005, and on September 27, 2005, the trustees approved the Amended Agreement. 94 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, number of portfolios in the fund complex they oversee, and other directorships they hold, are shown below. Each trustee serves in such capacity for each of the six series of Columbia Acorn Trust. 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, 2006 TO OFFICE* PAST FIVE YEARS TRUSTEE/OFFICER DIRECTORSHIPS ------------------------- ---------- ------------------------------------------------ --------------- ------------------------ TRUSTEES WHO ARE NOT INTERESTED PERSONS OF COLUMBIA ACORN TRUST: MARGARET EISEN, 52, Managing Director, CFA Institute since 2005; 6 Antigenics, Inc. Trustee 2002 Chief Investment Officer, EAM International LLC (biotechnology and from 2003 through 2005; formerly managing drugs); Global Financial director, DeGuardiola Advisors; formerly Group (venture capital managing director, North American Equities at fund of funds); Lehman General Motors Asset Management; prior thereto, Brothers/First Trust director of Worldwide Pension Investments for Income Opportunity Fund DuPont Asset Management. (high-yield closed-end fund). JEROME KAHN, JR., 71, 1987 Portfolio manager and stock analyst, (investment 6 None. Trustee adviser), former president, William Harris Investors, Inc. STEVEN N. KAPLAN, 46, 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, 70, 1972 Adjunct professor of strategic management, 6 Sonic Foundry, Inc. Trustee University of Chicago Graduate School of (software); Irex Corp. Business; Business consultant. (insulation contracting). ALLAN B. MUCHIN, 70, 1998 Chairman emeritus, Katten Muchin Zavis 6 None. Trustee Rosenman (law firm). ROBERT E. NASON, 69, 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, 70, 2002 Frank Wakely Gunsaulus Professor of Law and 6 AmerUs Life Holdings Trustee Finance, and chairman of the Center for the (life insurance); LDF, Study of Law and Financial Markets, Illinois Inc. and Labe Federal Institute of Technology; prior thereto, chairman Bank (banking); Margo of the board and chief executive officer of Caribe, Inc. (farming). ABN-AMRO Incorporated, formerly The Chicago Corporation, and chief executive officer of Market Liquidity Network, LLC. TRUSTEES WHO ARE INTERESTED PERSONS OF COLUMBIA ACORN TRUST: CHARLES P. MCQUAID, 52, 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, 71, 1970 Founder, former president, chief investment 10 Wanger Advisors Trust Trustee (1) officer and portfolio manager, Columbia WAM (4 portfolios). 1992-2003; former president of the Trust from April 1992 through September 2003; former president, Wanger Advisors Trust 1994 through September 2003; since September 2003, adviser to Columbia WAM (September 2003 through September 2005); principal, WAM from July 1992 until September 2000; president, WAM Ltd. from July 1992 to September 2000; former president, Wanger Advisors Trust; director, Wanger Investment Company plc.
95
NUMBER OF PORTFOLIOS IN NAME, POSITION(S) YEAR FIRST FUND COMPLEX WITH COLUMBIA ACORN ELECTED OR PRINCIPAL OCCUPATION(S) FOR WHICH AND AGE AT APPOINTED DURING OFFICER ACTS IN OTHER JANUARY 1, 2006 TO OFFICE* PAST FIVE YEARS SAME CAPACITY DIRECTORSHIPS ------------------------- ---------- ------------------------------------------------ --------------- ------------------------ OFFICERS OF COLUMBIA ACORN: J. KEVIN CONNAUGHTON, 41, 2001 Treasurer and CFO of the Columbia Funds and of 10 National Offshore Assistant Treasurer the Liberty All-Star Funds since December 2000 Funds (formerly chief accounting officer and controller of the Columbia Funds and of the Liberty All-Star Bank of America Funds from February 1998 to October 2000); Global Liquidity treasurer of the Galaxy Funds from September Funds, PLC 2002 through November 2005; treasurer, Columbia Management Multi-Strategy Hedge Fund, LLC from Banc of America December 2002 through December 2004. Capital Management (Ireland), Limited MICHAEL G. CLARKE, 35, 2004 Chief Accounting Officer of the Columbia Funds 10 None. Assistant Treasurer 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 Columbia Funds from February 2001 to June 2002; Assistant Treasurer of the Columbia Funds from August 1999 to February 2001). P. ZACHARY EGAN, 37, 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. BRUCE H. LAUER, 48, 1995 Chief operating officer, Columbia WAM since 10 Banc of America Vice President, Secretary April 1995; principal, WAM from January 2000 to Capital and Treasurer September 2000; vice president, treasurer and Management secretary, Wanger Advisors Trust; director, (Ireland), Limited Wanger Investment Company plc and New Americas Small Cap Fund. ROBERT A. MOHN, 44, 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, 41, 2003 Analyst and portfolio manager, Columbia WAM 6 None. Vice President since 2001; prior thereto, analyst and portfolio manager, Merrill Lynch. CHRISTOPHER OLSON, 41, 2001 Analyst and portfolio manager, Columbia WAM since 10 None. Vice President 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; vice president Wanger Advisors Trust. VINCENT P. PIETROPAOLO, 2001 Assistant general counsel, Bank of America 10 None. 40, Assistant Secretary (and its predecessors) since December 1999. ROBERT SCALES, 53, 2004 Deputy Counsel, Grant Thornton LLP 2002-2004; 10 None. Chief Compliance Officer, prior thereto, Associate general counsel, UBS Senior Vice President and PaineWebber. General Counsel
* Dates prior to April 1992 correspond to the date first elected or appointed as a director or officer of The 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 1940 Act, because he is an officer of the Trust and/or because he is an existing or former employee or other affiliated person of Columbia WAM. The Statement of Additional Information includes additional information about Fund trustees and is available, without charge, upon request by calling 1-800-345-6611. 96 SPECIAL NOTICE A special meeting of the shareholders was held on September 27, 2005 for the purpose of electing nine trustees. A Proxy Statement that described the proposal had been mailed to shareholders of record as of July 21, 2005. The holders of the majority of the shares of the Trust entitled to vote at the meeting elected the following nine trustees, by the votes shown below: NOMINEE FOR AGAINST ABSTAIN/BNV* --------------- --------------- ------------- ------------ Margaret Eisen 425,129,820.877 2,052,402.324 0 Jerome Kahn, Jr. 425,077,605.023 2,104,618.178 0 Steven Kaplan 425,232,834.956 1,949,388.245 0 David Kleinman 425,147,691.140 2,034,532.061 0 Charles McQuaid 425,489,435.797 1,692,787.404 0 Allan Muchin 425,087,258.090 2,094,965.110 0 Robert Nason 425,119,296.755 2,062,926.446 0 Ralph Wanger 425,410,879.931 1,772,043.270 0 John Wing 425,005,357.986 2,176,865.215 0 * "BNVs" or "broker non-votes" are shares held by brokers or nominees as to which (i) the broker or nominee does not have discretionary voting power, and (ii) the broker or nominee has not received instructions from the beneficial owner or other person who is entitled to instruct how the shares will be voted. 97 This page intentionally left blank. 98 This page intentionally left blank. 99 This page intentionally left blank. 100 COLUMBIA ACORN FAMILY OF FUNDS CLASS Z SHARE INFORMATION MINIMUM INITIAL INVESTMENT IN COLUMBIA ACORN INTERNATIONAL, COLUMBIA ACORN INTERNATIONAL SELECT AND COLUMBIA THERMOSTAT FUND $1,000 $1,000 FOR AN IRA MINIMUM INITIAL INVESTMENT IN COLUMBIA ACORN FUND AND COLUMBIA ACORN USA* $75,000 MINIMUM INITIAL INVESTMENT IN COLUMBIA ACORN SELECT** $50,000 MINIMUM SUBSEQUENT INVESTMENT $50 EXCHANGE FEE NONE COLUMBIA ACORN FUND ACRNX Management Fee 0.64% 12b-1 Fee None Other Expenses 0.10% ----- Net Expense Ratio 0.74% COLUMBIA ACORN INTERNATIONAL ACINX Management Fee 0.79% 12b-1 Fee None Other Expenses 0.20% ----- Net Expense Ratio 0.99% COLUMBIA ACORN USA AUSAX Management Fee 0.89% 12b-1 Fee None Other Expenses 0.12% ----- Net Expense Ratio 1.01% COLUMBIA ACORN INTERNATIONAL SELECT ACFFX Management Fee 0.94% 12b-1 Fee None Other Expenses 0.51% ----- Net Expense Ratio 1.45% COLUMBIA ACORN SELECT ACTWX Management Fee 0.82% 12b-1 Fee None Other Expenses 0.17% ----- Net Expense Ratio 0.99% 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, 2005 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, 2006. The Fund's adviser and/or affiliates have contractually agreed to waive a portion of "other expenses" through April 30, 2006. * Effective February 3, 2006, the minimum initial investment in Columbia Acorn Fund and Columbia Acorn USA was raised to $75,000 from $50,000. ** Effective August 5, 2005, the minimum initial investment in Columbia Acorn Select was raised to $50,000 from $1,000. *** Does not include estimated fees and expenses of 0.74% incurred by the Fund from the underlying portfolio funds. 101 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 Management Distributors, Inc. One Financial Center Boston, Massachusetts 02111-2621 TRANSFER AGENT, DIVIDEND DISBURSING AGENT Columbia Management 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 AND A COPY OF THE FUNDS' VOTING RECORD ARE AVAILABLE (I) WITHOUT CHARGE, UPON REQUEST, BY CALLING 800-922-6769 AND (II) ON THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT WWW.SEC.GOV. INFORMATION REGARDING HOW THE FUNDS VOTED PROXIES RELATING TO PORTFOLIO SECURITIES DURING THE 12-MONTH PERIOD ENDED JUNE 30, IS AVAILABLE FROM THE SEC'S WEBSITE. INFORMATION REGARDING HOW THE FUNDS VOTED PROXIES RELATING TO PORTFOLIO SECURITIES IS ALSO AVAILABLE FROM THE FUND'S WEBSITE 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. 102 [PHOTO OF ACORNS] --------------------- PRESORTED [LOGO] COLUMBIAFUNDS FIRST-CLASS MAIL U.S. POSTAGE PAID A MEMBER OF COLUMBIA MANAGEMENT GROUP HOLLISTON, MA PERMIT NO. 20 --------------------- (C) 2006 COLUMBIA FUNDS DISTRIBUTOR, INC. ONE FINANCIAL CENTER, BOSTON, MA 02111-2621 SHC-42/105107-1205 (02/06) 06/9839 COLUMBIA ACORN FUNDS CLASS ABC SHARES ANNUAL REPORT DECEMBER 31, 2005 [PHOTO OF A WOMEN] 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 LETTER TO SHAREHOLDERS FROM THE COLUMBIA ACORN TRUST BOARD OF TRUSTEES The investment process for the Columbia Acorn Family of Funds ("Acorn Funds") traces back to inception 35 years ago. Your trustees believe that this process and its underlying philosophy have been the principal drivers producing the exceptional long-term investment results. The process has remained the same despite changes in ownership of our investment adviser which is now named Columbia Wanger Asset Management ("CWAM"). CWAM is owned by Bank of America ("B of A") and is a subsidiary of B of A's Columbia Management ("CM"). The Board of Trustees of the Acorn Funds has always insisted that its investment adviser possess three pillars of competitive strength: first, the investment process referred to above; second, execution of the process by exceptionally talented investment professionals; and third, a single autonomous and creative environment in which the investment professionals can reach for optimal success. While there have been some operational changes to CWAM as ownership has changed, these three pillars of competitive strength remain substantially intact today. We are pleased to report to shareholders that the investment advisory agreement, which we approved for renewal through July 31, 2006, contains provisions directed toward the preservation of those pillars of competitive strength. In addition to renewal of the investment advisory agreement, your trustees participated in several other matters over the past year that will be of particular interest to shareholders. INCREASE IN MINIMUM INVESTMENT FOR NEW SHAREHOLDERS IN THREE FUNDS The trustees increased the minimum investment for new shareholders in Columbia Acorn Select to $50,000 and for new shareholders in Columbia Acorn Fund and Columbia Acorn USA from $50,000 to $75,000. The Acorn Funds experienced strong net cash inflows during 2005 and aggregate net assets increased over 23% which includes positive investment returns. The investment minimums for the three domestic funds were increased to protect existing shareholders by tempering net cash inflows. MANAGEMENT FEE EXPENSE REDUCTIONS The trustees approved management fee reductions initiated by CM following its settlement of its regulatory proceedings, and we negotiated a new break point in the investment advisory agreement for Columbia Acorn USA. These reductions lowered management fees by the following annualized percentages based on total net assets at December 31, 2005: Acorn Select 5.8%; Acorn USA 4.3%; Acorn Fund 2.5%; Acorn International 1.3%; Acorn International Select 1.1%. CHANGES IN INVESTMENT STRATEGIES The trustees approved an increase in the market capitalization limit for companies in which Columbia Acorn Select may invest from $15 billion to $20 billion to provide the investment manager greater flexibility in searching for new investment opportunities. We also approved a change in the stock/bond allocation table for Columbia Thermostat Fund in 2005. Further, a change in stock equity allocations among various Columbia funds was approved for Columbia Thermostat, with the intent of improving future stock investment results. COMPLIANCE OVERSIGHT Our compliance committee was our most active in 2005. Our Chief Compliance Officer, Robert Scales, is leading our compliance oversight effort and is making an extremely valuable contribution to protecting shareholder interests. He reports to the committee and to the Board of Trustees on a regular basis, providing results of his reviews and his recommendations for future action. During this past year he did an extensive evaluation and review of the management fees shareholders pay to CWAM. Extracts of his written evaluation appear in this report to shareholders on Page 88. His recommendations are currently under consideration and will be addressed by our contract committee as part of the investment advisory agreement review process this summer. INDEPENDENT DISTRIBUTION CONSULTANT ("IDC") As reported at the annual shareholders' meeting this past September, we are waiting for the IDC to make a final determination on the distribution of payments to any Acorn fund or its shareholders arising from the settlement of regulatory proceedings by B of A. We have met with the IDC to provide our findings and recommendation, and we hope to advise shareholders of the final determination this year. Unfortunately, there is no further action we can take to expedite the distribution process. CWAM We advised shareholders at the annual meeting that the road ahead for the Acorn Funds looks extremely positive. The Acorn Funds are in a new era. Ralph Wanger has retired from his advisory role at CWAM but remains a valuable contributor as a non-management trustee. The investment management baton has been passed to Chuck McQuaid who has more than 20 years of experience working with Ralph. He officially succeeded Ralph more than two years ago. Chuck has already demonstrated his effective leadership and along with the CWAM team, he has sustained an impressive record. Your trustees are confident that all shareholders will benefit in the years ahead with the three pillars of competitive strength intact and Chuck leading the way. 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 1-800-922-6769 COLUMBIA ACORN FAMILY OF FUNDS ANNUAL REPORT 2005 TABLE OF CONTENTS COLUMBIA ACORN FAMILY OF FUNDS Net Asset Value Per Share 2 Share Class Performance 3 Fund Performance vs. Benchmarks 4 Squirrel Chatter II: Understanding Our Investment Style 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 43 COLUMBIA ACORN USA In a Nutshell 14 At a Glance 15 Major Portfolio Changes 44 Statement of Investments 45 COLUMBIA ACORN INTERNATIONAL SELECT In a Nutshell 16 At a Glance 17 Major Portfolio Changes 50 Statement of Investments 51 Portfolio Diversification 53 COLUMBIA ACORN SELECT In a Nutshell 18 At a Glance 19 Major Portfolio Changes 54 Statement of Investments 55 COLUMBIA THERMOSTAT FUND In a Nutshell 20 At a Glance 21 Statement of Investments 76 Statement of Assets and Liabilities 77 Statement of Operations 78 Statement of Changes in Net Assets 79 Financial Highlights 81 Notes to Financial Statements 82 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 69 Report of Independent Registered Public Accounting Firm 86 Unaudited Information 87 Management Fee Evaluation of the Senior Officer 88 Board Approval of the Existing Advisory Agreement 94 Board of Trustees and Management of Columbia Acorn Funds 98 Special Notice 100 Columbia Acorn Family of Funds Information 101 1 NET ASSET VALUE PER SHARE as of 12/31/05
Columbia Columbia Acorn Columbia Columbia Columbia Acorn Columbia International Acorn Thermostat Acorn Fund International Acorn USA Select Select Fund ----------------------------------------------------------------------------------------------------------------- Class A $27.57 $33.20 $26.52 $20.36 $22.47 $12.49 ----------------------------------------------------------------------------------------------------------------- Class B $26.61 $32.71 $25.61 $19.80 $21.71 $12.51 ----------------------------------------------------------------------------------------------------------------- Class C $26.58 $32.68 $25.59 $19.80 $21.69 $12.51 -----------------------------------------------------------------------------------------------------------------
2005 YEAR-END DISTRIBUTIONS The following table details the funds' year-end distributions. The record date for COLUMBIA ACORN FUND, COLUMBIA ACORN INTERNATIONAL, COLUMBIA ACORN USA and COLUMBIA ACORN SELECT was December 8, 2005. The ex-dividend date was December 9, 2005, and the payable date was December 12, 2005. For COLUMBIA THERMOSTAT FUND, the record date was December 22, 2005. The ex-dividend date was December 23, 2005, and the payable date was December 27, 2005. COLUMBIA ACORN INTERNATIONAL SELECT did not have any year-end distributions.
Short-term Long-term Capital Capital Ordinary Reinvestment Gains Gains Income Price -------------------------------------------------------------------------------------------------------- Columbia Acorn Fund Class A $0.0272 $1.1500 $0.0704 $27.83 - A -------------------------------------------------------------------------------------------------------- Columbia Acorn Fund Class B and C $0.0272 $1.1500 None $26.87 - B $26.84 - C -------------------------------------------------------------------------------------------------------- Columbia Acorn International Class A None $1.0760 $0.2027 $32.26 - A -------------------------------------------------------------------------------------------------------- Columbia Acorn International Class B and C None $1.0760 None $31.80 - B $31.78 - C -------------------------------------------------------------------------------------------------------- Columbia Acorn USA Class A, B and C $0.0145 $0.9905 None $26.83 - A $25.93 - B $25.91 - C -------------------------------------------------------------------------------------------------------- Columbia Acorn Select Class A $0.0603 $0.4416 None $22.51 - A -------------------------------------------------------------------------------------------------------- Columbia Acorn Select Class B and C None $0.4416 None $21.75 - B $21.73 - C -------------------------------------------------------------------------------------------------------- Columbia Thermostat Fund, Class A $0.0337 $0.6288 $0.3907 $12.54 - A -------------------------------------------------------------------------------------------------------- Columbia Thermostat Fund, Class B $0.0337 $0.6288 $0.3120 $12.56 - B -------------------------------------------------------------------------------------------------------- Columbia Thermostat Fund, Class C $0.0337 $0.6288 $0.2923 $12.56 - C --------------------------------------------------------------------------------------------------------
1-800-922-6769 2 COLUMBIA ACORN FAMILY OF FUNDS >SHARE CLASS PERFORMANCE Average Annual Total Returns through 12/31/05
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* 2.99% -2.93% 2.80% -2.13% 2.80% 1.82% ---------------------------------------------------------------------------------------------------------------- 1 year 12.76% 6.28% 11.98% 6.98% 11.90% 10.90% ---------------------------------------------------------------------------------------------------------------- 3 years 25.51% 23.06% 24.63% 23.99% 24.62% 24.62% ---------------------------------------------------------------------------------------------------------------- 5 years 12.46% 11.13% 11.70% 11.45% 11.68% 11.68% ---------------------------------------------------------------------------------------------------------------- Life of fund 13.45% 12.17% 12.70% 12.58% 12.68% 12.68% ---------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN INTERNATIONAL (10/16/2000) ---------------------------------------------------------------------------------------------------------------- 3 months* 4.40% -1.60% 4.21% -0.79% 4.18% 3.18% ---------------------------------------------------------------------------------------------------------------- 1 year 21.42% 14.44% 20.57% 15.57% 20.45% 19.45% ---------------------------------------------------------------------------------------------------------------- 3 years 32.00% 29.42% 31.09% 30.50% 31.06% 31.06% ---------------------------------------------------------------------------------------------------------------- 5 years 8.54% 7.27% 7.81% 7.51% 7.79% 7.79% ---------------------------------------------------------------------------------------------------------------- Life of fund 7.15% 5.94% 6.43% 6.28% 6.41% 6.41% ---------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN USA (10/16/2000) ---------------------------------------------------------------------------------------------------------------- 3 months* 2.59% -3.31% 2.40% -2.53% 2.36% 1.37% ---------------------------------------------------------------------------------------------------------------- 1 year 12.68% 6.20% 11.84% 6.84% 11.76% 10.76% ---------------------------------------------------------------------------------------------------------------- 3 years 25.56% 23.11% 24.69% 24.04% 24.65% 24.65% ---------------------------------------------------------------------------------------------------------------- 5 years 13.74% 12.40% 12.98% 12.73% 12.96% 12.96% ---------------------------------------------------------------------------------------------------------------- Life of fund 14.73% 13.43% 13.98% 13.87% 13.96% 13.96% ---------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN INT'L SELECT (10/16/2000) ---------------------------------------------------------------------------------------------------------------- 3 months* 3.40% -2.54% 3.29% -1.71% 3.23% 2.23% ---------------------------------------------------------------------------------------------------------------- 1 year 15.60% 8.95% 14.97% 9.97% 14.77% 13.77% ---------------------------------------------------------------------------------------------------------------- 3 years 26.38% 23.91% 25.57% 24.94% 25.51% 25.51% ---------------------------------------------------------------------------------------------------------------- 5 years 3.94% 2.72% 3.24% 2.88% 3.21% 3.21% ---------------------------------------------------------------------------------------------------------------- Life of fund 3.14% 1.97% 2.44% 2.27% 2.43% 2.43% ---------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN SELECT (10/16/2000) ---------------------------------------------------------------------------------------------------------------- 3 months* 6.59% 0.46% 6.39% 1.39% 6.35% 5.35% ---------------------------------------------------------------------------------------------------------------- 1 year 10.78% 4.41% 10.01% 5.01% 9.91% 8.91% ---------------------------------------------------------------------------------------------------------------- 3 years 19.37% 17.04% 18.54% 17.82% 18.50% 18.50% ---------------------------------------------------------------------------------------------------------------- 5 years 10.95% 9.65% 10.20% 9.93% 10.18% 10.18% ---------------------------------------------------------------------------------------------------------------- Life of fund 11.78% 10.52% 11.02% 10.90% 11.00% 11.00% ---------------------------------------------------------------------------------------------------------------- COLUMBIA THERMOSTAT FUND (3/3/2003) ---------------------------------------------------------------------------------------------------------------- 3 months* 2.03% -3.84% 1.89% -2.83% 1.90% 0.95% ---------------------------------------------------------------------------------------------------------------- 1 year 5.25% -0.80% 4.56% -0.20% 4.49% 3.53% ---------------------------------------------------------------------------------------------------------------- Life of fund 12.90% 10.57% 12.17% 11.31% 12.09% 12.09% ----------------------------------------------------------------------------------------------------------------
*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 AND MOST RECENT MONTH-END 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. 3 COLUMBIA ACORN FAMILY OF FUNDS >FUND PERFORMANCE VS. BENCHMARKS Class A Shares, without sales charge, Average Annual Total Returns through 12/31/05
4th Life Quarter* 1 year 3 years 5 years of Fund ------------------------------------------------------------------------------------------------------------ COLUMBIA ACORN FUND (10/16/00) 2.99% 12.76% 25.51% 12.46% 13.45% ------------------------------------------------------------------------------------------------------------ Russell 2500 1.81% 8.11% 23.00% 9.14% 9.43% ------------------------------------------------------------------------------------------------------------ S&P 500 2.09% 4.91% 14.39% 0.54% -0.19% ------------------------------------------------------------------------------------------------------------ Lipper Small-Cap Core Funds Index 1.67% 7.56% 21.51% 9.19% 9.26% ------------------------------------------------------------------------------------------------------------ Lipper Mid-Cap Core Funds Index 2.45% 9.46% 19.95% 6.28% 5.86% ------------------------------------------------------------------------------------------------------------ COLUMBIA ACORN INTERNATIONAL (10/16/00) 4.40% 21.42% 32.00% 8.54% 7.15% ------------------------------------------------------------------------------------------------------------ S&P/Citigroup EMI Global ex-US 6.67% 21.99% 34.71% 14.20% 13.41% ------------------------------------------------------------------------------------------------------------ MSCI EAFE 4.08% 13.54% 23.68% 4.55% 4.60% ------------------------------------------------------------------------------------------------------------ Lipper Int'l Small-Cap Funds Index 6.23% 23.77% 35.47% 13.45% 12.10% ------------------------------------------------------------------------------------------------------------ COLUMBIA ACORN USA (10/16/00) 2.59% 12.68% 25.56% 13.74% 14.73% ------------------------------------------------------------------------------------------------------------ Russell 2000 1.13% 4.55% 22.13% 8.22% 8.07% ------------------------------------------------------------------------------------------------------------ Lipper Small-Cap Core Funds Index 1.67% 7.56% 21.51% 9.19% 9.26% ------------------------------------------------------------------------------------------------------------ S&P 500 2.09% 4.91% 14.39% 0.54% -0.19% ------------------------------------------------------------------------------------------------------------ COLUMBIA ACORN INT'L SELECT (10/16/00) 3.40% 15.60% 26.38% 3.94% 3.14% ------------------------------------------------------------------------------------------------------------ S&P/Citigroup World ex-US Cap Range $2-10B 6.50% 20.35% 31.14% 11.60% 11.78% ------------------------------------------------------------------------------------------------------------ MSCI EAFE 4.08% 13.54% 23.68% 4.55% 4.60% ------------------------------------------------------------------------------------------------------------ Lipper International Funds Index 4.75% 15.67% 23.10% 5.34% 5.28% ------------------------------------------------------------------------------------------------------------ COLUMBIA ACORN SELECT (10/16/00) 6.59% 10.78% 19.37% 10.95% 11.78% ------------------------------------------------------------------------------------------------------------ S&P MidCap 400 3.34% 12.56% 21.15% 8.60% 8.91% ------------------------------------------------------------------------------------------------------------ Lipper Mid-Cap Growth Index 3.11% 9.58% 19.16% -0.91% -3.71% ------------------------------------------------------------------------------------------------------------ S&P 500 2.09% 4.91% 14.39% 0.54% -0.19% ------------------------------------------------------------------------------------------------------------ COLUMBIA THERMOSTAT FUND (3/3/03) 2.03% 5.25% -- -- 12.90% ------------------------------------------------------------------------------------------------------------ S&P 500 2.09% 4.91% -- -- 16.98% ------------------------------------------------------------------------------------------------------------ Lehman Brothers U.S. Credit Intermediate Bond Index 0.39% 1.42% -- -- 3.61% ------------------------------------------------------------------------------------------------------------ Lipper Flexible Portfolio Funds Index 1.95% 6.34% -- -- 14.60% ------------------------------------------------------------------------------------------------------------
*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 AND MOST RECENT MONTH-END 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. S&P/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. S&P/CITIGROUP WORLD EX-US CAP RANGE $2-10B is a subset of the broad market selected by the index sponsor, representing the mid-cap developed market 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 and Columbia Acorn USA. 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 BROTHERS 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. It is not possible to invest directly in an index. 1-800-922-6769 4 >SQUIRREL CHATTER II: UNDERSTANDING OUR INVESTMENT STYLE [PHOTO OF CHARLES P. MCQUAID] In the five-year history of Columbia Acorn Fund's Class A, B and C shares, the Fund outperformed its primary small-cap benchmark, the Russell 2500, 1 in all but one, 1-year period. In 2003 the Fund's Class A shares (without sales charge) underperformed the benchmark by 0.66%. The Fund's annualized 5-year return was 12.46% vs. a 9.14% gain for the Russell 2500 through December 31, 2005. We are pleased that we could offer our shareholders these excellent, long-term returns. PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. We believe our sensible approach, plus a lot of hard work, have been the drivers of the Fund's good performance. This column is the first of several columns that I will devote to explaining Columbia Wanger Asset Management's unique approach to investing. WHY SMALL AND MID CAPS? Acorn Fund's mission was defined at inception in 1970 by its founders Irving Harris and Ralph Wanger. The mission was simple: Invest in good quality, reasonably priced small-cap companies that have growth potential and competitive advantages, and hold on to them. When Wanger Asset Management was formed in 1992 the focus did not change. We like small companies. They are generally less complicated because big companies typically have lots of divisions while most small companies have one division. An added benefit is that sometimes these small companies are undiscovered, which may mean they are undervalued and a potentially good investment. Managers of small companies tend to focus on customers and are acutely aware of competitors. Small-cap stocks are often exciting businesses run by accessible managers, so in addition to the above virtues, they are fun for us to follow. Though we like small-caps, we don't force sales of successful stocks simply because they appreciated beyond some arbitrary small-cap definition (other small-cap managers may sell at $2 billion capitalizations, for example). The funds we manage could not make strong gains if we simply sold due to size. We let our winners run. This creates a drift upwards in weighted-~average market caps in the Fund and helps to explain why Columbia Acorn Fund has straddled between small- and mid-cap classifications. Currently Morningstar identifies Columbia Acorn Fund as Small-Cap Growth while Lipper 2 and THE WALL STREET JOURNAL put the Fund in their Mid-Cap Core category. While style classifications can be helpful, we are not style purists. For example, small-cap stocks have outperformed large caps for more than five years and we think on average they are no longer cheap based on historical valuations. Our analysts have been finding more value among mid-cap names that have the same attributes we like in small caps. Consequently, the Columbia Acorn Trust board of trustees amended the Columbia Acorn Fund prospectus on May 1, 2004 to allow the Fund to invest in stocks with market capitalizations of less than $5 billion at the time of initial purchase. 3 This too helps explain why the Fund straddles the small- and mid-cap categories. WHY GROWTH-AT-A-REASONABLE-PRICE? At Columbia Wanger Asset Management, we define growth investing styles using the terms Hard Core Value, Growth-at-a-Reasonable-Price (GARP) and Momentum. These terms help define the different ways that an investor can look for returns. Hard Core Value investors usually buy very cheap stocks, as measured by comparing the stock valuation to the underlying asset values. While this strategy works for a number of competitors who are very good at it, Hard Core 5 Value is not for us. We believe that too often the stocks are very cheap because the underlying businesses are lousy. Successful investing in Hard Core Value largely depends on predicting (or hastening) events such as takeovers, spinouts or turnarounds. Until such an event occurs the stock may be a diminishing asset. In implementing our Growth-at-a-Reasonable-Price style, our 20 analysts first search for good, growing businesses. We view what we do as investing in companies rather than in stocks, and we try to analyze companies as if we were buying the whole business rather than just a fraction of ownership. We define "good, growing businesses" as companies that have sustainable competitive advantages, fine managements, growing markets, and opportunities for market-share gains. Once we've found a good business that has been growing, we follow the company closely and determine if it sells at what we believe is a "reasonable price." A stock is at a reasonable price if it sells at (or hopefully below) what we believe is its true value. Most growth companies ("growth stock" is a misnomer) are valued by the market based on price-to-earnings (PE) ratios, and comparisons between growth companies are often based on PE-to-growth (PEG) ratios. While that approach makes theoretical sense, reported earnings are often poor measures of underlying economic profits. For example, the costs of employee stock options were not required to be an accounting expense until 2006, so underlying earnings of many companies were overstated. In other cases, companies may have higher free cash flows than suggested by reported earnings. We ask our analysts to look beyond reported earnings and adjust for many factors when using PE or related dividend discount model valuations. Our analysts also use value discipline techniques, calculating potential sell-out or break-up values, when it is appropriate to do so. Often we determine that the stock of a good business that has been growing is not selling at a reasonable price. In those cases we wait--and there have been times that we've waited for years. If valuation is borderline, we can purchase an initial small position and later increase the position or sell the stock depending on fundamentals or valuation. Valuation matters because it enables our shareholders to potentially benefit in two ways: (1) from growth of the underlying business and (2) from growth of a valuation multiplier, such as a PE ratio. Market conditions also impact how many growth companies end up in the portfolio. We had below benchmark percentage ownership in technology stocks during the 1999-2000 bubble, and we sold media and telecommunications stocks (often a bit early) in 1999. At the height of the bubble in early 2000, we bought real estate investment trusts (REITs), taking Columbia Acorn Fund's ownership of REITs to a benchmark weighting. This was an unusual move for a growth-oriented fund like ours. Then when tech stocks collapsed, we bought lots of them, and they substantially helped the Fund to keep up with the 2003 rally. These common-sense moves confused some pundits who questioned whether we had changed our style. We didn't, we just kept true to GARP, as we define it, and avoided becoming what we call GASP (Growth-at-a-Stupid-Price) investors. The remaining growth style definition is Momentum. Momentum players (I hesitate to say "investors") look for stocks that have been rising, along with fast earnings growth, and preferably earnings estimate increases. Many Momentum players completely ignore valuation. (Economists label luxury goods as those where demand rises when prices increase, so momentum players are the ultimate luxury goods buyers!) Because Momentum players buy at any price when earnings are good and often sell at any price when earnings are disappointing, we often like to sell our winners to them and sometimes buy their losers--at our dream prices. Momentum can work, especially in bubbles, but it's not for us. It's too far from our mission of investing in good businesses and targeting rational returns. 1-800-922-6769 6 Just as individual stocks can graduate from small to mid to large caps, they can also move from Value to Growth-at-a-Reasonable-Price and then to Momentum. We love to buy stocks in companies not yet recognized as growth businesses. If we can find good companies that we believe are mistakenly priced at Hard Core Value levels, better yet. Often our best performing stocks were those that were undiscovered when we bought them, and as they grew, became investor favorites because of their strong business models. We are often challenged (in a good way) when Columbia Acorn Fund stocks rise to Momentum valuations. The challenge then becomes when to sell. We try to resist significant selling unless we think fundamentals will deteriorate or valuations are entirely inappropriate vs. fundamentals. By most measures, including beta (a calculation of how much a fund moves relative to movements of its benchmark) and standard deviation (a calculation of volatility) vs. benchmarks, Columbia Acorn Fund has had below average risk over time. 4 The combination of outstanding returns yet below average risk defies economic theory. However, it seems intuitive that valuation affects risk. If a stock is overpriced, isn't it riskier? We believe that buying stocks consistent with our GARP style has reduced risk. Having a sensible investment style is very useful but it is not enough for long-term success. Other factors, such as our process and the people who make up our investment team, will be discussed in future columns. COLUMBIA WAM NEWS After the close of the period, we hired a new energy analyst. In January, William Doyle came on board. Bill was most recently a manager of PPM America's credit analysis team where part of his responsibilities included following the high yield energy sector. Bill's degrees include an MBA from Loyola University in Chicago and bachelor's degrees in finance and history from Illinois State University. In the past, our annual report Squirrel Chatters have included Scarlet A award winners. These awards acknowledged the outside analysts who provided some of the funds' winning stock ideas. In recent years it has become more difficult to come up with this list as our own investment team has become larger and has originated most of our best stocks. We continue to value the assistance provided by outside analysts but we are opting to discontinue the Scarlet A recognition program. /s/ Charles P. McQuaid Charles P. McQuaid PRESIDENT AND CHIEF INVESTMENT OFFICER COLUMBIA WANGER ASSET MANAGEMENT, L.P. -------------------------------------------------------------------------------- 1 The Russell 2500 Index is a market-weighted index of the largest 3,000 stocks held by the Russell 3000 minus the 500 largest company stocks in that group. The Russell 2500 was not the primary benchmark for Columbia Acorn Fund for the entire, 5-year period. 2 Morningstar and Lipper, Inc., are widely respected data providers in the industry. 3 This market cap adjustment was also applied to Columbia Acorn USA on the same date. Prior to the adjustment, Columbia Acorn Fund and Columbia Acorn USA invested in stocks with market capitalizations of less than $2 billion at the time of initial purchase. 4 Columbia Acorn Fund's beta relative to the Russell 2500 Index as of 12/31/05 was 0.91 for the 5-year period. The views expressed in Squirrel Chatter II are those of the author. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict so actual outcomes and results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia Acorn Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia Acorn Fund. References to specific company securities should not be construed as a recommendation or investment advice. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. MID- AND 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. 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 ongoing 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 Columbia Acorn 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 funds 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 Management Services, Inc., your account balance is available online at 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 $8,600 at the end of the period, the result would be 8.6. 2. In the section of the table titled "Expenses paid during the period," locate the amount for your fund. You will find this number is in the column labeled "actual." Multiply this number by the result from step 1. Your answer is an estimate of the expenses you paid on your account during the period. 1-800-922-6769 8 >July 1, 2005 - December 31, 2005
ACCOUNT VALUE AT ACCOUNT VALUE AT THE BEGINNING OF THE END OF EXPENSES PAID FUND'S THE PERIOD ($) THE PERIOD ($) DURING THE PERIOD ($) ANNUALIZED --------------------------------------------------------------------- EXPENSE ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL ACTUAL HYPOTHETICAL RATIO (%)* --------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN FUND --------------------------------------------------------------------------------------------------------------- Class A 1,000.00 1,000.00 1099.01 1020.11 5.34 5.14 1.01 --------------------------------------------------------------------------------------------------------------- Class B 1,000.00 1,000.00 1094.82 1016.64 8.98 8.64 1.70 --------------------------------------------------------------------------------------------------------------- Class C 1,000.00 1,000.00 1094.52 1016.13 9.50 9.15 1.80 --------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN INTERNATIONAL --------------------------------------------------------------------------------------------------------------- Class A 1,000.00 1,000.00 1180.82 1018.75 7.04 6.51 1.28 --------------------------------------------------------------------------------------------------------------- Class B 1,000.00 1,000.00 1176.59 1015.12 10.97 10.16 2.00 --------------------------------------------------------------------------------------------------------------- Class C 1,000.00 1,000.00 1175.98 1014.72 11.41 10.56 2.08 --------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN USA --------------------------------------------------------------------------------------------------------------- Class A 1,000.00 1,000.00 1069.32 1018.75 6.68 6.51 1.28 --------------------------------------------------------------------------------------------------------------- Class B 1,000.00 1,000.00 1065.38 1015.27 10.26 10.01 1.97 --------------------------------------------------------------------------------------------------------------- Class C 1,000.00 1,000.00 1064.98 1014.77 10.77 10.51 2.07 --------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN INTERNATIONAL SELECT --------------------------------------------------------------------------------------------------------------- Class A 1,000.00 1,000.00 1150.88 1016.53 9.32 8.74 1.72 --------------------------------------------------------------------------------------------------------------- Class B 1,000.00 1,000.00 1147.80 1013.66 12.40 11.62 2.29 --------------------------------------------------------------------------------------------------------------- Class C 1,000.00 1,000.00 1147.20 1012.85 13.26 12.43 2.45 --------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN SELECT --------------------------------------------------------------------------------------------------------------- Class A 1,000.00 1,000.00 1110.80 1018.80 6.76 6.46 1.27 --------------------------------------------------------------------------------------------------------------- Class B 1,000.00 1,000.00 1107.02 1015.17 10.57 10.11 1.99 --------------------------------------------------------------------------------------------------------------- Class C 1,000.00 1,000.00 1106.52 1014.67 11.10 10.61 2.09 --------------------------------------------------------------------------------------------------------------- COLUMBIA THERMOSTAT FUND --------------------------------------------------------------------------------------------------------------- Class A 1,000.00 1,000.00 1038.31 1022.68 2.57 2.55 .50 --------------------------------------------------------------------------------------------------------------- Class B 1,000.00 1,000.00 1035.39 1019.66 5.64 5.60 1.10 --------------------------------------------------------------------------------------------------------------- Class C 1,000.00 1,000.00 1034.68 1018.90 6.41 6.36 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 fund's most recent fiscal half-year and divided by 365. 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 12/31/05. 9 COLUMBIA ACORN FUND >IN A NUTSHELL [PHOTO OF CHARLES P. MCQUAID] [PHOTO OF ROBERT A. MOHN] PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. Columbia Acorn Fund gained 12.76% (Class A shares, without sales charge) in 2005, 4.65% ahead of the Russell 2500, its most comparable benchmark, and 7.85% ahead of the large-cap S&P 500 Index. During the fourth quarter, the Fund was up 2.99%, modestly ahead of all of its benchmarks. Energy stocks boosted results for the year. Southwestern Energy and Ultra Petroleum more than doubled, while Talisman Energy, Range Resources, UK-based Tullow Oil, XTO Energy and Western Gas Resources gushed profits of at least 60% each. All of the Fund's energy winners benefited from both higher prices and increased production. The winnings should help take some of the sting out of our shareholders' higher gas bills. We trimmed several stocks in this sector and ended the year with 8.1% of the Fund in energy, modestly more than the Russell 2500's weighting of 6.3%. Other excellent performers for the year included oil-pipe makers Vallourec, based in France, and Tenaris, an Argentinean multinational. Vallourec delivered a 284% gain and Tenaris about half as much due to increased demand for their products. A number of non-energy related stocks also helped performance. Human resources service provider Administaff jumped 238% while women's specialty retailer Chico's FAS rang up a 93% gain, both due to excellent earnings. Troublesome stocks for the year included Seachange International, sinking 54%, Helen of Troy, losing 52%, and RSA Security, dropping 46%, all on disappointing results. Fourth quarter results were driven by a rebound in retailers coupled with good stock picking. Last summer retailers appeared oversold when many analysts predicted a slowdown due to high energy costs and consumer debt, plus a concern about possibly peaking home prices. Our consumer analyst, Susie Hultquist, did her homework and believed that the Fund's retail stocks would be okay. Christopher & Banks, Abercrombie & Fitch and Ann Taylor Stores each marked up gains of at least 30% for the quarter. Other fine stock picks in the quarter included casino operator Pinnacle Entertainment, winning 35% on optimism that it will wisely reinvest insurance proceeds from its Biloxi casino, and portable computer maker Symbol Technologies, up 33% on better than expected earnings plus victorious patent litigation. Electronics contract manufacturing company Plexus and video editing equipment maker Avid Technology produced gains of over 30% each, again due to fine earnings. Detractors included Martek Biosciences, off 30% on disappointing earnings and fears of competition, and Dendrite International, down 28% on contract delays. Columbia Acorn Fund's international stocks rose 27.29% for the year, significantly helping performance, and gained 3.36% during the quarter. The Fund's international weighting dropped slightly during the fourth quarter to 15.6% at year-end /s/ Charles P. McQuaid Charles P. McQuaid LEAD PORTFOLIO MANAGER /s/ Robert A. Mohn Robert A. Mohn CO-PORTFOLIO MANAGER 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 12/31/05, THE FUND'S POSITIONS IN THE STOCKS MENTIONED WERE: SOUTHWESTERN ENERGY, 0.4%; ULTRA PETROLEUM, 0.9%; TALISMAN ENERGY, 0.8%; RANGE RESOURCES, 0.2%; TULLOW OIL, 0.4%; XTO ENERGY, 0.7%; WESTERN GAS RESOURCES, 0.9%; VALLOUREC, 0.4%; TENARIS, 0.4%; ADMINISTAFF, 0.3%; CHICO'S FAS, 1.4%; SEACHANGE INTERNATIONAL, 0.1%; HELEN OF TROY, 0.1%; RSA SECURITY, 0.2%; CHRISTOPHER & BANKS, 0.4%: ABERCROMBIE & FITCH, 0.8%; ANN TAYLOR STORES, 0.3%; PINNACLE ENTERTAINMENT, 0.3%; SYMBOL TECHNOLOGIES, 0.2%; PLEXUS, 0.3%; AVID TECHNOLOGY, 0.6%; MARTEK BIOSCIENCES, 0.1%; DENDRITE INTERNATIONAL, 0.2%. 1-800-922-6769 10 COLUMBIA ACORN FUND (LACAX) >AT A GLANCE PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (BASED ON CLASS A SHARE RETURNS) >through December 31, 2005 --------------------------------------- LIFE OF INCEPTION 10/16/00 1 YEAR 5 YEARS FUND --------------------------------------- Returns before taxes NAV 12.76% 12.46% 13.45% POP 6.28 11.13 12.17 ---------------------------------------------------------------- Returns after taxes NAV 11.79 12.05 12.55 on distributions POP 5.36 10.73 11.28 ---------------------------------------------------------------- Returns after taxes NAV 9.55 10.84 11.46 on distributions and POP 5.27 9.66 10.31 sale of fund shares ---------------------------------------------------------------- Russell 2500 (pretax) 8.11 9.14 9.43 ---------------------------------------------------------------- S&P 500 (pretax) 4.91 0.54 -0.19 ---------------------------------------------------------------- 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 tax impact of 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, 2005 [PIE CHART] Consumer Goods/Services 20.1% Industrial Goods/Services 16.2% Finance 12.3% Other* 10.6% Energy/Minerals 9.3% Health Care 9.3% Information 22.2% Computer Related Hardware 7.1% Media 2.6% Software/Services 8.9% Telecommunications 3.6% * Other includes short-term obligations, cash and other assets less liabilities of 6.1%. Foreign equities within the portfolio were 15.57% diversified by country as follows: 5.94% Europe ex-Ireland and UK; 2.75% Ireland and UK; 1.99% Canada; 2.03% Latin America and Emerging Markets; 1.35% Asia ex-Japan; 1.13% Japan; 0.38% Australia/New Zealand. THE GROWTH OF A $75,000 INVESTMENT IN COLUMBIA ACORN FUND (CLASS A) >October 16, 2000 through December 31, 2005 Illustration is based on a hypothetical $75,000 investment from inception in Class A shares of the Fund, which includes the 4.50% maximum 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. TOTAL NET ASSETS OF THE FUND: $16,391.3 MILLION [LINE GRAPH] Columbia Acorn Columbia Acorn Fund - A Fund - A with sales at charge Russell 2500 NAV 10/16/2000 71625 75000 75000 10/31/2000 73588 78239 77055 69717 71354 73002 12/31/2000 76919 77499 80543 78303 80046 81993 76291 74891 79886 3/31/2001 72804 70783 76235 79204 77034 82936 82562 79351 86452 6/30/2001 83644 80477 87585 82004 77600 85868 78732 75057 82442 9/30/2001 68009 65344 71213 70920 68722 74261 76324 74280 79920 12/31/2001 81193 78444 85019 80373 77471 84160 79320 76114 83058 3/31/2002 85111 81377 89121 84881 81170 88880 82283 78791 86161 6/30/2002 78087 74350 81766 68779 65478 72020 69329 65676 72596 9/30/2002 65176 60472 68248 67914 62443 71114 72294 67541 75701 12/31/2002 69966 64485 73263 68280 62772 71498 67188 61263 70354 3/31/2003 68007 61847 71212 73890 67359 77372 79092 73984 82819 6/30/2003 81512 75398 85353 85294 79450 89313 89721 83127 93949 9/30/2003 88671 81996 92850 95880 88475 100398 98987 91805 103651 12/31/2003 101362 93832 106139 105012 97255 109960 107017 98759 112060 3/31/2004 108569 99353 113685 104639 94580 109569 106512 96511 111531 6/30/2004 110208 99686 115401 104587 93885 109515 104451 93645 109373 9/30/2004 109204 97177 114350 111901 99394 117174 118895 106815 124497 12/31/2004 122700 110997 128481 120000 107268 125655 123360 109696 129173 3/31/2005 121041 107512 126745 116078 102676 121548 121847 108889 127589 6/30/2005 125893 112373 131825 132955 119015 139220 132237 117240 138468 9/30/2005 134353 117865 140684 131035 114204 137209 137521 119720 144001 12/31/2005 138362 119997 144882 COLUMBIA ACORN FUND TOP 10 HOLDINGS (AS A % OF NET ASSETS) 1. Chico's FAS 1.4% WOMEN'S SPECIALTY RETAIL 2. Coach 1.2% DESIGNER & RETAILER OF BRANDED LEATHER ACCESSORIES 3. Expeditors International of Washington 1.1% INTERNATIONAL FREIGHT FORWARDER 4. AmeriCredit 1.0% AUTO LENDING 5. Western Gas 0.9% OIL & COAL SEAM GAS PRODUCER 6. Ultra Petroleum 0.9% NATURAL GAS PRODUCER 7. Watsco 0.8% HVAC DISTRIBUTION 8. ITT Educational Services 0.8% POSTSECONDARY DEGREE PROGRAM 9. Talisman Energy 0.8% OIL & GAS PRODUCER 10. HNI 0.8% OFFICE FURNITURE & FIREPLACES Portfolio characteristics and holdings are subject to change periodically and may not be representative of current characteristics and holdings. 11 COLUMBIA ACORN INTERNATIONAL >IN A NUTSHELL [PHOTO OF P. ZACHARY EGAN] [PHOTO OF LOUIS J. MENDES III] PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. Columbia Acorn International ended 2005 up 21.42% (Class A shares, without sales charge), trailing the 21.99% gain of the S&P/Citigroup EMI Global ex-US Index by a very narrow margin. For the fourth quarter, the Fund gained 4.40% vs. 6.67% for the index. Fund underperformance in the final three months was largely due to an underweight in a rallying Japanese market. As we have noted in previous quarters, provided we can find ideas that meet our return requirements and other investment criteria, we intend to continue adding to the Fund's weighting in Japanese holdings. We believe Japanese market fundamentals are improving and valuations are generally reasonable. Columbia Acorn International continued to benefit from a number of winners in the energy sector. Perusahaan Gas Negara, an Indonesian pipeline operator, posted a 69% return in the quarter, and was up 240% for the year owing to an Indonesian government decision to deregulate natural gas prices earlier than expected. Vallourec (France) and Tenaris (an Argentinean multinational), both seamless tube manufacturers supplying energy producers, were up nearly 284% and 144%, respectively, on strong volumes and favorable pricing. Canadian oil and gas producer Talisman Energy gained 99% and the UK's Tullow Oil increased 72%. Overall, the Fund's energy stocks gained 65% over the 12-month period, well ahead of the benchmark index's 47% gain in the sector. Winners outside of the energy sector included Japanese parking lot operator Park 24, that was up 68% in the quarter and 102% in the year. While Japan was among the best performing markets in 2005, Park 24 was also a beneficiary of favorable regulatory changes affecting its core parking-lot business. Some disappointments included Mexican airport operator Grupo Aeroportaurio Del Sureste that fell 19% in the quarter as investors considered how damage to the Cancun region caused by hurricane Wilma would impact tourism. Laggards for the year included Business Post Group, a UK parcel and express mail service company, that fell 51% on declining volumes and rising costs. Hong Kong's Global Bio-Chem Technology Group, a refiner of corn-based commodities, dropped 32% on price weakness in some key commodities. Japan's Funai Electric, a consumer electronics manufacturer, traded down 32% as rising raw material costs weighed on profitability. Small-cap international stocks have had a very good run over the last few years. Share price appreciation has been driven by a combination of improving company earnings and higher valuations assigned by the market to those earnings. As a consequence, this group of stocks does not appear to be cheap. We nonetheless continue to find what we believe to be good companies around the world with attractive fundamentals not yet fully reflected in their share prices. /s/ P. Zachary Egan P. Zachary Egan CO-PORTFOLIO MANAGER /s/ Louis J. Mendes III Louis J. Mendes III CO-PORTFOLIO MANAGER 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 12/31/05, THE FUND'S POSITIONS IN THE STOCKS MENTIONED WERE: PERUSAHAAN GAS NEGARA, 0.7%; VALLOUREC, 1.0%; TENARIS, 0.4%; TALISMAN ENERGY, 0.7%; TULLOW OIL, 1.0%; PARK 24, 1.1%; GRUPO AEROPORTAURIO DEL SURESTE, 0.6%; BUSINESS POST GROUP, 0.0%; GLOBAL BIO-CHEM TECHNOLOGY GROUP, 0.5%; FUNAI ELECTRIC, 0.0%. 1-800-922-6769 12 COLUMBIA ACORN INTERNATIONAL (LAIAX) >AT A GLANCE PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (BASED ON CLASS A SHARE RETURNS) >through December 31, 2005 --------------------------------------- LIFE OF INCEPTION 10/16/00 1 YEAR 5 YEARS FUND --------------------------------------- Returns before taxes NAV 21.42% 8.54% 7.15% POP 14.44 7.27 5.94 ---------------------------------------------------------------- Returns after taxes NAV 20.68 8.35 6.45 on distributions POP 13.74 7.08 5.25 ---------------------------------------------------------------- Returns after taxes NAV 15.17 7.44 5.98 on distributions and POP 10.56 6.31 4.92 sale of fund shares ---------------------------------------------------------------- S&P/Citigroup EMI 21.99 14.20 13.41 Global ex-US (pretax) ---------------------------------------------------------------- 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 tax impact of 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, 2005 [PIE CHART] Consumer Goods/Services 18.4% Finance 15.5% Information Technology 14.0% Other* 9.7% Energy/Minerals 10.5% Health Care 6.5% Industrial Goods/Services 25.4% * Other includes short-term obligations, cash and other assets less liabilities of 3.4%. THE GROWTH OF A $10,000 INVESTMENT IN COLUMBIA ACORN INTERNATIONAL (CLASS A) >October 16, 2000 through December 31, 2005 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/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. TOTAL NET ASSETS OF THE FUND: $2,892.6 MILLION [LINE GRAPH] Columbia Acorn International - Columbia Acorn S&P/Citigroup A International - A EMI Global at NAV with sales charge ex-US 10/16/2000 10000 9425 10000 10/31/2000 10153 9569 9992 9322 8786 9552 12/31/2000 9514 8967 9925 9941 9369 10110 9222 8692 9717 3/31/2001 8332 7853 8965 8651 8154 9552 8592 8098 9532 6/30/2001 8167 7698 9209 7838 7387 8939 7676 7234 8915 9/30/2001 6626 6245 7754 6939 6540 8069 7326 6905 8401 12/31/2001 7460 7031 8470 7277 6859 8316 7252 6835 8456 3/31/2002 7627 7188 9007 7874 7422 9194 7838 7387 9488 6/30/2002 7517 7085 9112 6720 6334 8339 6610 6230 8289 9/30/2002 6017 5671 7524 6045 5698 7694 6228 5870 7981 12/31/2002 6233 5874 7886 6078 5729 7754 5912 5572 7615 3/31/2003 5822 5488 7541 6351 5986 8252 6872 6477 8956 6/30/2003 7066 6660 9290 7217 6802 9621 7536 7102 10081 9/30/2003 7821 7372 10542 8417 7933 11309 8642 8145 11514 12/31/2003 9161 8634 12225 9430 8888 12665 9781 9218 13101 3/31/2004 9781 9218 13422 9565 9015 12971 9593 9042 12973 6/30/2004 9940 9369 13390 9678 9122 12917 9724 9164 13056 9/30/2004 10126 9544 13543 10488 9885 13958 11285 10636 15057 12/31/2004 11806 11127 15804 11913 11228 15953 12553 11832 16730 3/31/2005 12180 11480 16310 11802 11124 15798 11827 11147 15909 6/30/2005 12140 11442 16245 12847 12108 16892 13228 12467 17352 9/30/2005 13731 12941 18075 13136 12381 17419 13505 12729 18137 12/31/2005 14335 13511 19280 COLUMBIA ACORN INTERNATIONAL TOP 10 HOLDINGS (AS A % OF NET ASSETS) 1. Anglo Irish Bank (Ireland) 1.8% SMALL BUSINESS & MIDDLE MARKET BANKING 2. Rhoen-Klinikum (Germany) 1.6% HOSPITAL MANAGEMENT 3. Fugro (Netherlands) 1.4% SURVEY & GPS SERVICES 4. Hexagon (Sweden) 1.3% MEASUREMENT EQUIPMENT & POLYMERS 5. Housing Development Finance (India) 1.2% PREMIER MORTGAGE LENDER IN INDIA 6. Jupiter Telecommunications (Japan) 1.2% LARGEST CABLE SERVICE PROVIDER IN JAPAN 7. SES Global (France) 1.2% SATELLITE BROADCASTING SERVICES 8. Neopost (France) 1.1% POSTAGE METER MACHINES 9. Billabong International (Australia) 1.1% ACTION SPORTS APPAREL BRAND MANAGER 10. Paragon Group (United Kingdom) 1.1% BUY-TO-LET FINANCE COMPANY Portfolio characteristics and holdings are subject to change periodically and may not be representative of current characteristics and holdings. 13 COLUMBIA ACORN USA >IN A NUTSHELL [PHOTO OF ROBERT A. MOHN] PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. Columbia Acorn USA gained 2.59% (Class A shares, without sales charge) in the quarter, outperforming the 1.13% increase of the Russell 2000. For the year, the Fund was up 12.68%, almost tripling the 4.55% annual increase of the Russell 2000. After dropping in the third quarter, retail stocks came back strong in the fourth quarter. Teen retailer Abercrombie & Fitch was up 31% in the three months on strong same-store sales. Christopher & Banks and Ann Taylor Stores were also up over 30% for the quarter. For the year, the Fund's consumer stocks as a whole were up over 4% compared to a 2% decline in the benchmark index for the sector. Rebounding technology stocks also paid off in the quarter. Credit card processor Global Payments gained 20% and was up nearly 60% for the year on strong growth and on news it is planning to expand overseas. Software developer Novell gained 19% in the quarter and Symbol Technologies, a maker of mobile computers and barcode scanners, gained 32%. Outside the technology sector, ITT Educational Services put in another good quarter, gaining 20% on strong enrollment growth. The worst performing sector for the Fund in the quarter was the industrial sector due largely to two stocks: Esco Technologies and Chicago Bridge & Iron. Esco, a manufacturer of automated meter readers, has been a big winner for the Fund over the last two years but was off 11% in the quarter as revenues came in short. Chicago Bridge & Iron, a construction company for refineries and liquid natural gas terminals, was unable to release third quarter earnings due to an accounting issue. The stock fell 19% in the quarter. Annual winners included Quicksilver Resources, a coal seam gas producer that gained nearly 71% as energy prices increased. Crown Castle International, an owner of communication towers, gained 62% on strong growth. On the downside for the year, Petco Animal Supplies fell 44%. The stock declined due to weaker than expected sales and elevated distribution costs. Seachange International, a developer of systems used for video on demand, was also off in the year falling 55% as cable and telephone customers delayed new video-on-demand launches. Looking forward into 2006, we will continue to search for what we believe to be the best small-cap stocks to add to the portfolio. /s/ Robert A. Mohn Robert A. Mohn LEAD PORTFOLIO MANAGER 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 12/31/05, THE FUND'S POSITIONS IN THE STOCKS MENTIONED WERE: ABERCROMBIE & FITCH, 2.1%; CHRISTOPHER & BANKS, 0.8%; ANN TAYLOR STORES, 0.6%; GLOBAL PAYMENTS, 1.6%; NOVELL, 1.3%; SYMBOL TECHNOLOGIES, 0.6%; ITT EDUCATIONAL SERVICES, 2.0%; ESCO TECHNOLOGIES, 2.1%; CHICAGO BRIDGE & IRON, 1.2%; QUICKSILVER RESOURCES, 1.8%; CROWN CASTLE INTERNATIONAL, 2.2%; PETCO ANIMAL SUPPLIES, 0.8%; SEACHANGE INTERNATIONAL, 0.3%. 1-800-922-6769 14 COLUMBIA ACORN USA (LAUAX) >AT A GLANCE PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (BASED ON CLASS A SHARE RETURNS) >through December 31, 2005 --------------------------------------- LIFE OF INCEPTION 10/16/00 1 YEAR 5 YEARS FUND --------------------------------------- Returns before taxes NAV 12.68% 13.74% 14.73% POP 6.20 12.40 13.43 ---------------------------------------------------------------- Returns after taxes NAV 11.83 13.50 14.50 on distributions POP 5.40 12.16 13.21 ---------------------------------------------------------------- Returns after taxes NAV 9.35 12.04 12.95 on distributions and POP 5.07 10.83 11.78 sale of fund shares ---------------------------------------------------------------- Russell 2000 (pretax) 4.55 8.22 8.07 ---------------------------------------------------------------- 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 tax impact of 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 USA PORTFOLIO DIVERSIFICATION >as a % of net assets, as of December 31, 2005 [PIE CHART] Consumer Goods/Services 17.1% Health Care 13.3% Other* 12.4% Energy/Minerals 10.5% Finance 8.0% Industrial Goods/Services 9.7% Information 29.0% * Other includes short-term obligations, cash and other assets less liabilities of 9.9%. THE GROWTH OF A $75,000 INVESTMENT IN COLUMBIA ACORN USA (CLASS A) >October 16, 2000 through December 31, 2005 Illustration is based on a hypothetical $75,000 investment from inception in Class A shares of the Fund, which includes the 4.50% maximum 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. TOTAL NET ASSETS OF THE FUND: $1,221.5 MILLION {LINE GRAPH] Columbia Acorn Columbia USA - A with Acorn USA - A sales charge Russell 2000 at NAV 10/16/2000 71625 75000 75000 10/31/2000 74576 77729 78090 70228 69750 73537 12/31/2000 77061 75741 80693 81932 79684 85792 81669 74455 85518 3/31/2001 79750 70813 83508 89384 76353 93596 94354 78230 98800 6/30/2001 96939 80931 101507 97918 76550 102532 95176 74078 99661 9/30/2001 81404 64106 85240 81608 67858 85453 86374 73111 90444 12/31/2001 91427 77624 95735 92469 76816 96826 89279 74711 93486 3/31/2002 96850 80716 101413 98264 81451 102894 92672 77836 97039 6/30/2002 87084 73974 91188 75171 62802 78713 74021 62642 77509 9/30/2002 68484 58143 71711 71724 60008 75103 77942 65363 81615 12/31/2002 74076 61723 77567 72928 60015 76364 71885 58202 75272 3/31/2003 72043 58951 75438 79096 64541 82823 87299 71467 91412 6/30/2003 88660 72760 92838 92792 77313 97164 97858 80857 102470 9/30/2003 95559 79365 100061 105325 86030 110288 107568 89083 112637 12/31/2003 108353 90890 113459 113945 94839 119314 114469 95689 119862 3/31/2004 113633 96581 118987 110815 91657 116037 115148 93116 120574 6/30/2004 118810 97037 124408 111491 90503 116744 109874 90038 115052 9/30/2004 114005 94265 119377 117243 96121 122768 125708 104458 131632 12/31/2004 130158 107550 136291 128323 103062 134370 130736 104808 136896 3/31/2005 130108 101808 136239 124748 95977 130626 131634 102259 137836 6/30/2005 137162 106203 143625 142978 112932 149715 141805 110838 148487 9/30/2005 142982 111186 149720 138664 107734 145198 145750 112964 152618 12/31/2005 146671 112447 153583 COLUMBIA ACORN USA TOP 10 HOLDINGS (AS A % OF NET ASSETS) 1. AmeriCredit 2.4% AUTO LENDING 2. Crown Castle International 2.2% COMMUNICATION TOWERS 3. Abercrombie & Fitch 2.1% TEEN APPAREL RETAILER 4. Esco Technologies 2.1% AUTOMATIC ELECTRIC METER READERS 5. ITT Educational Services 2.0% POSTSECONDARY DEGREE PROGRAMS 6. Edwards Lifesciences 2.0% HEART VALVES 7. Alltel 1.8% CELLULAR & WIRELINE TELEPHONE SERVICES 8. Quicksilver Resources 1.8% NATURAL GAS & COAL SEAM GAS PRODUCER 9. Micros Systems 1.8% INFORMATION SYSTEMS FOR RESTAURANTS & HOTELS 10. Scotts Miracle-Gro 1.7% CONSUMER LAWN & GARDEN PRODUCTS Portfolio characteristics and holdings are subject to change periodically and may not be representative of current characteristics and holdings. 15 COLUMBIA ACORN INTERNATIONAL SELECT >IN A NUTSHELL [PHOTO OF CHRISTOPHER J. OLSON] PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. Columbia Acorn International Select ended the fourth quarter up 3.40% (Class A shares, without sales charge) vs. a 6.50% gain for the S&P/Citigroup World ex-US Cap Range $2-10B Index. For the year, the Fund was up 15.60% while the index gained 20.35%. An underweight in Japan and a pull back in energy stock performance in the fourth quarter hurt the Fund's relative performance for both periods. Five of the Fund's top 10 performing stocks in the quarter were based in Japan. The Japanese market rallied in the fourth quarter as foreign investors, motivated by signs of an improving economy, poured money into that market. A new holding to the Fund, mall developer Aeon Mall, increased 42%. Beverage distributor Ito En gained 30%. Industrial lighting company Ushio rose 13%. Daito Trust Construction, an apartment developer, gained 19%. Lastly, Hiroshima Bank increased 21% in the three month period. While the quarter was all about Japan, the year was all about energy. Argentinean multinational Tenaris, a steel-pipe manufacturer, topped the annual charts with a 144% gain. Canada's Talisman Energy, an oil and gas producer, increased 100% in 2005. Outside the energy sector, UK freight forwarder Exel increased 65% in the year and the Fund's investment in Hong Kong exchange operator Hong Kong Exchanges & Clearing increased 61%. Tenaris gets a second mention as a quarterly loser. The stock came down with the energy sector in the fourth quarter, dropping 16%. Australian beer brewer and distributor Lion Nathan was off 13% in the quarter due to concerns about slower growth in its business. Losers for the year included Compass Group, a UK concession and contract caterer, off 25% due to pricing competition in the UK market. Global Bio-Chem Technology Group, a Hong Kong refiner of corn-based commodities, fell more than 32% in the year due to weakness in some of its commodity prices. Japanese electronics manufacturer Funai Electric was also off 32% due to increases in raw material costs. Looking forward to 2006, we will continue to work to increase the Fund's weighting in Japan. To achieve this goal, we are in the process of hiring an analyst to enhance our coverage of Japan. Elsewhere we will continue to follow our bottom-up investment approach to find what we believe to be the best stocks for your portfolio. On December 7, 2005, I was named lead portfolio manager of Columbia Acorn International Select. I've been a co-portfolio manager on the Fund since September of 2001. /s/ Christopher J. Olson Christopher J. Olson LEAD PORTFOLIO MANAGER 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 12/31/05, THE FUND'S POSITIONS IN THE STOCKS MENTIONED WERE: AEON MALL, 2.3%; ITO EN, 2.4%; USHIO, 3.6%; DAITO TRUST CONSTRUCTION, 4.1%; HIROSHIMA BANK, 1.2%; TENARIS, 2.4%; TALISMAN ENERGY, 1.5%; EXEL, 0.0%; HONG KONG EXCHANGES & CLEARING, 3.0%; LION NATHAN, 0.0%; COMPASS GROUP, 0.0%; GLOBAL BIO-CHEM TECHNOLOGY GROUP, 0.9%; FUNAI ELECTRIC, 0.0%. 1-800-922-6769 16 COLUMBIA ACORN INTERNATIONAL SELECT (LAFAX) >AT A GLANCE PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (BASED ON CLASS A SHARE RETURNS) >through December 31, 2005 --------------------------------------- LIFE OF INCEPTION 10/16/00 1 YEAR 5 YEARS FUND --------------------------------------- Returns before taxes NAV 15.60% 3.94% 3.14% POP 8.95 2.72 1.97 ---------------------------------------------------------------- Returns after taxes NAV 15.50 3.94 3.14 on distributions POP 8.86 2.72 1.97 ---------------------------------------------------------------- Returns after taxes NAV 10.51 3.44 2.74 on distributions and POP 6.17 2.38 1.73 sale of fund shares ---------------------------------------------------------------- S&P/Citigroup World 20.35 11.60 11.78 ex-US Cap Range $2-10B (pretax) ---------------------------------------------------------------- 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 tax impact of 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, 2005 [PIE CHART] Consumer Goods/Services 20.3% Finance 15.0% Other* 9.1% Information Technology 15.3% Energy/Minerals 5.4% Health Care 8.7% Industrial Goods/Services 26.2% * Other includes short-term obligations, cash and other assets less liabilities of 4.4%. THE GROWTH OF A $10,000 INVESTMENT IN COLUMBIA ACORN INTERNATIONAL SELECT (CLASS A) >October 16, 2000 through December 31, 2005 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. S&P/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. TOTAL NET ASSETS OF THE FUND: $95.0 MILLION [LINE GRAPH] Columbia Acorn Columbia Acorn International International S&P/Citigroup Select - A Select - A with World ex-US Cap at NAV sale charge Range $2-$10B 10/16/2000 10000 9425 10000 10/31/2000 10344 9749 10149 9023 8504 9847 12/31/2000 9684 9127 10328 9994 9420 10276 8848 8339 9903 3/31/2001 7662 7222 9131 8063 7600 9805 8041 7578 9721 6/30/2001 7700 7257 9468 7296 6877 9230 7143 6732 9147 9/30/2001 5938 5597 8084 6313 5950 8409 6660 6277 8710 12/31/2001 6859 6465 8728 6506 6132 8471 6427 6057 8600 3/31/2002 6655 6272 9092 6859 6464 9258 6927 6528 9552 6/30/2002 6711 6325 9221 5989 5645 8395 6097 5746 8375 9/30/2002 5654 5329 7626 5642 5318 7762 5779 5447 8157 12/31/2002 5819 5484 7927 5535 5217 7728 5302 4997 7584 3/31/2003 5348 5040 7454 5848 5511 8113 6353 5988 8695 6/30/2003 6393 6026 8943 6496 6122 9302 6774 6385 9838 9/30/2003 7024 6620 10243 7547 7113 11034 7706 7263 11127 12/31/2003 8212 7739 11863 8359 7879 12112 8717 8216 12403 3/31/2004 8774 8269 12886 8592 8098 12447 8598 8104 12413 6/30/2004 8824 8317 12727 8620 8124 12245 8614 8118 12358 9/30/2004 8978 8462 12755 9240 8709 13185 9820 9256 14227 12/31/2004 10162 9578 14855 10088 9508 14775 10629 10018 15407 3/31/2005 10310 9717 15017 9963 9390 14582 9969 9396 14670 6/30/2005 10207 9620 14973 10639 10028 15467 11037 10403 15995 9/30/2005 11361 10707 16787 10916 10289 16193 11043 10408 16850 12/31/2005 11747 11072 17878 COLUMBIA ACORN INTERNATIONAL SELECT TOP 10 HOLDINGS (AS A % OF NET ASSETS) 1. Jupiter Telecommunications (Japan) 4.2% LARGEST CABLE SERVICE PROVIDER IN JAPAN 2. Daito Trust Construction (Japan) 4.1% APARTMENT BUILDER 3. Gambro (Sweden) 4.1% PRODUCTS FOR RENAL & BLOOD CARE 4. Anglo Irish Bank (Ireland) 3.9% SMALL BUSINESS & MIDDLE MARKET BANKING 5. Shimano (Japan) 3.6% BICYCLE COMPONENTS & FISHING TACKLE 6. Ushio (Japan) 3.6% INDUSTRIAL LIGHT SOURCES 7. Northern Rock (United Kingdom) 3.5% LOWEST COST MORTGAGE BANK IN UK 8. Neopost (France) 3.5% POSTAGE METER MACHINES 9. SES Global (France) 3.4% SATELLITE BROADCASTING SERVICES 10. Hoya (Japan) 3.3% OPTO-ELECTRICAL COMPONENTS & EYEGLASS LENSES Portfolio characteristics and holdings are subject to change periodically and may not be representative of current characteristics and holdings. 17 COLUMBIA ACORN SELECT >IN A NUTSHELL [PHOTO OF BEN ANDREWS] PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. Columbia Acorn Select gained 6.59% (Class A shares, without sales charge) in the fourth quarter beating its benchmark S&P MidCap 400's gain of 3.34%. The S&P 500 was up 2.09% in the quarter. For the year the Fund trailed the S&P MidCap 400 by 1.78%. Columbia Acorn Select was up 10.78% and the S&P MidCap 400 was up 12.56% for the year. The S&P 500 was up 4.91% in 2005. The Fund's fourth quarter performance was driven by a number of stocks. The top four performers (Abercrombie & Fitch, ITT Educational Services, Avid Technology and Janus Capital) generated $62 million of gains and propelled the Fund higher by approximately 4.25%. For the year, the Fund's top four dollar gainers were Tellabs, Abercrombie & Fitch, American Tower, and ITT Educational Services, which added 6.6% to the Fund's annual return. The Fund had only one big loser this year, security software developer McAfee. The stock was sold in the second quarter and cost the Fund $21 million or 2.2% of performance. Columbia Acorn Select purchased its first raw material stocks (beyond energy) in the quarter. Throughout Columbia Wanger's history, we have not focused on commodities because we felt the majority of commodity companies could not differentiate themselves enough for us to find a superior business model. To make money in commodities one has to rely on price appreciation and, when supply and demand are in line, prices are often flat to down. A year-and-a-half ago, Columbia Wanger hired its first raw materials analyst, Fritz Kaegi. We recognized that a number of commodity industries had not added new supply capacity in more than 10 years. As global demand has increased, many commodity companies have started to deplete their excess capacity, leaving them with tight supply and putting upward pressure on prices. September and October of 2005 were rough months for these stocks and the sell-off that occurred gave us our entry point. Columbia Acorn Select invested in Potash and UrAsia Energy, which focus on the crop nutrient market and the uranium market, respectively. We believe we are just a few years into what could be a long-term cycle of outperformance in commodities. However, the sector can be volatile. Potash's stock, for example, fell 35% from August through October and this drastic decline was not triggered by any major event. We do not anticipate adding a large commodities weighting to the Fund but it does seem to be the right time to broaden the Fund's portfolio to include some exposure to this sector. In the quarter we purchased the two new stocks mentioned above and sold one, CDW. CDW, a technology reseller, was sold because we became increasingly uncertain about the company's ability to meet our growth projections over the next year. For 2006, the Fund's focus is simple: To continue to make money for the Fund's shareholders and to beat the mid-cap benchmark. /s/ Ben Andrews Ben Andrews LEAD PORTFOLIO MANAGER 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 12/31/05, THE FUND'S POSITIONS IN THE STOCKS MENTIONED WERE: ABERCROMBIE & FITCH, 5.1%; ITT EDUCATIONAL SERVICES, 5.4%; AVID TECHNOLOGY, 3.2%; JANUS CAPITAL, 2.6%; TELLABS, 5.9%; AMERICAN TOWER, 3.6%; MCAFEE, 0.0%; POTASH, 0.9%; URASIA ENERGY, 3.0%; CDW, 0.0%. 1-800-922-6769 18 COLUMBIA ACORN SELECT (LTFAX) >AT A GLANCE PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (BASED ON CLASS A SHARE RETURNS) >through December 31, 2005 --------------------------------------- LIFE OF INCEPTION 10/16/00 1 YEAR 5 YEARS FUND --------------------------------------- Returns before taxes NAV 10.78% 10.95% 11.78% POP 4.41 9.65 10.52 ---------------------------------------------------------------- Returns after taxes NAV 10.34 10.76 11.54 on distributions POP 4.00 9.46 10.28 ---------------------------------------------------------------- Returns after taxes NAV 7.57 9.54 10.27 on distributions and POP 3.40 8.38 9.14 sale of fund shares ---------------------------------------------------------------- S&P MidCap 12.56 8.60 8.91 400 (pretax) ---------------------------------------------------------------- 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 tax impact of 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, 2005 [PIE CHART] Consumer Goods/Services 27.5% Other* 7.2% Finance 15.3% Industrial Goods/Services 9.3% Health Care 5.0% Energy/Minerals 8.3% Information 27.4% *Other includes short-term obligations, cash and other assets less liabilities of 5.2%. THE GROWTH OF A $50,000 INVESTMENT IN COLUMBIA ACORN SELECT (CLASS A) >October 16, 2000 through December 31, 2005 Illustration is based on a hypothetical $50,000 investment from inception in Class A shares of the Fund, which includes the 4.50% maximum 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 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. TOTAL NET ASSETS OF THE FUND: $1,787.3 MILLION [LINE GRAPH] Columbia Acorn Columbia Acorn Select - A Select - A with S&P at NAV sales charge MidCap 400 10/16/2000 50000 47750 50000 10/31/2000 54790 52324 51911 49470 47244 47992 12/31/2000 53160 50768 51664 54702 52240 52815 51502 49184 49801 3/31/2001 49468 47242 46098 53044 50657 51183 55940 53423 52375 6/30/2001 55001 52525 52164 54473 52021 51387 51912 49576 49706 9/30/2001 48715 46522 43523 49733 47495 45449 54890 52420 48829 12/31/2001 57228 54653 51352 56095 53571 51085 54889 52419 51148 3/31/2002 56777 54222 54804 53683 51267 54548 55191 52708 53628 6/30/2002 54248 51806 49703 50814 48527 44888 52023 49682 45114 9/30/2002 49609 47377 41480 52328 49973 43277 54929 52457 45781 12/31/2002 52550 50185 43899 52324 49970 42617 52397 50040 41602 3/31/2003 53456 51050 41952 56513 53970 44998 59531 56852 48727 6/30/2003 61079 58331 49348 63986 61107 51099 66629 63631 53417 9/30/2003 65157 62225 52600 67535 64496 56577 67008 63993 58548 12/31/2003 68295 65221 59536 70152 66995 60826 71934 68697 62287 3/31/2004 71898 68663 62551 69777 66637 60498 70915 67723 61753 6/30/2004 73191 69897 63158 70007 66857 60211 69398 66275 60054 9/30/2004 70918 67727 61832 73684 70368 62822 78193 74674 66563 12/31/2004 80695 77064 69350 77871 74367 67580 76788 73333 69847 3/31/2005 76366 72930 69073 73617 70304 66389 77180 73707 70387 6/30/2005 80470 76849 72019 83970 80192 75802 82064 78372 74957 9/30/2005 83855 80082 75533 83587 79825 73910 88493 84511 77521 12/31/2005 89384 85362 78057 COLUMBIA ACORN SELECT TOP 10 HOLDINGS (AS A % OF NET ASSETS) 1. Tellabs 5.9% TELECOMMUNICATIONS EQUIPMENT 2. ITT Educational Services 5.4% POSTSECONDARY DEGREE PROGRAMS 3. Abercrombie & Fitch 5.1% TEEN APPAREL RETAILER 4. Safeway 4.5% RETAIL FOOD & DRUG STORES 5. American Tower 3.6% COMMUNICATION TOWERS IN USA & MEXICO 6. Pride International 3.3% OFFSHORE DRILLING CONTRACTOR 7. Avid Technology 3.2% DIGITAL NONLINEAR EDITING SOFTWARE & SYSTEMS 8. Harley-Davidson 3.1% MOTORCYCLES & RELATED MERCHANDISE 9. TCF Financial 3.0% GREAT LAKES BANK 10. Skillsoft Publishing 3.0% PROVIDER OF WEB-BASED LEARNING SOLUTIONS (E-LEARNING) Portfolio characteristics and holdings are subject to change periodically and may not be representative of current characteristics and holdings. 19 COLUMBIA THERMOSTAT FUND >IN A NUTSHELL [PHOTO OF CHARLES P. MCQUAID] PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. Columbia Thermostat Fund gained 2.03% (Class A shares, without sales charge) in the fourth quarter and was up 5.25% for the year. The S&P 500 gained 2.09% in the quarter and 4.91% for the year while the Lehman Brothers U.S. Credit Intermediate Bond Index posted a 0.39% quarterly gain and increased 1.42% for the year. The Lipper Flexible Portfolio Funds Index was up 1.95% in the quarter and ended the year up 6.34%. Both income and stock funds made positive contributions to the portfolio for the quarter and for the year. As mentioned last quarter, we added an international equity component to the portfolio in early September and international markets showed continued strength through the end of the year. Columbia Acorn International Z posted a 4.47% gain in the quarter. The portfolio's top performer for the quarter was Columbia Acorn Select Z, up 6.66%. The Fund's small- and mid-cap equity funds outperformed its large-cap equity funds for both time periods. As noted in the table, the Fund hit three reallocation triggers in the quarter. In October, the Fund's stock exposure increased while in November it was reduced twice. In 2004, the S&P 500 had a 1-year gain of 10.88% and Columbia Thermostat Fund was up 8.92%. In 2005, the S&P 500 increased 4.91% and the Fund gained 5.25%. Columbia Thermostat Fund was designed to keep a portion of your portfolio at an even temperature despite ongoing market volatility and the data suggests that it has succeeded. We thank you for your investment in the Fund. /s/ Charles P. McQuaid Charles P. McQuaid LEAD 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. 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. 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 AT DECEMBER 31, 2005 Equities 4TH 1-YEAR WEIGHTINGS IN QUARTER RETURN TO FUND CATEGORY RETURNS 12/31/05 ----------------------------------------------------- Columbia 15% 3.09% 13.11% Acorn Fund Z ----------------------------------------------------- Columbia 10% 6.66% 11.08% Acorn Select Z ----------------------------------------------------- Columbia Large 15% 2.33% 9.15% Cap Value Fund ----------------------------------------------------- Columbia Acorn 15% 4.47% 21.81% International Z ----------------------------------------------------- Columbia Dividend 20% 2.00% 6.62% Income Fund ----------------------------------------------------- Columbia Large Cap 25% 2.32% 6.70% Enhanced Core Fund ----------------------------------------------------- WEIGHTED AVERAGE EQUITY RETURN 100% 3.20% 7.94% ----------------------------------------------------- Fixed Income 4TH 1-YEAR WEIGHTINGS IN QUARTER RETURN TO FUND CATEGORY RETURNS 12/31/05 ----------------------------------------------------- Columbia Federal 30% 0.55% 2.48% Securities Fund ----------------------------------------------------- Columbia 50% 0.71% 2.40% Intermediate Bond Fund ----------------------------------------------------- Columbia 20% 1.26% 2.68% Conservative High Yield Fund ----------------------------------------------------- WEIGHTED AVERAGE INCOME RETURN 100% 0.77% 2.50% ----------------------------------------------------- COLUMBIA THERMOSTAT FUND REBALANCING IN THE FOURTH QUARTER OCTOBER 6, 2005: 55% stock, 45% bond NOVEMBER 7, 2005: 50% stock, 50% bond NOVEMBER 22, 2005: 45% stock, 55% bond 1-800-922-6769 20 COLUMBIA THERMOSTAT FUND (CTFAX) >AT A GLANCE PERFORMANCE SHOWN HERE REPRESENTS PAST PERFORMANCE, WHICH 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. VISIT COLUMBIAFUNDS.COM FOR DAILY AND MONTH-END UPDATES. PRETAX AND AFTER-TAX AVERAGE ANNUAL TOTAL RETURNS (BASED ON CLASS A SHARES RETURNS) >through December 31, 2005 ------------------------------------ LIFE OF INCEPTION 3/3/03 1 YEAR FUND ------------------------------------ Returns before taxes NAV 5.25% 12.90% POP -0.80 10.57 ------------------------------------------------------------- Returns after taxes NAV 2.97 11.64 on distributions POP -2.95 9.33 ------------------------------------------------------------- Returns after taxes NAV 4.66 10.61 on distributions and POP 0.65 8.59 sale of fund shares ------------------------------------------------------------- S&P 500 (pretax) 4.91 16.98 ------------------------------------------------------------- Lehman Brothers U.S. 1.42 3.61 Credit Intermediate Bond Index (pretax) ------------------------------------------------------------- Lipper Flexible Portfolio 6.34 14.60 Funds Index (pretax)* ------------------------------------------------------------- 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 funds classification, as defined by Lipper. COLUMBIA THERMOSTAT FUND PORTFOLIO WEIGHTINGS >as a % of assets in each investment category, as of December 31, 2005 [PIE CHART] STOCK MUTUAL FUNDS Columbia Large Cap Value Fund 15% Columbia Acorn International 15% Columbia Acorn Select 10% Columbia Large Cap Enhanced Core Fund 25% Columbia Dividend Income Fund 20% Columbia Acorn Fund 15% [PIE CHART] BOND MUTUAL FUNDS Columbia Federal Securities Fund 30% Columbia Intermediate Bond Fund 50% Columbia Conservative High Yield Fund 20% THE GROWTH OF A $10,000 INVESTMENT IN COLUMBIA THERMOSTAT FUND (CLASS A) >March 3, 2003 through December 31, 2005 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 Brothers 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 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 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. TOTAL NET ASSETS OF THE FUND: $203.4 MILLION [LINE CHART]
Lipper Columbia Lehman Brothers Flexible Columbia Thermostat U.S. Credit Portfolio Thermostat Fund - A with Intermediate Funds Fund - A at NAV sales charge S&P 500 Bond Index Index 3/3/2003 10000 9425 10000 10000 10000 3/31/2003 10089 9509 10097 10021 10065 10604 9994 10929 10158 10640 11079 10442 11505 10418 11162 6/30/2003 11225 10579 11651 10423 11277 11284 10635 11857 10104 11330 11512 10850 12088 10134 11562 9/30/2003 11482 10822 11960 10436 11572 11868 11186 12636 10343 12027 12007 11317 12747 10374 12153 12/31/2003 12308 11601 13416 10477 12643 12478 11761 13662 10561 12825 12618 11892 13852 10678 12998 3/31/2004 12658 11930 13643 10773 12943 12398 11685 13429 10498 12618 12437 11722 13613 10431 12706 6/30/2004 12635 11908 13878 10469 12928 12444 11729 13419 10576 12583 12514 11794 13473 10781 12643 9/30/2004 12674 11945 13619 10821 12848 12884 12144 13827 10904 13024 13185 12427 14386 10808 13489 12/31/2004 13408 12637 14876 10904 13845 13315 12549 14513 10936 13624 13427 12655 14819 10878 13881 3/31/2005 13254 12492 14556 10777 13634 13131 12376 14280 10896 13385 13447 12674 14735 11011 13694 6/30/2005 13591 12810 14755 11075 13795 13810 13016 15304 10987 14236 13821 13026 15165 11125 14235 9/30/2005 13831 13036 15287 11017 14442 13654 12869 15033 10934 14245 13967 13164 15601 10986 14587 12/31/2005 14111 13300 15606 11060 14723
COLUMBIA THERMOSTAT FUND ASSET ALLOCATION >as a % of net assets, as of December 31, 2005 [PIE CHART] Stock Mutual Funds 44.5% Bond Mutual Funds 55.3% Short-term obligations, Cash and other Assets less Liabilities 0.2% 21 COLUMBIA ACORN FUND >MAJOR PORTFOLIO CHANGES IN THE FOURTH QUARTER (UNAUDITED) NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 ADDITIONS ---------------------------------------------------------------------------- INFORMATION Agile Software 0 1,000,000 Amphenol 495,000 980,000 Ceridian 2,120,000 2,235,000 Cnet Networks 1,500,000 2,500,000 Concur Technologies 0 434,000 Discovery Holding 4,000,000 4,015,000 Dobson Communications 0 7,000,000 Flir Systems 0 900,000 Gemstar TV Guide International 0 4,000,000 Integrated Device Technology 1,963,000 2,563,000 Jabil Circuit 1,955,000 2,020,000 Jupiter Telecommunications (Japan) 36,000 60,000 Liberty Global, Series C 1,700,000 1,800,000 Lions Gate Entertainment 2,768,000 3,000,000 Logitech (Switzerland) 0 300,000 Netgear 625,000 900,000 Nice Systems (Israel) 350,000 588,000 Novatek Microelectronics (Taiwan) 2,954,000 5,254,000 Parametric Technology 2,131,000 3,000,000 Phoenixtec Power (Taiwan) 10,987,000 11,999,000 Plexus 1,861,000 1,961,000 PRIMEDIA 1,700,000 2,500,000 Radiant Systems 440,000 575,000 Salem Communications 1,291,000 1,541,000 Shuffle Master 1,675,000 2,430,000 Spanish Broadcasting 1,200,000 2,400,000 Symbol Technologies 2,100,000 2,560,000 Tellabs 9,540,000 9,800,000 Time Warner Telecom 1,500,000 3,500,000 Universo Online (Brazil) 0 170,200 Varian 428,000 670,000 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Abercrombie & Fitch 1,630,000 2,000,000 Alliance Gaming 3,690,000 3,900,000 Carter's 515,000 559,000 Cheesecake Factory 700,000 800,000 Electro Rent 0 305,000 Fleetwood Enterprises 2,500,000 3,229,000 Four Seasons Hotels (Canada) 815,000 915,000 IAWS (Ireland) 1,381,000 1,900,000 Kerzner International 0 260,000 LaQuinta 3,512,000 4,989,000 Lincoln Technical Institute 0 276,000 Michaels Stores 3,350,000 3,560,000 Petco Animal Supplies 1,445,000 1,755,000 Pier 1 Imports 0 135,000 Polaris Industries 1,056,000 1,130,000 Prestige Brands 1,300,000 1,886,000 RC2 1,370,000 1,795,000 NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES--CONTINUED Red Robin Gourmet 24,900 523,000 Rite Aid 0 3,835,000 Rona (Canada) 0 1,050,000 SCP Pool 1,689,000 1,820,000 Sonic 390,000 1,266,000 Speedway Motorsports 1,320,000 1,416,000 Station Casinos 745,000 885,000 Winnebago 170,000 360,000 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES Aviall 600,000 1,000,000 Clarcor 3,200,000 3,222,000 Donaldson 2,200,000 2,500,000 Esco Technologies 2,100,000 2,200,000 Genlyte Group 1,791,000 1,900,000 Hexagon (Sweden) 120,000 176,600 Hughes Supply 1,200,000 1,400,000 Kingspan Group (Ireland) 0 1,100,000 Koninklijke Ten Cate (Netherlands) 0 105,000 Mine Safety Appliances 1,640,000 1,800,000 Pentair 1,400,000 1,950,000 TAL International Group 0 655,000 Toro 400,000 522,000 Watts Water Technologies 554,000 900,000 ---------------------------------------------------------------------------- FINANCE AmeriCredit 5,831,000 6,481,000 Associated Banc-Corp 2,822,000 3,297,000 Assurant 715,000 830,000 BOK Financial 2,114,000 2,334,000 CityBank Lynnwood 510,000 586,000 Eaton Vance 2,590,000 2,990,000 Endurance Specialty Holdings 560,000 940,000 First Financial BankShares 267,000 406,000 First Mutual Bancshares 242,000 297,000 Northern Rock (United Kingdom) 0 2,850,000 Nuveen Investments 1,630,000 1,657,000 Republic 1,438,000 1,581,000 StanCorp Financial 420,000 520,000 (INCLUDES THE EFFECT OF A 2 FOR 1 STOCK SPLIT) S Y Bancorp 221,000 275,000 West Bancorporation 551,000 647,000 ---------------------------------------------------------------------------- HEALTH CARE Arena Pharmaceuticals 1,415,000 1,429,000 CYTYC 1,550,000 1,560,000 Datascope 630,000 930,000 Gambro (Sweden) 3,470,000 4,260,000 Human Genome Sciences 0 1,650,000 Incyte 3,600,000 3,935,000 1-800-922-6769 22 NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 ADDITIONS (CONTINUED) ---------------------------------------------------------------------------- HEALTH CARE--CONTINUED Ligand Pharmaceuticals 2,200,000 2,380,000 Nektar Therapeutics 1,055,000 1,360,000 Neurocrine Biosciences 880,000 913,000 NPS Pharmaceuticals 1,176,000 1,600,000 Par Pharmaceuticals 500,000 576,000 PRA International 0 158,000 PSS World Medical 0 650,000 Serologicals 1,200,000 1,607,000 Synthes (Switzerland) 125,000 175,000 United Surgical Partners 0 600,000 Vital Signs 206,000 450,000 ---------------------------------------------------------------------------- ENERGY/MINERALS Jubilee Gold Mines (Australia) 0 2,900,000 UrAsia Energy (Canada) 0 13,100,000 ---------------------------------------------------------------------------- OTHER INDUSTRIES American Campus Communities 87,000 900,000 Brandywine Realty 55,000 670,000 Diamondrock Hospitality 144A 303,000 1,991,000 Gaylord Entertainment 475,000 1,050,000 Heartland Express 1,557,000 1,980,000 Highland Hospitality 2,552,000 4,002,000 JB Hunt 256,000 355,000 Kite Realty Group 1,400,000 1,720,000 Mills 620,000 870,000 Waste Connections 1,500,000 1,700,000 SALES ---------------------------------------------------------------------------- INFORMATION Analysts International 1,272,000 0 ASE Test (Taiwan) 1,045,000 0 Avnet 2,325,000 2,100,000 Avocent 1,070,000 877,000 CDW 655,000 575,000 Commonwealth Telephone 700,000 500,000 Fair Isaac 1,316,000 916,000 Insight Communications 2,430,000 0 Intermec (formerly known as Unova) 0 1,240,000 International Game Technology 5,775,000 4,120,000 JDA Software Group 2,200,000 1,500,000 Maximus 460,000 0 MRO Software 1,602,000 1,168,000 Saga Communications 829,000 692,000 Sunplus Technology (Taiwan) 5,397,000 0 Sybase 1,521,000 1,000,000 Telephone and Data Systems, Cl. S 600,000 300,000 NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 SALES (CONTINUED) ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Aeropostale 2,070,000 1,040,000 AFC Enterprises 1,656,000 1,600,000 American Woodmark 844,000 591,000 Argosy Gaming 875,000 0 Brookstone 958,000 0 Fast Retailing (Japan) 300,000 0 Funai Electric (Japan) 133,000 0 Intrawest (Canada) 1,217,000 1,044,000 Kappa Create (Japan) 137,000 0 Lion Nathan (Australia) 3,000,000 0 NBTY 850,000 342,000 Steven Madden 328,000 0 Whole Foods Market 230,000 0 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES Clark 378,000 205,000 Exel (United Kingdom) 1,300,000 0 Imerys (France) 300,000 200,000 Tenaris (Argentina) 600,000 550,000 Tetra Tech 2,000,000 1,700,000 Wienerberger (Austria) 550,000 425,000 ---------------------------------------------------------------------------- FINANCE Den Norske Bank (Norway) 1,670,000 0 Glacier Bancorp 2,734,000 2,720,000 ---------------------------------------------------------------------------- HEALTH CARE Diagnostic Products 1,240,000 1,040,000 Martek Biosciences 1,160,000 650,000 Omega Pharma (Belgium) 236,000 0 Techne 686,000 486,000 ---------------------------------------------------------------------------- ENERGY/MINERALS Atmos Energy 1,206,000 966,000 Oneok 1,700,000 435,000 PetroKazakhstan (Canada) 500,000 0 Talisman Energy (Canada) 3,000,000 2,500,000 Tipperary 2,320,000 0 Ultra Petroleum 3,400,000 2,700,000 XTO Energy 4,500,000 2,500,000 ---------------------------------------------------------------------------- OTHER INDUSTRIES Grupo Aeroportaurio Del Sureste (Mexico) 720,000 560,000 Kobenhavns Lufthavne (Denmark) 70,000 0 23 COLUMBIA ACORN FUND >STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- COMMON STOCKS AND OTHER EQUITY-LIKE SECURITIES: 93.9% ---------------------------------------------------------------------------- INFORMATION: 22.2% SOFTWARE/SERVICES >BUSINESS SOFTWARE: 3.3% 11,500,000 Novell (b) $ 101,545 DIRECTORY, OPERATING SYSTEM & IDENTITY MANAGEMENT SOFTWARE 1,800,000 Avid Technology (b) 98,568 DIGITAL NONLINEAR EDITING SOFTWARE & SYSTEMS 1,700,000 Kronos (b)(c) 71,162 LABOR MANAGEMENT SOLUTIONS 1,425,000 Micros Systems (b) 68,856 INFORMATION SYSTEMS FOR RESTAURANTS & HOTELS 1,360,000 Witness Systems (b) 26,751 CUSTOMER EXPERIENCE MANAGEMENT SOFTWARE 1,500,000 JDA Software Group (b)(c) 25,515 APPLICATIONS/SOFTWARE & SERVICES FOR RETAILERS 3,000,000 Lawson Software (b) 22,050 ENTERPRISE RESOURCE PLANNING (ERP) SOFTWARE 1,000,000 Sybase (b) 21,860 DATABASE SOFTWARE 6,000,000 Actuate (b)(c) 18,840 INFORMATION DELIVERY SOFTWARE & SOLUTIONS 3,000,000 Parametric Technology (b) 18,300 ENGINEERING SOFTWARE & SERVICES 928,000 SSA Global Technologies (b) 16,880 ENTERPRISE RESOURCE PLANNING (ERP) SOFTWARE 1,168,000 MRO Software (b) 16,399 ENTERPRISE MAINTENANCE SOFTWARE 5,000,000 Indus International (b)(c) 15,700 600,000 Indus International (c) 1,884 ENTERPRISE ASSET MANAGEMENT SOFTWARE 575,000 Radiant Systems (b) 6,992 POINT OF SALE SYSTEMS FOR CONVENIENCE STORES 1,000,000 Agile Software (b) 5,980 SOFTWARE THAT DISSEMINATES PRODUCT DESIGN CHANGES THORUGH COMPANY 434,000 Concur Technologies (b) 5,594 WEB ENABLED ENTERPRISE APPLICATIONS 1,250,000 ClickSoftware Technologies (b) 2,288 SERVICE CHAIN OPTIMIZATION SOFTWARE ---------------------------------------------------------------------------- 545,164 >BUSINESS INFORMATION/BUSINESS SERVICES/PUBLISHING: 1.8% 1,200,000 Getty Images (b) 107,124 PHOTOGRAPHS FOR PUBLICATIONS & ELECTRONIC MEDIA 2,235,000 Ceridian (b) 55,540 HR SERVICES & PAYMENT PROCESSING 916,000 Fair Isaac 40,460 CREDIT SCORING & DECISION ANALYTIC SOFTWARE 1,836,000 Navigant Consulting (b) 40,355 FINANCIAL CONSULTING FIRM NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 2,685,000 InfoUSA (b) $ 29,347 BUSINESS DATA FOR SALES LEADS 500,000 Navteq (b) 21,935 MAP DATA FOR ELECTRONIC DEVICES 2,500,000 PRIMEDIA (b) 4,025 SPECIALTY MAGAZINES & OTHER PUBLICATIONS ---------------------------------------------------------------------------- 298,786 >TRANSACTION PROCESSORS: 1.2% 2,814,000 Global Payments 131,161 CREDIT CARD PROCESSOR 9,000,000 Hong Kong Exchanges & Clearing (Hong Kong) 37,318 HONG KONG EQUITY & DERIVATIVES OPERATOR 600,000 Cubic 11,976 REVENUE COLLECTION & DEFENSE SYSTEMS 1,250,000 Pegasus Systems (b)(c) 11,212 TRANSACTION PROCESSOR FOR HOTEL INDUSTRY ---------------------------------------------------------------------------- 191,667 >INTERNET: 1.0% 9,500,000 Skillsoft Publishing (b)(c) 52,250 PROVIDER OF WEB-BASED LEARNING SOLUTIONS (E-LEARNING) 2,500,000 Cnet Networks (b) 36,725 INTERNET ADVERTISING ON NICHE WEBSITES 2,000,000 ValueClick (b) 36,220 INTERNET ADVERTISING 3,000,000 RSA Security (b) 33,690 ENTERPRISE SECURITY SOFTWARE 1,879,808 Vital Stream, Cl. C (b) 3,478 STREAMING SERVICES FOR THE INTERNET 170,200 Universo Online (Brazil) (b) 1,434 LARGEST INTERNET PORTAL IN BRAZIL ---------------------------------------------------------------------------- 163,797 >ELECTRONICS DISTRIBUTION: 0.8% 2,100,000 Avnet (b) 50,274 ELECTRONIC COMPONENTS DISTRIBUTION 575,000 CDW 33,103 TECHNOLOGY RESELLER 680,000 Tech Data (b) 26,982 I/T DISTRIBUTOR 710,000 Agilysys 12,936 I/T DISTRIBUTOR ---------------------------------------------------------------------------- 123,295 >COMPUTER SERVICES: 0.5% 4,000,000 Bearing Point (b) 31,440 BUSINESS CONSULTING & TECHNOLOGY STRATEGY 5,000,000 Igate Capital (b)(c) 24,300 I/T & BPO OUTSOURCING SERVICES 4,600,000 AnswerThink Consulting (b)(c) 19,550 I/T INTEGRATION & BEST PRACTICE RESEARCH 2,000,000 Ciber (b) 13,200 SOFTWARE SERVICES & STAFFING 1,025,000 New Horizons Worldwide (b)(c) 717 COMPUTER TRAINING SERVICES ---------------------------------------------------------------------------- 89,207 1-800-922-6769 24 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >CONSUMER SOFTWARE: 0.3% 1,925,000 Activision (b) $ 26,450 ENTERTAINMENT SOFTWARE 1,050,000 THQ (b) 25,042 ENTERTAINMENT SOFTWARE ---------------------------------------------------------------------------- 51,492 COMPUTER RELATED HARDWARE >COMPUTER HARDWARE/RELATED SYSTEMS: 2.9% 980,000 Amphenol 43,375 ELECTRONIC CONNECTORS 1,240,000 Intermec (formerly known as Unova) (b) 41,912 BAR CODE & WIRELESS LAN SYSTEMS 371,900 Neopost (France) 37,293 POSTAGE METER MACHINES 2,560,000 Symbol Technologies 32,819 MOBILE COMPUTERS & BARCODE SCANNERS 1,173,000 Belden CDT 28,656 SPECIALTY CABLE 588,000 Nice Systems (Israel) (b) 28,318 AUDIO & VIDEO RECORDING SOLUTIONS 9,761,000 Advantech (Tawain) 27,654 EMBEDDED COMPUTERS 660,000 Rogers (b) 25,859 PCB LAMINATES & HIGH PERFORMANCE FOAMS 230,000 Wincor Nixdorf (Germany) 24,335 RETAIL POS SYSTEMS & ATM MACHINES 1,360,000 II VI (b) 24,303 LASER COMPONENTS 877,000 Avocent (b) 23,846 COMPUTER CONTROL SWITCHES 530,000 Zebra Technologies (b) 22,710 BAR CODE PRINTERS 1,870,000 CTS (c) 20,682 ELECTRONIC COMPONENTS, SENSORS & EMS 900,000 Netgear (b) 17,325 NETWORKING PRODUCTS FOR SMALL BUSINESS & HOME 625,000 Excel Technologies (b)(c) 14,863 LASER SYSTEMS & ELECTRO-OPTICAL COMPONENTS 1,875,000 Seachange International (c) 14,812 SYSTEMS FOR VIDEO ON DEMAND & AD INSERTION 375,000 Diebold 14,250 AUTOMATED TELLER MACHINES 300,000 Logitech (Switzerland) (b) 14,098 BRANDED PERIPHERAL COMPUTER DEVICES 11,999,000 Phoenixtec Power (Taiwan) 13,086 UNINTERRUPTABLE POWER SUPPLIES 5,000,000 Concurrent Computer (b)(c) 9,450 VIDEO ON DEMAND SYSTEMS & SERVICES ---------------------------------------------------------------------------- 479,646 >SEMICONDUCTORS/RELATED EQUIPMENT: 1.3% 2,563,000 Integrated Device Technology (b) 33,780 COMMUNICATIONS SEMICONDUCTORS 3,490,000 Entegris (b) 32,876 SEMICONDUCTOR WAFER SHIPPING & HANDLING PRODUCTS NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 5,254,000 Novatek Microelectronics (Taiwan) $ 30,890 LCD RELATED IC DESIGNER 565,000 Supertex (b) 25,001 MIXED-SIGNAL SEMICONDUCTORS 915,000 Littelfuse (b) 24,934 LITTLE FUSES 1,235,000 Semtech (b) 22,551 ANALOG SEMICONDUCTORS 1,905,000 IXYS (b)(c) 22,269 POWER SEMICONDUCTORS 1,950,000 AMIS Holdings (b) 20,768 ANALOG & MIXED - SIGNAL SEMICONDUCTORS ---------------------------------------------------------------------------- 213,069 >GAMING EQUIPMENT: 1.2% 4,120,000 International Game Technology 126,814 SLOT MACHINES & PROGRESSIVE JACKPOTS 2,430,000 Shuffle Master (b)(c) 61,090 CARD SHUFFLERS & CASINO GAMES ---------------------------------------------------------------------------- 187,904 >INSTRUMENTATION: 1.0% 750,000 Mettler Toledo (b) 41,400 LABORATORY EQUIPMENT 1,000,000 Trimble Navigation (b) 35,490 GPS-BASED INSTRUMENTS 711,000 Dionex (b) 34,896 ION & LIQUID CHROMATOGRAPHY 670,000 Varian (b) 26,659 ANALYTICAL INSTRUMENTS 2,300,000 Spectris (United Kingdom) 25,069 ELECTRONIC INSTRUMENTATION & CONTROLS ---------------------------------------------------------------------------- 163,514 >CONTRACT MANUFACTURING: 0.7% 2,020,000 Jabil Circuit (b) 74,922 ELECTRONIC MANUFACTURING SERVICES 1,961,000 Plexus (b) 44,593 ELECTRONIC MANUFACTURING SERVICES ---------------------------------------------------------------------------- 119,515 TELECOMMUNICATIONS >TELECOMMUNICATION SERVICES: 2.8% 4,500,000 Crown Castle International (b) 121,095 COMMUNICATION TOWERS 1,600,000 Alltel 100,960 CELLULAR & WIRELINE TELEPHONE SERVICES 3,500,000 American Tower (b) 94,850 COMMUNICATION TOWERS IN USA & MEXICO 7,000,000 Dobson Communications (b) 52,500 RURAL & SMALL CITY CELLULAR TELEPHONE SERVICES 3,500,000 Time Warner Telecom (b) 34,475 COMPETITIVE LOCAL EXCHANGE CARRIER 780,000 Telephone and Data Systems 28,103 300,000 Telephone and Data Systems, Cl. S 10,383 CELLULAR & WIRELINE TELEPHONE SERVICES 500,000 Commonwealth Telephone 16,885 RURAL PHONE FRANCHISES & COMPETING TELCO ---------------------------------------------------------------------------- 459,251 25 COLUMBIA ACORN FUND >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >TELECOMMUNICATIONS EQUIPMENT: 0.8% 9,800,000 Tellabs (b) $ 106,820 TELECOMMUNICATIONS EQUIPMENT 1,750,000 Andrew (b) 18,778 WIRELESS INFRASTRUCTURE EQUIPMENT 1,510,000 Symmetricom (b) 12,790 NETWORK TIMING & SYNCHRONIZATION DEVICES ---------------------------------------------------------------------------- 138,388 MEDIA >TELEVISION PROGRAMMING/CATV: 1.6% 4,015,000 Discovery Holding (b) 60,827 CATV PROGRAMMING 60,000 Jupiter Telecommunications (Japan) (b) 47,874 LARGEST CABLE SERVICE PROVIDER IN JAPAN 1,705,000 Liberty Global, Series A (b) 38,362 1,800,000 Liberty Global, Series C (b) 38,160 CATV HOLDING COMPANY 3,000,000 Lions Gate Entertainment (b) 23,040 FILM & TV STUDIO 2,618,000 Liberty Media (b) 20,604 CATV PROGRAMMING & MEDIA COMPANY HOLDINGS 4,000,000 Gemstar TV Guide International (b) 10,440 TV PROGRAM GUIDES & CATV PROGRAMMING 337,800 Alliance Atlantis Communication (Canada) (b) 9,932 CATV CHANNELS, TV/MOVIE PRODUCTION/DISTRIBUTION 1,250,000 Mediacom Communications (b) 6,863 CABLE TELEVISION FRANCHISES 500,000 Outdoor Channel (b) 6,750 CABLE TELEVISION PROGRAMMING ---------------------------------------------------------------------------- 262,852 >TV/SATELLITE BROADCASTING: 0.6% 2,750,000 SES Global (France) 48,152 SATELLITE BROADCASTING SERVICES 2,500,000 Entravision Communications (b) 17,800 SPANISH LANGUAGE TV, RADIO & OUTDOOR 1,750,000 Gray Television 17,185 MID MARKET AFFILIATED TV STATIONS 270,000 Metropole TV (France) 7,480 TELEVISION BROADCASTER ---------------------------------------------------------------------------- 90,617 >RADIO BROADCASTING: 0.4% 1,541,000 Salem Communications (b)(c) 26,952 RADIO STATIONS FOR RELIGIOUS PROGRAMMING 1,500,000 Cumulus Media, Cl. A (b) 18,615 RADIO STATIONS IN SMALL CITIES 2,400,000 Spanish Broadcasting (b) 12,264 SPANISH LANGUAGE RADIO STATIONS 692,000 Saga Communications (b) 7,522 RADIO STATIONS IN SMALL & MID-SIZED CITIES ---------------------------------------------------------------------------- 65,353 ----------- INFORMATION: TOTAL 3,643,517 ---------------------------------------------------------------------------- NUMBER OF SHARES OR PRINCIPAL AMOUNT (000) VALUE (000) ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES: 20.1% SERVICES >RETAIL: 5.9% 5,090,000 Chico's FAS (b) $ 223,604 WOMEN'S SPECIALTY RETAIL 2,000,000 Abercrombie & Fitch 130,360 TEEN APPAREL RETAILER 3,560,000 Michaels Stores 125,917 CRAFT & HOBBY SPECIALTY RETAILER 3,743,000 Christopher & Banks (c) 70,294 WOMEN'S APPAREL RETAILER 1,400,000 Williams Sonoma (b) 60,410 HOME GOODS & FURNISHING RETAILER 1,520,000 Sports Authority (b)(c) 47,318 SPORTING GOODS STORES 1,852,000 Urban Outfitters (b) 46,874 APPAREL & HOME SPECIALTY RETAILER 1,223,000 Ann Taylor Stores (b) 42,218 WOMEN'S APPAREL RETAILER 1,755,000 Petco Animal Supplies (b) 38,522 PET SUPPLIES & SERVICES 775,000 Genesco (b) 30,062 MULTI-CONCEPT BRANDED FOOTWEAR RETAILER 1,300,000 Borders Group 28,171 BOOKSTORES 1,040,000 Aeropostale (b) 27,352 MALL BASED TEEN RETAILER 1,072,000 Zale (b) 26,961 SPECIALTY RETAILER OF JEWELRY 3,500,000 Edgars Consolidated Stores (South Africa) 19,448 LEADING RETAIL CONGLOMERATE 1,050,000 Rona (Canada) (b) 19,375 LEADING CANADIAN DIY RETAILER 1,062,000 Gaiam (b)(c) 14,348 HEALTHY LIVING CATALOGS & E-COMMERCE 3,835,000 Rite Aid (b) 13,346 DRUG STORES 270,000 Hot Topic (b) 3,848 MUSIC INSPIRED RETAILER OF APPAREL, ACCESSORIES & GIFTS 135,000 Pier 1 Imports 1,179 IMPORTED FURNITURE & TCHOTCHKES $ 6,000 Gadzooks 5% Convertible 10/07/08 (d) 0 TEEN APPAREL RETAILER ---------------------------------------------------------------------------- 969,607 >CONSUMER SERVICES: 1.8% 2,250,000 ITT Educational Services (b) 132,997 POSTSECONDARY DEGREE PROGRAMS 775,000 Weight Watchers (b) 38,308 WEIGHT LOSS PROGRAMS 1,440,000 Coinstar (b)(c) 32,875 OWNER/OPERATOR OF COIN COUNTING MACHINES 870,000 Park 24 (Japan) 31,131 PARKING LOT OPERATOR 620,000 Regis Corp Minnesota 23,913 HAIR SALONS 1-800-922-6769 26 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >CONSUMER SERVICES--CONTINUED 1,530,000 Central Parking $ 20,992 OWNER, OPERATOR & MANAGER OF PARKING LOTS & GARAGES 1,850,000 Princeton Review (b)(c) 9,527 COLLEGE PREPARATION COURSES 276,000 Lincoln Technical Institute (b) 3,936 TECH EDUCATION TRAINING IN AUTO, HEALTH & SKILLED TRADES ---------------------------------------------------------------------------- 293,679 >TRAVEL: 1.4% 2,110,000 Vail Resorts (b) 69,693 OWNER/OPERATOR OF SKI RESORTS 4,989,000 LaQuinta (b) 55,577 OWNER/FRANCHISER OF MID-PRICED HOTELS 915,000 Four Seasons Hotels (Canada) 45,521 LUXURY HOTEL OPERATOR 1,044,000 Intrawest (Canada) 29,934 OWNER/OPERATOR OF SKI RESORTS 260,000 Kerzner International (Bahamas) (b) 17,875 DESTINATION RESORTS & CASINOS 1,045,000 Navigant International (b)(c) 11,338 CORPORATE TRAVEL AGENCY ---------------------------------------------------------------------------- 229,938 >CASINOS: 1.1% 885,000 Station Casinos 60,003 CASINOS & RIVERBOATS 3,900,000 Alliance Gaming (b)(c) 50,778 DIVERSIFIED GAMING COMPANY 1,898,000 Pinnacle Entertainment (b) 46,900 REGIONAL RIVERBOAT CASINOS 4,500,000 Sky City Entertainment (New Zealand) 14,412 CASINO/ENTERTAINMENT COMPLEX 226,000 Lakes Entertainment (b) 1,503 NATIVE AMERICAN CASINO DEVELOPMENT ---------------------------------------------------------------------------- 173,596 >ENTERTAINMENT/LEISURE PRODUCTS: 1.0% 1,795,000 RC2 (b)(c) 63,758 COLLECTIBLES, TOYS & INFANT PRODUCTS 1,025,000 International Speedway Motors 49,097 LARGEST MOTORSPORT RACETRACK OWNER & OPERATOR 1,416,000 Speedway Motorsports 49,093 MOTORSPORT RACETRACK OWNER & OPERATOR 500,000 Callaway Golf 6,920 PREMIUM GOLF CLUBS & BALLS ---------------------------------------------------------------------------- 168,868 >RESTAURANTS: 0.7% 1,266,000 Sonic (b) 37,347 DRIVE-IN RESTAURANTS 800,000 Cheesecake Factory (b) 29,912 CASUAL DINING RESTAURANTS 523,000 Red Robin Gourmet (b) 26,652 CASUAL DINING RESTAURANTS 1,600,000 AFC Enterprises (b)(c) 24,192 POPEYES RESTAURANTS ---------------------------------------------------------------------------- 118,103 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >GAMING: 0.2% 690,000 Intralot (Greece) $ 12,090 LOTTERY & GAMING SYSTEMS & SERVICES 780,000 Paddy Power (Ireland) 11,174 IRISH BETTING SERVICES ---------------------------------------------------------------------------- 23,264 >CRUISE LINES: 0.1% 400,000 Carnival 21,388 LARGEST CRUISE LINE ---------------------------------------------------------------------------- GOODS >FURNITURE/TEXTILES: 2.0% 2,400,000 HNI 131,832 OFFICE FURNITURE & FIREPLACES 765,000 Mohawk Industries (b) 66,540 CARPET & FLOORING 2,068,000 Herman Miller 58,297 OFFICE FURNITURE 1,850,000 Nobia (Sweden) 37,491 KITCHEN CABINET MANUFACTURING & DISTRIBUTION 1,435,000 Knoll 24,553 OFFICE FURNITURE 591,000 American Woodmark 14,651 KITCHEN CABINET MANUFACTURER ---------------------------------------------------------------------------- 333,364 >APPAREL: 2.0% 5,980,000 Coach (b) 199,373 DESIGNER & RETAILER OF BRANDED LEATHER ACCESSORIES 844,000 Oxford Industries 46,167 BRANDED & PRIVATE LABEL APPAREL 559,000 Carter's (b) 32,897 CHILDREN'S BRANDED APPAREL 3,000,000 Billabong International (Australia) 31,934 ACTION SPORTS APPAREL BRAND MANAGER 400,000 Columbia Sportswear (b) 19,092 ACTIVE OUTDOOR APPAREL, FOOTWEAR & ACCESSORIES ---------------------------------------------------------------------------- 329,463 >NONDURABLES: 1.2% 1,790,000 Scotts Miracle-Gro 80,980 CONSUMER LAWN & GARDEN PRODUCTS 1,820,000 SCP Pool 67,740 DISTRIBUTOR OF SWIMMING POOL SUPPLIES & EQUIPMENT 630,000 Natura Cosmeticos (Brazil) 27,752 DIRECT RETAILER OF COSMETICS 1,886,000 Prestige Brands (b) 23,575 OTC, HOUSEHOLD & PERSONAL CARE PRODUCTS ---------------------------------------------------------------------------- 200,047 >LEISURE VEHICLES: 1.0% 1,751,000 Harley-Davidson 90,159 MOTORCYCLES & RELATED MERCHANDISE 1,130,000 Polaris Industries 56,726 LEISURE VEHICLES & RELATED PRODUCTS 360,000 Winnebago 11,981 PREMIER MOTORHOME MAKER 2,850,000 Ducati Motor (Italy) (b) 3,118 MOTORCYCLES & RELATED MERCHANDISE ---------------------------------------------------------------------------- 161,984 27 COLUMBIA ACORN FUND >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >DURABLE GOODS: 1.0% 465,000 Hyundai Mobis (South Korea) $ 42,233 AUTO PARTS 3,229,000 Fleetwood Enterprises (b)(c) 39,878 RV & MANUFACTURED HOME MAKER 14,999,300 Techtronic Industries (Hong Kong) 35,691 POWER TOOLS & MOTORIZED APPLIANCES 1,316,000 Helen of Troy (b) 21,201 HAIRDRYERS & CURLING IRONS 780,000 Shimano (Japan) 20,503 BICYCLE COMPONENTS & FISHING TACKLE ---------------------------------------------------------------------------- 159,506 >FOOD & BEVERAGES: 0.7% 725,000 Orkla (Norway) 30,023 MATERIALS, BRANDED CONSUMER GOODS & MEDIA 1,900,000 IAWS (Ireland) 27,330 BAKED GOODS 995,000 Kerry (Ireland) 22,040 CONSUMER FOODS & FOOD INGREDIENTS 35,000,000 Global Bio-Chem Technology Group (China) 15,348 REFINER OF CORN-BASED COMMODITIES 1,800,000 Davide Campari (Italy) 13,319 SPIRITS & WINE 342,000 NBTY (b) 5,557 VITAMINS & SUPPLEMENTS ---------------------------------------------------------------------------- 113,617 ----------- CONSUMER GOODS/SERVICES: TOTAL 3,296,424 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES: 16.2% >MACHINERY: 2.8% 2,200,000 Esco Technologies (b)(c) 97,878 FILTRATION & TEST EQUIPMENT 2,250,000 Ametek 95,715 AEROSPACE/INDUSTRIAL INSTRUMENTS 1,950,000 Pentair 67,314 PUMPS, WATER TREATMENT & TOOLS 1,500,000 Nordson 60,765 DISPENSING SYSTEMS FOR ADHESIVES & COATINGS 1,140,000 Gardner Denver (b) 56,202 AIR COMPRESSORS, BLOWERS & PUMPS 1,100,000 Kaydon 35,354 SPECIALIZED FRICTION & MOTION CONTROL PRODUCTS 522,000 Toro 22,848 TURF MAINTENANCE EQUIPMENT 212,000 Oshkosh Truck 9,453 SPECIALTY TRUCK MANUFACTURER 150,000 Tennant 7,800 NON-RESIDENTIAL FLOOR CLEANING EQUIPMENT ---------------------------------------------------------------------------- 453,329 >INDUSTRIAL GOODS: 2.4% 1,900,000 Genlyte Group (b)(c) 101,783 COMMERCIAL LIGHTING FIXTURES 3,222,000 Clarcor (c) 95,726 MOBILE & INDUSTRIAL FILTERS NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 2,500,000 Donaldson $ 79,500 INDUSTRIAL AIR FILTRATION 1,800,000 Mine Safety Appliances 65,178 SAFETY EQUIPMENT 876,000 Drew Industries (b) 24,694 RV & MFG HOME COMPONENTS 900,000 Flir Systems (b) 20,097 INFRA RED CAMERAS 3,000,000 Electric City (b)(c) 1,800 ELECTRICITY CONSERVATION DEVICES ---------------------------------------------------------------------------- 388,778 >INDUSTRIAL DISTRIBUTION: 2.1% 2,286,000 Watsco (c) 136,726 HVAC DISTRIBUTION 1,925,000 Airgas 63,333 INDUSTRIAL GAS DISTRIBUTOR 1,400,000 Hughes Supply 50,190 INDUSTRIAL DISTRIBUTION 3,800,000 Grafton Group (Ireland) 41,389 BUILDING MATERIALS WHOLESALING & DIY RETAILING 1,000,000 Aviall (b) 28,800 AIRCRAFT REPLACEMENT PARTS DISTRIBUTOR 1,031,000 Nuco2 (b)(c) 28,744 BULK CO2 GAS DISTRIBUTION TO RESTAURANTS ---------------------------------------------------------------------------- 349,182 >LOGISTICS: 2.1% 2,750,000 Expeditors International of Washington 185,653 INTERNATIONAL FREIGHT FORWARDER 900,000 UTI Worldwide 83,556 GLOBAL LOGISTICS & FREIGHT FORWARDING 2,000,000 Forward Air (c) 73,300 FREIGHT TRANSPORTATION BETWEEN AIRPORTS ---------------------------------------------------------------------------- 342,509 >CONSTRUCTION: 1.5% 1,107,000 Florida Rock Industries 54,309 CONCRETE & AGGREGATES 1,450,000 Simpson 52,707 WALL JOINT MAKER 42,500 Geberit International (Switzerland) 33,636 PLUMBING SUPPLIES 635,000 Bilfinger Berger (Germany) 30,297 CONSTRUCTION & RELATED SERVICES 380,000 Daito Trust Construction (Japan) 19,655 APARTMENT BUILDER 425,000 Wienerberger (Austria) 16,924 BRICKS & CLAY ROOFING TILES 1,100,000 Kingspan Group (Ireland) 13,869 BUILDING INSULATION & ENVIRONMENTAL CONTAINERS 3,000,000 Consorcio (Mexico) 13,120 AFFORDABLE HOUSING BUILDER 90,000 Ciments Francais (France) 11,699 LEADING FRENCH & EMERGING MARKETS CEMENT PRODUCER ---------------------------------------------------------------------------- 246,216 1-800-922-6769 28 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >STEEL: 1.4% 128,000 Vallourec (France) $ 70,466 SEAMLESS TUBES 2,860,000 Gibraltar Industries (c) 65,608 STEEL PROCESSING 550,000 Tenaris (Argentina) 62,975 SEAMLESS TUBES 1,964,000 Worthington Industries 37,728 STEEL PROCESSING ---------------------------------------------------------------------------- 236,777 >SPECIALTY CHEMICALS & INDUSTRIAL MATERIALS: 1.2% 3,150,000 Spartech (c) 69,142 PLASTICS DISTRIBUTION & COMPOUNDING 650,000 Novozymes (Denmark) 35,584 INDUSTRIAL ENZYMES 35,000 Sika (Switzerland) 29,032 CHEMICALS FOR CONSTRUCTION & INDUSTRIAL APPLICATION 200,000 Imerys (France) 14,467 INDUSTRIAL MINERALS PRODUCER 20,000 Givaudan (Switzerland) 13,554 INDUSTRIAL FRAGRANCES & FLAVORS 260,000 Carbone Lorraine (France) (b) 11,882 ADVANCED INDUSTRIAL MATERIALS 105,000 Koninklijke Ten Cate (Netherlands) 10,691 ADVANCED TEXTILES & INDUSTRIAL FABRICS 750,000 Ultrapar (Brazil) 10,421 SPECIALTY CHEMICALS & LIQUID PROPANE GAS DISTRIBUTION ---------------------------------------------------------------------------- 194,773 >OUTSOURCING SERVICES & TRAINING: 1.1% 1,300,000 Administaff 54,665 PROFESSIONAL EMPLOYER ORGANIZATION 1,600,000 Labor Ready (b) 33,312 TEMPORARY MANUAL LABOR 2,481,000 Quanta Services (b) 32,675 ELECTRICAL & TELECOM CONSTRUCTION SERVICES 740,000 United Services Group (Netherlands) 31,364 TEMPORARY STAFFING SERVICES 565,000 Meitec (Japan) 18,301 R&D STAFFING SERVICES 600,000 GP Strategies (b) 4,896 TRAINING PROGRAMS ---------------------------------------------------------------------------- 175,213 >OTHER INDUSTRIAL SERVICES: 0.5% 825,000 Mobile Mini (b)(c) 39,105 LEASES PORTABLE STORAGE UNITS 35,000 Schindler (Switzerland) 13,877 ELEVATOR MANUFACTURER & SERVICE PROVIDER 655,000 Tal International (b) 13,526 LEASES INTERMODAL FREIGHT CONTAINERS 300,000 IM Tech (Netherlands) 9,767 ENGINEERING & TECHNICAL SERVICES 185,000 Jaakko Poyry (Finland) 6,978 ENGINEERING CONSULTANTS IN FORESTRY, ENERGY 205,000 Clark 2,716 EXECUTIVE COMPENSATION & BENEFITS CONSULTING ---------------------------------------------------------------------------- 85,969 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >WATER: 0.5% 1,080,000 Pall $ 29,009 FILTRATION & FLUIDS CLARIFICATION 900,000 Watts Water Technologies 27,261 WATER, VALVES, REGULATORS & FILTRATION 1,700,000 Tetra Tech (b) 26,639 RESOURCE MANAGEMENT & INFRASTRUCTURE CONSULTING ---------------------------------------------------------------------------- 82,909 >CONGLOMERATES: 0.4% 755,000 Aalberts Industrie (Netherlands) 40,089 FLOW CONTROL & HEAT TREATMENT 277,500 Pargesa (Switzerland) 23,694 INDUSTRIAL & MEDIA HOLDINGS 176,600 Hexagon (Sweden) 5,268 MEASUREMENT EQUIPMENT & POLYMERS ---------------------------------------------------------------------------- 69,051 >ELECTRICAL COMPONENTS: 0.2% 1,125,000 Ushio (Japan) 26,280 INDUSTRIAL LIGHT SOURCES ---------------------------------------------------------------------------- ----------- INDUSTRIAL GOODS/SERVICES: TOTAL 2,650,986 ---------------------------------------------------------------------------- FINANCE: 12.3% >BANKS: 4.6% 3,297,000 Associated Banc-Corp 107,317 MIDWEST BANK 2,334,000 BOK Financial 106,034 SOUTHWEST MIDDLE MARKET BANK 3,502,000 TCF Financial 95,044 GREAT LAKES BANK 5,607,000 Anglo Irish Bank (Ireland) 85,101 SMALL BUSINESS & MIDDLE MARKET BANKING 2,720,000 Glacier Bancorp (c) 81,736 MOUNTAIN STATES BANK 2,850,000 Northern Rock (United Kingdom) 46,239 LOWEST COST MORTGAGE BANK IN UK 250,000 Komercni Banka (Czech Republic) 34,990 LEADING CZECH UNIVERSAL BANK 1,320,000 West Coast Bancorp (c) 34,914 PORTLAND SMALL BUSINESS LENDER 1,850,000 Depfa Bank (Germany) 27,356 INVESTMENT BANKER TO PUBLIC AUTHORITIES 756,000 Chittenden 21,024 VERMONT & WESTERN MASSACHUSETTS BANK 586,000 CityBank Lynnwood (c) 20,844 NORTH SEATTLE REAL ESTATE LENDER 1,581,000 Republic 18,814 MICHIGAN BANK 641,000 Great Southern Bancorp 17,698 MISSOURI REAL ESTATE LENDER 406,000 First Financial BankShares 14,234 WEST TEXAS BANK 647,000 West Bancorporation 12,099 DES MOINES COMMERCIAL BANK 297,000 First Mutual Bancshares (c) 7,704 SEATTLE COMMUNITY BANK 29 COLUMBIA ACORN FUND >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >BANKS--CONTINUED 367,000 Sterling Bancorp $ 7,241 NEW YORK CITY NICHE LENDER 265,000 Independent Bank 7,216 MICHIGAN BANK 275,000 S Y Bancorp 6,880 LOUISVILLE BANK 382,000 Cascade Financial 6,782 SEATTLE COMMUNITY BANK ---------------------------------------------------------------------------- 759,267 >INSURANCE: 2.8% 575,000 Philadelphia Consolidated Holding (b) 55,597 SPECIALTY INSURANCE 1,119,000 Leucadia National 53,108 INSURANCE HOLDING COMPANY 1,530,000 HCC Insurance Holdings 45,410 SPECIALTY INSURANCE 995,000 Protective Life 43,551 LIFE INSURANCE 1,700,000 Scottish Re Group 41,735 LIFE REINSURANCE 710,000 Selective Insurance Group 37,701 COMMERCIAL & PERSONAL LINES INSURANCE 830,000 Assurant 36,097 SPECIALTY INSURANCE 109,000 Markel (b) 34,558 SPECIALTY INSURANCE 940,000 Endurance Specialty Holdings 33,699 COMMERCIAL LINES INSURANCE/REINSURANCE 1,550,000 United America Indemnity (b) 28,458 SPECIALTY INSURANCE 570,000 RLI 28,426 SPECIALTY INSURANCE 520,000 StanCorp Financial 25,974 GROUP LIFE & DISABILITY INSURANCE ---------------------------------------------------------------------------- 464,314 >FINANCE COMPANIES: 1.7% 6,481,000 AmeriCredit (b) 166,108 AUTO LENDING 1,700,000 World Acceptance (b)(c) 48,450 PERSONAL LOANS 1,100,000 Intermediate Capital (United Kingdom) 26,363 EUROPEAN PROVIDER OF MEZZANINE CAPITAL 1,950,000 Paragon Group (United Kingdom) 21,774 UK BUY-TO-LET FINANCE COMPANY 1,000,000 Northgate (United Kingdom) 16,749 LIGHT COMMERCIAL VEHICLE RENTAL SPECIALIST 305,000 Electro Rent (b) 4,548 TEST & MEASUREMENT EQUIPMENT RENTALS ---------------------------------------------------------------------------- 283,992 >SAVINGS & LOANS: 1.5% 4,016,000 Peoples Bank Bridgeport 124,737 CONNECTICUT SAVINGS & LOAN 1,700,000 Housing Development Finance (India) 45,641 PREMIER MORTGAGE LENDER IN INDIA 1,178,000 Anchor Bancorp Wisconsin (c) 35,741 WISCONSIN THRIFT NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 1,285,000 Washington Federal $ 29,542 OLD FASHIONED THRIFT 200,000 Bankinter (Spain) 11,098 MORTGAGE LENDER 360,000 Provident Bancorp 3,964 NEW YORK STATE THRIFT ---------------------------------------------------------------------------- 250,723 >MONEY MANAGEMENT: 1.5% 2,355,000 SEI Investments 87,135 MUTUAL FUND ADMINISTRATION & INVESTMENT MANAGEMENT 2,990,000 Eaton Vance 81,806 SPECIALTY MUTUAL FUNDS 1,657,000 Nuveen Investments 70,621 SPECIALTY MUTUAL FUNDS ---------------------------------------------------------------------------- 239,562 >BROKERAGE: 0.2% 690,000 Investment Technology Group (b) 24,454 ELECTRONIC TRADING ---------------------------------------------------------------------------- ----------- FINANCE: TOTAL 2,022,312 ---------------------------------------------------------------------------- HEALTH CARE: 9.3% >MEDICAL EQUIPMENT/LABORATORY SUPPLIES: 2.9% 1,629,000 Edwards Lifesciences (b) 67,783 HEART VALVES 1,040,000 Diagnostic Products 50,492 IMMUNODIAGNOSTIC KITS 1,560,000 CYTYC (b) 44,039 CONSUMABLES RELATED TO WOMEN'S HEALTH 475,000 Essilor International (France) 38,352 EYEGLASS LENSES 1,180,000 Intermagnetics General (b) 37,642 MRI EQUIPMENT 930,000 Datascope (c) 30,737 MEDICAL DEVICES 714,000 ICU Medical (b)(c) 27,996 INTRAVENOUS THERAPY PRODUCTS 905,000 Arrow International 26,236 DISPOSABLE CATHETERS 583,000 Orthofix International (b) 23,256 BONE FIXATION & STIMULATION DEVICES 552,000 Advanced Medical Optics (b) 23,074 MEDICAL DEVICES FOR EYE CARE 875,000 Viasys Healthcare (b) 22,487 RESPIRATORY & NEUROLOGY MEDICAL EQUIPMENT 390,000 Hogy Medical (Japan) 21,065 DISPOSABLE SURGICAL PRODUCTS 175,000 Synthes (Switzerland) 19,657 PRODUCTS FOR ORTHOPEDIC SURGERY 450,000 Vital Signs 19,269 ANESTHESIA, RESPIRATORY & SLEEP PRODUCTS 350,000 Haemonetics (b) 17,101 BLOOD & PLASMA COLLECTION EQUIPMENT 650,000 PSS World Medical (b) 9,646 MEDICAL SUPPLIES DISTRIBUTOR ---------------------------------------------------------------------------- 478,832 1-800-922-6769 30 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >BIOTECHNOLOGY/DRUG DELIVERY: 2.9% 913,000 Neurocrine Biosciences (b) $ 57,272 DRUGS FOR SLEEP, DIABETES, MS & ENDOMETRIOSIS 3,230,000 Exelixis (b) 30,427 TREATMENTS FOR CANCER & METABOLIC DISORDERS 2,000,000 Medarex (b) 27,700 HUMANIZED ANTIBODIES 2,380,000 Ligand Pharmaceuticals (b) 26,537 DRUGS FOR PAIN, CANCER, OSTEOPOROSIS & DIABETES 1,500,000 Tanox (b) 24,555 DRUGS FOR ASTHMA & HIV 1,179,000 AtheroGenics (b) 23,592 DRUGS FOR ATHEROSCLEROSIS 2,400,000 Pozen (b)(c) 23,016 DRUGS FOR MIGRAINES 1,360,000 Nektar Therapeutics (b) 22,386 DRUG DELIVERY TECHNOLOGIES 3,935,000 Incyte (b) 21,013 DRUG DEVELOPMENT 1,429,000 Arena Pharmaceuticals (b) 20,320 NOVEL DRUG TARGETING TECHNOLOGY 1,355,000 DOV Pharmaceuticals (b)(c) 19,891 DRUGS FOR INSOMNIA, ANXIETY, PAIN & DEPRESSION 1,600,000 NPS Pharmaceuticals (b) 18,944 DRUGS FOR OSTEOPOROSIS & HYPERPARATHYROIDISM 800,000 Momenta Pharmaceuticals (b) 17,632 SUGAR ANALYSIS TECHNOLOGY FOR DRUG DESIGN 650,000 Martek Biosciences (b) 15,996 FATTY ACIDS FOR BABY FORMULA & OTHER FOODS 1,900,000 Decode Genetics (b) 15,694 DRUGS FOR HEART ATTACK, ASTHMA & VASCULAR DISEASE 1,000,000 Renovis (b) 15,300 DRUG TO MINIMIZE NEUROLOGICAL DAMAGE FROM STROKES 1,650,000 Human Genome Sciences (b) 14,124 DRUG DISCOVERY/DEVELOPMENT 1,750,000 Genitope (c) 13,913 CANCER VACCINE 2,000,000 Cytokinetics (b)(c) 13,080 DRUGS FOR CANCER & HEART FAILURE 3,100,000 Lexicon Genetics (b) 11,315 DRUG DISCOVERY 2,300,000 Seattle Genetics (b)(c) 10,856 ANTIBODY-BASED THERAPIES FOR CANCER 1,265,000 Maxygen (b) 9,500 MOLECULAR BREEDING 975,000 Rigel Pharmaceuticals (b) 8,151 DRUGS FOR HAY FEVER, ASTHMA, HEPATITIS & CANCER 1,100,000 La Jolla Pharmaceuticals (b)(c) 4,070 LUPUS TREATMENT 1,249,999 Perlegen Sciences (d) 3,375 LARGE SCALE GENE SEQUENCING 1,875,000 Locus Discovery, Series D, Pfd. (d) 2,813 HIGH THROUGHPUT RATIONAL DRUG DESIGN 359,944 Microdose (d) 166 DRUG INHALERS ---------------------------------------------------------------------------- 471,638 >SERVICES: 2.8% 2,491,000 Lincare Holdings (b) 104,398 HOME HEALTH CARE SERVICES NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 1,232,000 Coventry Health Care (b) $ 70,175 PPO NETWORK 1,595,000 Charles River Laboratories (b) 67,580 PHARMACEUTICAL RESEARCH 2,592,000 NDCHealth Group (c) 49,844 HEALTH CLAIMS PROCESSING & DRUG MARKETING SERVICES 4,260,000 Gambro (Sweden) 46,517 PRODUCTS FOR RENAL & BLOOD CARE 510,000 OPG Groep (Netherlands) 36,408 HEALTHCARE SUPPLIES & PHARMACIES 1,607,000 Serologicals (b) 31,722 BLOOD COLLECTION & ANTIBODY PRODUCTION 2,033,000 Dendrite International (b) 29,296 SOFTWARE FOR PHARMACEUTICAL SALES FORCE 600,000 United Surgical Partners (b) 19,290 OUTPATIENT SURGERY CENTER 158,000 PRA International (b) 4,448 CONTRACT RESEARCH ORGANIZATION ---------------------------------------------------------------------------- 459,678 >MEDICAL SUPPLIES: 0.3% 486,000 Techne (b) 27,289 CYTOKINES, ANTIBODIES, OTHER REAGENTS FOR LIFE SCIENCES 650,000 Owens & Minor 17,894 DISTRIBUTION OF MEDICAL SUPPLIES ---------------------------------------------------------------------------- 45,183 >HOSPITAL MANAGEMENT: 0.2% 1,000,000 Rhoen-Klinikum (Germany) 38,062 HOSPITAL MANAGEMENT ---------------------------------------------------------------------------- >PHARMACEUTICALS: 0.2% 576,000 Par Pharmaceuticals (b) 18,052 GENERICS 4,100,000 United Drug (Ireland) 17,717 IRISH PHARMACEUTICAL WHOLESALER & OUTSOURCER ---------------------------------------------------------------------------- 35,769 ----------- HEALTH CARE: TOTAL 1,529,162 ---------------------------------------------------------------------------- ENERGY/MINERALS: 9.3% >OIL/GAS PRODUCERS: 5.3% 3,200,000 Western Gas Resources 150,688 OIL & COAL SEAM GAS PRODUCER 2,700,000 Ultra Petroleum (b) 150,660 NATURAL GAS PRODUCER 2,500,000 Talisman Energy (Canada) 132,479 OIL & GAS PRODUCER 2,500,000 XTO Energy 109,850 NATURAL GAS PRODUCER 2,400,000 Equitable Resources 88,056 NATURAL GAS PRODUCER & UTILITY 2,000,000 Southwestern Energy 71,880 NATURAL GAS PRODUCER 13,500,000 Tullow Oil (United Kingdom) 62,712 OIL & GAS PRODUCER 1,500,000 Range Resources 39,510 OIL & GAS PRODUCER 1,200,000 McMoran Exploration (b) 23,724 NATURAL GAS PRODUCERS & DEVELOPER 700,000 Denbury Resources (b) 15,946 OIL PRODUCER USING CO2 INJECTION 31 COLUMBIA ACORN FUND >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >OIL/GAS PRODUCERS--CONTINUED 3,200,000 Vaalco Energy (b)(c) $ 13,568 OIL & GAS PRODUCER ---------------------------------------------------------------------------- 859,073 >OIL SERVICES: 2.8% 2,350,000 FMC Technologies (b) 100,862 OIL & GAS WELL HEAD MANUFACTURER 2,300,000 Pride International (b) 70,725 OFFSHORE DRILLING CONTRACTOR 1,365,000 Fugro (Netherlands) 43,843 SURVEY & GPS SERVICES 750,000 Carbo Ceramics 42,390 NATURAL GAS WELL STIMULANTS 1,600,000 Chicago Bridge & Iron 40,336 ENGINEERING & CONSTRUCTION FOR PETROCHEMICALS 5,000,000 Newpark Resources (b)(c) 38,150 DRILLING FLUID SERVICES TO OIL & GAS INDUSTRY 2,000,000 Saipem (Italy) 32,818 OFFSHORE CONSTRUCTION & DRILLING 2,400,000 Key Energy Services (b) 32,328 OIL & GAS WELL WORKOVER SERVICES 1,350,000 Enerflex Systems (Canada) (c) 31,170 NATURAL GAS COMPRESSOR 700,000 Veritas DGC (b) 24,843 GEOPHYSICAL CONTRACTOR 168,000 Pioneer Drilling (b) 3,012 OIL & GAS WELL DRILLER ---------------------------------------------------------------------------- 460,477 >MINING: 0.9% 1,440,000 Xstrata (United Kingdom) 33,694 DIVERSIFIED MINING HOLDING COMPANY 275,000 Sociedad Quimica Y Minera de Chile (Chile) 30,030 PRODUCER OF SPECIALTY FERTILIZERS, LITHIUM & IODINE 900,000 Falconbridge (Canada) 26,711 DIVERSIFIED MINING HOLDING COMPANY 13,100,000 UrAsia Energy (Canada) 24,454 URANIUM MINING IN KAZAKHSTAN 2,900,000 Jubilee Gold Mines (Australia) 15,987 NICKEL MINING IN AUSTRALIA 1,000,000 Ivanhoe Mines (Canada) (b) 7,183 COPPER MINING IN MONGOLIA ---------------------------------------------------------------------------- 138,059 >DISTRIBUTION/MARKETING/REFINING: 0.2% 966,000 Atmos Energy 25,271 NATURAL GAS UTILITY 435,000 Oneok 11,584 NATURAL GAS UTILITY, MARKETING & PROCESSING ---------------------------------------------------------------------------- 36,855 >AGRICULTURAL COMMODITIES: 0.1% 550,000 Aracruz Celulose (Brazil) 22,006 BRAZILIAN HARDWOOD PULP PRODUCER ---------------------------------------------------------------------------- ----------- ENERGY/MINERALS: TOTAL 1,516,470 ---------------------------------------------------------------------------- NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- OTHER INDUSTRIES: 4.5% >REAL ESTATE: 3.2% 1,320,000 General Growth Properties $ 62,027 REGIONAL SHOPPING MALLS 1,398,000 Forest City Enterprises, Cl. B 52,970 COMMERCIAL & RESIDENTIAL PROPERTY DEVELOPER 650,000 SL Green Realty 49,653 MANHATTAN OFFICE BUILDINGS 1,050,000 Gaylord Entertainment (b) 45,770 CONVENTION HOTELS 4,002,000 Highland Hospitality (c) 44,222 HOTEL OWNER 635,000 Macerich Company 42,634 REGIONAL SHOPPING MALLS 870,000 Mills 36,488 REGIONAL SHOPPING MALLS 575,000 Federal Realty Investment Trust 34,874 SHOPPING CENTERS 1,375,000 Crescent Real Estate Equities 27,253 CLASS A OFFICE BUILDINGS 1,720,000 Kite Realty Group (c) 26,608 COMMUNITY SHOPPING CENTERS 1,991,000 Diamondrock Hospitality 23,812 1,000,000 Diamondrock Hospitality 144A (d) 11,960 HOTEL OWNER 900,000 American Campus Communities (c) 22,320 STUDENT HOUSING/APARTMENTS 670,000 Brandywine Realty 18,700 OFFICE BUILDINGS 400,000 Parkway Properties 16,056 OFFICE BUILDINGS 1,355,000 Sponda (Finland) 12,753 OFFICE & WAREHOUSE PROPERTY COMPANY 37,407 Security Capital European Realty (Luxembourg) (d) 539 SELF STORAGE PROPERTIES ---------------------------------------------------------------------------- 528,639 >TRANSPORTATION: 0.5% 1,980,000 Heartland Express 40,174 REGIONAL TRUCKER 560,000 Grupo Aeroportaurio Del Sureste (Mexico) 18,110 CANCUN & COZUMEL AIRPORT OPERATOR 18,000,000 Comfort Del Gro (Singapore) 17,322 TAXI & MASS TRANSIT SERVICE 355,000 JB Hunt 8,037 TRUCKING CONGLOMERATE ---------------------------------------------------------------------------- 83,643 >REGULATED UTILITIES: 0.4% 1,650,000 Northeast Utilities 32,488 REGULATED ELECTRIC UTILITY 989,800 Red Electrica (Spain) 30,655 SPANISH POWER GRID ---------------------------------------------------------------------------- 63,143 1-800-922-6769 32 NUMBER OF SHARES OR PRINCIPAL AMOUNT (000) VALUE (000) ---------------------------------------------------------------------------- >WASTE MANAGEMENT: 0.4% 1,700,000 Waste Connections (b) $ 58,582 SOLID WASTE MANAGEMENT ---------------------------------------------------------------------------- ----------- OTHER INDUSTRIES TOTAL 734,007 TOTAL COMMON STOCKS AND OTHER ----------- EQUITY-LIKE SECURITIES: 93.9% (e) 15,392,878 (COST: $8,967,326) ---------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS: 6.0% $123,000 Countrywide Financial Funding 4.15% - 4.34% Due 1/6/06 - 2/9/06 122,624 120,000 Virginia Electric & Power 4.30% - 4.32% Due 1/26/06 - 1/31/06 119,623 119,000 Credit Suisse First Boston 4.14% - 4.16% Due 1/12/06 - 1/17/06 118,822 80,000 Prudential Funding 4.24% - 4.25% Due 1/19/06 - 1/23/06 79,811 75,000 Citigroup Funding 4.24% - 4.27% Due 1/18/06 - 1/30/06 74,795 73,000 Toyota Credit 4.27% - 4.31% Due 2/3/06 - 2/6/06 72,700 64,000 American General Finance 4.13% Due 1/3/06 - 1/4/06 63,982 40,000 Pfizer Investment Capital (f) 4.10% Due 1/9/06 39,964 40,000 State Street Boston Corp 4.10% Due 1/10/06 39,959 40,000 Siemens Capital Corp 4.115% Due 1/11/06 39,954 40,000 Verizon Global Funding (f) 4.33% Due 2/8/06 39,817 35,000 Concentrate Manufacturing (f) 4.27% Due 2/2/06 34,867 30,000 American Express Credit Corp 4.15% Due 1/5/06 29,986 30,000 General Electric Capital Services 4.26% Due 1/24/06 29,918 28,000 Aluminum Company America 4.28% Due 1/25/06 27,920 25,000 Toyota Motor Credit 4.26% Due 2/1/06 24,908 16,000 General Electric Capital Corporate 4.25% Due 2/10/06 15,924 PRINCIPAL AMOUNT (000) VALUE (000) ---------------------------------------------------------------------------- $ 4,458 Repurchase Agreement with State Street Bank & Trust dated 12/30/05, due 1/3/06 at 3.75% collateralized by Federal Home Loan Mortgage Discount Notes, maturing 5/2/06 market value $4,550 (repurchase proceeds: $4,460) $ 4,458 ---------------------------------------------------------------------------- (AMORTIZED COST: $980,032) 980,032 ----------- TOTAL INVESTMENTS: 99.9% 16,372,910 (COST: $9,947,358)(a) CASH AND OTHER ASSETS LESS LIABILITIES: 0.1% 18,414 ----------- TOTAL NET ASSETS: 100% $16,391,324 ============================================================================ 33 COLUMBIA ACORN FUND >STATEMENT OF INVESTMENTS, CONTINUED -------------------------------------------------------------------------------- >Notes to Statement of Investments (in thousands) (a) At December 31, 2005, for federal income tax purposes cost of investments was $9,982,149 and net unrealized appreciation was $6,390,761 consisting of gross unrealized appreciation of $6,721,158 and gross unrealized depreciation of $330,397. (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, 2005, the Fund held five percent or more of the outstanding voting securities of the following companies: AnswerThink Consulting 10.42% Datascope 6.28% Christopher & Banks 10.39 Clarcor 6.21 Actuate 9.95 Genitope 6.16 Spartech 9.85 Salem Communications 6.08 New Horizons Worldwide 9.80 Kite Realty Group 6.02 Gibraltar Industries 9.63 Pegasus Systems 6.01 Indus International 9.60 Enerflex Systems 5.97 Igate Capital 9.50 Electric City 5.90 World Acceptance 9.28 DOV Pharmaceuticals 5.87 West Coast Bancorp 8.95 Sports Authority 5.75 Skillsoft Publishing 8.85 CityBank Lynwood 5.72 RC2 8.67 IXYS 5.68 Esco Technologies 8.60 Newpark Resources 5.66 Glacier Bancorp 8.47 Vaalco Energy 5.62 Watsco 8.28 Coinstar 5.62 Pozen 8.27 AFC Enterprises 5.61 Highland Hospitality 7.75 First Mutual Bancshares 5.54 Concurrent Computer 7.50 Seattle Genetics 5.42 Alliance Gaming 7.48 Mobile Mini 5.42 La Jolla Pharmaceuticals 7.41 Anchor Bancorp Wisconsin 5.37 NDCHealth Group 7.15 Kronos 5.33 Cytokinetics 6.97 Gaiam 5.24 Shuffle Master 6.97 American Campus Communities 5.23 Genlyte Group 6.80 JDA Software Group 5.20 Navigant International 6.73 CTS 5.18 Nuco2 6.73 Excel Technologies 5.18 Princeton Review 6.70 ICU Medical 5.14 Seachange International 6.58 Fleetwood Enterprises 5.08 Forward Air 6.39 The aggregate cost and value of these companies at December 31, 2005, was $1,461,876 and $2,084,199, respectively. Investments in affiliate companies represent 12.7% of total net assets at December 31, 2005. Investment activity and income amounts relating to affiliates during the twelve months ended December 31, 2005 were as follows: Dividend Income $ 16,279 Net realized gain or loss 2,494 Change in unrealized gain or loss (743,008) Purchases 365,595 Proceeds from sales 39,464 In addition, additional purchases of existing portfolio holdings that were not considered affiliates in prior years, resulted in the fund owning more than 5% of the outstanding shares of certain issues at December 31, 2005. Therefore, the cost and market value affiliate disclosure amounts include both acquisitions of new investments in affiliates during the period, as well as prior period investment holdings that became affiliates during the current period. 1-800-922-6769 34 (d) Denotes a restricted security, which is subject to restrictions on resale under federal securities laws. These securities, except for Diamondrock Hospitality, are valued in good faith by the Board of Trustees. At December 31, 2005, these securities (in thousands) amounted to $18,853, which represents 0.12% of total net assets. Additional information on these securities is as follows:
ACQUISITION SHARES/ SECURITY DATES PAR (000) COST (000) VALUE (000) ----------------------------------------------------------------------------------------------------------- Diamondrock Hospitality 144A 06/29/04 1,000,000 $10,000 $11,960 Gadzooks 5% Convertible 10/07/08 10/08/03 $6,000 6,000 0 Locus Discovery, Series D, Pfd. 09/05/01 1,875,000 7,500 2,813 Microdose 11/24/00 359,944 2,005 166 Perlegen Sciences 03/30/01 1,249,999 4,500 3,375 Security Capital European Realty 08/20/98-11/12/99 37,407 748 539 ------- ------- $30,753 $18,853 ======= =======
(e) On December 31, 2005, the market value of foreign securities (in thousands) represents 15.57% of total net assets. The Fund's foreign portfolio was diversified as follows: VALUE PERCENT =========================================================== Canada $ 326,759 1.99% France 239,791 1.46 United Kingdom 232,600 1.42 Ireland 218,620 1.33 Japan 184,809 1.13 Netherlands 172,162 1.05 Switzerland 147,548 0.90 Germany 120,050 0.73 Sweden 89,276 0.55 Hong Kong 73,009 0.45 Taiwan 71,630 0.44 Argentina 62,975 0.39 Brazil 61,613 0.38 Italy 49,255 0.30 Australia 47,921 0.29 India 45,641 0.28 South Korea 42,233 0.26 VALUE PERCENT =========================================================== Spain $ 41,753 0.26% Denmark 35,584 0.22 Czeck Republic 34,990 0.21 Mexico 31,230 0.19 Chile 30,030 0.18 Norway 30,023 0.18 Israel 28,318 0.17 Finland 19,731 0.12 South Africa 19,448 0.12 Bahamas 17,875 0.11 Singapore 17,322 0.11 Austria 16,924 0.10 China 15,348 0.09 New Zealand 14,412 0.09 Greece 12,090 0.07 Luxembourg 539 0.00 ---------- ------- Total Foreign Portfolio $2,551,509 15.57% ========== ======= (f) 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, 2005, these securities amounted to $114,648, which represents 0.7% of net assets. 35 COLUMBIA ACORN INTERNATIONAL >MAJOR PORTFOLIO CHANGES IN THE FOURTH QUARTER (UNAUDITED) NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 ADDITIONS ---------------------------------------------------------------------------- EUROPE >UNITED KINGDOM/IRELAND Bloomsbury Publishing 1,500,000 2,000,000 IAWS (Ireland) 1,690,000 2,000,000 Kingspan Group (Ireland) 0 880,000 Northern Rock 0 1,850,000 Novolipetsk Steel Works 0 775,000 RPS Group 3,800,000 6,000,000 Taylor Nelson 3,850,000 4,200,000 United Drug (Ireland) 6,000,000 6,500,000 >FRANCE April Group 636,501 700,000 Carbone Lorraine 303,000 340,000 Norbert Dentressangle 144,000 280,000 Rubis 40,000 271,833 Trigano 4,000 104,943 (INCLUDES THE EFFECT OF A 2 FOR 1 STOCK SPLIT) >GERMANY CTS Eventim 300,000 523,655 (INCLUDES THE EFFECT OF A 2 FOR 1 STOCK SPLIT) Grenkeleasing 222,000 260,000 Porsche 0 17,500 Vossloh 200,000 260,000 >SWITZERLAND Logitech 0 275,000 Synthes 110,000 135,000 >SWEDEN Gambro 1,112,000 1,492,000 Sweco 194,000 324,000 >ITALY Banca Italease 0 320,000 NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 ---------------------------------------------------------------------------- ASIA >JAPAN Aeon Mall 0 440,700 Chiba Bank 1,400,000 2,000,000 Jupiter Telecommunications 15,000 43,500 Kintetsu World Express 0 321,100 Nagaileben 0 156,000 Shimano 450,000 900,000 T. Hasegawa 0 104,000 Toyo Technica 906,000 918,000 Ushio 750,000 1,272,000 USS 0 350,000 Yusen Air & Sea Service 0 125,000 >TAIWAN Bank of Kaohsiung 8,470,000 17,000,000 Novatek Microelectronics 2,044,000 3,244,000 Springsoft Systems 5,686,000 7,186,000 ---------------------------------------------------------------------------- OTHER COUNTRIES >CANADA Railpower Technologies 0 432,000 Railpower Technologies 144A 0 2,036,000 Rona 0 790,000 >AUSTRALIA/NEW ZEALAND ABC Learning Center 2,000,000 3,980,100 Jubilee Gold Mines 0 2,000,000 Sky City Entertainment (New Zealand) 4,000,000 5,000,000 >SOUTH AFRICA Edgars Conolidated Stores 3,500,000 4,000,000 ---------------------------------------------------------------------------- LATIN AMERICA >BRAZIL Caemi Mine 8,800,000 10,600,000 Diagnosticos 200,000 364,800 Suzano 943,000 1,800,000 Universo Online 0 223,400 1-800-922-6769 36 NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 SALES ---------------------------------------------------------------------------- EUROPE >UNITED KINGDOM Business Post 1,175,000 0 Exel 1,750,000 0 William Hill 1,650,000 0 >FRANCE/BELGIUM Imerys 360,000 240,000 Omega Pharma (Belgium) 184,000 0 Vallourec 70,000 50,000 >DENMARK Kobenhavn Lufthavne 35,000 0 ---------------------------------------------------------------------------- ASIA >JAPAN Funai Electric 110,000 0 Kappa Create 142,000 0 >TAIWAN ASE Test 881,000 0 Chicony Electronic 10,620,000 0 Sunplus Technology 3,258,000 0 >HONG KONG/CHINA Hainan Meilan Airport (China) 9,800,000 0 Lerado Group 27,476,000 2,670,000 Ngai Lik Industrial 11,330,000 0 >SOUTH KOREA S&T 200,000 0 >SINGAPORE LMA International 20,000,000 11,564,000 >INDONESIA Perusahaan Gas Negara 45,000,000 30,000,500 NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 ---------------------------------------------------------------------------- OTHER COUNTRIES >CANADA Intrawest 102,000 0 PetroKazakhstan 153,100 0 Talisman Energy 595,000 385,000 >AUSTRALIA Lion Nathan 3,000,000 0 Pacific Brands 3,800,000 0 ---------------------------------------------------------------------------- LATIN AMERICA >MEXICO Grupo Aeroportaurio Del Sureste 660,000 500,000 >ARGENTINA Tenaris 316,000 110,000 37 COLUMBIA ACORN INTERNATIONAL >STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- COMMON STOCKS: 96.6% ---------------------------------------------------------------------------- EUROPE: 58.7% >UNITED KINGDOM/IRELAND: 17.7% 3,438,000 Anglo Irish Bank (Ireland) $ 52,181 SMALL BUSINESS & MIDDLE MARKET BANKING 2,800,000 Paragon Group 31,265 BUY-TO-LET FINANCE COMPANY 1,850,000 Northern Rock 30,015 LOWEST COST MORTGAGE BANK IN UK 6,370,000 Tullow Oil 29,591 OIL & GAS PRODUCER 2,000,000 IAWS (Ireland) 28,769 BAKED GOODS 6,500,000 United Drug (Ireland) 28,088 IRISH PHARMACEUTICAL WHOLESALER & OUTSOURCER 2,840,000 Expro International 27,851 OFFSHORE OIL FIELD SERVICES 1,700,000 Kensington 27,055 NON-CONFORMING MORTGAGE COMPANY 2,350,000 Grafton Group (Ireland) 25,596 BUILDING MATERIALS WHOLESALING & DIY RETAILING 900,000 Intermediate Capital 21,570 EUROPEAN PROVIDER OF MEZZANINE CAPITAL 795,000 Kerry (Ireland) 17,610 CONSUMER FOODS & FOOD INGREDIENTS 750,000 Xstrata 17,549 DIVERSIFIED MINING HOLDING COMPANY 6,000,000 Cobham 17,497 AEROSPACE COMPONENTS 975,000 Northgate 16,330 LIGHT COMMERCIAL VEHICLE RENTAL SPECIALIST 4,200,000 Taylor Nelson 16,241 MARKET RESEARCH 6,000,000 RPS Group 16,104 ENVIRONMENTAL CONSULTING & PLANNING 1,800,000 Ulster Television 13,162 IRISH TELEVISION & RADIO STATION OPERATOR 1,200,000 Spectris 13,079 ELECTRONIC INSTRUMENTATION & CONTROLS 2,450,000 Workspace Group 13,067 REAL ESTATE 2,200,000 BBA Group 12,434 AVIATION SUPPORT SERVICES & NON-WOVEN MATERIALS 2,000,000 Bloomsbury Publishing 11,579 BOOK PUBLISHER 880,000 Kingspan Group (Ireland) 11,095 BUILDING INSULATION & ENVIRONMENTAL CONTAINERS 775,000 Novolipetsk Steel Works (b) 11,082 VERTICALLY INTEGRATED STEEL PRODUCER 720,000 Paddy Power (Ireland) 10,314 IRISH BETTING SERVICES 600,000 Cambridge Antibody (b) 7,211 LEADER IN HUMAN MONOCLONAL ANTIBODIES 450,000 Viridian 6,925 NORTHERN IRELAND ELECTRIC UTILITY ---------------------------------------------------------------------------- 513,260 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >FRANCE: 10.2% 1,980,000 SES Global $ 34,670 SATELLITE BROADCASTING SERVICES 327,500 Neopost 32,840 POSTAGE METER MACHINES 700,000 April Group 28,923 INSURANCE POLICY CONSTRUCTION 50,000 Vallourec 27,526 SEAMLESS TUBES 390,000 Iliad 24,148 HIGH SPEED INTERNET SERVICE PROVIDER 170,000 Ciments Francais 22,099 LEADING FRENCH & EMERGING MARKETS CEMENT PRODUCER 271,833 Rubis 19,985 TANK STORAGE & LPG SUPPLIER 240,000 Imerys 17,361 INDUSTRIAL MINERALS PRODUCER 280,000 Norbert Dentressangle 16,488 TRANSPORT 200,000 Essilor International 16,148 EYEGLASS LENSES 340,000 Carbone Lorraine (b) 15,537 ADVANCED INDUSTRIAL MATERIALS 170,000 Pierre & Vacances 13,857 VACATION APARTMENT LETS 450,000 Metropole TV 12,466 TELEVISION BROADCASTER 94,000 Bacou Dalloz 8,096 SAFETY EQUIPMENT 104,943 Trigano 4,674 LEISURE VEHICLES & CAMPING EQUIPMENT ---------------------------------------------------------------------------- 294,818 >GERMANY/AUSTRIA: 8.5% 1,230,000 Rhoen-Klinikum 46,817 HOSPITAL MANAGEMENT 275,000 Wincor Nixdorf 29,096 RETAIL POS SYSTEMS & ATM MACHINES 500,000 Bilfinger Berger 23,856 CONSTRUCTION & RELATED SERVICES 1,275,000 Depfa Bank 18,853 INVESTMENT BANKER TO PUBLIC AUTHORITIES 175,000 Deutsche Boerse 17,934 TRADING, CLEARING & SETTLEMENT SERVICES FOR FINANCIAL MARKETS 450,000 Hugo Boss Designs 15,823 FASHION APPAREL 260,000 Grenkeleasing 14,867 FINANCING FOR IT EQUIPMENT 415,000 GFK 13,904 MARKET RESEARCH SERVICES 523,655 CTS Eventim (b) 12,777 EVENT TICKET SALES 260,000 Vossloh 12,651 RAIL INFRASTRUCTURE & DIESEL LOCOMOTIVES 17,500 Porsche 12,575 SPECIALTY AUTOMOBILE MANUFACTURER 300,000 Wienerberger (Austria) 11,946 BRICKS & CLAY ROOFING TILES 1-800-922-6769 38 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >GERMANY/AUSTRIA--CONTINUED 870,000 Takkt $ 9,785 MAIL ORDER RETAILER OF OFFICE & WAREHOUSE DURABLES 260,000 Deutsche Beteiligungs 4,294 PRIVATE EQUITY INVESTMENT MANAGEMENT ---------------------------------------------------------------------------- 245,178 >NETHERLANDS: 7.3% 1,245,000 Fugro 39,988 SURVEY & GPS SERVICES 550,000 Aalberts Industries 29,204 FLOW CONTROL & HEAT TREATMENT 684,000 United Services Group 28,990 TEMPORARY STAFFING SERVICES 237,000 Koninklijke Ten Cate 24,130 ADVANCED TEXTILES & INDUSTRIAL FABRICS 327,000 OPG Groep 23,344 HEALTHCARE SUPPLIES & PHARMACIES 330,000 Smit International 21,566 HARBOR & OFFSHORE TOWAGE & MARINE SERVICES 475,000 Sligro Food Group 19,840 FOOD SERVICE & WHOLESALING 400,000 IM Tech 13,023 ENGINEERING & TECHNICAL SERVICES 890,000 Unit 4 Aggresso (b) 12,813 BUSINESS & SECURITY SOFTWARE ---------------------------------------------------------------------------- 212,898 >SWITZERLAND: 4.9% 95,000 Kuehne & Nagel 26,785 FREIGHT FORWARDING/LOGISTICS 30,000 Geberit International 23,743 PLUMBING SUPPLIES 24,000 Sika 19,908 CHEMICALS FOR CONSTRUCTION & INDUSTRIAL APPLICATION 135,000 Synthes 15,164 PRODUCTS FOR ORTHOPEDIC SURGERY 275,000 Logitech (b) 12,923 BRANDED PERIPHERAL COMPUTER DEVICES 150,000 Pargesa 12,808 INDUSTRIAL & MEDIA CONGLOMERATE 30,000 Schindler 11,895 ELEVATOR MANUFACTURER & SERVICE PROVIDER 15,000 Givaudan 10,165 INDUSTRIAL FRAGRANCES & FLAVORS 130,000 BKW Energie 8,706 ELECTRIC UTILITY ---------------------------------------------------------------------------- 142,097 >SWEDEN: 2.8% 1,230,000 Hexagon 36,693 MEASUREMENT EQUIPMENT & POLYMERS 905,000 Nobia 18,340 KITCHEN CABINET MANUFACTURING & DISTRIBUTION 1,492,000 Gambro 16,292 PRODUCTS FOR RENAL & BLOOD CARE 324,000 Sweco 8,544 NORDIC INFRASTRUCTURE/ENVIRONMENT CONSULTING ---------------------------------------------------------------------------- 79,869 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >SPAIN: 1.4% 620,000 Red Electrica $ 19,202 SPANISH POWER GRID 1,000,000 Abengoa 14,692 ENGINEERING & CONSTRUCTION 120,000 Bankinter 6,659 MORTGAGE LENDER ---------------------------------------------------------------------------- 40,553 >ITALY: 1.4% 2,120,000 Davide Campari 15,687 SPIRITS & WINE 170,000 Amplifon 11,472 HEARING AID RETAILER 320,000 Banca Italease (b) 8,157 ITALIAN LEASING & FACTORING LEADER 4,600,000 Ducati Motor (b) 5,032 MOTORCYCLES & RELATED MERCHANDISE ---------------------------------------------------------------------------- 40,348 >RUSSIA: 0.9% 700,000 RBC Information Systems (b) 18,760 FINANCIAL INFORMATION, MEDIA & IT SERVICES 370,000 Mechel Steel Group 8,943 COKING COAL ---------------------------------------------------------------------------- 27,703 >CZECH REPUBLIC: 0.9% 183,000 Komercni Banka 25,613 LEADING CZECH UNIVERSAL BANK ---------------------------------------------------------------------------- >FINLAND: 0.9% 439,000 Jaakko Poyry 16,559 ENGINEERING CONSULTANTS IN FORESTRY, ENERGY 950,000 Sponda 8,941 OFFICE & WAREHOUSE PROPERTY COMPANY ---------------------------------------------------------------------------- 25,500 >NORWAY: 0.6% 221,000 Orkla 9,152 MATERIALS, BRANDED CONSUMER GOODS & MEDIA 470,000 Ekornes 8,652 NICHE FURNITURE MANUFACTURER ---------------------------------------------------------------------------- 17,804 >GREECE: 0.6% 930,000 Intralot 16,295 LOTTERY & GAMING SYSTEMS/SERVICES ---------------------------------------------------------------------------- >DENMARK: 0.4% 200,000 Novozymes 10,949 INDUSTRIAL ENZYMES ---------------------------------------------------------------------------- >POLAND: 0.2% 132,000 Central European Distribution (b) 5,298 SPIRITS & WINE DISTRIBUTION ---------------------------------------------------------------------------- ----------- EUROPE: TOTAL 1,698,183 ---------------------------------------------------------------------------- 39 COLUMBIA ACORN INTERNATIONAL >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- ASIA: 23.7% >JAPAN: 14.4% 43,500 Jupiter Telecommunications (b) $ 34,709 LARGEST CABLE SERVICE PROVIDER IN JAPAN 868,000 Park 24 31,059 PARKING LOT OPERATOR 1,272,000 Ushio 29,714 INDUSTRIAL LIGHT SOURCES 481,000 Daito Trust Construction 24,879 APARTMENT BUILDER 2,900,000 Bank of Yokohama 23,729 REGIONAL BANK 900,000 Shimano 23,657 BICYCLE COMPONENTS & FISHING TACKLE 350,000 USS 22,317 USED CAR AUCTIONEER 220,000 Fast Retailing 21,508 APPAREL RETAILER 359,000 Ito En 21,491 BOTTLED TEA & OTHER BEVERAGES 440,700 Aeon Mall 21,487 SUBURBAN SHOPPING MALL DEVELOPER, OWNER & OPERATOR 338,000 Hogy Medical 18,256 DISPOSABLE SURGICAL PRODUCTS 710,000 Sato 17,338 BAR CODE PRINTERS & SUPPLIES 2,000,000 Chiba Bank 16,772 REGIONAL BANK 475,000 Meitec 15,386 R&D STAFFING SERVICES 918,000 Toyo Technica 14,603 VALUE ADDED RESELLER OF IMPORTED INSTRUMENTATION 2,248,000 Hiroshima Bank 14,525 REGIONAL BANK 2,960 Risa Partners 13,930 NPL & REAL ESTATE RELATED INVESTMENT 1,500,000 Fukuoka Bank 12,833 REGIONAL BANK 450,200 Ain Pharmaciez 8,952 DISPENSING PHARMACY/DRUGSTORE OPERATOR 321,100 Kintetsu World Express 8,522 AIRFREIGHT LOGISTICS 625 Japan Pure Chemical 8,108 PRECIOUS METAL PLATING CHEMICALS FOR ELECTRONICS 125,000 Yusen Air & Sea Service 6,285 AIRFREIGHT LOGISTICS 156,000 Nagaileben 3,810 MEDICAL/HEALTHCARE RELATED CLOTHES 104,000 T.Hasegawa 1,548 INDUSTRIAL FLAVORS & FRAGRANCES ---------------------------------------------------------------------------- 415,418 >TAIWAN: 3.2% 18,300,000 Phoenixtec Power 19,958 UNINTERRUPTABLE POWER SUPPLIES 6,822,000 Advantech 19,327 EMBEDDED COMPUTERS 3,244,000 Novatek Microelectronics 19,073 LCD RELATED IC DESIGNER NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 7,186,000 Springsoft Systems $ 11,777 ELECTRONIC DESIGN AUTOMATION SOFTWARE 5,565,000 Wah Lee Industrial 10,884 DISTRIBUTOR OF CHEMICALS, MATERIALS & EQUIPMENT 17,000,000 Bank of Kaohsiung 9,374 COMMERCIAL BANKING 3,040,000 Taiwan Fu Hsing 3,426 DOOR LOCK MANUFACTURER ---------------------------------------------------------------------------- 93,819 >HONG KONG/CHINA: 2.1% 6,000,000 Hong Kong Exchanges & Clearing 24,879 HONG KONG EQUITY & DERIVATIVES OPERATOR 6,500,000 Techtronic Industries 15,467 POWER TOOLS & MOTORIZED APPLIANCES 35,000,000 Global Bio-Chem Technology Group (China) 15,348 REFINER OF CORN-BASED COMMODITIES 20,000,000 Linmark 5,481 GLOBAL SOURCING AGENT OF CONSUMER GOODS 2,670,000 Lerado Group 158 BABY STROLLERS & INFANT CAR SEATS MANUFACTURER ---------------------------------------------------------------------------- 61,333 >SOUTH KOREA: 1.2% 250,000 Hyundai Mobis 22,706 AUTO PARTS 100,000 Samsung Fire & Marine 12,575 NON-LIFE INSURANCE ---------------------------------------------------------------------------- 35,281 >INDIA: 1.2% 1,300,000 Housing Development Finance 34,902 PREMIER MORTGAGE LENDER IN INDIA ---------------------------------------------------------------------------- >SINGAPORE: 0.9% 20,000,000 Comfort Del Gro 19,246 TAXI & MASS TRANSIT SERVICE 11,564,000 LMA International (b) 5,182 MEDICAL EQUIPMENT & SUPPLIES ---------------------------------------------------------------------------- 24,428 >INDONESIA: 0.7% 30,000,500 Perusahaan Gas Negara 20,953 GAS PIPELINE OPERATOR ---------------------------------------------------------------------------- ----------- ASIA: TOTAL 686,134 ---------------------------------------------------------------------------- OTHER COUNTRIES: 8.2% >CANADA: 3.8% 385,000 Talisman Energy 20,402 OIL & GAS PRODUCER 1,190,000 Shawcor 15,929 OIL & GAS PIPELINE PRODUCTS 790,000 Rona (b) 14,577 LEADING CANADIAN DIY RETAILER 400,000 Falconbridge 11,871 DIVERSIFIED MINING HOLDING COMPANY 2,036,000 Railpower Technologies 144A (b)(c) 11,315 432,000 Railpower Technologies 2,401 HYBRID LOCOMOTIVES 1-800-922-6769 40 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >CANADA--CONTINUED 1,100,000 Kinross Gold (b) $ 10,163 GOLD MINING 5,300,000 UrAsia Energy 9,894 URANIUM MINING IN KAZAKHSTAN 2,000,000 Northern Orion Resources (b) 6,521 COPPER & GOLD IN ARGENTINA 850,000 Ivanhoe Mines (b) 6,106 COPPER MINING IN MONGOLIA 4,900 Alliance Atlantis Communication (b) 144 CATV CHANNELS, TV/MOVIE PRODUCTION/DISTRIBUTION ---------------------------------------------------------------------------- 109,323 >AUSTRALIA/NEW ZEALAND: 3.6% 3,000,000 Billabong International 31,934 ACTION SPORTS APPAREL BRAND MANAGER 3,980,100 ABC Learning Center 21,008 CHILDCARE CENTERS 350,000 Perpetual Trustees 17,448 MUTUAL FUND MANAGER 5,000,000 Sky City Entertainment (New Zealand) 16,013 CASINO/ENTERTAINMENT COMPLEX 2,000,000 Jubilee Gold Mines (Australia) 11,026 NICKEL MINING IN AUSTRALIA 530,000 Major Drilling Group International (b) 8,020 MINING EXPLORATION DRILLER ---------------------------------------------------------------------------- 105,449 >SOUTH AFRICA: 0.8% 4,000,000 Edgars Consolidated Stores 22,227 LEADING RETAIL CONGLOMERATE ---------------------------------------------------------------------------- ----------- OTHER COUNTRIES: TOTAL 236,999 ---------------------------------------------------------------------------- LATIN AMERICA: 6.0% >BRAZIL: 3.3% 640,000 Natura Cosmeticos 28,193 DIRECT RETAILER OF COSMETICS 10,600,000 Caemi Mine 15,320 IRON ORE/KAOLIN PRODUCER 280,000 America Latina Logistics 11,853 RAIL OPERATOR IN BRAZIL & ARGENTINA 1,000,000 Porto Seguro (b) 10,667 AUTO & LIFE INSURANCE 1,800,000 Suzano 9,022 PULP & PAPER PRODUCER 500,000 Ultrapar 6,947 SPECIALTY CHEMICALS & LIQUID PROPANE GAS DISTRIBUTION 364,800 Diagnosticos (b) 6,770 MEDICAL DIAGNOSTIC SERVICES 375,000 Obrascon Huarte (b) 4,055 TOLLROADS 223,400 Universo Online (b) 1,882 LARGEST INTERNET PORTAL IN BRAZIL ---------------------------------------------------------------------------- 94,709 NUMBER OF SHARES OR PRINCIPAL AMOUNT (000) VALUE (000) ---------------------------------------------------------------------------- >MEXICO: 1.4% 500,000 Grupo Aeroportaurio Del Sureste $ 16,170 CANCUN & COZUMEL AIRPORT OPERATOR 3,000,000 Consorcio ARA 13,120 AFFORDABLE HOUSING BUILDER 1,400,000 URBI Desarrollo (b) 9,678 AFFORDABLE HOUSING BUILDER ---------------------------------------------------------------------------- 38,968 >CHILE: 0.9% 160,000 Sociedad Quimica Y Minera de Chile 17,472 PRODUCER OF SPECIALTY FERTILIZERS, LITHIUM & IODINE 300,000 CorpBanca 8,295 CONSUMER & SME BANKING ---------------------------------------------------------------------------- 25,767 >ARGENTINA: 0.4% 110,000 Tenaris 12,595 SEAMLESS TUBES ---------------------------------------------------------------------------- ----------- LATIN AMERICA: TOTAL 172,039 ----------- TOTAL COMMON STOCKS: 96.6% 2,793,355 (COST: $1,818,614) ---------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS: 3.0% $ 56,000 Countrywide Financial Corp 4.32% - 4.34% Due 1/3/06 - 1/4/06 55,983 27,000 General Electric Capital Corporate 4.10% Due 1/9/06 26,975 3,884 Repurchase Agreement with State Street Bank & Trust dated 12/30/05, due 1/3/06 at 3.75% collateralized by US Treasury Bond, maturing 8/28/15 market value $4,613 (repurchase proceeds: $3,886) 3,884 ---------------------------------------------------------------------------- (AMORTIZED COST: $86,842) 86,842 ----------- TOTAL INVESTMENTS: 99.6% 2,880,197 (COST: $1,905,456) (a)(d) CASH AND OTHER ASSETS LESS LIABILITIES: 0.4% 12,380 ----------- TOTAL NET ASSETS - 100% $ 2,892,577 ============================================================================ 41 COLUMBIA ACORN INTERNATIONAL >STATEMENT OF INVESTMENTS, CONTINUED -------------------------------------------------------------------------------- >Notes to Statement of Investments (in thousands) (a) At December 31, 2005, for federal income tax purposes cost of investments was $1,926,874 and net unrealized appreciation was $953,323 consisting of gross unrealized appreciation of $993,522 and gross unrealized depreciation of $40,199. (b) Non-income producing security. (c) Denotes a restricted security, which is subject to restrictions on resale under federal securities laws. At December 31, 2005, this security (in thousands) amounted to $11,315 which represents 0.39% of total net assets. Additional information on this security is as follows:
ACQUISITION SECURITY DATES SHARES COST (000) VALUE (000) -------------------------------------------------------------------------------------------- Railpower Technologies 144A 11/10/05 - 11/18/05 2,036,000 $ 9,220 $ 11,315
(d) On December 31, 2005, the Fund's total investments were denominated in currencies as follows: % OF TOTAL CURRENCY VALUE NET ASSETS ============================================================ Euro $1,049,244 36.3% Japanese Yen 415,418 14.4 British Pounds 328,526 11.3 US Dollar 185,458 6.4 Other currencies less than 5% of total net assets 901,551 31.2 ---------- ------- $2,880,197 99.6% ========== ======= 1-800-922-6769 42 COLUMBIA ACORN INTERNATIONAL >PORTFOLIO DIVERSIFICATION At December 31, 2005, the Fund's portfolio investments as a percent of net assets was diversified as follows: VALUE (000) PERCENT ---------------------------------------------------------------------------- >INDUSTRIAL GOODS/SERVICES Construction $ 121,044 4.2% Other Industrial Services 99,709 3.4 Conglomerates 93,397 3.2 Industrial Materials 89,519 3.1 Machinery 76,545 2.6 Specialty Chemicals 75,097 2.6 Outsourcing & Training Services 56,810 2.0 Steel 51,203 1.8 Electrical Components 47,211 1.6 Industrial Distribution 25,596 0.9 ---------------------------------------------------------------------------- 736,131 25.4 >CONSUMER GOODS/SERVICES Retail 100,223 3.5 Food 66,219 2.3 Other Consumer Services 66,082 2.3 Durables Goods 56,731 2.0 Apparels 53,238 1.8 Nondurables 37,345 1.3 Beverage 37,178 1.3 Consumer Goods Distribution 27,615 1.0 Furniture & Textiles 26,992 0.9 Gaming 26,609 0.9 Casinos 16,013 0.5 Entertainment 12,777 0.4 Leisure Products 4,674 0.2 ---------------------------------------------------------------------------- 531,696 18.4 >FINANCE Banks 212,190 7.3 Other Finance Companies 119,244 4.1 Insurance 52,165 1.8 Savings & Loans 41,561 1.5 Money Management 21,742 0.8 ---------------------------------------------------------------------------- 446,902 15.5 VALUE (000) PERCENT ---------------------------------------------------------------------------- >INFORMATION TECHNOLOGY Computer Hardware & Related Equipment $ 81,304 2.8% Business Information & Marketing Services 46,249 1.6 Financial Processors 42,813 1.5 Cable Television 34,709 1.2 Satellite Broadcasting 34,670 1.2 Instrumentation 27,682 1.0 Internet Related 26,030 0.9 Television Broadcasting 25,628 0.9 Business Software 24,590 0.8 Semiconductors & Related Equipment 19,073 0.7 Computer Services 18,760 0.6 Publishing 11,579 0.4 Electronics Distribution 10,884 0.4 Television Programming 144 0.0 ---------------------------------------------------------------------------- 404,115 14.0 >ENERGY/MINERALS Mining 87,230 3.0 Oil Services 83,768 2.9 Oil/Gas Producers 49,993 1.7 Refining/Marketing/Distribution 40,938 1.4 Non-Ferrous Metals 18,183 0.6 Agricultural Commodities 15,348 0.6 Other Resources 9,022 0.3 ---------------------------------------------------------------------------- 304,482 10.5 >HEALTH CARE Hospital Management 46,817 1.6 Services 39,636 1.4 Medical Equipment 36,494 1.3 Hospital/ Laboratory Supplies 28,836 1.0 Pharmaceuticals 28,088 1.0 Biotechnology/ Drug Delivery 7,211 0.2 ---------------------------------------------------------------------------- 187,082 6.5 >OTHER INDUSTRIES Transportation 89,378 3.1 Real Estate 58,736 2.0 Regulated Utilities 34,833 1.2 ---------------------------------------------------------------------------- 182,947 6.3 ------------------------------- TOTAL COMMON STOCKS 2,793,355 96.6 SHORT-TERM OBLIGATIONS 86,842 3.0 ------------------------------- TOTAL INVESTMENTS 2,880,197 99.6 CASH AND OTHER ASSETS LESS LIABILITIES 12,380 0.4 ------------------------------- NET ASSETS $ 2,892,577 100.0% ============================================================================ 43 COLUMBIA ACORN USA >MAJOR PORTFOLIO CHANGES IN THE FOURTH QUARTER (UNAUDITED) NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 ADDITIONS ---------------------------------------------------------------------------- INFORMATION American Tower 490,000 506,000 Amphenol 95,000 122,800 Avid Technology 0 32,400 Cnet Networks 0 300,000 Discovery Holding 0 140,000 Dobson Communications 0 893,000 Gemstar TV Guide International 0 880,000 Integrated Device Technology 474,890 683,490 Netgear 0 90,000 Nice Systems (Israel) 29,300 76,400 Parametric Technology 248,500 818,000 Shuffle Master 0 98,500 Spanish Broadcasting 695,000 705,500 Symbol Technologies 570,000 584,000 Time Warner Telecom 300,000 666,000 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Abercrombie & Fitch 350,000 398,000 Ann Taylor Stores 212,500 224,500 Carter's 20,300 40,100 Chico's FAS 230,000 253,000 Christopher & Banks 393,750 486,250 Coach 168,000 222,200 Petco Animal Supplies 360,000 428,000 Polaris Industries 10,400 106,000 Sonic 53,300 208,100 Speedway Motorsports 0 195,500 ---------------------------------------------------------------------------- HEALTH CARE Lincare Holdings 246,800 291,800 Serologicals 405,000 547,400 United Surgical Partners 0 35,000 ---------------------------------------------------------------------------- ENERGY/MINERALS Pride International 300,000 311,000 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES Donaldson 94,000 134,800 Esco Technologies 564,000 580,300 Genlyte Group 347,200 376,000 Pentair 414,000 573,600 Spartech 337,500 357,500 UTI Worldwide 0 21,000 ---------------------------------------------------------------------------- FINANCE AmeriCredit 1,091,500 1,121,500 Associated Banc-Corp 50,000 94,000 Endurance Specialty Holdings 0 75,000 HCC Insurance Holdings 645,000 664,500 NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 ---------------------------------------------------------------------------- OTHER INDUSTRIES American Campus Communities 8,500 90,000 Diamondrock Hospitality 0 130,600 Heartland Express 361,700 465,900 Highland Hospitality 35,000 235,000 Kite Realty Group 0 150,000 Mills 0 55,000 SALES ---------------------------------------------------------------------------- INFORMATION Commonwealth Telephone 233,800 128,800 JDA Software 974,000 724,000 Maximus 60,000 0 MRO Software 385,900 282,800 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Aeropostale 395,750 200,000 American Woodmark 60,000 30,000 Brookstone 141,200 0 Coinstar 435,000 0 Steven Madden 62,000 0 ---------------------------------------------------------------------------- HEALTH CARE Diagnostic Products 221,300 191,200 Lexicon Genetics 300,000 0 Techne 222,800 158,300 ---------------------------------------------------------------------------- ENERGY/MINERALS Atmos Energy 193,000 155,000 Chicago Bridge & Iron 635,000 585,000 Oneok 245,000 50,250 1-800-922-6769 44 COLUMBIA ACORN USA >STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- COMMON STOCKS: 90.1% ---------------------------------------------------------------------------- INFORMATION: 29.0% >BUSINESS/CONSUMER SOFTWARE: 6.6% 455,200 Micros Systems (b) $ 21,995 INFORMATION SYSTEMS FOR RESTAURANTS & HOTELS 1,850,000 Novell (b) 16,335 DIRECTORY, OPERATING SYSTEM & IDENTITY MANAGEMENT SOFTWARE 724,000 JDA Software (b) 12,315 APPLICATIONS/SOFTWARE & SERVICES FOR RETAILERS 270,650 Kronos (b) 11,329 LABOR MANAGEMENT SOLUTIONS 405,800 SSA Global Technologies (b) 7,381 ENTERPRISE RESOURCE PLANNING (ERP) SOFTWARE 818,000 Parametric Technology (b) 4,990 ENGINEERING SOFTWARE & SERVICES 282,800 MRO Software (b) 3,970 ENTERPRISE MAINTENANCE SOFTWARE 32,400 Avid Technology (b) 1,774 DIGITAL NONLINEAR EDITING SOFTWARE & SYSTEMS 48,400 Witness Systems (b) 952 CUSTOMER EXPERIENCE MANAGEMENT SOFTWARE ---------------------------------------------------------------------------- 81,041 >TELECOMMUNICATION SERVICES: 6.6% 1,005,000 Crown Castle International (b) 27,045 COMMUNICATION TOWERS 356,605 Alltel 22,502 CELLULAR & WIRELINE TELEPHONE SERVICES 506,000 American Tower (b) 13,713 COMMUNICATION TOWERS IN USA & MEXICO 893,000 Dobson Communications (b) 6,697 RURAL & SMALL CITY CELLULAR TELEPHONE SERVICES 666,000 Time Warner Telecom (b) 6,560 COMPETITIVE LOCAL EXCHANGE CARRIER 128,800 Commonwealth Telephone 4,350 RURAL PHONE FRANCHISES & COMPETING TELCO ---------------------------------------------------------------------------- 80,867 >COMPUTER HARDWARE/ SEMICONDUCTORS/RELATED EQUIPMENT: 4.6% 683,490 Integrated Device Technology (b) 9,008 COMMUNICATIONS SEMICONDUCTORS 260,000 Intermec (formerly known as Unova) (b) 8,788 BAR CODE & WIRELESS LAN SYSTEMS 584,000 Symbol Technologies 7,487 MOBILE COMPUTERS & BARCODE SCANNERS 670,000 Entegris (b) 6,311 SEMICONDUCTOR WAGER SHIPPING & HANDLING PRODUCTS 122,800 Amphenol 5,435 ELECTRONIC CONNECTORS 99,000 Zebra Technologies (b) 4,242 BAR CODE PRINTERS 76,400 Nice Systems (b) 3,679 AUDIO & VIDEO RECORDING SOLUTIONS 424,100 Seachange International (b) 3,350 SYSTEMS FOR VIDEO ON DEMAND & AD INSERTION 100,000 Belden CDT 2,443 SPECIALTY CABLE NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 70,000 Littelfuse (b) $ 1,907 LITTLE FUSES 90,000 Netgear (b) 1,732 NETWORKING PRODUCTS FOR SMALL BUSINESS & HOME 40,000 Rogers (b) 1,567 PCB LAMINATES & HIGH PERFORMANCE FOAMS ---------------------------------------------------------------------------- 55,949 >BUSINESS INFORMATION/BUSINESS SERVICES/PUBLISHING: 2.0% 530,000 Ceridian (b) 13,170 HR SERVICES & PAYMENT PROCESSING 104,800 Getty Images (b) 9,355 PHOTOGRAPHS FOR PUBLICATIONS & ELECTRONIC MEDIA 98,300 Navigant Consulting (b) 2,161 FINANCIAL CONSULTING FIRM ---------------------------------------------------------------------------- 24,686 >TELECOMMUNICATIONS EQUIPMENT: 1.9% 1,610,000 Tellabs (b) 17,549 TELECOMMUNICATIONS EQUIPMENT 310,000 Andrew (b) 3,326 WIRELESS INFRASTRUCTURE EQUIPMENT 323,500 Symmetricom (b) 2,740 NETWORK TIMING & SYNCHRONIZATION DEVICES ---------------------------------------------------------------------------- 23,615 >TRANSACTION PROCESSORS: 1.7% 423,280 Global Payments 19,729 CREDIT CARD PROCESSOR 143,100 Pegasus Systems (b) 1,284 TRANSACTION PROCESSOR FOR HOTEL INDUSTRY ---------------------------------------------------------------------------- 21,013 >BROADCASTING: 1.7% 511,100 Salem Communications (b) 8,939 RADIO STATIONS FOR RELIGIOUS PROGRAMMING 955,000 Entravision Communications (b) 6,800 SPANISH LANGUAGE TV, RADIO & OUTDOOR 705,500 Spanish Broadcasting (b) 3,605 SPANISH LANGUAGE RADIO STATIONS 138,500 Gray Television 1,360 MID MARKET AFFILIATED TV STATIONS ---------------------------------------------------------------------------- 20,704 >INSTRUMENTATION: 0.9% 140,000 Mettler Toledo (b) 7,728 LABORATORY EQUIPMENT 90,000 Trimble Navigation (b) 3,194 GPS-BASED INSTRUMENTS ---------------------------------------------------------------------------- 10,922 >INTERNET: 0.8% 285,000 ValueClick (b) 5,161 INTERNET ADVERTISING 300,000 Cnet Networks (b) 4,407 INTERNET ADVERTISING ON NICHE WEBSITES ---------------------------------------------------------------------------- 9,568 45 COLUMBIA ACORN USA >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >COMPUTER SERVICES: 0.8% 1,005,500 AnswerThink Consulting (b) $ 4,273 I/T INTEGRATION & BEST PRACTICE RESEARCH 786,000 RCM Technologies (b)(c) 4,009 TECHNOLOGY ENGINEERING SERVICES 235,000 Igate Capital (b) 1,142 I/T & BPO OUTSOURCING SERVICES ---------------------------------------------------------------------------- 9,424 >TELEVISION PROGRAMMING/CATV: 0.7% 460,000 Lions Gate Entertainment (b) 3,533 FILM & TV STUDIO 880,000 Gemstar TV Guide International (b) 2,297 TV PROGRAM GUIDES & CATV PROGRAMMING 140,000 Discovery Holding (b) 2,121 CATV PROGRAMMING ---------------------------------------------------------------------------- 7,951 >ELECTRONICS DISTRIBUTION: 0.3% 60,000 CDW 3,454 TECHNOLOGY RESELLER ---------------------------------------------------------------------------- >CONTRACT MANUFACTURING: 0.2% 131,100 Plexus (b) 2,981 ELECTRONIC MANUFACTURING SERVICES ---------------------------------------------------------------------------- >GAMING EQUIPMENT: 0.2% 98,500 Shuffle Master (b) 2,476 CARD SHUFFLERS & CASINO GAMES ---------------------------------------------------------------------------- ----------- INFORMATION: TOTAL 354,651 ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES: 17.1% >RETAIL: 6.8% 398,000 Abercrombie & Fitch 25,942 TEEN APPAREL RETAILER 253,000 Chico's FAS (b) 11,114 WOMEN'S SPECIALTY RETAILER 428,000 Petco Animal Supplies (b) 9,395 PET SUPPLIES & SERVICES 486,250 Christopher & Banks 9,132 WOMEN'S APPAREL RETAILER 224,500 Ann Taylor Stores (b) 7,750 WOMEN'S APPAREL RETAILER 203,000 Michaels Stores 7,180 CRAFT & HOBBY SPECIALTY RETAILER 200,000 Aeropostale (b) 5,260 MALL BASED TEEN RETAILER 95,000 Genesco (b) 3,685 MULTI-CONCEPT BRANDED FOOTWEAR RETAILER 105,000 Sports Authority (b) 3,269 SPORTING GOODS STORES ---------------------------------------------------------------------------- 82,727 >CONSUMER SERVICES: 2.7% 416,000 ITT Educational Services (b) 24,590 POSTSECONDARY DEGREE PROGRAM 387,700 Central Parking 5,319 OWNER, OPERATOR & MANAGER OF PARKING LOTS & GARAGES NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- 60,000 Weight Watchers (b) $ 2,966 WEIGHT LOSS PROGRAMS ---------------------------------------------------------------------------- 32,875 >ENTERTAINMENT/LEISURE PRODUCTS: 2.4% 301,300 International Speedway Motors 14,432 LARGEST MOTORSPORT RACETRACK OWNER & OPERATOR 195,500 Speedway Motorsports 6,778 MOTORSPORT RACETRACK OWNER & OPERATOR 106,000 Polaris Industries 5,321 LEISURE VEHICLES & RELATED PRODUCTS 195,000 Callaway Golf 2,699 PREMIUM GOLF CLUBS & BALLS ---------------------------------------------------------------------------- 29,230 >NONDURABLES: 1.8% 461,400 Scotts Miracle-Gro 20,874 CONSUMER LAWN & GARDEN PRODUCTS 100,000 Prestige Brands 1,250 OTC, HOUSEHOLD & PERSONAL CARE PRODUCTS ---------------------------------------------------------------------------- 22,124 >APPAREL: 1.7% 199,200 Oxford Industries 10,896 BRANDED & PRIVATE LABEL APPAREL 222,200 Coach 7,408 DESIGNER & RETAILER OF BRANDED LEATHER ACCESSORIES 40,100 Carter's 2,360 CHILDREN'S BRANDED APPAREL ---------------------------------------------------------------------------- 20,664 >FURNITURE: 0.9% 106,000 HNI 5,823 OFFICE FURNITURE & FIREPLACES 90,000 Herman Miller 2,537 OFFICE FURNITURE 20,000 Mohawk Industries 1,740 CARPET & FLOORING 30,000 American Woodmark 744 KITCHEN CABINET MANUFACTURER ---------------------------------------------------------------------------- 10,844 >RESTAURANTS: 0.5% 208,100 Sonic 6,139 DRIVE-IN RESTAURANTS ---------------------------------------------------------------------------- >CASINOS: 0.2% 200,000 Alliance Gaming 2,604 DIVERSIFIED GAMING COMPANY ---------------------------------------------------------------------------- >TRAVEL: 0.1% 12,400 Kerzner International 852 DESTINATION RESORTS & CASINOS ---------------------------------------------------------------------------- >FOOD & BEVERAGES: 0.0% 15,000 NBTY 244 VITAMINS & SUPPLEMENTS ---------------------------------------------------------------------------- ----------- CONSUMER GOODS/SERVICES: TOTAL 208,303 ---------------------------------------------------------------------------- 1-800-922-6769 46 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- HEALTH CARE: 13.3% >SERVICES: 4.8% 303,000 Charles River Laboratories (b) $ 12,838 PHARMACEUTICAL RESEARCH 291,800 Lincare Holdings (b) 12,229 HOME HEALTH CARE SERVICES 199,875 Coventry Health Care (b) 11,385 PPO NETWORK 547,400 Serologicals (b) 10,806 BLOOD COLLECTION & ANTIBODY PRODUCTION 430,800 NDCHealth Group 8,284 HEALTH CLAIMS PROCESSING & DRUG MARKETING SERVICES 100,000 Dendrite International (b) 1,441 SOFTWARE FOR PHARMACEUTICAL SALES FORCE 35,000 United Surgical Partners (b) 1,125 OUTPATIENT SURGERY CENTER 31,500 Pra International (b) 887 CONTRACT RESEARCH ORGANIZATION ---------------------------------------------------------------------------- 58,995 >MEDICAL EQUIPMENT: 4.4% 577,400 Edwards Lifesciences (b) 24,026 HEART VALVES 191,200 Diagnostic Products 9,283 IMMUNODIAGNOSTIC KITS 220,000 Viasys Healthcare (b) 5,654 RESPIRATORY & NEUROLOGY MEDICAL EQUIPMENT 115,700 ICU Medical (b) 4,537 INTRAVENOUS THERAPY PRODUCTS 94,171 Advanced Medical Optics (b) 3,936 MEDICAL DEVICES FOR EYE CARE 110,000 Intermagnetics General 3,509 MRI EQUIPMENT 104,000 Arrow International 3,015 DISPOSABLE CATHETERS ---------------------------------------------------------------------------- 53,960 >BIOTECHNOLOGY/DRUG DELIVERY: 2.8% 192,000 Neurocrine Biosciences (b) 12,044 DRUGS FOR SLEEP, DIABETES, MS & ENDOMETRIOSIS 360,000 Nektar Therapeutics (b) 5,926 DRUG DELIVERY TECHNOLOGIES 263,000 AtheroGenics (b) 5,263 DRUGS FOR ATHEROSCLEROSIS, RHEUMATOID ARTHRITIS, ASTHMA 455,000 Ligand Pharmaceuticals (b) 5,073 DRUGS FOR PAIN, CANCER, OSTEOPOROSIS & DIABETES 235,000 Exelixis (b) 2,214 TREATMENTS FOR CANCER & METABOLIC DISORDERS 100,000 Momenta Pharmaceuticals (b) 2,204 SUGAR ANALYSIS TECHNOLOGY FOR DRUG DESIGN 375,000 Locus Discovery, Series D. Pfd. (d) 562 HIGH THROUGHPUT RATIONAL DRUG DESIGN 363,636 Metabolex, Series F (d) 99 DRUGS FOR DIABETES ---------------------------------------------------------------------------- 33,385 >MEDICAL SUPPLIES: 0.7% 158,300 Techne (b) 8,888 CYTOKINES, ANTIBODIES, OTHER REAGENTS FOR LIFE SCIENCES ---------------------------------------------------------------------------- NUMBER OF SHARES VALUE (000) >PHARMACEUTICALS: 0.6% 245,500 Par Pharmaceuticals (b) $ 7,694 GENERICS ---------------------------------------------------------------------------- ----------- HEALTH CARE: TOTAL 162,922 ---------------------------------------------------------------------------- ENERGY/MINERALS: 10.5% >OIL SERVICES: 5.9% 401,700 FMC Technologies (b) 17,241 OIL & GAS WELL HEAD MANUFACTURER 585,000 Chicago Bridge & Iron 14,748 ENGINEERING & CONSTRUCTION FOR PETROCHEMICALS 311,000 Pride International (b) 9,563 OFFSHORE DRILLING CONTRACTOR 1,001,000 Newpark Resources (b) 7,638 DRILLING FLUID SERVICES TO OIL & GAS INDUSTRY 242,000 Layne Christensen (b) 6,154 WATER/MINERAL DRILLER & COAL SEAM GAS PRODUCER 355,000 Hanover Compressor (b) 5,009 NATURAL GAS COMPRESSOR RENTAL 266,800 Pioneer Drilling (b) 4,784 OIL & GAS WELL DRILLER 76,500 Carbo Ceramics 4,324 NATURAL GAS WELL STIMULANTS 155,000 Key Energy Services (b) 2,088 OIL & GAS WELL WORKOVER SERVICES ---------------------------------------------------------------------------- 71,549 >OIL & GAS PRODUCERS: 4.2% 525,000 Quicksilver Resources (b) 22,055 NATURAL GAS & COAL SEAM GAS PRODUCER 282,600 Western Gas Resources 13,308 OIL & COAL SEAM GAS PRODUCER 208,400 Southwestern Energy (b) 7,490 NATURAL GAS PRODUCER 111,200 Equitable Resources 4,080 NATURAL GAS PRODUCER & UTILITY 450,000 Vaalco Energy (b) 1,908 OIL & GAS PRODUCER 92,000 McMoran Exploration (b) 1,819 NATURAL GAS PRODUCERS & DEVELOPER ---------------------------------------------------------------------------- 50,660 >DISTRIBUTION/MARKETING/REFINING: 0.4% 155,000 Atmos Energy 4,055 NATURAL GAS UTILITY 50,250 Oneok 1,338 NATURAL GAS UTILITY, MARKETING & PROCESSING ---------------------------------------------------------------------------- 5,393 ----------- ENERGY/MINERALS: TOTAL 127,602 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES: 9.7% >MACHINERY: 5.5% 580,300 Esco Technologies (b) 25,818 AUTOMATIC ELECTRIC METER READERS 573,600 Pentair 19,801 PUMPS, WATER TREATMENT & TOOLS 373,600 Nordson 15,135 DISPENSING SYSTEMS FOR ADHESIVES & COATINGS 47 COLUMBIA ACORN USA >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >MACHINERY--CONTINUED 110,000 Ametek $ 4,679 AEROSPACE/INDUSTRIAL INSTRUMENTS 50,000 Kaydon 1,607 SPECIALIZED FRICTION & MOTION CONTROL PRODUCTS ---------------------------------------------------------------------------- 67,040 >INDUSTRIAL GOODS: 2.0% 376,000 Genlyte Group (b) 20,142 COMMERCIAL LIGHTING FIXTURES 134,800 Donaldson 4,287 INDUSTRIAL AIR FILTRATION ---------------------------------------------------------------------------- 24,429 >CONSTRUCTION: 0.7% 169,050 Florida Rock Industries 8,294 CONCRETE & AGGREGATES ---------------------------------------------------------------------------- >SPECIALTY CHEMICALS/INDUSTRIAL MATERIALS: 0.6% 357,500 Spartech 7,847 PLASTICS DISTRIBUTION & COMPOUNDING ---------------------------------------------------------------------------- >OUTSOURCING SERVICES: 0.4% 400,000 Quanta Services (b) 5,268 ELECTRICAL & TELECOM CONSTRUCTION SERVICES ---------------------------------------------------------------------------- >INDUSTRIAL DISTRIBUTION: 0.3% 113,000 Nuco2 (b) 3,150 BULK CO2 GAS DISTRIBUTION TO RESTAURANTS ---------------------------------------------------------------------------- >LOGISTICS: 0.2% 21,000 UTI Worldwide 1,950 GLOBAL LOGISTICS & FREIGHT FORWARDING ---------------------------------------------------------------------------- >INDUSTRIAL SERVICES: 0.0% 13,200 Clark 175 EXECUTIVE COMPENSATION & BENEFITS CONSULTING ---------------------------------------------------------------------------- ----------- INDUSTRIAL GOODS/SERVICES: TOTAL 118,153 ---------------------------------------------------------------------------- FINANCE: 8.0% >FINANCE COMPANIES: 3.5% 1,121,500 AmeriCredit (b) 28,744 AUTO LENDING 520,200 World Acceptance (b) 14,826 PERSONAL LOANS ---------------------------------------------------------------------------- 43,570 >INSURANCE: 2.6% 664,500 HCC Insurance Holdings 19,722 SPECIALTY INSURANCE 14,000 Markel (b) 4,439 SPECIALTY INSURANCE 35,000 Philadelphia Consolidated Holding 3,384 SPECIALTY INSURANCE 75,000 Endurance Specialty Holdings 2,689 COMMERCIAL LINES INSURANCE/REINSURANCE 91,000 United America Indemnity (b) 1,671 SPECIALTY INSURANCE ---------------------------------------------------------------------------- 31,905 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >BANKS: 1.6% 272,000 TCF Financial $ 7,382 GREAT LAKES BANK 197,656 Chittenden 5,497 VERMONT & WESTERN MASSACHUSETTS BANK 94,000 Associated Banc-Corp 3,060 MIDWEST BANK 74,016 Greene City Bancshares 2,025 TENNESSEE BANK 20,000 First Financial BankShares 701 WEST TEXAS BANK 30,000 West Bancorporation 561 DES MOINES COMMERCIAL BANK ---------------------------------------------------------------------------- 19,226 >SAVINGS & LOAN: 0.3% 116,400 Anchor Bancorp Wisconsin 3,532 WISCONSIN THRIFT ---------------------------------------------------------------------------- ----------- FINANCE: TOTAL 98,233 ---------------------------------------------------------------------------- OTHER INDUSTRIES: 2.5% >REAL ESTATE: 1.1% 235,000 Highland Hospitality 2,597 HOTEL OWNER 150,000 Kite Realty Group 2,320 COMMUNITY SHOPPING CENTERS 55,000 Mills 2,307 REGIONAL SHOPPING MALLS 90,000 American Campus Communities 2,232 STUDENT HOUSING/APARTMENTS 110,500 Crescent Real Estate Equities 2,190 CLASS A OFFICE BUILDINGS 130,600 Diamondrock Hospitality 1,562 HOTEL OWNER ---------------------------------------------------------------------------- 13,208 >TRANSPORTATION: 0.8% 465,900 Heartland Express 9,453 REGIONAL DRY VAN TRUCKER ---------------------------------------------------------------------------- >WASTE MANAGEMENT: 0.5% 187,250 Waste Connections (b) 6,453 SOLID WASTE MANAGEMENT ---------------------------------------------------------------------------- >REGULATED UTILITIES: 0.1% 97,500 Northeast Utilities 1,920 REGULATED ELECTRIC UTILITY ---------------------------------------------------------------------------- ----------- OTHER INDUSTRIES: TOTAL 31,034 TOTAL COMMON STOCKS: 90.1% ----------- (COST: $744,763) 1,100,898 1-800-922-6769 48 PRINCIPAL AMOUNT (000) VALUE (000) ---------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS: 9.4% $ 52,000 Countrywide Financial Funding 4.30% - 4.35% Due 1/3/06 - 1/4/06 $ 51,984 30,000 American General Finance 4.30% Due 1/3/06 - 1/5/06 29,986 30,000 Marshall + Ilsley 4.21% Due 1/6/06 29,983 2,930 Repurchase Agreement with State Street Bank & Trust dated 12/30/05, due 1/3/06 at 3.75% collateralized by US Treasury Bonds, maturing 2/15/26 market value $2,994 (repurchase proceeds: $2,930) 2,930 ---------------------------------------------------------------------------- (AMORTIZED COST: $114,822) 114,883 ----------- TOTAL INVESTMENTS: 99.5% 1,215,781 (COST: $859,585) (a) CASH AND OTHER ASSETS LESS LIABILITIES: 0.5% 5,713 ----------- TOTAL NET ASSETS: 100% $ 1,221,494 ============================================================================ ---------------------------------------------------------------------------- >Notes to Statement of Investments (in thousands) (a) At December 31, 2005, for federal income tax purposes cost of investments was $859,886 and net unrealized appreciation was $355,895 consisting of gross unrealized appreciation of $392,931 and gross unrealized depreciation of $37,036. (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, 2005, the Fund held five percent or more of the outstanding voting securities of the following companies: RCM Technologies 6.79% The aggregate cost and value of this company at December 31, 2005, was $5,636 and $4,009, respectively. Investments in affiliate companies represent 0.33% of total net assets at December 31, 2005. Investment activity and income amounts relating to affiliates during the twelve months ended December 31, 2005, were as follows: Dividend Income $ 0 Net realized gain or loss 0 Change in unrealized gain or loss 55 Purchases 0 Proceeds from sales 0 (d) Denotes a restricted security, which is subject to restrictions on resale under federal securities laws. These securities are valued in good faith by the Board of Trustees. At December 31, 2005, these securities (in thousands) amounted to $661 which represents 0.05% of total net assets. Additional information on these securities is as follows: ACQUISITION SECURITY DATES SHARES COST (000) VALUE (000) -------------------------------------------------------------------------------- Locus Discovery, Series D, Pfd. 09/05/01 375,000 $1,500 $562 Metabolex, Series F 05/11/00 363,636 2,000 99 ------ ----- $3,500 $661 ====== ===== 49 COLUMBIA ACORN INTERNATIONAL SELECT >MAJOR PORTFOLIO CHANGES IN THE FOURTH QUARTER (UNAUDITED) NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 ADDITIONS ---------------------------------------------------------------------------- EUROPE >UNITED KINGDOM/IRELAND Grafton Group (Ireland) 105,000 125,000 IAWS (Ireland) 160,600 220,000 Northern Rock 0 205,000 >SWITZERLAND Synthes 14,500 25,000 >FRANCE SES Global 170,000 182,000 >SWEDEN Gambro 56,000 354,000 >DENMARK Novozymes 15,000 50,000 >SPAIN Red Electra 73,000 88,000 >NORWAY Orkla 26,000 47,000 ---------------------------------------------------------------------------- ASIA >JAPAN Aeon Mall 0 44,100 Daito Trust Construction 48,000 76,000 Hoya 64,800 88,500 Ito En 34,000 38,000 Jupiter Telecommunications 2,000 5,000 Shimano 68,000 130,000 Ushio 77,000 145,000 USS 0 29,000 >HONG KONG Hong Kong Exchanges & Clearing 650,000 680,000 ---------------------------------------------------------------------------- OTHER COUNTRIES >CANADA Kinross Gold 300,000 311,000 Rona 0 90,000 NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 SALES ---------------------------------------------------------------------------- EUROPE >UNITED KINGDOM/IRELAND British Sky Broadcasting 80,000 0 Cobham 170,000 0 Compass Group 400,000 0 Exel 192,000 0 Kerry (Ireland) 25,000 0 William Hill 150,000 0 >FRANCE/BELGIUM Belgacom (Belgium) 34,000 0 Imerys 27,000 18,000 >GERMANY Rhoen-Klinikum 24,000 0 >NORWAY Den Norske Bank 157,500 0 ---------------------------------------------------------------------------- ASIA >JAPAN Funai Electric 11,000 0 >SINGAPORE Comfort Del Gro 1,600,000 1,000,000 ---------------------------------------------------------------------------- OTHER COUNTRIES >CANADA Talisman Energy 47,000 26,000 >AUSTRALIA Lion Nathan 330,000 0 ---------------------------------------------------------------------------- LATIN AMERICA >ARGENTINA Tenaris 37,000 20,100 1-800-922-6769 50 COLUMBIA ACORN INTERNATIONAL SELECT >STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- COMMON STOCKS: 95.6% ---------------------------------------------------------------------------- EUROPE: 54.6% >UNITED KINGDOM/IRELAND: 13.2% 245,175 Anglo Irish Bank (Ireland) $ 3,721 SMALL BUSINESS & MIDDLE MARKET BANKING 205,000 Northern Rock 3,326 LOWEST COST MORTGAGE BANK IN UK 220,000 IAWS (Ireland) 3,165 BAKED GOODS 125,000 Grafton Group (Ireland) 1,362 BUILDING MATERIALS WHOLESALING & DIY RETAILING 40,000 Intermediate Capital 959 EUROPEAN PROVIDER OF MEZZANINE CAPITAL ---------------------------------------------------------------------------- 12,533 >SWITZERLAND: 12.8% 10,200 Kuehne & Nagel 2,876 FREIGHT FORWARDING/LOGISTICS 25,000 Synthes 2,808 PRODUCTS FOR ORTHOPEDIC SURGERY 14,000 Swatch Group 2,078 WATCH & ELECTRONICS MANUFACTURER 2,400 Geberit International 1,899 PLUMBING SUPPLIES 2,300 Schindler 912 ELEVATOR MANUFACTURER & SERVICE PROVIDER 1,200 Givaudan 813 INDUSTRIAL FRAGRANCES & FLAVORS 12,100 BKW Energie 810 ELECTRIC UTILITY ---------------------------------------------------------------------------- 12,196 >FRANCE/BELGIUM: 9.9% 33,000 Neopost 3,309 POSTAGE METER MACHINES 182,000 SES Global 3,187 SATELLITE BROADCASTING SERVICES 20,000 Essilor International 1,615 EYEGLASS LENSES 18,000 Imerys 1,302 INDUSTRIAL MINERALS PRODUCER ---------------------------------------------------------------------------- 9,413 >GERMANY: 4.3% 132,000 Depfa Bank 1,952 INVESTMENT BANKER TO PUBLIC AUTHORITIES 13,000 Deutsche Boerse 1,332 TRADING, CLEARING & SETTLEMENT SERVICES FOR FINANCIAL MARKETS 1,100 Porsche 790 SPECIALTY AUTOMOBILE MANUFACTURER ---------------------------------------------------------------------------- 4,074 >SWEDEN: 4.1% 354,000 Gambro 3,866 PRODUCTS FOR RENAL & BLOOD CARE ---------------------------------------------------------------------------- >DENMARK: 2.9% 50,000 Novozymes 2,737 INDUSTRIAL ENZYMES ---------------------------------------------------------------------------- NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >SPAIN: 2.9% 88,000 Red Electrica $ 2,725 SPANISH POWER GRID ---------------------------------------------------------------------------- >CZECH REPUBLIC: 2.5% 16,840 Komercni Banka 2,357 LEADING CZECH UNIVERSAL BANK ---------------------------------------------------------------------------- >NORWAY: 2.0% 47,000 Orkla 1,946 MATERIALS, BRANDED CONSUMER GOODS & MEDIA ---------------------------------------------------------------------------- ----------- EUROPE: TOTAL 51,847 ---------------------------------------------------------------------------- ASIA: 32.4% >JAPAN: 27.5% 5,000 Jupiter Telecommunications (b) 3,990 LARGEST CABLE SERVICE PROVIDER IN JAPAN 76,000 Daito Trust Construction 3,931 APARTMENT BUILDER 130,000 Shimano 3,417 BICYCLE COMPONENTS & FISHING TACKLE 145,000 Ushio 3,387 INDUSTRIAL LIGHT SOURCES 88,500 Hoya 3,182 OPTO-ELECTRICAL COMPONENTS & EYEGLASS LENSES 38,000 Ito En 2,275 BOTTLED TEA & OTHER BEVERAGES 44,100 Aeon Mall 2,150 SUBURBAN SHOPPING MALL DEVELOPER, OWNER & OPERATOR 29,000 USS 1,849 USED CAR AUCTIONEER 181,800 Hiroshima Bank 1,175 REGIONAL BANK 94,000 Bank of Yokohama 769 REGIONAL BANK ---------------------------------------------------------------------------- 26,125 >HONG KONG/CHINA: 3.9% 680,000 Hong Kong Exchanges & Clearing 2,820 HONG KONG EQUITY & DERIVATIVES OPERATOR 2,000,000 Global Bio-Chem Technology Group (China) 877 REFINER OF CORN-BASED COMMODITIES ---------------------------------------------------------------------------- 3,697 >SINGAPORE: 1.0% 1,000,000 Comfort Del Gro 962 TAXI & MASS TRANSIT SERVICE ---------------------------------------------------------------------------- ----------- ASIA: TOTAL 30,784 ---------------------------------------------------------------------------- 51 COLUMBIA ACORN INTERNATIONAL SELECT >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- OTHER COUNTRIES: 6.2% >CANADA: 6.2% 311,000 Kinross Gold (b) $ 2,873 GOLD MINING 90,000 Rona (b) 1,661 LEADING CANADIAN DIY RETAILER 26,000 Talisman Energy 1,378 OIL & GAS PRODUCER ---------------------------------------------------------------------------- 5,912 ----------- OTHER COUNTRIES: TOTAL 5,912 ---------------------------------------------------------------------------- LATIN AMERICA: 2.4% >ARGENTINA: 2.4% 20,100 Tenaris 2,301 SEAMLESS TUBES ---------------------------------------------------------------------------- ----------- LATIN AMERICA: TOTAL 2,301 ----------- TOTAL COMMON STOCKS: 95.6% 90,844 (COST: $69,540) PRINCIPAL AMOUNT (000) VALUE (000) ---------------------------------------------------------------------------- SHORT-TERM OBLIGATION: 3.3% $ 3,087 Repurchase Agreement with State Street Bank & Trust dated 12/30/05, due 1/3/06 at 3.75% collateralized by US Treasury Bond, maturing 2/15/26 market value $3,151 (repurchase proceeds: $3,088) $ 3,087 ---------------------------------------------------------------------------- (COST: $3,087) 3,087 ----------- TOTAL INVESTMENTS: 98.9% 93,931 (COST: $72,627) (a)(c) CASH AND OTHER ASSETS LESS LIABILITIES: 1.1% 1,068 ----------- TOTAL NET ASSETS: 100% $ 94,999 ============================================================================ ---------------------------------------------------------------------------- >Notes to Statement of Investments (in thousands) (a) At December 31, 2005, for federal income tax purposes cost of investments was $73,401 and net unrealized appreciation was $20,530 consisting of gross unrealized appreciation of $22,311 and gross unrealized depreciation of $1,781. (b) Non-income producing security. (c) On December 31, 2005, the Fund's total investments were denominated in currencies as follows: % OF TOTAL CURRENCY VALUE NET ASSETS ========================================================== Japanese Yen $26,124 27.5% Euro 24,460 25.8 Swiss Franc 12,196 12.8 Canadian Dollar 5,912 6.2 US Dollar 5,389 5.7 Other currencies less than 5% of total net assets 19,850 20.9 -------- ------- $93,931 98.9% ======== ======= 1-800-922-6769 52 COLUMBIA ACORN INTERNATIONAL SELECT >PORTFOLIO DIVERSIFICATION At December 31, 2005, the Fund's portfolio investments as a percent of net assets was diversified as follows: VALUE (000) PERCENT ---------------------------------------------------------------------------- >INDUSTRIAL GOODS/SERVICES Construction $ 5,830 6.2% Other Industrial Services 3,788 4.0 Speciality Chemicals 3,550 3.7 Electrical Components 3,387 3.6 Machinery 3,309 3.5 Steel 2,301 2.4 Industrial Distribution 1,362 1.4 Industrial Materials 1,302 1.4 ---------------------------------------------------------------------------- 24,829 26.2 >CONSUMER GOODS/SERVICES Durables Goods 6,285 6.6 Retail 3,811 4.0 Food 3,165 3.3 Beverage 2,275 2.4 Nondurables 1,946 2.1 Consumer Goods Distribution 1,849 1.9 ---------------------------------------------------------------------------- 19,331 20.3 >FINANCE Banks 13,300 14.0 Other Finance Companies 959 1.0 ---------------------------------------------------------------------------- 14,259 15.0 VALUE (000) PERCENT ---------------------------------------------------------------------------- >INFORMATION TECHNOLOGY Financial Processors $ 4,152 4.4% Cable Television 3,990 4.2 Satellite Broadcasting 3,187 3.4 Computer Hardware & Related Equipment 3,182 3.3 ---------------------------------------------------------------------------- 14,511 15.3 >HEALTH CARE Medical Equipment 4,423 4.6 Services 3,866 4.1 ---------------------------------------------------------------------------- 8,289 8.7 >ENERGY/MINERALS Non-Ferrous Metals 2,873 3.0 Oil/Gas Producers 1,378 1.5 Agricultural Commodities 877 0.9 ---------------------------------------------------------------------------- 5,128 5.4 >OTHER INDUSTRIES Regulated Utilities 3,535 3.7 Transportation 962 1.0 ---------------------------------------------------------------------------- 4,497 4.7 ------------------------------- TOTAL COMMON STOCKS 90,844 95.6 SHORT-TERM OBLIGATION 3,087 3.3 ------------------------------- TOTAL INVESTMENTS 93,931 98.9 CASH AND OTHER ASSETS LESS LIABILITIES 1,068 1.1 ------------------------------- NET ASSETS $ 94,999 100.0% ============================================================================ 53 COLUMBIA ACORN SELECT >MAJOR PORTFOLIO CHANGES IN THE FOURTH QUARTER (UNAUDITED) NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 ADDITIONS ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES Abercrombie & Fitch 1,375,000 1,400,000 Harley-Davidson 1,050,000 1,075,000 ITT Educational Services 1,600,000 1,625,000 Safeway 3,275,000 3,400,000 ---------------------------------------------------------------------------- INFORMATION Avid Technology 842,000 1,030,000 Discovery Holding 2,075,000 2,200,000 Liberty Global, Series A 896,350 1,200,000 Liberty Global, Series C 896,350 1,000,000 Tellabs 9,275,000 9,750,000 Tribune Company 775,000 825,000 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES Mine Safety Appliances 1,081,200 1,125,000 Worthington Industries 2,112,500 2,150,000 ---------------------------------------------------------------------------- ENERGY/MINERALS Potash 0 200,000 Pride International 1,854,000 1,900,000 UrAsia Energy (Canada) 0 29,000,000 ---------------------------------------------------------------------------- HEALTH CARE Coventry Health Care 795,000 900,000 (INCLUDES THE EFFECT OF A 3 FOR 2 STOCK SPLIT) NUMBER OF SHARES ------------------------------- 09/30/05 12/31/05 SALES ---------------------------------------------------------------------------- INFORMATION AnswerThink Consulting 1,606,186 1,367,000 CDW 690,000 0 1-800-922-6769 54 COLUMBIA ACORN SELECT >STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- COMMON STOCKS: 94.8% ---------------------------------------------------------------------------- CONSUMER GOODS/SERVICES: 27.5% >RETAIL: 11.9% 1,400,000 Abercrombie & Fitch $ 91,252 TEEN APPAREL RETAILER 3,400,000 Safeway 80,444 RETAIL FOOD & DRUG STORES 845,000 Costco 41,802 WAREHOUSE SUPERSTORES ---------------------------------------------------------------------------- 213,498 >CONSUMER SERVICES: 7.4% 1,625,000 ITT Educational Services (b) 96,054 POSTSECONDARY DEGREE PROGRAMS 728,000 Weight Watchers (b) 35,985 WEIGHT LOSS PROGRAM ---------------------------------------------------------------------------- 132,039 >LEISURE VEHICLES: 3.1% 1,075,000 Harley-Davidson 55,352 MOTORCYCLES & RELATED MERCHANDISE ---------------------------------------------------------------------------- >FURNITURE & MANUFACTURERS: 2.6% 1,400,000 Coach (b) 46,676 DESIGNER & RETAILER OF BRANDED LEATHER ACCESSORIES ---------------------------------------------------------------------------- >ENTERTAINMENT: 1.8% 670,000 International Speedway Motors 32,093 LARGEST MOTORSPORT RACETRACK OWNER & OPERATOR ---------------------------------------------------------------------------- >TRAVEL: 0.7% 544,000 Expedia (b) 13,034 ONLINE TRAVEL SERVICES COMPANY ---------------------------------------------------------------------------- ----------- CONSUMER GOODS/SERVICES: TOTAL 492,692 ---------------------------------------------------------------------------- INFORMATION: 27.4% >TELECOMMUNICATIONS EQUIPMENT: 6.0% 9,750,000 Tellabs (b) 106,275 TELECOMMUNICATIONS EQUIPMENT ---------------------------------------------------------------------------- >BUSINESS SOFTWARE: 5.6% 1,030,000 Avid Technology (b) 56,403 DIGITAL NONLINEAR EDITING SOFTWARE & SYSTEMS 5,000,000 Novell (b) 44,150 DIRECTORY, OPERATING SYSTEM & IDENTITY MANAGEMENT SOFTWARE ---------------------------------------------------------------------------- 100,553 >TELEVISION PROGRAMMING/CATV: 4.5% 2,200,000 Discovery Holding (b) 33,330 CATV PROGRAMMING 1,200,000 Liberty Global, Series C (b) 25,440 1,000,000 Liberty Global, Series A (b) 22,500 CATV HOLDING COMPANY ---------------------------------------------------------------------------- 81,270 NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >INTERNET: 3.8% 9,600,000 Skillsoft Publishing (b)(c) $ 52,800 PROVIDER OF WEB-BASED LEARNING SOLUTIONS (E-LEARNING) 544,000 IAC/Interactive Corp (b) 15,401 DOMINATE INTERNET MIDDLEMAN ---------------------------------------------------------------------------- 68,201 >MOBILE COMMUNICATIONS: 3.6% 2,350,000 American Tower (b) 63,685 COMMUNICATION TOWERS IN USA & MEXICO ---------------------------------------------------------------------------- >INSTRUMENTATION: 2.2% 1,400,000 Tektronix 39,494 ANALYTICAL INSTRUMENTS ---------------------------------------------------------------------------- >PUBLISHING: 1.4% 825,000 Tribune Company 24,964 NEWSPAPERS & TV STATIONS ---------------------------------------------------------------------------- >COMPUTER SERVICES: 0.3% 1,367,000 AnswerThink Consulting (b) 5,810 I/T INTEGRATION & BEST PRACTICE RESEARCH ---------------------------------------------------------------------------- ----------- INFORMATION: TOTAL 490,252 ---------------------------------------------------------------------------- FINANCE: 15.3% >MONEY MANAGEMENT: 6.4% 2,500,000 Janus Capital 46,575 MANAGES MUTUAL FUNDS 975,000 Nuveen Investments 41,555 SPECIALTY MUTUAL FUNDS 729,500 SEI Investments 26,991 MUTUAL FUND ADMINISTRATION & INVESTMENT MANAGEMENT ---------------------------------------------------------------------------- 115,121 >INSURANCE: 4.5% 1,800,000 Conseco (b) 41,706 LIFE, LONG TERM CARE & MEDICAL SUPPLEMENT INSURANCE 120,000 Markel (b) 38,046 SPECIALTY INSURANCE ---------------------------------------------------------------------------- 79,752 >BANKS: 4.4% 1,970,000 TCF Financial 53,466 GREAT LAKES BANK 750,000 Associated Banc-Corp 24,413 MIDWEST BANK ---------------------------------------------------------------------------- 77,879 ----------- FINANCE: TOTAL 272,752 ---------------------------------------------------------------------------- INDUSTRIAL GOODS/SERVICES: 9.3% >LOGISTICS: 2.5% 661,000 Expeditors International of Washington 44,624 INTERNATIONAL FREIGHT FORWARDER ---------------------------------------------------------------------------- 55 COLUMBIA ACORN SELECT >STATEMENT OF INVESTMENTS, CONTINUED NUMBER OF SHARES VALUE (000) ---------------------------------------------------------------------------- >STEEL: 2.3% 2,150,000 Worthington Industries $ 41,301 STEEL PROCESSING ---------------------------------------------------------------------------- >INDUSTRIAL GOODS: 2.3% 1,125,000 Mine Safety Appliances 40,736 SAFETY EQUIPMENT ---------------------------------------------------------------------------- >OUTSOURCING SERVICES & TRAINING: 2.2% 3,030,000 Quanta Services (b) 39,905 ELECTRICAL & TELECOM CONSTRUCTION SERVICES ---------------------------------------------------------------------------- ----------- INDUSTRIAL GOODS/SERVICES: TOTAL 166,566 ---------------------------------------------------------------------------- ENERGY & MINERALS: 8.3% >OIL SERVICES: 4.3% 1,900,000 Pride International (b) 58,425 OFFSHORE DRILLING CONTRACTOR 450,000 FMC Technologies (b) 19,314 OIL & GAS WELL HEAD MANUFACTURER ---------------------------------------------------------------------------- 77,739 >MINING: 4.0% 29,000,000 UrAsia Energy (Canada) (b)(c) 54,136 URANIUM MINING IN KAZAKHSTAN 200,000 Potash 16,044 WORLD'S LARGES PRODUCER OF POTASH ---------------------------------------------------------------------------- 70,180 ----------- ENERGY & MINERALS: TOTAL 147,919 ---------------------------------------------------------------------------- HEALTH CARE: 5.0% >SERVICES: 5.0% 900,000 Coventry Health Care (b) 51,264 PPO NETWORK 910,000 Lincare Holdings (b) 38,138 HOME HEALTH CARE SERVICES ---------------------------------------------------------------------------- ----------- HEALTH CARE: TOTAL 89,402 ---------------------------------------------------------------------------- NUMBER OF SHARES OR PRINCIPAL AMOUNT (000) VALUE (000) ---------------------------------------------------------------------------- OTHER INDUSTRIES: 2.0% >WASTE MANAGEMENT: 2.0% 1,175,000 Waste Management $ 35,661 US GARBAGE COLLECTION & DISPOSAL ---------------------------------------------------------------------------- ----------- OTHER INDUSTRIES: TOTAL 35,661 ----------- TOTAL COMMON STOCKS: 94.8% 1,695,244 (COST: $1,310,279) SHORT-TERM OBLIGATIONS: 5.2% $ 62,000 Countrywide Financial Funding 4.32% - 4.34% Due 1/3/06 - 1/4/06 61,981 28,000 General Electric Capital Corporate 4.10% Due 1/9/06 27,975 2,428 Repurchase Agreement with State Street Bank & Trust dated 12/30/05, due 1/3/06 at 3.75% collateralized by Federal Home Loan Mortgage Discount Notes, maturing 5/2/06 market value $,2488 (repurchase proceeds: $2,439) 2,428 ---------------------------------------------------------------------------- (AMORTIZED COST: $92,384) 92,384 ----------- TOTAL INVESTMENTS: 100.0% 1,787,628 (COST: $1,402,663) (a) CASH AND OTHER ASSETS LESS LIABILITIES: (0.0)%* (313) ----------- TOTAL NET ASSETS: 100% $ 1,787,315 ============================================================================ >Notes to Statement of Investments (in thousands) (a) At December 31, 2005, for federal income tax purposes cost of investments was $1,412,718 and net unrealized appreciation was $374,910 consisting of gross unrealized appreciation of $393,232 and gross unrealized depreciation of $18,322. (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, 2005, the Fund held five percent or more of the outstanding voting securities of the following companies: Skillsoft Publishing 8.95% UrAsia Energy 6.91 The aggregate cost and value of these companies at December 31, 2005, was $104,847 and $106,936 respectively. Investments in affiliate companies represent 5.98% of total net assets at December 31, 2005. Investment activity and income amounts relating to affiliates during the twelve months ended December 31, 2005, were as follows: Dividend Income $ 0 Net realized gain or loss 0 Change in unrealized gain or loss 8,843 Purchases 57,347 Proceeds from sales 3,612 * Rounds to less than 0.1%. 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, 2005 FUND INTERNATIONAL USA ---------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) ASSETS: Unaffiliated investments, at cost $ 8,485,482 $ 1,905,456 $ 853,949 Affiliated investments, at cost (See Note 4) 1,461,876 -- 5,636 ---------------------------------------------------------------------------------------------------------------------- Unaffiliated investments, at value $ 14,288,711 $ 2,880,197 $ 1,211,772 Affiliated investments, at value (See Note 4) 2,084,199 -- 4,009 Cash 172 -- 14 Foreign currency (cost: Columbia Acorn Fund $3,077; Columbia Acorn International $7,924; Columbia Acorn International Select $15) 3,119 8,096 -- Receivable for: Investments sold 13,085 2,232 376 Fund shares sold 40,960 7,998 6,198 Dividends and interest 11,596 2,995 413 Foreign tax reclaims 374 240 4 Expense reimbursement due from Adviser 166 16 22 Deferred Trustees' Compensation Investments 1,683 493 119 ---------------------------------------------------------------------------------------------------------------------- Total Assets 16,444,065 2,902,267 1,222,927 LIABILITIES: Payable for: Investments purchased 23,416 7,288 369 Fund shares redeemed 22,733 1,108 660 Administration fee 8 2 --* 12b-1 Service & Distribution fees 2,934 116 127 Reports to shareholders 789 197 75 Deferred Trustees' fees 1,683 493 119 Transfer agent fees 538 102 40 Trustees' fees 1 --* 1 Audit fee 33 33 16 Custody fees 315 320 6 Other liabilities 291 31 20 ---------------------------------------------------------------------------------------------------------------------- Total Liabilities 52,741 9,690 1,433 ---------------------------------------------------------------------------------------------------------------------- NET ASSETS $ 16,391,324 $ 2,892,577 $ 1,221,494 ====================================================================================================================== COMPOSITION OF NET ASSETS: Paid in capital $ 9,810,781 $ 1,880,784 $ 862,822 Overdistributed net investment income (Accumulated net investment loss) (34,063) (14,604) (119) Accumulated net realized gain (loss) 189,024 51,516 2,595 Net unrealized appreciation (depreciation) on: Investments 6,425,552 974,741 356,196 Foreign currency translations 30 143 -- Foreign capital gains tax -- (3) -- ---------------------------------------------------------------------------------------------------------------------- NET ASSETS $ 16,391,324 $ 2,892,577 $ 1,221,494 ====================================================================================================================== Net asset value per share -- Class A (a) $ 27.57 $ 33.20 $ 26.52 (Net assets/shares) ($3,349,461/121,494) ($142,204/4,284) ($168,922/6,371 Maximum offering price per share -- Class A (b) $ 29.25 $ 35.23 $ 28.14 (Net asset value per share/front-end sales charge) ($27.57/0.9425) ($33.20/0.9425) ($26.52/0.9425) Net asset value and offering price per share -- Class B (a) $ 26.61 $ 32.71 $ 25.61 (Net assets/shares) ($1,422,580/53,454) ($73,572/2,249) ($73,168/2,857) Net asset value and offering price per share -- Class C (a) $ 26.58 $ 32.68 $ 25.59 (Net assets/shares) ($1,220,339/45,913) ($47,325/1,448) ($42,844/1,674) Net asset value and offering price per share -- Class Z (c) $ 28.17 $ 33.44 $ 27.03 (Net assets/shares) ($10,398,944/369,169) ($2,629,476/78,642) ($936,560/34,650) COLUMBIA COLUMBIA ACORN ACORN DECEMBER 31, 2005 INTERNATIONAL SELECT SELECT ------------------------------------------------------------------------------------------------- (IN THOUSANDS) ASSETS: Unaffiliated investments, at cost $ 72,627 $ 1,297,816 Affiliated investments, at cost (See Note 4) -- 104,847 ------------------------------------------------------------------------------------------------- Unaffiliated investments, at value $ 93,931 $ 1,680,692 Affiliated investments, at value (See Note 4) -- 106,936 Cash 1 1 Foreign currency (cost: Columbia Acorn Fund $3,077; Columbia Acorn International $7,924; Columbia Acorn International Select $15) 15 -- Receivable for: Investments sold 761 -- Fund shares sold 376 2,928 Dividends and interest 70 251 Foreign tax reclaims 5 -- Expense reimbursement due from Adviser 15 38 Deferred Trustees' Compensation Investments -- -- ------------------------------------------------------------------------------------------------- Total Assets 95,174 1,790,846 LIABILITIES: Payable for: Investments purchased -- -- Fund shares redeemed 86 2,655 Administration fee --* --* 12b-1 Service & Distribution fees 9 451 Reports to shareholders 26 177 Deferred Trustees' fees 12 47 Transfer agent fees 7 130 Trustees' fees --* 8 Audit fee 17 17 Custody fees 12 4 Other liabilities 6 42 ------------------------------------------------------------------------------------------------- Total Liabilities 175 3,531 ------------------------------------------------------------------------------------------------- NET ASSETS $ 94,999 $ 1,787,315 ================================================================================================= COMPOSITION OF NET ASSETS: Paid in capital $ 99,908 $ 1,403,075 Overdistributed net investment income (Accumulated net investment loss) (603) (7,548) Accumulated net realized gain (loss) (25,609) 6,823 Net unrealized appreciation (depreciation) on: Investments 21,304 384,965 Foreign currency translations (1) --* Foreign capital gains tax -- -- ------------------------------------------------------------------------------------------------- NET ASSETS $ 94,999 $ 1,787,315 ================================================================================================= Net asset value per share -- Class A (a) $ 20.36 $ 22.47 (Net assets/shares) ($10,219/502) ($744,178/33,118) Maximum offering price per share -- Class A (b) $ 21.60 $ 23.84 (Net asset value per share/front-end sales charge) ($20.36/0.9425) ($22.47/0.9425) Net asset value and offering price per share -- Class B (a) $ 19.80 $ 21.71 (Net assets/shares) ($6,594/333) ($206,441/9,511) Net asset value and offering price per share -- Class C (a) $ 19.80 $ 21.69 (Net assets/shares) ($4,083/206) ($149,160/6,878) Net asset value and offering price per share -- Class Z (c) $ 20.57 $ 22.77 (Net assets/shares) ($74,103/3,602) ($687,536/30,193)
(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, 2005
COLUMBIA COLUMBIA COLUMBIA COLUMBIA ACORN COLUMBIA ACORN ACORN ACORN INTERNATIONAL ACORN (IN THOUSANDS) FUND INTERNATIONAL USA SELECT SELECT ----------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Dividend income $ 145,247 $ 50,628 $ 9,697 $ 1,613 $ 8,672 Dividend income from affiliates (See Note 4) 16,279 -- -- -- -- Interest income 35,518 3,052 3,315 122 3,867 ----------------------------------------------------------------------------------------------------------------------------------- 197,044 53,680 13,012 1,735 12,539 Foreign taxes withheld (4,337) (4,050) (12) (112) -- ----------------------------------------------------------------------------------------------------------------------------------- Total Investment Income 192,707 49,630 13,000 1,623 12,539 EXPENSES: Management fee 94,919 18,911 8,995 708 12,411 Administration fee 6,207 1,005 425 32 632 12b-1 Service and Distribution fees: Class A 7,280 242 328 17 1,569 Class B 11,707 531 604 50 1,630 Class C 11,160 366 408 32 1,280 Transfer agent fees: Class A 2,085 110 116 12 621 Class B 2,232 144 129 20 432 Class C 1,259 58 52 8 216 Class Z 2,702 1,263 263 64 459 Custody fees 1,930 1,798 36 69 39 Trustees' fees 602 109 46 18 90 Registration & blue sky fees 266 175 127 83 202 Reports to shareholders 1,716 382 178 61 547 Compliance expenses 423 67 28 2 41 Non-recurring costs (See Note 9) 1,244 201 85 6 127 Other expenses 791 219 107 69 132 ----------------------------------------------------------------------------------------------------------------------------------- Total expenses 146,523 25,581 11,927 1,251 20,428 Less custody fees paid indirectly (52) (2) (4) --* (18) Less reimbursement of expenses by Investment Adviser (See Note 4) -- -- -- (31) -- Less fees waived by Investment Adviser (See Note 4) (395) (39) (16) (1) (117) Less reimbursement of expenses by Transfer Agent (1,848) (379) (122) (21) (294) Non-recurring costs reimbursed (See Note 9) (1,244) (201) (85) (6) (127) ----------------------------------------------------------------------------------------------------------------------------------- Net Expenses 142,984 24,960 11,700 1,192 19,872 ----------------------------------------------------------------------------------------------------------------------------------- Net Investment Income (Loss) 49,723 24,670 1,300 431 (7,333) NET REALIZED AND UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS: Net realized gain (loss) on: Unaffiliated investments 888,923 204,393 49,825 5,542 46,214 Affiliated investments (See Note 4) 2,494 -- -- -- -- Foreign currency transactions (858) (1,226) -- (46) -- ----------------------------------------------------------------------------------------------------------------------------------- Net realized gain 890,559 203,167 49,825 5,496 46,214 ----------------------------------------------------------------------------------------------------------------------------------- Net change in net unrealized appreciation (depreciation) on: Unaffiliated investments 1,642,314 259,156 75,557 5,776 132,119 Affiliated investments (See Note 4) (743,008) -- 55 -- 8,843 Foreign currency translations (360) (293) -- (3) -- Foreign capital gains tax -- (3) -- -- -- ----------------------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) 898,946 258,860 75,612 5,773 140,962 =================================================================================================================================== Net realized and unrealized gain 1,789,505 462,027 125,437 11,269 187,176 ----------------------------------------------------------------------------------------------------------------------------------- Net Increase in Net Assets resulting from Operations $ 1,839,228 $ 486,697 $ 126,737 $ 11,700 $ 179,843 ===================================================================================================================================
* 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) 2005 2004 2005 2004 OPERATIONS: Net investment income (loss) $ 49,723 $ (13,051) $ 24,670 $ 16,703 Net realized gain on investments and foreign currency transactions 890,559 693,184 203,167 175,881 Net change in net unrealized appreciation (depreciation) on investments, foreign currency translations and foreign capital gains tax 898,946 1,701,999 258,860 276,935 -------------------------------------------------------------------------------------------------------------------------------- Net Increase from Operations 1,839,228 2,382,132 486,697 469,519 DISTRIBUTIONS DECLARED TO SHAREHOLDERS FROM: Net investment income - Class A (8,157) -- (1,772) (374) Net realized gain - Class A (177,617) (89,952) (4,275) -- Net investment income - Class B -- -- (280) (75) Net realized gain - Class B (81,483) (49,011) (2,334) -- Net investment income - Class C -- -- (171) (42) Net realized gain - Class C (68,235) (37,671) (1,462) -- Net investment income - Class Z (52,311) (5,620) (51,974) (16,439) Net realized gain - Class Z (547,733) (290,184) (81,064) -- -------------------------------------------------------------------------------------------------------------------------------- Total Distribution to Shareholders (935,536) (472,438) (143,332) (16,930) SHARE TRANSACTIONS: Subscriptions - Class A 912,797 703,271 66,630 19,736 Distributions reinvested - Class A 167,704 81,405 4,900 306 Redemptions - Class A (579,536) (453,387) (14,669) (17,531) -------------------------------------------------------------------------------------------------------------------------------- Net Increase - Class A 500,965 331,289 56,861 2,511 Subscriptions - Class B 49,025 90,732 17,173 10,422 Distributions reinvested - Class B 74,120 44,616 2,310 66 Redemptions - Class B (174,945) (146,696) (10,198) (7,152) -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class B (51,800) (11,348) 9,285 3,336 Subscriptions - Class C 171,533 145,878 15,891 8,030 Distributions reinvested - Class C 54,677 30,636 1,302 35 Redemptions - Class C (149,119) (136,434) (6,051) (6,936) -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class C 77,091 40,080 11,142 1,129 Subscriptions - Class Z 1,686,601 1,596,519 577,455 206,434 Distributions reinvested - Class Z 513,385 254,191 103,732 14,669 Redemptions - Class Z (1,080,069) (1,447,781) (284,340) (284,074) -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class Z 1,119,917 402,929 396,847 (62,971) -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) from Share Transactions 1,646,173 762,950 474,135 (55,995) -------------------------------------------------------------------------------------------------------------------------------- Redemption Fees -- -- 65 86 -------------------------------------------------------------------------------------------------------------------------------- Total Increase in Net Assets 2,549,865 2,672,644 817,565 396,680 NET ASSETS: -------------------------------------------------------------------------------------------------------------------------------- Beginning of period 13,841,459 11,168,815 2,075,012 1,678,332 -------------------------------------------------------------------------------------------------------------------------------- End of period $ 16,391,324 $ 13,841,459 $ 2,892,577 $ 2,075,012 ================================================================================================================================ UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME OR (ACCUMULATED NET INVESTMENT LOSS) $ (34,063) $ (20,921) $ (14,604) $ 16,151 ================================================================================================================================ 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) 2005 2004 2005 2004 OPERATIONS: Net investment income (loss) $ 1,300 $ (6,571) $ 431 $ 51 Net realized gain on investments and foreign currency transactions 49,825 28,245 5,496 7,208 Net change in net unrealized appreciation (depreciation) on investments, foreign currency translations and foreign capital gains tax 75,612 121,948 5,773 2,762 -------------------------------------------------------------------------------------------------------------------------------- Net Increase from Operations 126,737 143,622 11,700 10,021 DISTRIBUTIONS DECLARED TO SHAREHOLDERS FROM: Net investment income - Class A -- -- (79) (6) Net realized gain - Class A (7,747) (622) -- -- Net investment income - Class B -- -- (46) -- Net realized gain - Class B (3,824) (415) -- -- Net investment income - Class C -- -- (24) -- Net realized gain - Class C (2,282) (224) -- -- Net investment income - Class Z (1,613) -- (888) (151) Net realized gain - Class Z (43,227) (3,487) -- -- -------------------------------------------------------------------------------------------------------------------------------- Total Distribution to Shareholders (58,693) (4,748) (1,037) (157) SHARE TRANSACTIONS: Subscriptions - Class A 66,241 27,362 5,743 1,860 Distributions reinvested - Class A 6,880 572 71 5 Redemptions - Class A (25,265) (22,954) (1,004) (763) -------------------------------------------------------------------------------------------------------------------------------- Net Increase - Class A 47,856 4,980 4,810 1,102 Subscriptions - Class B 4,001 4,936 2,123 1,664 Distributions reinvested - Class B 3,491 375 41 -- Redemptions - Class B (11,124) (10,452) (1,480) (586) -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class B (3,632) (5,141) 684 1,078 Subscriptions - Class C 8,047 5,707 1,655 786 Distributions reinvested - Class C 1,878 187 20 -- Redemptions - Class C (9,090) (8,114) (599) (2,429) -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class C 835 (2,220) 1,076 (1,643) Subscriptions - Class Z 302,588 199,048 25,890 11,787 Distributions reinvested - Class Z 40,433 3,134 582 146 Redemptions - Class Z (105,312) (161,267) (7,003) (7,456) -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class Z 237,709 40,915 19,469 4,477 -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) from Share Transactions 282,768 38,534 26,039 5,014 -------------------------------------------------------------------------------------------------------------------------------- Redemption Fees -- -- 9 4 -------------------------------------------------------------------------------------------------------------------------------- Total Increase in Net Assets 350,812 177,408 36,711 14,882 NET ASSETS: Beginning of period 870,682 693,274 58,288 43,406 -------------------------------------------------------------------------------------------------------------------------------- End of period $ 1,221,494 $ 870,682 $ 94,999 $ 58,288 ================================================================================================================================ UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME OR (ACCUMULATED NET INVESTMENT LOSS) $ (119) $ (103) $ (603) $ 49 ================================================================================================================================ COLUMBIA ACORN SELECT Year ended Year ended INCREASE (DECREASE) IN NET ASSETS December 31, December 31, ---------------------------------------------------------------------------------------- (IN THOUSANDS) 2005 2004 OPERATIONS: Net investment income (loss) $ (7,333) $ (8,994) Net realized gain on investments and foreign currency transactions 46,214 47,420 Net change in net unrealized appreciation (depreciation) on investments, foreign currency translations and foreign capital gains tax 140,962 133,791 ---------------------------------------------------------------------------------------- Net Increase from Operations 179,843 172,217 DISTRIBUTIONS DECLARED TO SHAREHOLDERS FROM: Net investment income - Class A -- -- Net realized gain - Class A (19,098) (10,300) Net investment income - Class B -- -- Net realized gain - Class B (5,029) (3,895) Net investment income - Class C -- -- Net realized gain - Class C (3,559) (2,321) Net investment income - Class Z -- -- Net realized gain - Class Z (19,071) (8,700) ---------------------------------------------------------------------------------------- Total Distribution to Shareholders (46,757) (25,216) SHARE TRANSACTIONS: Subscriptions - Class A 296,611 274,350 Distributions reinvested - Class A 17,770 9,614 Redemptions - Class A (143,717) (91,343) ---------------------------------------------------------------------------------------- Net Increase - Class A 170,664 192,621 Subscriptions - Class B 28,258 61,755 Distributions reinvested - Class B 4,510 3,496 Redemptions - Class B (26,292) (19,113) ---------------------------------------------------------------------------------------- Net Increase (Decrease) - Class B 6,476 46,138 Subscriptions - Class C 48,457 49,173 Distributions reinvested - Class C 2,903 1,934 Redemptions - Class C (23,251) (17,236) ---------------------------------------------------------------------------------------- Net Increase (Decrease) - Class C 28,109 33,871 Subscriptions - Class Z 333,604 204,740 Distributions reinvested - Class Z 13,462 6,716 Redemptions - Class Z (155,173) (114,619) ---------------------------------------------------------------------------------------- Net Increase (Decrease) - Class Z 191,893 96,837 ---------------------------------------------------------------------------------------- Net Increase (Decrease) from Share Transactions 397,142 369,467 ---------------------------------------------------------------------------------------- Redemption Fees -- -- ---------------------------------------------------------------------------------------- Total Increase in Net Assets 530,228 516,468 NET ASSETS: Beginning of period 1,257,087 740,619 ---------------------------------------------------------------------------------------- End of period $ 1,787,315 $ 1,257,087 ======================================================================================== UNDISTRIBUTED (OVERDISTRIBUTED) NET INVESTMENT INCOME OR (ACCUMULATED NET INVESTMENT LOSS) $ (7,548) $ (57) ========================================================================================
See accompanying notes to financial statements. 60-61 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) 2005 2004 2005 2004 Subscriptions - Class A 34,302 29,671 2,150 809 Shares issued in reinvestment and capital gains - Class A 6,137 3,255 155 13 Less shares redeemed - Class A (21,923) (19,230) (476) (722) -------------------------------------------------------------------------------------------------------------------------------- Net Increase - Class A 18,516 13,696 1,829 100 Subscriptions - Class B 1,922 3,928 574 438 Shares issued in reinvestment and capital gains - Class B 2,814 1,836 73 3 Less shares redeemed - Class B (6,826) (6,388) (341) (301) -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class B (2,090) (624) 306 140 Subscriptions - Class C 6,667 6,282 524 333 Shares issued in reinvestment and capital gains - Class C 2,077 1,261 41 2 Less shares redeemed - Class C (5,835) (5,916) (201) (293) -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class C 2,909 1,627 364 42 Subscriptions - Class Z 62,182 66,041 18,615 8,246 Shares issued in reinvestment and capital gains - Class Z 18,385 9,967 3,274 624 Less shares redeemed - Class Z (39,912) (60,621) (9,349) (11,723) -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class Z 40,655 15,387 12,540 (2,853) -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Shares of Beneficial Interest 59,990 30,086 15,039 (2,571) -------------------------------------------------------------------------------------------------------------------------------- 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) 2005 2004 2005 2004 Subscriptions - Class A 2,559 1,239 307 116 Shares issued in reinvestment and capital gains - Class A 260 24 4 --* Less shares redeemed - Class A (990) (1,043) (53) (49) -------------------------------------------------------------------------------------------------------------------------------- Net Increase - Class A 1,829 220 258 67 Subscriptions - Class B 161 229 118 108 Shares issued in reinvestment and capital gains - Class B 137 16 2 -- Less shares redeemed - Class B (451) (485) (81) (38) -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class B (153) (240) 39 70 Subscriptions - Class C 321 261 92 52 Shares issued in reinvestment and capital gains - Class C 74 8 1 -- Less shares redeemed - Class C (363) (379) (33) (167) -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class C 32 (110) 60 (115) Subscriptions - Class Z 11,555 8,912 1,378 707 Shares issued in reinvestment and capital gains - Class Z 1,500 128 33 10 Less shares redeemed - Class Z (4,040) (7,291) (378) (479) -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) - Class Z 9,015 1,749 1,033 238 -------------------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Shares of Beneficial Interest 10,723 1,619 1,390 260 -------------------------------------------------------------------------------------------------------------------------------- COLUMBIA ACORN SELECT Year ended Year ended CHANGES IN SHARES OF BENEFICIAL INTEREST: December 31, December 31, ---------------------------------------------------------------------------------------- (IN THOUSANDS) 2005 2004 Subscriptions - Class A 14,487 14,418 Shares issued in reinvestment and capital gains - Class A 802 473 Less shares redeemed - Class A (6,938) (4,824) ---------------------------------------------------------------------------------------- Net Increase - Class A 8,351 10,067 Subscriptions - Class B 1,441 3,336 Shares issued in reinvestment and capital gains - Class B 211 177 Less shares redeemed - Class B (1,313) (1,035) ---------------------------------------------------------------------------------------- Net Increase (Decrease) - Class B 339 2,478 Subscriptions - Class C 2,455 2,649 Shares issued in reinvestment and capital gains - Class C 136 98 Less shares redeemed - Class C (1,172) (929) ---------------------------------------------------------------------------------------- Net Increase (Decrease) - Class C 1,419 1,818 Subscriptions - Class Z 15,890 10,606 Shares issued in reinvestment and capital gains - Class Z 601 326 Less shares redeemed - Class Z (7,371) (5,997) ---------------------------------------------------------------------------------------- Net Increase (Decrease) - Class Z 9,120 4,935 ---------------------------------------------------------------------------------------- Net Increase (Decrease) in Shares of Beneficial Interest 19,229 19,298 ----------------------------------------------------------------------------------------
* Rounds to less than 500 shares. See accompanying notes to financial statements. 1-800-922-6769 62-63 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 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 25.93 $ 22.20 $ 15.34 $ 17.80 $ 17.19 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (a) 0.07 (0.05) (0.07) (0.07) (0.05) Net realized and unrealized gain (loss) 3.20 4.69 6.95 (2.39) 1.01 -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 3.27 4.64 6.88 (2.46) 0.96 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.07) -- -- -- -- From net realized gains (1.56) (0.91) (0.02) -- (0.35) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (1.63) (0.91) (0.02) -- (0.35) -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 27.57 $ 25.93 $ 22.20 $ 15.34 $ 17.80 ================================================================================================================================ Total Return (b) 12.76%(c) 21.05%(c) 44.85% (13.82)% 5.56% -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (d) 1.03% 1.20% 1.33% 1.42% 1.42% Net investment income (loss) (d) 0.28% (0.21)% (0.36)% (0.45)% (0.33)% Waiver/reimbursement 0.02% 0.02% -- -- -- Portfolio turnover rate 16% 20% 10% 13% 20% Net assets at end of period (000'S) $ 3,349,461 $ 2,669,936 $ 1,982,260 $ 724,121 $ 306,405
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (c) Had the Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact.
Class B Shares Year ended December 31, -------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 25.19 $ 21.75 $ 15.13 $ 17.67 $ 17.17 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (0.11) (0.22) (0.18) (0.17) (0.16) Net realized and unrealized gain (loss) 3.09 4.57 6.82 (2.37) 1.01 -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 2.98 4.35 6.64 (2.54) 0.85 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net realized gains (1.56) (0.91) (0.02) -- (0.35) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (1.56) (0.91) (0.02) -- (0.35) -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 26.61 $ 25.19 $ 21.75 $ 15.13 $ 17.67 ================================================================================================================================ Total Return (b) 11.98%(c) 20.15%(c) 43.89% (14.37)% 4.92% -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (d) 1.72% 1.95% 1.98% 2.07% 2.07% Net investment loss (d) (0.42)% (0.96)% (1.01)% (1.10)% (0.98)% Waiver/reimbursement 0.02% 0.02% -- -- -- Portfolio turnover rate 16% 20% 10% 13% 20% Net assets at end of period (000'S) $ 1,422,580 $ 1,399,135 $ 1,221,931 $ 618,727 $ 286,422
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (c) Had the Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact.
Class C Shares Year ended December 31, -------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 25.18 $ 21.75 $ 15.12 $ 17.66 $ 17.17 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (0.13) (0.22) (0.18) (0.17) (0.17) Net realized and unrealized gain (loss) 3.09 4.56 6.83 (2.37) 1.01 -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 2.96 4.34 6.65 (2.54) 0.84 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net realized gains (1.56) (0.91) (0.02) -- (0.35) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (1.56) (0.91) (0.02) -- (0.35) -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 26.58 $ 25.18 $ 21.75 $ 15.12 $ 17.66 ================================================================================================================================ Total Return (b) 11.90%(c) 20.11%(c) 43.99% (14.38)% 4.86% -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (d) 1.82% 1.95% 1.98% 2.07% 2.07% Net investment income loss (d) (0.51)% (0.96)% (1.01)% (1.10)% (0.98)% Waiver/reimbursement 0.02% 0.02% -- -- -- Portfolio turnover rate 16% 20% 10% 13% 20% Net assets at end of period (000'S) $ 1,220,339 $ 1,083,006 $ 900,016 $ 376,024 $ 150,727
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (c) Had the Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact. See accompanying notes to financial statements 1-800-922-6769 64 COLUMBIA ACORN INTERNATIONAL
Class A Shares Year ended December 31, -------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 28.75 $ 22.45 $ 15.32 $ 18.35 $ 23.84 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) 0.22 0.14 0.10 0.05 0.01 Net realized and unrealized gain (loss) 5.84 6.31 7.08 (3.07) (5.11) -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 6.06 6.45 7.18 (3.02) (5.10) -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.53) (0.15) (0.05) (0.01) -- From net realized gains (1.08) -- -- -- (0.39) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (1.61) (0.15) (0.05) (0.01) (0.39) -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 33.20 $ 28.75 $ 22.45 $ 15.32 $ 18.35 ================================================================================================================================ Total Return (b) 21.42%(c) 28.91%(c) 46.94% (16.46)% (21.59)% -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (d) 1.30% 1.48% 1.59% 1.56% 1.65% Net investment income (d) 0.72% 0.61% 0.57% 0.30% 0.03% Waiver/reimbursement 0.02% 0.02% -- -- -- Portfolio turnover rate 27% 40% 40% 52% 45% Net assets at end of period (000'S) $ 142,204 $ 70,582 $ 52,872 $ 33,806 $ 25,587
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (c) Had the Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact.
Class B Shares Year ended December 31, -------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 28.18 $ 22.07 $ 15.11 $ 18.22 $ 23.81 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (a) 0.02 (0.04) (0.02) (0.06) (0.12) Net realized and unrealized gain (loss) 5.73 6.19 6.98 (3.05) (5.08) -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 5.75 6.15 6.96 (3.11) (5.20) -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.14) (0.04) -- -- -- From net realized gains (1.08) -- -- -- (0.39) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (1.22) (0.04) -- -- (0.39) -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 32.71 $ 28.18 $ 22.07 $ 15.11 $ 18.22 ================================================================================================================================ Total Return (b) 20.57%(c) 27.91%(c) 46.06% (17.07)% (22.04)% -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (d) 2.01% 2.27% 2.24% 2.21% 2.30% Net investment income (loss) (d) 0.08% (0.18)% (0.10)% (0.35)% (0.62)% Waiver/reimbursement 0.02% 0.02% -- -- -- Portfolio turnover rate 27% 40% 40% 52% 45% Net assets at end of period (000'S) $ 73,572 $ 54,752 $ 39,800 $ 22,560 $ 17,235
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (c) Had the Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact.
Class C Shares Year ended December 31, -------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 28.19 $ 22.06 $ 15.11 $ 18.21 $ 23.81 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (0.00)(b) (0.03) (0.01) (0.06) (0.13) Net realized and unrealized gain (loss) 5.71 6.20 6.96 (3.04) (5.08) -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 5.71 6.17 6.95 (3.10) (5.21) -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.14) (0.04) -- -- -- From net realized gains (1.08) -- -- -- (0.39) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (1.22) (0.04) -- -- (0.39) -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 32.68 $ 28.19 $ 22.06 $ 15.11 $ 18.21 ================================================================================================================================ Total Return (c) 20.45%(d) 28.01%(d) 46.00% (17.02)% (22.08)% -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (e) 2.09% 2.24% 2.24% 2.21% 2.30% Net investment loss (e) (0.01)% (0.15)% (0.06)% (0.35)% (0.62)% Waiver/reimbursement 0.02% 0.02% -- -- -- Portfolio turnover rate 27% 40% 40% 52% 45% Net assets at end of period (000'S) $ 47,325 $ 30,547 $ 22,990 $ 14,575 $ 14,327
(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 and no initial sales charge or contingent deferred sales charge. (d) Had the Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (e) The benefits derived from custody fees paid indirectly had no impact. 65 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 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 24.77 $ 20.74 $ 14.18 $ 17.50 $ 14.88 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (0.01) (0.24) (0.22) (0.19) (0.19) Net realized and unrealized gain (loss) 3.13 4.41 6.78 (3.13) 2.96 -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 3.12 4.17 6.56 (3.32) 2.77 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net realized gains (1.37) (0.14) -- -- (0.15) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (1.37) (0.14) -- -- (0.15) -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 26.52 $ 24.77 $ 20.74 $ 14.18 $ 17.50 ================================================================================================================================ Total Return (b) 12.68%(c) 20.12%(c) 46.26% (18.97)% 18.65% -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (d) 1.31% 1.51% 1.65% 1.74% 1.84% Net investment loss (d) (0.02)% (1.08)% (1.26)% (1.21)% (1.13)% Waiver/reimbursement 0.01% 0.02% -- -- -- Portfolio turnover rate 13% 18% 7% 31% 24% Net assets at end of period (000'S) $ 168,922 $ 112,509 $ 89,650 $ 32,422 $ 20,455
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (c) Had the Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact.
Class B Shares Year ended December 31, -------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 24.14 $ 20.36 $ 14.01 $ 17.40 $ 14.87 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (0.18) (0.39) (0.32) (0.29) (0.30) Net realized and unrealized gain (loss) 3.02 4.31 6.67 (3.10) 2.96 -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 2.84 3.92 6.35 (3.39) 2.66 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net realized gains (1.37) (0.14) -- -- (0.13) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (1.37) (0.14) -- -- (0.13) -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 25.61 $ 24.14 $ 20.36 $ 14.01 $ 17.40 ================================================================================================================================ Total Return (b) 11.84%(c) 19.26%(c) 45.32% (19.48)% 17.92% -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (d) 2.00% 2.23% 2.30% 2.39% 2.49% Net investment loss (d) (0.72)% (1.80)% (1.91)% (1.86)% (1.78)% Waiver/reimbursement 0.01% 0.02% -- -- -- Portfolio turnover rate 13% 18% 7% 31% 24% Net assets at end of period (000'S) $ 73,168 $ 72,643 $ 66,175 $ 37,478 $ 27,722
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (c) Had the Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact.
Class C Shares Year ended December 31, -------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 24.14 $ 20.36 $ 14.01 $ 17.40 $ 14.87 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (0.20) (0.39) (0.32) (0.29) (0.30) Net realized and unrealized gain (loss) 3.02 4.31 6.67 (3.10) 2.96 -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 2.82 3.92 6.35 (3.39) 2.66 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net realized gains (1.37) (0.14) -- -- (0.13) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (1.37) (0.14) -- -- (0.13) -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 25.59 $ 24.14 $ 20.36 $ 14.01 $ 17.40 ================================================================================================================================ Total Return (b) 11.76%(c) 19.26%(c) 45.32% (19.48)% 17.92% -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (d) 2.10% 2.23% 2.30% 2.39% 2.49% Net investment loss (d) (0.81)% (1.80)% (1.91)% (1.86)% (1.78)% Waiver/reimbursement 0.01% 0.02% -- -- -- Portfolio turnover rate 13% 18% 7% 31% 24% Net assets at end of period (000'S) $ 42,844 $ 39,643 $ 35,662 $ 18,313 $ 13,049
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (c) Had the Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact. See accompanying notes to financial statements 1-800-922-6769 66 COLUMBIA ACORN INTERNATIONAL SELECT
Class A Shares Year ended December 31, -------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 17.85 $ 14.45 $ 10.24 $ 12.07 $ 17.15 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (a) 0.06 (0.00) (b) 0.03 (0.01) (0.09) Net realized and unrealized gain (loss) 2.69 3.43 4.18 (1.82) (4.90) -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 2.75 3.43 4.21 (1.83) (4.99) -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.24) (0.03) -- -- (0.01) From net realized gains -- -- -- -- (0.08) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (0.24) (0.03) -- -- (0.09) -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 20.36 $ 17.85 $ 14.45 $ 10.24 $ 12.07 ================================================================================================================================ Total Return (c)(d) 15.60% 23.76% 41.11% (15.16)% (29.17)% -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (e) 1.70% 1.75% 1.80% 1.80% 1.80% Net investment income (loss) (e) 0.34% (0.03)% 0.24% (0.09)% (0.67)% Waiver/reimbursement 0.10% 0.37% 0.44% 0.33% 0.23% Portfolio turnover rate 39% 73% 69% 02% 82% Net assets at end of period (000'S) $ 10,219 $ 4,357 $ 2,557 $ 2,612 $ 2,861
(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 and no initial sales charge or contingent deferred sales charge. (d) Had the Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (e) The benefits derived from custody fees paid indirectly had no impact.
Class B Shares Year ended December 31, -------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 17.36 $ 14.12 $ 10.08 $ 11.96 $ 17.13 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (0.03) (0.10) (0.06) (0.08) (0.18) Net realized and unrealized gain (loss) 2.61 3.34 4.10 (1.80) (4.90) -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 2.58 3.24 4.04 (1.88) (5.08) -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.14) -- -- -- (0.01) From net realized gains -- -- -- -- (0.08) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (0.14) -- -- -- (0.09) -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 19.80 $ 17.36 $ 14.12 $ 10.08 $ 11.96 ================================================================================================================================ Total Return (b)(c) 14.97% 22.95% 40.08% (15.72)% (29.73)% -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (d) 2.30% 2.38% 2.45% 2.45% 2.45% Net investment loss (d) (0.16)% (0.66)% (0.52)% (0.74)% (1.32)% Waiver/reimbursement 0.28% 0.58% 0.44% 0.33% 0.23% Portfolio turnover rate 39% 73% 69% 102% 82% Net assets at end of period (000'S) $ 6,594 $ 5,097 $ 3,162 $ 1,835 $ 2,069
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (c) Had the Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact.
Class C Shares Year ended December 31, -------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 17.38 $ 14.14 $ 10.09 $ 11.97 $ 17.14 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (0.05) (0.11) (0.05) (0.08) (0.18) Net realized and unrealized gain (loss) 2.60 3.35 4.10 (1.80) (4.90) -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 2.55 3.24 4.05 (1.88) (5.08) -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.13) -- -- -- (0.01) From net realized gains -- -- -- -- (0.08) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (0.13) -- -- -- (0.09) -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 19.80 $ 17.38 $ 14.14 $ 10.09 $ 11.97 ================================================================================================================================ Total Return (b)(c) 14.77% 22.91% 40.14% (15.71)% (29.71)% -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (d) 2.45% 2.45% 2.45% 2.45% 2.45% Net investment loss (d) (0.30)% (0.73)% (0.41)% (0.74)% (1.32)% Waiver/reimbursement 0.17% 0.35% 0.44% 0.33% 0.23% Portfolio turnover rate 39% 73% 69% 102% 82% Net assets at end of period (000'S) $ 4,083 $ 2,543 $ 3,691 $ 2,915 $ 3,885
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (c) Had the Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact. 67 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 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 20.83 $ 18.01 $ 13.93 $ 15.17 $ 14.12 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (0.09) (0.16) (0.20) (0.16) (0.10) Net realized and unrealized gain (loss) 2.32 3.42 4.37 (1.08) 1.18 -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 2.23 3.26 4.17 (1.24) 1.08 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net realized gains (0.59) (0.44) (0.09) -- (0.03) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (0.59) (0.44) (0.09) -- (0.03) -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 22.47 $ 20.83 $ 18.01 $ 13.93 $ 15.17 ================================================================================================================================ Total Return (b) 10.78%(c) 18.16%(c) 29.95% (8.17)%(c) 7.65%(c) -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses 1.26%(d) 1.47%(d) 1.63%(d) 1.70%(d) 1.70% Net investment loss (0.42)%(d) (0.86)%(d) (1.15)%(d) (1.11)%(d) (0.79)% Waiver/reimbursement 0.03% 0.02% -- 0.10% 0.18% Portfolio turnover rate 19% 34% 16% 40% 82% Net assets at end of period (000'S) $ 744,178 $ 515,842 $ 264,679 $ 31,742 $ 11,900
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (c) Had the Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact.
Class B Shares Year ended December 31, -------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 20.23 $ 17.64 $ 13.73 $ 15.05 $ 14.10 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (0.23) (0.31) (0.29) (0.25) (0.20) Net realized and unrealized gain (loss) 2.24 3.34 4.29 (1.07) 1.18 -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 2.01 3.03 4.00 (1.32) 0.98 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net realized gains (0.53) (0.44) (0.09) -- (0.03) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (0.53) (0.44) (0.09) -- (0.03) -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 21.71 $ 20.23 $ 17.64 $ 13.73 $ 15.05 ================================================================================================================================ Total Return (b) 10.01%(c) 17.24%(c) 29.14% (8.77)%(c) 6.95%(c) -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses 1.99%(d) 2.26%(d) 2.28%(d) 2.35%(d) 2.35% Net investment loss (1.15)%(d) (1.65)%(d) (1.80)%(d) (1.76)%(d) (1.44)% Waiver/reimbursement 0.03% 0.02% -- 0.10% 0.18% Portfolio turnover rate 19% 34% 16% 40% 82% Net assets at end of period (000'S) $ 206,441 $ 185,545 $ 118,064 $ 33,106 $ 13,358
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (c) Had the Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact.
Class C Shares Year ended December 31, -------------------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $ 20.23 $ 17.64 $ 13.73 $ 15.05 $ 14.10 INCOME FROM INVESTMENT OPERATIONS Net investment loss (a) (0.25) (0.30) (0.30) (0.25) (0.20) Net realized and unrealized gain (loss) 2.24 3.33 4.30 (1.07) 1.18 -------------------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 1.99 3.03 4.00 (1.32) 0.98 -------------------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net realized gains (0.53) (0.44) (0.09) -- (0.03) -------------------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (0.53) (0.44) (0.09) -- (0.03) -------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 21.69 $ 20.23 $ 17.64 $ 13.73 $ 15.05 ================================================================================================================================ Total Return (b) 9.91%(c) 17.24%(c) 29.14% (8.77)%(c) 6.95%(c) -------------------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses 2.08%(d) 2.25%(d) 2.28%(d) 2.35%(d) 2.35% Net investment loss (1.24)%(d) (1.64)%(d) (1.80)%(d) (1.76)%(d) (1.44)% Waiver/reimbursement 0.03% 0.02% -- 0.10% 0.18% Portfolio turnover rate 19% 34% 16% 40% 82% Net assets at end of period (000'S) $ 149,160 $ 110,435 $ 64,212 $ 10,919 $ 4,945
(a) Per share data was calculated using average shares outstanding during the period. (b) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (c) Had the Investment Adviser and/or Transfer Agent not waived and/or reimbursed a portion of expenses, total return would have been reduced. (d) The benefits derived from custody fees paid indirectly had no impact. See accompanying notes to financial statements 1-800-922-6769 68 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 impose 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 shares of the Fund for shares of another fund distributed by Columbia Management Distributors, Inc. 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, the Fund will charge you a redemption fee of 2% of the redemption proceeds. 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 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, begin on page 76 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. >Repurchase agreements The Funds may engage in repurchase agreement transactions. The Funds, through their custodians, receive delivery of underlying securities collateralizing repurchase agreements. The Funds' investment adviser determines that the value of the underlying securities is at all times 69 COLUMBIA ACORN FAMILY OF FUNDS >NOTES TO FINANCIAL STATEMENTS, CONTINUED 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" on 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, 2005. >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 (the "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 1-800-922-6769 70 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 on 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 15%. 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. >Indemnification In the normal course of business, each Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnities. A Fund's maximum exposure under these arrangements is unknown, as this would involve future claims against the Fund. Also, under the Trust's organizational documents, the Trustees and Officers of the Trust are indemnified against certain liabilities that may arise out of their duties to the Trust. However, based on experience, the Funds expect the risk of loss due to these warranties and indemnities to be minimal. 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 GAAP. 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, 2005, permanent book and tax basis differences resulting primarily from differing treatments for distribution reclassifications, foreign currency transactions, passive foreign investment company ("PFIC") adjustments, foreign capital gains tax adjustments and REIT adjustments were identified and reclassified among the components of the Funds' net assets as follows: OVERDISTRIBUTED NET INVESTMENT INCOME OR ACCUMULATED ACCUMULATED NET NET REALIZED PAID-IN INVESTMENT LOSS GAIN/LOSS CAPITAL ---------------------------------------------------------------------------- Columbia Acorn Fund $ (2,397) $ (33,273) $ 35,670 Columbia Acorn International (1,228) 1,228 -- Columbia Acorn USA 297 (297) -- Columbia Acorn International Select (46) 46 -- Columbia Acorn Select (158) 158 -- 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 years ended December 31, 2005 and December 31, 2004 was as follows: DECEMBER 31, 2005 LONG- TERM ORDINARY CAPITAL INCOME* GAINS ---------------------------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $ 89,415 $ 846,121 Columbia Acorn International 54,197 89,135 Columbia Acorn USA 1,825 56,868 Columbia Acorn International Select 1,037 -- Columbia Acorn Select 7,041 39,716 DECEMBER 31, 2004 LONG- TERM ORDINARY CAPITAL 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 * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2005, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED NET UNDISTRIBUTED LONG-TERM UNREALIZED ORDINARY CAPITAL APPRECIATION INCOME GAINS (DEPRECIATION)* -------------------------------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $ -- $ 191,435 $6,390,761 Columbia Acorn International 6,502 52,297 953,053 Columbia Acorn USA -- 5,425 355,895 Columbia Acorn International Select 187 -- 20,529 Columbia Acorn Select 9,422 -- 374,910 * The differences between book-basis and tax-basis net unrealized appreciation/depreciation are primarily due to deferral of losses from wash sales and PFIC adjustments. 71 COLUMBIA ACORN FAMILY OF FUNDS >NOTES TO FINANCIAL STATEMENTS, CONTINUED The following capital loss carryforwards, determined as of December 31, 2005, 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 USA INTERNATIONAL SELECT ----------------------------------------------------------------- (IN THOUSANDS) 2009 $ 2,023* $ 10,593 2010 506* 12,528 2011 -- 2,488 ----------------------------------------------------------------- TOTAL $ 2,529 $ 25,609 * 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, 2005: _________________________ (IN THOUSANDS) Columbia Acorn International $ 62,579 Columbia Acorn USA 7,025 Columbia Acorn International Select 5,542 4. Transactions with Affiliates Columbia Wanger Asset Management, L.P. ("Columbia WAM"), a wholly owned subsidiary of Columbia Management Group, Inc., which in turn is an indirect, 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. Effective September 28, 2005, under the Fund's investment management agreement, fees are accrued daily and paid monthly to Columbia WAM at the annual rates shown in the table below for Columbia Acorn USA: Net asset value: On the first $200 million 0.94% Next $300 million 0.89% Net assets in excess of $500 million 0.84% Effective March 8, 2005, 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 0.74% Next $1.3 billion 0.69% Next $4 billion 0.64% Net assets in excess of $6 billion 0.63% COLUMBIA ACORN INTERNATIONAL ------------------------------------------------------------------------------- Net asset value: On the first $100 million 1.19% Next $400 million 0.94% Net assets in excess of $500 million 0.74% COLUMBIA ACORN USA ------------------------------------------------------------------------------- Net asset value: On the first $200 million 0.94% Net assets in excess of $200 million 0.89% COLUMBIA ACORN INTERNATIONAL SELECT ------------------------------------------------------------------------------- On average daily net assets: 0.94% COLUMBIA ACORN SELECT ------------------------------------------------------------------------------- Net asset value: On the first $700 million 0.85% Net assets in excess of $700 million 0.80% Prior to March 8, 2005, 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% In accordance with the terms of the Assurance of Discontinuance with the New York Attorney General (as defined and discussed further under Note 9 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 - 0.74% - up to $700 million; 0.69% - $700 million to $2 billion; 0.64% - $2 billion to $6 billion; 0.63% - $6 billion and 1-800-922-6769 72 over; COLUMBIA ACORN INTERNATIONAL - 1.19% - up to $100 million; 0.94% - $100 million to $500 million; 0.74% - $500 million and over; COLUMBIA ACORN USA - 0.94% up to $200 million; 0.89% - 200 million and over; COLUMBIA ACORN INTERNATIONAL SELECT - 0.94% on average daily net assets; COLUMBIA ACORN SELECT - 0.85% - up to $700 million; 0.80% - $700 million and over. The fee waiver was effective as of March 8, 2005 but applied as if it had gone into effect on December 1, 2004. Fees waived in accordance with the terms of the NYAG settlement are as follows for the year ended December 31, 2005: ------------------------------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $ 395 Columbia Acorn International 39 Columbia Acorn USA 16 Columbia Acorn International Select 1 Columbia Acorn Select 117 ------------------------------------------------------------------------------- For the year ended December 31, 2005, the Funds' effective investment advisory fee rates were as follows: ------------------------------------------------------------------------------- Columbia Acorn Fund 0.64% Columbia Acorn International 0.79% Columbia Acorn USA 0.89% Columbia Acorn International Select 0.94% Columbia Acorn Select 0.82% ------------------------------------------------------------------------------- >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 Select 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. Expenses reimbursed by Columbia WAM for Columbia Acorn International Select for the year ended December 31, 2005 were $30,833. 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, 2005 each Fund's effective administration fee rate was 0.042%. Columbia Management Distributors, Inc. (formerly Columbia Funds Distributor, Inc.) ("CMDI"), a 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, 2005, Columbia Acorn Fund, Columbia Acorn International, Columbia Acorn USA, Columbia Acorn International Select and Columbia Acorn Select have been advised that CMDI retained $1,261,138 in underwriting discounts on the sale of Class A shares and received CDSCs of $2,749,648 and $87,513, on Class B and Class C share redemptions, respectively. Each Fund has adopted a 12b-1 plan which requires it to pay CMDI 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 CMDI 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. Columbia Management Services, Inc. (formerly Columbia Funds Services, Inc.) (the "Transfer Agent"), a wholly owned subsidiary of BOA, provides shareholder services to the Funds and has contracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. 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. The Transfer Agent has agreed to waive the reimbursement for certain out-of-pocket expenses. Expenses reimbursed by the Transfer Agent for the year ended December 31, 2005 were as follows: ----------------------------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $ 1,848 Columbia Acorn International 379 Columbia Acorn USA 122 Columbia Acorn International Select 21 Columbia Acorn Select 294 ----------------------------------------------------------------------------- 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, 2005 were as follows: ----------------------------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $ 602 Columbia Acorn International 109 Columbia Acorn USA 46 Columbia Acorn International Select 18 Columbia Acorn Select 90 ----------------------------------------------------------------------------- 73 COLUMBIA ACORN FAMILY OF FUNDS >NOTES TO FINANCIAL STATEMENTS, CONTINUED The Board of Trustees appointed a Chief Compliance officer to the Trust in accordance with federal securities regulations. The Funds, along with other affiliated 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 expenses" 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, 2005, 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, 49 and 56, respectively. During the year ended December 31, 2005, the Funds engaged in purchase and sale transactions with funds that have a common investment adviser (or affiliated investment advisers), 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: PURCHASES SALES ------------------------------------------------------------------------------- (IN THOUSANDS) Columbia Acorn Fund $ 3,046 $ 1,713 Columbia Acorn International 5,602 623 Columbia Acorn USA -- 311 Columbia Acorn International Select 6,139 92 Columbia Acorn Select -- 912 5. Borrowing Arrangements The Trust participates in a $150 million credit facility, that was entered into to facilitate portfolio liquidity. Interest is charged to each participating fund based on its borrowings at a 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, 2005. 6. Investment Transactions The aggregate cost of purchases and proceeds from sales other than short-term obligations for the year ended December 31, 2005 were: COLUMBIA ACORN FUND ------------------------------------------------------------------------------- (IN THOUSANDS) Investment securities Purchases $ 3,451,637 Proceeds from sales 2,262,146 ------------------------------------------------------------------------------- COLUMBIA ACORN INTERNATIONAL ------------------------------------------------------------------------------- (IN THOUSANDS) Investment securities Purchases $ 1,029,877 Proceeds from sales 628,469 ------------------------------------------------------------------------------- COLUMBIA ACORN USA ------------------------------------------------------------------------------- (IN THOUSANDS) Investment securities Purchases $ 319,226 Proceeds from sales 119,923 ------------------------------------------------------------------------------- COLUMBIA ACORN INTERNATIONAL SELECT ------------------------------------------------------------------------------- (IN THOUSANDS) Investment securities Purchases $ 54,877 Proceeds from sales 27,790 ------------------------------------------------------------------------------- COLUMBIA ACORN SELECT ------------------------------------------------------------------------------- (IN THOUSANDS) Investment securities Purchases $ 737,121 Proceeds from sales 266,327 ------------------------------------------------------------------------------- 7. Redemption Fees For the year ended December 31, 2005, the redemption fees for the Class Z shares of Columbia Acorn International and Columbia Acorn International Select amounted to $65,351 and $9,133, respectively and are accounted for as additions to paid in capital. 8. Other During the year ended December 31, 2005, and as a result of an error, Columbia Acorn Select purchased shares of AnswerThink that were subsequently sold at a loss of $194,031. The Fund was reimbursed by Columbia WAM for the full amount of the loss. 9. Legal Proceedings The Trust, Columbia WAM and the Trustees of the Trust are named as defendants in class and derivative complaints that have been consolidated in a Multi-District Action in the federal district court for the District of Maryland. These 1-800-922-6769 74 lawsuits contend that defendants permitted certain investors to market time their trades in certain Columbia Acorn Funds. The Multi-District Action is ongoing. However, all claims against Columbia Acorn Trust and the independent trustees of Columbia Acorn Trust have been dismissed. Columbia WAM, the Columbia Acorn Funds and the Trustees of the Trust are also defendants in a consolidated lawsuit filed in the federal district court of Massachusetts 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. All claims against all defendants in this lawsuit have been dismissed. However, the plaintiffs have filed a notice of appeal with the First Circuit Court of Appeals. 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. The Seventh Circuit ruled that the plaintiffs' state law claims were preempted under federal law resulting in the dismissal of plaintiffs' complaint. However, plaintiffs are in the process of appealing that decision before the United States Supreme Court. On March 21, 2005, a class action complaint was filed against the Columbia Acorn Trust and Columbia WAM seeking to rescind the Contingent Deferred Sales Charges assessed upon redemption of Class B shares of Columbia Acorn Funds due to the alleged market timing of the Columbia Acorn Funds. In addition to the rescission of sales charges, plaintiffs seek recovery of actual damages, attorneys' fees and cost. The case has been transferred to the Multi-District Action in the federal district court of Maryland. The Trust and Columbia WAM intend to defend these suits vigorously. 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. However, based on currently available information, the Columbia Acorn Trust believes that the likelihood that these lawsuits will have a material adverse impact on any Fund is remote, and Columbia WAM believes that the lawsuits are not likely to materially affect its ability to provide investment management services to the Funds. For the year ended December 31, 2005, 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 $ 1,244 Columbia Acorn International 201 Columbia Acorn USA 85 Columbia Acorn International Select 6 Columbia Acorn Select 127 ------------------------------------------------------------------------------- 75 COLUMBIA THERMOSTAT FUND >STATEMENT OF INVESTMENTS, DECEMBER 31, 2005 NUMBER OF SHARES OR PRINCIPAL AMOUNT (000) VALUE (000) ----------------------------------------------------------------------------- >BOND FUNDS: 55.3% 6,320,154 Columbia Intermediate Bond Fund, Class Z $ 56,186 3,200,946 Columbia Federal Securities Fund, Class Z 33,674 2,646,607 Columbia Conservative High Yield Fund, Class Z 22,470 ----------------------------------------------------------------------------- TOTAL BOND FUNDS (COST: $113,091) 112,330 >STOCK FUNDS: 44.5% 1,657,847 Columbia Large Cap Enhanced Core Fund, Class Z 22,464 1,486,026 Columbia Dividend Income Fund, Class Z 18,070 412,119 Columbia Acorn International, Class Z 13,781 484,364 Columbia Acorn Fund, Class Z 13,644 979,072 Columbia Large Cap Value Fund, Class Z 13,531 397,883 Columbia Acorn Select, Class Z 9,060 ----------------------------------------------------------------------------- TOTAL STOCK FUNDS (COST: $82,765) 90,550 SHORT-TERM OBLIGATION: 0.3% $674 Repurchase Agreement with State Street Bank & Trust dated 12/30/06, due 1/3/06 at 3.75% collateralized by Federal Home Loan Mortgage Discount Notes, maturing 5/2/06 market value $689 (repurchase proceeds: $674) 674 ----------------------------------------------------------------------------- (COST: $674) 674 -------- TOTAL INVESTMENTS: 100.1% 203,554 (COST: $196,530) (a) CASH AND OTHER ASSETS LESS LIABILITIES: (0.1)% (198) -------- TOTAL NET ASSETS - 100% $203,356 ============================================================================= >NOTES TO STATEMENT OF INVESTMENTS (IN THOUSANDS) (a) At December 31, 2005, for federal income tax purposes cost of investments was $197,047 and net unrealized appreciation was $6,507 consisting of gross unrealized appreciation of $7,814 and gross unrealized depreciation of $1,307. 1-800-922-6769 76 COLUMBIA THERMOSTAT FUND >STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2005 ----------------------------------------------------------------------------- (IN THOUSANDS) ASSETS: Unaffiliated investments, at value (cost: $674) $ 674 Affiliated investments, at value (cost: $195,856) 202,880 Cash --* Receivable for: Fund shares sold 329 Dividends and interest 507 Expense reimbursement due from Investment Adviser 72 ----------------------------------------------------------------------------- Total Assets 204,462 LIABILITIES: Payable for: Investments purchased 507 Fund shares redeemed 414 Distributions --* Transfer agent fees 25 Trustees' fees 1 Custody fees 1 Reports to shareholders 39 12b-1 Service & Distribution fees 102 Other liabilities 17 ----------------------------------------------------------------------------- Total Liabilities 1,106 ----------------------------------------------------------------------------- NET ASSETS $ 203,356 ============================================================================= COMPOSITION OF NET ASSETS: Paid in capital $ 193,069 Undistributed net investment income 142 Accumulated net realized gain 3,121 Net unrealized appreciation on investments 7,024 ----------------------------------------------------------------------------- NET ASSETS $ 203,356 ============================================================================= Net asset value per share - Class A (a) $ 12.49 (Net assets/shares) ($71,034/5,687) Maximum offering price per share - Class A (b) $ 13.25 (Net asset value per share/front-end sales charge) ($12.49/0.9425) Net asset value and offering price per share - Class B (a) $ 12.51 (Net assets/shares) ($78,444/6,270) Net asset value and offering price per share - Class C (a) $ 12.51 (Net assets/shares) ($28,316/2,263) Net asset value, offering and redemption price per share - Class Z $ 12.50 (Net assets/shares) ($25,562/2,044) * Rounds to less than $500. (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. 77 COLUMBIA THERMOSTAT FUND >STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2005 (IN THOUSANDS) ----------------------------------------------------------------------------- INVESTMENT INCOME: Dividends from affiliated investment company shares $ 7,123 Interest income 25 ----------------------------------------------------------------------------- Total Investment Income 7,148 EXPENSES: Management fee 205 Administration fee 87 12b-1 Service and Distribution fees: Class A 182 Class B 670 Class C 299 Transfer agent fees: Class A 99 Class B 139 Class C 50 Class Z 23 Trustees' fees 11 Custody fees 5 Reports to shareholders 114 Compliance expenses 6 Non-recurring costs (See Note 7) 17 Other expenses 121 ----------------------------------------------------------------------------- Total expenses 2,028 Less custody fees paid indirectly --* Less reimbursement of expenses by Investment Adviser (300) Less reimbursement of expenses by Transfer Agent (47) Non-recurring costs reimbursed (See Note 7) (17) ----------------------------------------------------------------------------- Net Expenses 1,664 ----------------------------------------------------------------------------- Net Investment Income 5,484 NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on: Affiliated investments 13,060 Distributions from affiliated investment company shares 1,640 ----------------------------------------------------------------------------- Net realized gain 14,700 Net change in unrealized appreciation (depreciation) on affiliated investments (10,409) ----------------------------------------------------------------------------- Net realized and unrealized gain 4,291 ----------------------------------------------------------------------------- Net Increase in Net Assets from Operations $ 9,775 ============================================================================= * Rounds to less than $500. See accompanying notes to financial statements. 1-800-922-6769 78 COLUMBIA THERMOSTAT FUND >STATEMENT OF CHANGES IN NET ASSETS
Year ended Year ended INCREASE (DECREASE) IN NET ASSETS December 31, December 31, ---------------------------------------------------------------------------------------------- (IN THOUSANDS) 2005 2004 OPERATIONS: Net investment income $ 5,484 $ 3,334 Net realized gain on affiliated investments and distributions from affiliated investment company shares 14,700 3,692 Net change in net unrealized appreciation (depreciation) on affiliated investments (10,409) 8,154 ---------------------------------------------------------------------------------------------- Net Increase from Operations 9,775 15,180 DISTRIBUTIONS DECLARED TO SHAREHOLDERS FROM: Net investment income -- Class A (2,069) (1,488) Net realized gain -- Class A (4,875) (141) Net investment income -- Class B (1,831) (997) Net realized gain -- Class B (5,382) (146) Net investment income -- Class C (617) (383) Net realized gain -- Class C (1,972) (61) Net investment income -- Class Z (797) (450) Net realized gain -- Class Z (1,697) (36) ---------------------------------------------------------------------------------------------- Total Distributions to Shareholders (19,240) (3,702) SHARE TRANSACTIONS: Subscriptions -- Class A 15,104 42,302 Distributions reinvested -- Class A 6,273 1,425 Redemptions -- Class A (24,089) (13,080) ---------------------------------------------------------------------------------------------- Net Increase (Decrease) -- Class A (2,712) 30,647 Subscriptions -- Class B 8,919 27,802 Distributions reinvested -- Class B 6,512 1,024 Redemptions -- Class B (11,391) (6,671) ---------------------------------------------------------------------------------------------- Net Increase -- Class B 4,040 22,155 Subscriptions -- Class C 5,664 12,939 Distributions reinvested -- Class C 2,303 378 Redemptions -- Class C (9,480) (4,000) ---------------------------------------------------------------------------------------------- Net Increase (Decrease) -- Class C (1,513) 9,317 Subscriptions -- Class Z 5,843 8,408 Distributions reinvested -- Class Z 2,384 470 Redemptions -- Class Z (2,485) (3,140) ---------------------------------------------------------------------------------------------- Net Increase -- Class Z 5,742 5,738 ---------------------------------------------------------------------------------------------- Net Increase from Share Transactions 5,557 67,857 ---------------------------------------------------------------------------------------------- Total Increase (Decrease) in Net Assets (3,908) 79,335 ---------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 207,264 127,929 ---------------------------------------------------------------------------------------------- End of period $ 203,356 $ 207,264 ============================================================================================== UNDISTRIBUTED NET INVESTMENT INCOME $ 142 $ 15 ==============================================================================================
See accompanying notes to financial statements. 79 COLUMBIA THERMOSTAT FUND >STATEMENT OF CHANGES IN NET ASSETS, CONTINUED
Year ended Year ended December 31, December 31, CHANGES IN SHARES OF BENEFICIAL INTEREST: ---------------------------------------------------------------------------------------------- (IN THOUSANDS) 2005 2004 Subscriptions -- Class A 1,151 3,381 Shares issued in reinvestment and capital gains -- Class A 497 110 Less shares redeemed -- Class A (1,840) (1,049) ---------------------------------------------------------------------------------------------- Net Increase (Decrease) -- Class A (192) 2,442 Subscriptions -- Class B 684 2,213 Shares issued in reinvestment and capital gains -- Class B 515 79 Less shares redeemed -- Class B (870) (530) ---------------------------------------------------------------------------------------------- Net Increase -- Class B 329 1,762 Subscriptions -- Class C 434 1,028 Shares issued in reinvestment and capital gains -- Class C 182 29 Less shares redeemed -- Class C (725) (316) ---------------------------------------------------------------------------------------------- Net Increase (Decrease) -- Class C (109) 741 Subscriptions -- Class Z 446 669 Shares issued in reinvestment and capital gains -- Class Z 189 36 Less shares redeemed -- Class Z (189) (250) ---------------------------------------------------------------------------------------------- Net Increase -- Class Z 446 455 ---------------------------------------------------------------------------------------------- Net Increase in Shares of Beneficial Interest 474 5,400 ----------------------------------------------------------------------------------------------
See accompanying notes to financial statements. 1-800-922-6769 80 COLUMBIA THERMOSTAT FUND >FINANCIAL HIGHLIGHTS
Inception March 3, 2003 Year ended through Class A Shares December 31, December 31, ---------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 NET ASSET VALUE, BEGINNING OF PERIOD $ 13.11 $ 12.30 $ 10.10 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) 0.39 0.28 0.18 Net realized and unrealized gain 0.29 0.81 2.15 ---------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 0.68 1.09 2.33 ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.39) (0.25) (0.13) From net realized gains (0.91) (0.03) (0.00)(b) ---------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (1.30) (0.28) (0.13) ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.49 $ 13.11 $ 12.30 ====================================================================================================================== Total Return (c)(d) 5.25% 8.92% 23.10%(e) ---------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (f)(g) 0.50% 0.50% 0.57%(h) Net investment income (g) 2.97% 2.23% 1.86%(h) Reimbursement 0.15% 0.33% 0.66%(h) Portfolio turnover rate 96% 67% 61% Net assets at end of period (000'S) $71,034 $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) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Investment Adviser 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.
Inception March 3,2003 Year ended through Class B Shares December 31, December 31, ---------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 NET ASSET VALUE, BEGINNING OF PERIOD $ 13.14 $ 12.32 $ 10.10 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) 0.31 0.19 0.10 Net realized and unrealized gain 0.28 0.83 2.16 ----------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 0.59 1.02 2.26 ----------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.31) (0.17) (0.04) From net realized gains (0.91) (0.03) (0.00)(b) ----------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (1.22) (0.20) (0.04) ----------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.51 $ 13.14 $ 12.32 ======================================================================================================================= Total Return (c)(d) 4.56% 8.27% 22.38%(e) ----------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (f)(g) 1.10% 1.18% 1.32%(h) Net investment income (g) 2.39% 1.55% 1.06%(h) Reimbursement 0.19% 0.29% 0.66%(h) Portfolio turnover rate 96% 67% 61% Net assets at end of period (000'S) $78,444 $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) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Investment Adviser 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.
Inception March 3,2003 Year ended through Class C Shares December 31, December 31, ---------------------------------------------------------------------------------------------------------------------- SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD 2005 2004 2003 NET ASSET VALUE, BEGINNING OF PERIOD $ 13.13 $ 12.32 $ 10.10 INCOME FROM INVESTMENT OPERATIONS Net investment income (a) 0.29 0.19 0.11 Net realized and unrealized gain 0.29 0.81 2.15 ---------------------------------------------------------------------------------------------------------------------- Total from Investment Operations 0.58 1.00 2.26 ---------------------------------------------------------------------------------------------------------------------- LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income (0.29) (0.16) (0.04) From net realized gains (0.91) (0.03) (0.00)(b) ---------------------------------------------------------------------------------------------------------------------- Total Distributions Declared to Shareholders (1.20) (0.19) (0.04) ---------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE, END OF PERIOD $ 12.51 $ 13.13 $ 12.32 ====================================================================================================================== Total Return (c)(d) 4.49% 8.13% 22.38%(e) ---------------------------------------------------------------------------------------------------------------------- RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA Expenses (f)(g) 1.25% 1.25% 1.32%(h) Net investment income (g) 2.21% 1.48% 1.10%(h) Reimbursement 0.19% 0.26% 0.66%(h) Portfolio turnover rate 96% 67% 61% Net assets at end of period (000'S) $28,316 $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) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (d) Had the Investment Adviser 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. See accompanying notes to financial statements. 81 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. 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. 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 adviser. As of December 31, 2005, the Fund invested in six stock Portfolio Funds (Columbia Acorn Fund, Columbia Acorn Select Fund, Columbia Large Cap Value Fund, Columbia Acorn International, Columbia Dividend Income Fund and Columbia Large Cap Enhanced Core Fund) and three bond Portfolio Funds (Columbia Federal Securities Fund, Columbia Intermediate Bond Fund and Columbia Conservative 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. 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 Investments in Portfolio Funds are valued at their net asset value as reported by the underlying funds. 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 adviser 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. 1-800-922-6769 82 >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 (the "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. >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 on 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. >Indemnification In the normal course of business, the Fund enters into contracts that contain a variety of representations and warranties and which provide general indemnities. The Fund's maximum exposure under these arrangements is unknown, as this would involve future claims against the Fund. Also, under the Trust's organizational documents, the Trustees and Officers of the Trust are indemnified against certain liabilities that may arise out of their duties to the Trust. However, based on experience, the Fund expects the risk of loss due to these warranties and indemnities to be minimal. 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 GAAP. 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, 2005, permanent book and tax basis differences resulting primarily from 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 -------------------------------------------------------------------------- $ (43) $ (1,001) $ 1,044 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 years ended December 31, 2005 and December 31, 2004 was as follows: DECEMBER 31, DECEMBER 31, 2005 2004 --------------------------------------------------------------------------- (IN THOUSANDS) Distributions paid from: Ordinary Income* $ 8,262 $ 3,645 Long-Term Capital Gains 10,978 57 * For tax purposes short-term capital gains distributions, if any, are considered ordinary income distributions. As of December 31, 2005, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM NET UNREALIZED INCOME CAPITAL GAINS APPRECIATION* --------------------------------------------------------------------------- $ 219 $ 3,573 $ 6,507 * The differences between book-basis and tax-basis net unrealized appreciation are primarily due to deferral of losses from wash sales. 4. Transactions with Affiliates Columbia Wanger Asset Management, L.P. ("Columbia WAM"), a wholly owned subsidiary of Columbia Management Group, Inc., which in turn is an indirect, 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. 83 COLUMBIA THERMOSTAT FUND >NOTES TO FINANCIAL STATEMENTS, CONTINUED 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 12b-1 service and distribution 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. Fees reimbursed amounted to $300,426 for the year ended December 31, 2005. Columbia WAM had the right to recoup expense reimbursement payments made to the Fund through December 31, 2005. No expenses were recouped through December 31, 2005. 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, 2005, the Fund's effective administration fee rate was 0.042%. Columbia Management Distributors, Inc. (formerly Columbia Funds Distributor, Inc.) ("CMDI"), a wholly owned subsidiary of BOA, is the Funds' principal indirect underwriter and receives no compensation on the sale of Class Z shares. For the year ended December 31, 2005, the Fund has been advised that CMDI retained $61,761 in underwriting discounts on the sale of Class A shares and received CDSCs of $5, $183,010 and $942, respectively, on Class A, Class B and Class C share redemptions, respectively. The Fund has adopted a 12b-1 plan which requires it to pay CMDI 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 to pay CMDI 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. Columbia Management Services, Inc. (formerly Columbia Funds Services, Inc.) (the "Transfer Agent"), a wholly owned subsidiary of BOA, provides shareholder services to the Fund and has contracted with Boston Financial Data Services ("BFDS") to serve as sub-transfer agent. 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. The Transfer Agent has agreed to waive the reimbursement for certain out-of-pocket expenses. Expenses reimbursed by the Transfer Agent for the year ended December 31, 2005 were $46,783. 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, 2005 were $11,411. The Board of Trustees appointed a Chief Compliance Officer to the Trust in accordance with federal securities regulations. The Fund, along with other affiliated funds, 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 expenses" 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 a 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, 2005. 6. Investment Transactions The aggregate cost of purchases and proceeds from sales other than short-term obligations for the year ended December 31, 2005 were: -------------------------------------------------------------------------------- (IN THOUSANDS) Purchases $ 197,083 Proceeds from sales 202,897 ================================================================================ 1-800-922-6769 84 7. Legal Proceedings The Trust, Columbia WAM and the Trustees of the Trust are named as defendants in class and derivative complaints which have been consolidated in a Multi-District Action in the federal district court for the District of Maryland. These lawsuits contend that defendants permitted certain investors to market time their trades in certain Columbia Acorn Funds. The Multi-District Action is ongoing. However, all claims against Columbia Acorn Trust and independent trustees of Columbia Acorn Trust have been dismissed. Columbia WAM, the Columbia Acorn Funds and the Trustees of the Trust are also defendants in a consolidated lawsuit filed in the federal district court of Massachusetts 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. All claims against all defendants in this lawsuit have been dismissed. However, the plaintiffs have filed a notice of appeal with the First Circuit Court of Appeals. 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. The Seventh Circuit ruled that the plaintiffs' state law claims were preempted under federal law resulting in the dismissal of plaintiffs' complaint. However, plaintiffs are in the process of appealing that decision before the United States Supreme Court. On March 21, 2005, a class action complaint was filed against the Columbia Acorn Trust and Columbia WAM seeking to rescind the Contingent Deferred Sales Charges assessed upon redemption of Class B shares of Columbia Acorn Funds due to the alleged market timing of the Columbia Acorn Funds. In addition to the rescission of sales charges, plaintiffs seek recovery of actual damages, attorneys' fees and cost. The case has been transferred to the Multi-District Action in the federal district court of Maryland. The Trust and Columbia WAM intend to defend these suits vigorously. 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. However, based on currently available information, the Columbia Acorn Trust believes that the likelihood that these lawsuits will have a material adverse impact on any Fund is remote, and Columbia WAM believes that the lawsuits are not likely to materially affect its ability to provide investment management services to the Funds. For the year ended December 31, 2005, Columbia Management has assumed $17,329 of consulting services and legal fees incurred by the Fund in connection with these matters. 85 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, changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Columbia Acorn Fund, Columbia Acorn International Fund, Columbia Acorn USA, Columbia Acorn International Select, Columbia Acorn Select and Columbia Acorn Thermostat Fund (each a series of Columbia Acorn Trust, hereinafter referred to as the "Funds") at December 31, 2005, the results of each of their operations for the year then ended, the changes in each of their net assets and the financial highlights for the two years in the period 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, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the Funds for the periods ended December 31, 2003 and prior were audited by other independent auditors whose report dated February 6, 2004 expressed an unqualified opinion on those financial statements. PricewaterhouseCoopers LLP Chicago, Illinois February 22, 2006 1-800-922-6769 86 COLUMBIA ACORN FAMILY OF FUNDS >UNAUDITED INFORMATION FEDERAL INCOME TAX INFORMATION (IN THOUSANDS) COLUMBIA ACORN FUND For the fiscal year ended December 31, 2005, the Fund designates long-term capital gains of $877,787. 100.00% of the ordinary income distributed by the Fund, for the year ended December 31, 2005, 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, 2005 to December 31, 2005 may represent qualified dividend income. Final information will be provided in your 2005 1099-Div Form. COLUMBIA ACORN INTERNATIONAL For the fiscal year ended December 31, 2005, the Fund designates long-term capital gains of $141,432. Foreign taxes paid during the fiscal year ended December 31, 2005, amounting to $4,028 ($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, 2005. 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, 2005 to December 31, 2005 may represent qualified dividend income. Final information will be provided in your 2005 1099-Div Form. COLUMBIA ACORN USA For the fiscal year ended December 31, 2005, the Fund designates long-term capital gains of $48,858. 100.00% of the ordinary income distributed by the Fund, for the year ended December 31, 2005, 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, 2005 to December 31, 2005 may represent qualified dividend income. Final information will be provided in your 2005 1099-Div Form. COLUMBIA ACORN INTERNATIONAL SELECT Foreign taxes paid during the fiscal year ended December 31, 2005, amounting to $112 ($0.02 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, 2005. Gross income derived from sources within foreign countries amounted to $1,614 ($0.35 per share) for the fiscal year ended December 31, 2005. 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, 2005 to December 31, 2005 may represent qualified dividend income. Final information will be provided in your 2005 1099-Div Form. COLUMBIA ACORN SELECT For the fiscal year ended December 31, 2005, the Fund designates long-term capital gains of $33,169. 100.00% of the ordinary income distributed by the Fund, for the year ended December 31, 2005, 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, 2005 to December 31, 2005 may represent qualified dividend income. Final information will be provided in your 2005 1099-Div Form. COLUMBIA THERMOSTAT FUND For the fiscal year ended December 31, 2005, the Fund designates long-term capital gains of $14,090. 87 [Excerpts from:] COLUMBIA ACORN TRUST Management Fee Evaluation of the Senior Officer Prepared Pursuant to the New York Attorney General's Assurance of Discontinuance July 2005 1-800-922-6769 88 INTRODUCTION The New York Attorney General's Assurance of Discontinuance ("Order") entered into by Columbia Management Advisors, Inc. ("CMAI") and Columbia Management Distributor, Inc., ("CMDI" and collectively with "CMAI", "CM") in February 2005, allows CMAI to manage or advise a mutual fund, including the Acorn Trust's family of funds (the "Acorn Funds" or "Acorn" or "Trust"), only if the trustees of the Acorn Funds appoint a "Senior Officer" to perform specified duties and responsibilities. One of these responsibilities includes "managing the process by which proposed management fees (including but not limited to, advisory fees) to be charged the Acorn Funds are negotiated so that they are negotiated in a manner that is at arms' length and reasonable and consistent with this Assurance of Discontinuance." The Order also provides that the Board of Trustees of the Acorn Funds ("Board") must determine the reasonableness of proposed "management fees" by using either an annual competitive bidding process supervised by the Senior Officer or Independent Fee Consultant, or by obtaining "an annual independent written evaluation prepared by or under the direction of the Senior Officer or the Independent Fee Consultant." "Management fees" are only part of the costs and expenses paid by mutual fund shareholders. The expenses can vary depending upon the class of shares held but usually include: (1) investment management or advisory fees to compensate analysts and portfolio managers for stock research and portfolio management, as well as the cost of operating a trading desk; (2) administrative expenses incurred to prepare registration statements and tax returns, calculate the Funds' net asset values, maintain effective compliance procedures and perform recordkeeping services; (3) transfer agency costs for establishing accounts, accepting and disbursing funds, as well as overseeing trading in Fund shares; (4) custodial expenses incurred to hold the securities purchased by the Funds; and (5) distribution expenses, including commissions paid to brokers that sell the Fund shares to investors. Columbia Wanger Asset Management, L.P. ("CWAM"), the adviser to the Acorn Funds, has proposed that the Trust enter into separate agreements governing the first two categories listed above: an advisory agreement governing portfolio management, and an administration agreement governing certain administration and clerical services. Together the fees paid under these two agreements are referred to as "management fees." Other fund expenses are governed by separate agreements, in particular agreements with two CWAM affiliates: CMDI, the broker-dealer that underwrites and distributes the Acorn Funds' shares, and Columbia Funds Services, Inc. ("CFSI"), the Funds' transfer agent. In conformity with the terms of the Order, this evaluation, therefore, addresses only the advisory and administrative contracts between CWAM and the Trust, and does not extend to the other agreements. According to the Order, the Senior Officer's evaluation must consider at least the following: (1) Management fees (including components thereof) charged to institutional and other clients of CWAM for like services; (2) Management fees (including any components thereof) charged by other mutual fund companies for like services; (3) Costs to CWAM and its affiliates of supplying services pursuant to the management fee agreements, excluding any intra-corporate profit; (4) Profit margins of CWAM and its affiliates from supplying such services; (5) Possible economies of scale as the Acorn Funds grow larger; and (6) The nature and quality of CWAM's services, including the performance of each Acorn Fund. 89 On November 16, 2004, the Board appointed me, Robert Scales, Senior Officer under the Order. The Board also determined not to pursue a competitive bidding process and instead, charged me with the responsibility of evaluating the Acorn Funds' proposed advisory and administrative fee contracts with CWAM in conformity with the requirements of the Order. This Report is an annual evaluation required under the Order. In discharging their responsibilities, the independent Trustees have also consulted independent, outside counsel. * * * This evaluation was performed in cooperation and regular communication with the Investment Advisory Committee of the Board of Trustees. PROCESS AND INDEPENDENCE The objectives of the Order are to insure the independent evaluation of the advisory fees paid by the Acorn Funds as well as to insure that all relevant factors are considered. In my view, the contract renewal process has been conducted at arms-length and with independence in gathering, considering and evaluating relevant data. For example, the selection of fund peer groups is critical in assessing a fund's relative performance and cost. I have required Lipper and Morningstar Inc. to prepare their reports without input or commentary from CWAM; the engagement letters with them reflect this requirement. As a result, the peer groups reflected in the Morningstar Inc. and Lipper reports were determined independently. After submission of the reports, I asked CWAM to comment on them to avoid errors and to establish a clear record of CWAM's views on which funds, in its judgment, constitute an appropriate peer group. Similarly, I discussed CWAM's profitability analysis with its management but also sought the independent views of Ernst & Young, an outside consultant, on the reasonableness of CWAM's cost allocation methodology and on the adequacy of the financial data it provided. The evaluation of CWAM's profitability was performed in the context of the limited industry data available. My evaluation of the advisory contract was shaped by my experience as Acorn's Chief Compliance Officer ("CCO"). As CCO, I report solely to the Board and have no reporting obligation to or employment relationship with CM or its affiliates, except for administrative purposes. This too contributes to the independence of this evaluation. I have made several comments on compliance matters in evaluating the quality of service provided by CWAM and CM. Finally, this Report, its supporting materials and the data contained in other materials submitted to the Investment Advisory Committee of the Board, in my view, provide a thorough factual basis upon which the Board, in consultation with independent counsel as it deems appropriate, may conduct management fee negotiations that are in the best interests of the Acorn Funds' shareholders. 1-800-922-6769 90 * * * VI. CONCLUSIONS My review of the data and other material above leads to the following conclusions with respect to the factors identified in the Order. 1. Performance. The Acorn Funds generally have achieved outstanding performance. The Acorn Fund, Acorn USA and Acorn Select all rank very favorably against their peers. The international funds have good recent performance records, but weaker long-term performance relative to the other, domestic Acorn Funds. Recent management changes have been followed by improved performance. The Acorn Funds typically achieve their performance with less risk than their competitors. 2. Management Fees relative to Peers. The management fee rankings of the Funds - particularly on the basis of a combined advisory and administrative fee basis - are generally above the respective medians and, hence, more favorable to shareholders than their peer group funds. Management fees do vary by Fund, with the Acorn Fund the least expensive and the Acorn USA Fund the most expensive. Acorn USA is the only fund that both Lipper and Morningstar Inc. ranked below the median. 3. Administrative Fees. The Acorn Funds' administrative fee, which is uniform across all Funds, is at a level comparable to that of its peers, provides for appropriate services to the Funds, and affords breakpoints that lower the fee as assets increase. 4. Management Fees relative to Institutional and Other Mutual Fund Accounts. CWAM's focus is on its mutual funds. It does not actively seek to manage separate or institutional accounts. The few institutional accounts it does manage vary in rate structures. Some pay advisory fees commensurate with or higher than the Acorn Funds. In a few instances, however, institutional accounts pay lower advisory fees than do the Acorn Funds. One particular institutional account is significant in size and has been under CWAM's management for over 25 years. Finally, in two instances, the Acorn Funds pay slightly higher fees than do similar funds sold through insurance companies. 5. Costs to CWAM and its Affiliates. CWAM's costs do not appear excessive, and, in my view, it uses appropriate methodologies to allocate overhead costs. CWAM's affiliates do not appear to profit indirectly from CWAM's advisory agreement with the Acorn Funds. 6. Profit Margins. CWAM's firm-wide profit margins are at the upper end of the industry, though these comparisons are hampered by limited industry data. High profit margins are not unexpected for firms that manage large, successful funds and have provided outstanding investment performance for investors. CMAI, the Funds' administrator, currently experiences losses rather than profits in connection with its activities relating to the Acorn Funds. 7. Economies of Scale. Economies of scale do exist at CWAM and will expand as the assets of the Acorn Funds get larger. They are, however, only partially reflected in the management fee schedule for the Funds. If the Acorn Funds' assets continue to grow, under the Funds' current fee schedules, shareholders might not benefit in a manner generally commensurate with CWAM's increased profits. 91 8. Nature and quality of services. This category includes a variety of considerations that are difficult to quantify, yet can have a significant bearing on the performance of the Acorn Funds. Several areas merit comment. a. Continuity of Management. It is critical that capable and experienced portfolio managers remain committed to the Funds and are able to hire and retain analysts to assist them. CWAM must have in place appropriate incentive plans that align its management's interests with those of investors. Further, CWAM must maintain the independence of its investment process, supported by effective information technology. b. Compliance. CWAM has a reasonably designed compliance program and a variety of related services that are valuable to shareholders, such as systems to ensure best execution of portfolio transactions and the daily review of security prices to ensure accuracy of the Acorn Funds' NAV. c. Administrative Services. The Acorn Funds benefit from a variety of administrative services that are performed by CWAM and CMAI, including preparation of registration statements, calculation of NAV's, accounting services, shareholder services, and other functions. In my opinion, these conclusions, taken together, support the reasonableness of the proposed advisory and administrative fees. In reaching my evaluation, I weighed heavily the factors of performance and management fees relative to those paid by competing funds. In this respect, the Acorn Funds provide excellent performance at costs that generally fall below industry medians. VII. RECOMMENDATIONS The Trustees should consider the following proposals to address the issues identified in this Report. Some of these recommendations require the collection and evaluation of more data. This work cannot be accomplished effectively before the expiration of the existing advisory contract on July 31, 2005. Therefore, I recommend that the Trustees consider extending the existing contract pending consideration of these recommendations. These recommendations do not purport to offer the only avenues to address the opinions and conclusions I have expressed in this Report. Economies of scale, for example, can be addressed in a variety of ways in a management contract. Sound business judgment will guide how any particular area is addressed with due consideration given to all the factors that must be weighed in reaching an advisory agreement that best serves the Acorn Fund shareholders. I believe the Trustees should consider the following: 1. Restructure the advisory fee beyond the current breakpoint schedule to reflect more fully economies of scale. The Trustees might consider several ways to accomplish this objective, including instituting a two-tier fee structure that incorporates a complex- or CWAM-wide fee (including assets held in separate accounts) and a fund specific fee, with each containing breakpoints to reflect their separate economies of scale. Another approach is to consider uniform breakpoints for all Acorn Funds, including breakpoints above current asset levels. 2. Condition contract renewal on submission of an employment agreement or management incentive plan designed to ensure the continued employment of senior management, under terms that align management's incentives with the interests of the Acorn Funds' shareholders. Any incentive plan should be designed to 1-800-922-6769 92 permit CWAM to attract and retain the highest caliber investment professionals and to support them with effective and reliable information technology systems. 3. Review with CWAM its anticipated capacity limitations and the degree to which increased staffing and effective incentives may address those issues. Robert P. Scales July 20, 2005 93 BOARD APPROVAL OF THE EXISTING ADVISORY AGREEMENTS The Investment Advisory Agreement Committee (the "Committee") of the board of trustees meets on at least an annual basis and as otherwise necessary or advisable to review the advisory agreement (the "Agreement") of the Columbia Acorn Funds (the "Funds") and determines whether to recommend that the full board approve the continuation of the Agreement for an additional term. The Committee is comprised of at least three trustees, each of whom is an independent trustee. After the Committee has made its recommendation, the full board, including the independent trustees, determines whether to approve the continuation of the Agreement. In addition, the board, including the independent trustees, considers matters bearing on the Agreement at most of their other meetings throughout the year and meets at least quarterly with the portfolio managers employed by Columbia Wanger Asset Management, L.P. ("CWAM"), the Funds' investment adviser. The trustees receive all materials that they or CWAM believe to be reasonably necessary for them to evaluate the Agreement and determine whether to approve the continuation of the Agreement. Those materials generally include, among other items, (i) information on the investment performance of the Funds and the performance of peer groups of funds and of the Funds' performance benchmarks, (ii) information on the Funds' advisory fees and other expenses, including information comparing the Funds' expenses to those of peer groups of funds and information about any applicable expense caps and fee "breakpoints," (iii) share sales and redemption data, (iv) information about the profitability to CWAM and its affiliates of their relationships with the Funds and potential "fall-out" or ancillary benefits that CWAM and its affiliates may receive as a result of their relationships with the Funds and (v) information obtained through CWAM's response to a questionnaire prepared at the request of the trustees by Bell, Boyd & Lloyd LLC, independent counsel to Columbia Acorn Trust (the "Trust") and to the independent trustees. The trustees may also consider other information such as (i) CWAM's financial results and financial condition, (ii) each Fund's investment objective and strategies and the size, education and experience of CWAM's investment staffs and their use of technology, external research and trading cost measurement tools, (iii) the allocation of the Funds' brokerage, if any, including allocations to brokers affiliated with CWAM, and the use of "soft" commission dollars to pay Fund expenses or to pay for research products and services, (iv) the resources devoted to, and the record of compliance with, the Funds' investment policies and restrictions, policies on personal securities transactions and other compliance policies, (v) the response of CWAM and its affiliates to various legal and regulatory proceedings since 2003 and (vi) the economic outlook generally and for the mutual fund industry in particular. In addition, the trustees conferred with, and reviewed the Management Fee Evaluation prepared by, the Trust's Senior Officer, who was appointed by the trustees as contemplated by the Assurance of Discontinuance dated February 9, 2005 among affiliates of CWAM and the Office of the New York Attorney General. A summary of the Management Fee Evaluation is included in this report. Throughout the process, the trustees have the opportunity to ask questions of and request additional materials from CWAM. On July 20, 2005 the board of trustees most recently approved the continuation of the Agreement through October 31, 2005, and on September 27, 2005 the board approved an amended and restated Agreement (the "Amended Agreement") for an initial term ending on July 31, 2006. The board actions followed Committee meetings held in February, May, June and August 2005. The board determined in the first instance to continue the Agreement through October (rather than for a full year period) pending the resolution of the compensation and incentive plan for key CWAM employees, whose employment agreements were to terminate in December, 2005. Those matters were resolved prior to September 27. In considering whether to approve the continuation of the Agreement and to approve the amended and restated Agreement, the trustees, including the independent trustees, did not identify any single factor as determinative, and each weighed the various factors as he or she deemed appropriate. The trustees considered the following matters in connection with their continuation of the Agreement and, except as noted in connection with their approval of the Amended Agreement (collectively with the Agreement, the "Agreements"). NATURE, QUALITY AND EXTENT OF SERVICES. The trustees reviewed the nature, quality and extent of CWAM's services to the Funds, taking into account the investment objective and strategy of each Fund and the knowledge gained from the board's regular meetings with management on at least a quarterly basis. In addition, the trustees reviewed CWAM's resources and key personnel, especially those who provide investment management services to the Funds. At the September 27, 2005 meeting, the trustees considered the 1-800-922-6769 94 fact that Columbia Management Group, Inc. ("CM") and CWAM had agreed on a new compensation and incentive plan for key CWAM employees. The trustees also considered other services provided to the Funds by CWAM, such as managing the execution of portfolio transactions and the selection of broker-dealers for those transactions, providing support services for the board and board committees, communicating with shareholders and overseeing the activities of other service providers, including monitoring compliance with various Fund policies and procedures and with applicable securities laws and regulations. The trustees concluded that the nature and extent of the services provided by CWAM to each Fund were appropriate and consistent with the terms of the Agreements, that the quality of those services had been consistent with or superior to quality norms in the industry and that the Funds were likely to benefit from the continued provision of those services. They also concluded that CWAM had sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated its continuing ability to attract and retain well-qualified personnel. PERFORMANCE OF THE FUNDS. The trustees considered the short-term and longer-term performance of each Fund. They reviewed information comparing each Fund's performance with the performance of the Fund's benchmark and with the performance of comparable funds and peer groups identified by Lipper Inc. ("Lipper") and Morningstar Associates, LLC ("Morningstar"). They noted that the four domestic Funds, including Columbia Acorn Fund, Columbia Acorn USA ("Acorn USA"), Columbia Acorn Select and Columbia Thermostat, have each outperformed their respective benchmarks and Lipper and Morningstar peers. The trustees discussed the performance of the two international Funds, Columbia Acorn International and Columbia Acorn International Select, noting that while the Funds underperformed their benchmarks for the three- and five-year periods, each Fund's performance had improved over the past two years. The trustees concluded that although past performance is not necessarily indicative of future results, the Funds' improving performance record and investment process enhancements were important factors in the trustees' evaluation of the quality of services provided by CWAM under the Agreement. COSTS OF SERVICES AND PROFITS REALIZED BY CWAM. The trustees examined information on fees and expenses of each Fund in comparison to information for other comparable funds as provided by Lipper and Morningstar. They considered that both the contractual rates of advisory fees and the actual advisory fees for most of the Funds were lower than the median advisory fees of the respective peer groups. The trustees also considered that the expense ratio of each Fund was also lower than the median expense ratio of the respective peer group. They discussed the contractual rates of advisory fees and actual advisory fees of Acorn USA, which were slightly above the median advisory fees of the peer groups. The trustees noted that, although Acorn USA's fees were above the median fees, Acorn USA has had superb long-term performance, ranking first within its Lipper peer group for the three, four and five-year periods. At the July 20, 2005 board meeting, the trustees concluded that they should continue to evaluate the investment advisory fee rates for Acorn USA, which culminated in the September 27, 2005 board approval of the Amended Agreement, which provides a new breakpoint for Columbia Acorn USA's fee schedule, reducing fees by 0.05% on net assets in excess of $500 million. The trustees reviewed information on the profitability of CWAM in serving as each Fund's investment adviser and of CWAM and its affiliates in all of their relationships with each Fund, as well as an explanation of the methodology utilized in allocating various expenses among the Funds and other business units. The trustees considered the methodology used by CWAM in determining compensation payable to portfolio managers and the very competitive environment for investment management talent. The trustees recognized that profitability comparisons among fund managers are difficult because very little comparative information is publicly available and profitability of any manager is affected by numerous factors, including the organizational structure of the particular manager, the types of funds and other accounts it manages, possible other lines of business, the methodology for allocating expenses and the manager's capital structure and cost of capital. However, based on the information available and taking those factors into account, the trustees concluded that the profitability of CWAM regarding each Fund in relation to the services rendered was not unreasonable. The trustees also reviewed CWAM's advisory fees for its institutional separate accounts. Although in most instances its institutional separate account fees for various investment strategies were lower than the advisory fees charged to the Funds with corresponding strategies, the trustees noted that CWAM performs significant additional 95 BOARD APPROVAL OF THE EXISTING ADVISORY AGREEMENTS, CONTINUED services for the Funds that it does not provide to those other clients, including administrative services, oversight of the Funds' other service providers, trustee support, regulatory compliance and numerous other services. Finally, the trustees considered the financial condition of CWAM, which they found to be sound. The trustees concluded that the advisory fees and other compensation payable by the Funds to CWAM and its affiliates were reasonable in relation to the nature and quality of the services to be provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies and the fees CWAM charges to other clients. The trustees noted, however, that they would continue to evaluate the Funds' investment advisory fee rates. The trustees also concluded that the Funds' estimated overall expense ratios, taking into account quality of services provided by CWAM and the investment performance of the Funds, were reasonable. ECONOMIES OF SCALE. The trustees noted that the advisory fee schedule for each Fund except Columbia Acorn International Select and Columbia Thermostat Fund contains one or more breakpoints that reduce the fee rate on assets above specified levels. The trustees received and discussed information concerning whether CWAM realizes economies of scale as a Fund's assets increase. The trustees concluded that the fee schedule for each Fund currently in effect represents a sharing of economies of scale at current asset levels but concluded to continue their periodic consideration of the Funds' fee structures and economies of scale. OTHER BENEFITS TO CWAM. The trustees also considered benefits that accrue to CWAM and its affiliates from their relationship with the Funds. The trustees concluded that, other than the services to be provided by CWAM and its affiliates pursuant to the Agreement and the fees payable by the Funds therefor, the Funds and CWAM may potentially benefit from their relationship with each other in other ways. Recognizing that affiliates of CWAM serve the Funds as distributor and transfer agent and receive compensation from the Funds for those services, the trustees determined that such compensation was not unreasonable. The trustees also considered CWAM's use of commissions to be paid by the Funds on their portfolio brokerage transactions to obtain proprietary research products and services benefiting the Funds and/or other clients of CWAM. The trustees concluded that CWAM's use of "soft" commission dollars to obtain research products and services was consistent with regulatory requirements and is beneficial to the Funds. They concluded that, although CWAM derives or may derive additional benefits through the use of soft dollars from the Funds' portfolio transactions, the Funds also benefit from the receipt of research products and services to be acquired through commissions paid on the portfolio transactions of other clients of CWAM. They also concluded that the Funds' success could attract other business to CWAM or its other clients' accounts and that CWAM's success could enhance its ability to serve the Funds. NEW TERMS OF THE AMENDED AGREEMENT. As previously mentioned, the trustees negotiated a new breakpoint for Columbia Acorn USA's fee schedule, reducing fees by 0.05% on net assets in excess of $500 million. That new breakpoint is reflected in the Amended Agreement. In addition, the Amended Agreement includes representations by CWAM that are substantially similar to those contained in a letter agreement between the Trust and CM that expired on July 31, 2005. The Amended Agreement provides that: (1) CWAM will endeavor to preserve the autonomy of the Trust; (2) CWAM remain a wholly owned subsidiary of CMG (or any successor company) as a Chicago-based management firm; (3) CWAM will maintain the investment philosophy and research that the Chicago-based management deems appropriate, research activities separate and dedicated solely to CWAM and its own domestic and international trading activities; (4) CWAM will use its best efforts to maintain information systems that will provide timely and uninterrupted operating information and data consistent with all regulatory and compliance requirements; (5) CWAM's Chicago-based management will have the responsibility and considerable latitude to recruit and compensate (on a competitive basis) investment management personnel and to control travel budgets for analysts consistent with its operational and strategic plans while subject to the approval of CM; and (6) CWAM acknowledges the importance that the Board and its compliance committee place on full legal and regulatory compliance by CM, CWAM, and all other Trust service providers and their personnel (collectively, "Providers") and agrees to (i) cooperate fully with the Board, the compliance committee and the Chief Compliance Officer ("CCO") of the Trust with all inquiries by the Trust concerning such compliance by the Providers and (ii) communicate proactively with the Board, the compliance committee and the CCO of the Trust concerning material compliance matters and any instance of legal or regulatory non-compliance by the 1-800-922-6769 96 Providers of which CWAM is aware and that CWAM deems to be material. Such cooperation and communication by CWAM will be done after receipt of an inquiry or upon learning of any such legal or regulatory non-compliance. Lastly, the Amended Agreement provides that the principal investment management focus and responsibilities of CWAM's portfolio managers and analysts will be dedicated to the Trust and Wanger Advisors Trust. After full consideration of the above factors as well as other factors that were instructive in analyzing the Agreement, the trustees, including all of the independent trustees, concluded that the continuation of the Agreement was in the best interest of each Fund. On July 20, 2005, the trustees continued the Agreement through October 31, 2005, and on September 27, 2005, the trustees approved the Amended Agreement. 97 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, number of portfolios in the fund complex they oversee, and other directorships they hold, are shown below. Each trustee serves in such capacity for each of the six series of Columbia Acorn Trust. 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, 2006 TO OFFICE* PAST FIVE YEARS TRUSTEE/OFFICER DIRECTORSHIPS ------------------------- ---------- ---------------------------------------------- --------------- --------------------------- TRUSTEES WHO ARE NOT INTERESTED PERSONS OF COLUMBIA ACORN TRUST: MARGARET EISEN, 52, Managing Director, CFA Institute since 2005; 6 Antigenics, Inc. Trustee 2002 Chief Investment Officer, EAM International (biotechnology and LLC from 2003 through 2005; formerly drugs); Global Financial managing director, DeGuardiola Advisors; Group (venture capital formerly managing director, North American fund of funds); Lehman Equities at General Motors Asset Management; Brothers/First Trust prior thereto, director of Worldwide Pension Income Opportunity Fund Investments for DuPont Asset Management. (high-yield closed-end fund). JEROME KAHN, JR., 71, 1987 Portfolio manager and stock analyst, 6 None. Trustee (investment advisor), former president, William Harris Investors, Inc. STEVEN N. KAPLAN, 46, 1999 Neubauer Family Professor of Entrepreneurship 6 Morningstar, Inc. (provider Trustee and Finance, Graduate School of Business, of independent investment University of Chicago. research). DAVID C. KLEINMAN, 70, 1972 Adjunct professor of strategic management, 6 Sonic Foundry, Inc. Trustee University of Chicago Graduate School of (software); Irex Corp. Business; Business consultant. (insulation contracting). ALLAN B. MUCHIN, 70, 1998 Chairman emeritus, Katten Muchin Zavis 6 None. Trustee and Vice Chairman Rosenman (law firm). ROBERT E. NASON, 69, 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, 70, 2002 Frank Wakely Gunsaulus Professor of Law and 6 AmerUs Life Holdings Trustee Finance, and chairman of the Center for the (life insurance); LDF, Inc. Study of Law and Financial Markets, Illinois and Labe Federal Bank Institute of Technology; prior thereto, (banking); Margo Caribe, chairman of the board and chief executive Inc. (farming). 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 TRUST: CHARLES P. MCQUAID, 52, 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, 71, 1970 Founder, former president, chief investment 10 Wanger Advisors Trust Trustee (1) officer and portfolio manager, Columbia WAM (4 portfolios). 1992-2003; former president of the Trust from April 1992 through September 2003; former president, Wanger Advisors Trust 1994 through September 2003; since September 2003, adviser to Columbia WAM (September 2003 through September 2005); principal, WAM from July 1992 until September 2000; president, WAM Ltd. from July 1992 to September 2000; former president, Wanger Advisors Trust; director, Wanger Investment Company plc.
98
NUMBER OF PORTFOLIOS IN NAME, POSITION(s) YEAR FIRST FUND COMPLEX WITH COLUMBIA ACORN ELECTED OR PRINCIPAL OCCUPATION(s) FOR WHICH OFFICER AND AGE AT APPOINTED DURING ACTS IN SAME OTHER JANUARY 1, 2006 TO OFFICE* PAST FIVE YEARS CAPACITY DIRECTORSHIPS ------------------------- ---------- ---------------------------------------------- ----------------- ------------------------- OFFICERS OF COLUMBIA ACORN: J. KEVIN CONNAUGHTON, 41, 2001 Treasurer and CFO of the Columbia Funds and 10 National Offshore Assistant Treasurer of the Liberty All-Star Funds since December Funds 2000 (formerly chief accounting officer and controller of the Columbia Funds and of the Bank of America Liberty All-Star Funds from February 1998 to Global Liquidity October 2000); treasurer of the Galaxy Funds Funds, PLC from September 2002 through November 2005; treasurer, Columbia Management Multi-Strategy Banc of America Hedge Fund, LLC from December 2002 through Capital December 2004. Management (Ireland), Limited MICHAEL G. CLARKE, 35, 2004 Chief Accounting Officer of the Columbia 10 None. Assistant Treasurer 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 Columbia Funds from February 2001 to June 2002; Assistant Treasurer of the Columbia Funds from August 1999 to February 2001). P. ZACHARY EGAN, 37, 2003 Director of international research, Columbia 6 None. Vice President December 2004; analyst and portfolio manager, Columbia WAM, since WAM since 1999; prior thereto, a research fellow with the Robert Bosch Foundation. BRUCE H. LAUER, 48, 1995 Chief operating officer, Columbia WAM since 10 Banc of America Vice President, Secretary April 1995; principal, WAM from January 2000 Capital and Treasurer to September 2000; vice president, treasurer Management and secretary, Wanger Advisors Trust; (Ireland), Limited director, Wanger Investment Company plc and New Americas Small Cap Fund. ROBERT A. MOHN, 44, 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, 41, 2003 Analyst and portfolio manager, Columbia WAM 6 None. Vice President since 2001; prior thereto, analyst and portfolio manager, Merrill Lynch. CHRISTOPHER OLSON, 41, 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 10 None. Vice President WAM since 1998; vice president Wanger Advisors Trust. VINCENT P. PIETROPAOLO, 40, 2001 Assistant general counsel, Bank of America 10 None. Assistant Secretary (and its predecessors) since December 1999. ROBERT SCALES, 53, 2004 Deputy Counsel, Grant Thornton LLP 2002-2004; 10 None. Chief Compliance Officer, prior thereto, Associate general counsel, Senior Vice President and UBS PaineWebber. General Counsel
* Dates prior to April 1992 correspond to the date first elected or appointed as a director or officer of The 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 1940 Act, because he is an officer of the Trust and/or because he is an existing or former employee or other affiliated person of Columbia WAM. The Statement of Additional Information includes additional information about Fund trustees and is available, without charge, upon request by calling 1-800-345-6611. 99 SPECIAL NOTICE A special meeting of the shareholders was held on September 27, 2005 for the purpose of electing nine trustees. A Proxy Statement that described the proposal had been mailed to shareholders of record as of July 21, 2005. The holders of the majority of the shares of the Trust entitled to vote at the meeting elected the following nine trustees, by the votes shown below: NOMINEE FOR AGAINST ABSTAIN/BNV* --------------- --------------- ------------- ------------ Margaret Eisen 425,129,820.877 2,052,402.324 0 Jerome Kahn, Jr. 425,077,605.023 2,104,618.178 0 Steven Kaplan 425,232,834.956 1,949,388.245 0 David Kleinman 425,147,691.140 2,034,532.061 0 Charles McQuaid 425,489,435.797 1,692,787.404 0 Allan Muchin 425,087,258.090 2,094,965.110 0 Robert Nason 425,119,296.755 2,062,926.446 0 Ralph Wanger 425,410,879.931 1,772,043.270 0 John Wing 425,005,357.986 2,176,865.215 0 * "BNVs" or "broker non-votes" are shares held by brokers or nominees as to which (i) the broker or nominee does not have discretionary voting power, and (ii) the broker or nominee has not received instructions from the beneficial owner or other person who is entitled to instruct how the shares will be voted. 100 COLUMBIA ACORN FAMILY OF FUNDS CLASS A, B AND C SHARE INFORMATION MINIMUM INITIAL INVESTMENT IN COLUMBIA ACORN INTERNATIONAL, COLUMBIA ACORN INTERNATIONAL SELECT AND COLUMBIA $ 1,000 THERMOSTAT FUND $ 1,000 FOR AN IRA MINIMUM INITIAL INVESTMENT IN COLUMBIA ACORN FUND AND COLUMBIA ACORN USA* $ 75,000 MINIMUM INITIAL INVESTMENT IN COLUMBIA ACORN SELECT** $ 50,000 MINIMUM SUBSEQUENT INVESTMENT $ 50 EXCHANGE FEE NONE
COLUMBIA ACORN FUND CLASS A CLASS B CLASS C Management Fees 0.64% 0.64% 0.64% Distribution and Service (12b-1) Fees 0.25% 0.85% 1.00% Other Expenses 0.14% 0.23% 0.18% --------------------------------------------------------- Net Expense Ratio 1.03% 1.72% 1.82% COLUMBIA ACORN INTERNATIONAL CLASS A CLASS B CLASS C Management Fees 0.79% 0.79% 0.79% Distribution and Service (12b-1) Fees 0.25% 0.85% 1.00% Other Expenses 0.26% 0.37% 0.30% --------------------------------------------------------- Net Expense Ratio 1.30% 2.01% 2.09% COLUMBIA ACORN USA CLASS A CLASS B CLASS C Management Fees 0.89% 0.89% 0.89% Distribution and Service (12b-1) Fees 0.25% 0.85% 1.00% Other Expenses 0.17% 0.26% 0.21% --------------------------------------------------------- Net Expense Ratio 1.31% 2.00% 2.10% COLUMBIA ACORN INTERNATIONAL SELECT CLASS A CLASS B CLASS C Management Fees 0.94% 0.94% 0.94% Distribution and Service (12b-1) Fees 0.25% 0.85% 1.00% Other Expenses 0.51% 0.51% 0.51% --------------------------------------------------------- Net Expense Ratio 1.70% 2.30% 2.45% COLUMBIA ACORN SELECT CLASS A CLASS B CLASS C Management Fees 0.82% 0.82% 0.82% Distribution and Service (12b-1) Fees 0.25% 0.85% 1.00% Other Expenses 0.19% 0.32% 0.26% --------------------------------------------------------- Net Expense Ratio 1.26% 1.99% 2.08% COLUMBIA THERMOSTAT FUND CLASS A CLASS B CLASS C Management Fees 0.10% 0.10% 0.10% Distribution and Service (12b-1) Fees 0.25% 0.85% 1.00% Other Expenses 0.15% 0.15% 0.15% --------------------------------------------------------- Net Expense Ratio*** 0.50% 1.10% 1.25%
Fees and expenses are for the year ended December 31, 2005 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, 2006. The Fund's adviser and/or affiliates have contractually agreed to waive a portion of "other expenses" through April 30, 2006. * Effective February 3, 2006, the minimum initial investment in Columbia Acorn Fund and Columbia Acorn USA was raised to $75,000 from $50,000. ** Effective August 5, 2005, the minimum initial investment in Columbia Acorn Select was raised to $50,000 from $1,000. *** Does not include estimated fees and expenses of 0.74% incurred by the Fund from the underlying portfolio funds. 1-800-922-6769 101 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 Management Distributors, Inc. One Financial Center Boston, Massachusetts 02111-2621 TRANSFER AGENT, DIVIDEND DISBURSING AGENT Columbia Management 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 WEB SITE (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 AND A COPY OF THE FUNDS' VOTING RECORD ARE AVAILABLE (I) WITHOUT CHARGE, UPON REQUEST, BY CALLING 800-922-6769 AND (II) ON THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT WWW.SEC.GOV. INFORMATION REGARDING HOW THE FUNDS VOTED PROXIES RELATING TO PORTFOLIO SECURITIES DURING THE 12-MONTH PERIOD ENDED JUNE 30, IS AVAILABLE FROM THE SEC'S WEB SITE. INFORMATION REGARDING HOW THE FUNDS VOTED PROXIES RELATING TO PORTFOLIO SECURITIES IS ALSO AVAILABLE FROM THE FUND'S WEB SITE. 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 WEB SITE 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 102 COLUMBIA ACORN FUNDS ANNUAL REPORT, DECEMBER 31, 2005 --------------- PRSRT STD [LOGO] COLUMBIAFUNDS U.S. POSTAGE PAID A MEMBER OF COLUMBIA MANAGEMENT HOLLISTON, MA PERMIT NO. 20 (C)2006 COLUMBIA MANAGEMENT DISTRIBUTORS, INC. --------------- ONE FINANCIAL CENTER, BOSTON, MA 02111-2621 800.345.6611 WWW.COLUMBIAFUNDS.COM SHC-42/105007-1205 (02/06) 06/10,071 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. (a) Aggregate Audit Fees billed by the principal accountant for professional services rendered during the fiscal years ended December 31, 2005 and December 31, 2004 are approximately as follows: 2005 2004 $199,200 $188,000 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, 2005 and December 31, 2004 are approximately as follows: 2005 2004 $41,800 $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 2005 and 2004, Audit-Related Fees include certain agreed-upon procedures performed for semi-annual shareholder reports. In fiscal year 2005 Audit-Related Fees also include certain agreed-upon procedures related to the review of the registrant's anti-money laundering program. (c) Aggregate Tax Fees billed by the principal accountant for professional services rendered during the fiscal years ended December 31, 2005 and December 31, 2004 are approximately as follows: 2005 2004 $33,300 $29,000 Tax Fees in both fiscal years 2005 and 2004 consist primarily of the review of annual tax returns and include amounts for professional services by the principal accountant for tax compliance, tax advice and tax planning. (d) Aggregate All Other Fees billed by the principal accountant for professional services rendered during the fiscal years ended December 31, 2005 and December 31, 2004 are as follows: 2005 2004 $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. None of the amounts described in paragraphs (a) through (d) above were approved pursuant to the "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (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. (e)(2) The percentage of services described in paragraphs (b) through (d) of this Item approved pursuant to the "de minimis" exception under paragraph (c)(7)(i)(c) of Rule 2-01 of Regulation S-X during both fiscal years ended December 31, 2005 and December 31, 2004 was zero. (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, 2005 and December 31, 2004 are disclosed in (b) through (d) of this Item. During the fiscal years ended December 31, 2005 and December 31, 2004, 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, 2005 and December 31, 2004, All Other Fees that were approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X were approximately $104,200 and $93,500, respectively. For both fiscal years, All Other Fees relate to internal controls reviews of the registrant's transfer agent. 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, 2005 and December 31, 2004 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. There have not been any material changes to the procedures by which shareholders may recommend nominees to the registrant's board of directors, since those procedures were last disclosed in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A or this Item. 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 27, 2006 ---------------------------------------------------------------------------- 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 27, 2006 ---------------------------------------------------------------------------- By (Signature and Title) /S/ Bruce H. Lauer ------------------------------------------------------- Bruce H. Lauer, Treasurer Date February 27, 2006 ----------------------------------------------------------------------------