-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VYuYbS/Jq4ra9cf7/3vDNpNGi/D0IDg0z1t4jWCLS2E6fUZM7tzZBUsuBTi988Ma hP31uuAOYHcb/UVbA5cflw== 0000891804-05-000047.txt : 20050106 0000891804-05-000047.hdr.sgml : 20050106 20050106112540 ACCESSION NUMBER: 0000891804-05-000047 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20041031 FILED AS OF DATE: 20050106 DATE AS OF CHANGE: 20050106 EFFECTIVENESS DATE: 20050106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLUMBIA FUNDS TRUST I CENTRAL INDEX KEY: 0000021832 IRS NUMBER: 046143403 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-02214 FILM NUMBER: 05514825 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CENTER CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6174263750 FORMER COMPANY: FORMER CONFORMED NAME: LIBERTY FUNDS TRUST I DATE OF NAME CHANGE: 19990430 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL TRUST I DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: COLONIAL HIGH YIELD SECURITIES TRUST DATE OF NAME CHANGE: 19910917 N-CSR 1 file001.txt COLUMBIA FUNDS TRUST I 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 811-2214 --------------------- Columbia Funds Trust I ------------------------------------------------------------------------------ (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: 10/31/2004 ------------------ Date of reporting period: 10/31/2004 ----------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. Columbia Tax-Managed Funds Annual Report October 31, 2004 [photo of man and woman smiling] [LOGO]: COLUMBIA FUNDS A MEMBER OF COLUMBIA MANAGEMENT Table of Contents Economic Update ....................... 1 Columbia Tax-Managed Aggressive Growth Fund ........................ 2 Columbia Tax-Managed Growth Fund ...... 6 Columbia Tax-Managed Growth Fund II ... 8 Columbia Tax-Managed Value Fund ....... 12 Financial Statements .................. 16 Investment Portfolio ............... 17 Statements of Assets and Liabilities 27 Statements of Operations ........... 29 Statements of Changes in Net Assets 30 Notes to Financial Statements ...... 34 Financial Highlights ............... 42 Report of Independent Registered Public Accounting Firm ............. 51 Unaudited Information ................. 52 Trustees and Officers ................. 53 Important Information About This Report .................. 57 PRESIDENT'S MESSAGE ----------------------------------------------------------- Columbia Tax-Managed Funds Dear Shareholder: Your fund's legal and management teams here at Columbia Funds have been working hard to strengthen our mutual fund services operation and to ensure that all operations and processes comply with legal and regulatory standards. In the coming months, we will continue to monitor the oversight enhancements recently put in place by your fund's Board of Trustees and make every effort to protect the interests of all our shareholders in everything we do. In our last report, we announced that your fund's advisor, Columbia Management Advisors, Inc., and your fund's distributor, Columbia Funds Distributor, Inc., had reached an agreement in principle with the Securities and Exchange Commission and the New York Attorney General to settle charges involving market timing in some of our mutual funds. We want to reassure you that the settlement and all associated legal fees will be paid by Columbia Management, not by the affected funds or their shareholders. Recently the Securities and Exchange Commission has adopted new rules regarding mutual fund governance. We think it is important for you to know that Columbia Management complied with the majority of these rules well before they were adopted. Your fund's Board of Trustees has taken the following important steps to strengthen its capacity to oversee your fund and to comply with SEC rules. o The Board of Trustees appointed Mary Joan Hoene as Chief Compliance Officer of Columbia Funds. In this role, Ms. Hoene will report directly to the Board of Trustees and will work with the Board of Trustees as well as the senior leadership of Columbia Management, the investment management arm of Bank of America, and with Bank of America's principal compliance executives. She will focus on the overall compliance program of the funds and the responsibility and performance of the fund's service providers. Prior to her appointment, Ms. Hoene was a partner in the law firm of Carter, Ledyard & Milburn, LLP. Previously she also served as associate director and deputy director for the Securities and Exchange Commission Division of Investment Management. As an active advisor, Ms. Hoene has helped several fund boards develop independent board practices. The Board is pleased to have Ms. Hoene, with her broad and extensive experience, in this important new position. o The Board of Trustees has established operational guidelines that result in stronger, more vigilant trusteeship across the entire Columbia Management organization. Board committees have been established to oversee products by fund category, allowing for greater specialization among board trustees. Shareholders will elect board members every five years, beginning in 2005. o In addition to enhancements to oversight within Columbia Management, our parent company--Bank of America--has also adopted a corporate Code of Ethics Committee, an Internal Compliance Controls Committee and a Regulatory Implementation Group to ensure full alignment and execution of remedial actions and best practices across the company. In the pages that follow, you'll find a discussion of the economic environment during the period, followed by a detailed report from the funds' managers on key factors that influenced performance. This report is rich in information, and you should discuss it with your financial advisor if you have questions. We are committed to providing quality products and services to our shareholders, strengthening your confidence in us, and working hard to help you achieve financial success. It is a privilege to play a role in your financial future, and we value your business. Thank you for choosing Columbia Management. Sincerely, /s/ Christopher Wilson Christopher Wilson Head of Mutual Funds, Columbia Management Christopher Wilson is Head of Mutual Funds for Columbia Management, responsible for the day-to-day delivery of mutual fund services to the firm's investors. With the exception of distribution, Chris oversees all aspects of the mutual fund services operation, including treasury, investment accounting and shareholder and broker services. Chris serves as Columbia Management's chief liaison to the mutual fund boards of trustees. Chris joined Bank of America in August 2004. Economic and market conditions change frequently. There is no assurance that the trends described in this report will continue or commence. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE ECONOMIC UPDATE --------------------------------------------------------------- Columbia Tax-Managed Funds The US economy grew at a solid pace of approximately 4.0% during the 12-month period that began November 1, 2003 and ended October 31, 2004. The economy encountered a soft patch in the second quarter of 2004, as disappointing job growth and rising energy prices slowed the pace of consumer spending and restrained business spending as well. Nevertheless, growth picked up again in the third quarter. Job growth dominated the economic news during this reporting period: When more than one million jobs were created in the spring of 2004, consumer confidence soared to its highest level in two years. However, when job growth faltered during the summer months, confidence fell--and continued to fall--through the end of the period. According to the Labor Department's Payroll Survey, the job market has not fully recovered from the losses incurred during the economic downturn of 2000-2001, leaving consumers cautious about job prospects for the months ahead. Consumer spending grew during the period, as last year's tax rebates and tax cuts worked their way into household budgets. Even when consumer spending growth declined during the summer, housing activity remained strong. The business sector also contributed to the economy's solid pace. Industrial production rose; factories utilized more of their capacity; and spending on technology, capital equipment and construction picked up. Yet, business spending was not as robust as expected, given a maturing economic cycle and two straight years of double-digit profit growth. Stocks outperformed bonds Buoyed by strong gains at the beginning of the period, the S&P 500 Index returned 9.42% during this 12-month reporting period. However, concerns about new terror threats, continued fighting in Iraq, higher oil prices and uncertainty surrounding the presidential election helped sideline investors as the period wore on. Late in the period, leadership passed from small-cap stocks to mid- and large-cap stocks. Value stocks continued to lead growth stocks until the final months of the period, when small- and mid-cap growth stocks bested their value counterparts. Energy and real estate investment trusts were the best-performing sectors. Bonds deliver respectable gains Despite bouts of interest-rate volatility, the US bond market delivered respectable gains during the period. Bond prices sagged in the spring when job growth picked up and investors began to anticipate higher short-term interest rates. However, a shaky stock market, higher oil prices and some disappointing economic data gave the bond market a boost in the latter half of the period. The 10-year Treasury yield, a bellwether for the bond market, ended the period at just over 4.0%, very close to where it started. In this environment, the Lehman Brothers Aggregate Bond Index returned 5.53% for the 12-month period. The municipal bond market did even better. The Lehman Brothers Municipal Bond Index returned 6.03%. High-yield bonds led the fixed income markets, as a stronger economy resulted in improved credit ratings, stronger balance sheets and higher profits for many companies in the high yield universe. The Merrill Lynch US High Yield, Cash Pay Index returned 12.07%. After a year of the lowest short-term interest rates in recent history, the Federal Reserve Board (the Fed) raised the federal funds rate, a key short-term rate, from 1.0% to 1.75% in three equal steps during the period. The federal funds rate was raised to 2.0% on November 10, 2004. The Fed indicated that it would continue to raise short-term interest rates at a "measured pace," in an attempt to balance economic growth against inflationary pressures. - ------------------------------------------------------------------------------- [sidebar data]: Summary For the 12-month period ended October 31, 2004 o Stocks outperformed bonds, as measured by the S&P 500 Index. Value stocks, as measured by the S&P 500/Barra Value Index, were the period's strongest performers. S&P 500 Index 9.42% S&P/Barra Value Index 14.46% o Despite interest rate volatility, bonds chalked up respectable gains as measured by the Lehman Brothers Aggregate Bond Index. High-yield bonds led the fixed income markets, as measured by the Merrill Lynch US High Yield, Cash Pay Index. Merrill Lynch Index 12.07% Lehman Aggregate Index 5.53% The S&P 500 Index is an unmanaged index that tracks the performance of 500 widely held, large capitalization US stocks. The S&P 500/Barra Value Index is an unmanaged index that tracks the performance of companies in the S&P 500 Index with low price-to-book ratios. The Lehman Brothers Aggregate Bond Index is a market value-weighted index that tracks the performance of fixed-rate, publicly placed, dollar-denominated, and non-convertible investment grade debt issues. The Merrill Lynch US High Yield, Cash Pay Index is an unmanaged index that tracks the performance of non-investment-grade corporate bonds. - ------------------------------------------------------------------------------- 1 Performance Information -------------------------------------------------------- Columbia Tax-Managed Aggressive Growth Fund Performance of a $10,000 investment 08/01/00 - 10/31/04 ($) - --------------------------------------- sales charge without with ======================================= Class A 6,626 6,244 ======================================= Class B 6,419 6,291 ======================================= Class C 6,419 6,419 ======================================= Class Z 6,661 n/a ======================================= Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. [mountain chart data]: Value of a $10,000 investment 08/01/00 - 10/31/04 Class A shares Class A shares Russell MidCap without sales charge with sales charge Growth Index 08/2000 $10,000 $ 9,425 $10,000 11,648 10,978 11,508 11,709 11,035 10,945 10,664 10,051 10,197 8,335 7,856 7,981 8,914 8,401 8,401 9,500 8,954 8,881 7,723 7,279 7,345 6,757 6,368 6,294 7,343 6,921 7,343 7,516 7,083 7,308 7,809 7,360 7,312 7,334 6,912 6,819 6,842 6,448 6,325 5,815 5,480 5,279 6,048 5,700 5,834 6,557 6,180 6,463 6,877 6,481 6,708 6,825 6,433 6,490 6,575 6,196 6,122 6,963 6,563 6,589 6,877 6,481 6,241 6,756 6,367 6,055 6,342 5,977 5,386 5,660 5,334 4,863 5,565 5,245 4,846 5,366 5,058 4,461 5,556 5,237 4,807 5,694 5,366 5,183 5,392 5,082 4,870 5,358 5,050 4,822 5,254 4,952 4,780 5,254 4,952 4,869 5,539 5,220 5,201 5,988 5,643 5,701 6,109 5,757 5,783 6,238 5,879 5,989 6,566 6,189 6,319 6,239 5,880 6,196 6,748 6,360 6,696 6,920 6,522 6,875 6,946 6,547 6,950 7,102 6,693 7,180 7,084 6,677 7,300 6,990 6,588 7,286 6,636 6,254 7,081 6,722 6,336 7,248 6,869 6,474 7,363 6,239 5,880 6,876 6,101 5,750 6,791 6,368 6,002 7,045 10/2004 6,626 6,244 7,282 The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Russell MidCap Growth Index is an unmanaged index that measures the performance of those Russell MidCap companies with higher price-to-book ratios and higher forecasted growth values. Unlike the fund, indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Index performance is from August 1, 2000.
Average annual total return as of 10/31/04 (%) - ------------------------------------------------------------------------------------------ Share class A B C Z ========================================================================================== Inception 08/01/00 08/01/00 08/01/00 08/01/00 ========================================================================================== Sales charge without with without with without with without ========================================================================================== 1-year -1.79 -7.47 -2.49 -7.37 -2.49 -3.47 -1.40 ========================================================================================== Life -9.22 -10.49 -9.90 -10.33 -9.90 -9.90 -9.11 ==========================================================================================
Average annual total return as of 09/30/04 (%) - ------------------------------------------------------------------------------------------- Share class A B C Z =========================================================================================== Sales charge without with without with without with without =========================================================================================== 1-year 2.07 -3.78 1.13 -3.87 1.27 0.27 2.34 =========================================================================================== Life -10.27 -11.54 -10.94 -11.38 -10.94 -10.94 -10.15 ===========================================================================================
The "with sales charge" returns include the maximum initial sales charge of 5.75% for class A shares, maximum contingent deferred sales charge of 5.00% for class B shares and 1.00% for class C shares for the first year only. The "without sales charge" returns do not include the effect of sales charges. If they had, returns would be lower. All results shown assume reinvestment of distributions. Class Z shares are sold at net asset value with no Rule 12b-1 fees. Performance for different share classes will vary based on differences in sales charges and fees associated with each class. Performance results reflect any voluntary waivers or reimbursement of fund expenses by the advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. 2 UNDERSTANDING YOUR EXPENSES --------------------------------------------------- Columbia Tax-Managed Aggressive Growth Fund 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, and/or Rule 12b-1 fees, and other fund expenses. The information on this page is intended to help you understand your ongoing costs of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. ANALYZING YOUR FUND'S EXPENSES BY SHARE CLASS To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting 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 the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. 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 this reporting period. - ------------------------------------------------------------------------------- [sidebar data]: ESTIMATING YOUR ACTUAL EXPENSES To estimate the expenses that you paid over the period, first you will need your account balance at the end of the period: o For shareholders who receive their account statements from Columbia Funds Services, Inc., your account balance is available online at www.columbiafunds.com or by calling Shareholder Services at 800.345.6611 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 $8,600 at the end of the period, the result would be 8.6 2. In the section of the table below titled "Expenses paid during the period," locate the amount for your share class. You will find this number is in the column labeled "actual." Multiply this number by the result from step 1. Your answer is an estimate of the expenses you paid on your account during the period - -------------------------------------------------------------------------------
May 1, 2004 - October 31, 2004 - ------------------------------------------------------------------------------------------------------------------------- Account value at the Account value at the Expenses paid Fund's annualized beginning of the period ($) end of the period ($) during the period ($) expense ratio (%) ========================================================================================================================= Actual Hypothetical Actual Hypothetical Actual Hypothetical ========================================================================================================================= Class A 1,000.00 1,000.00 998.64 1,017.34 7.79 7.86 1.55 ========================================================================================================================= Class B 1,000.00 1,000.00 994.52 1,013.83 11.28 11.39 2.25 ========================================================================================================================= Class C 1,000.00 1,000.00 994.52 1,013.83 11.28 11.39 2.25 ========================================================================================================================= Class Z 1,000.00 1,000.00 999.95 1,018.85 6.28 6.34 1.25 =========================================================================================================================
Expenses paid during the period are equal to the fund's respective class 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 366. Had the Investment Advisor not waived or reimbursed 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 fund 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. COMPARE WITH OTHER FUNDS Since all mutual fund companies are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the fund 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. 3 PORTFOLIO MANAGERS' REPORT ----------------------------------------------------- Columbia Tax-Managed Aggressive Growth Fund For the 12-month period ended October 31, 2004, Columbia Tax-Managed Aggressive Growth Fund class A shares returned negative 1.79% without sales charge. The fund trailed the Russell MidCap Growth Index, which returned 8.77%. The fund also fell short of the Morningstar Mid-Cap Growth Funds Category average, which was 5.68%.1 Much of the fund's weak performance occurred in the first half of the reporting period, when an emphasis on technology stocks hurt the fund's performance. Technology was one of the period's disappointments, and the fund's stock selection within technology detracted from the fund's return. The fund had less exposure than its benchmark to entertainment and consumer-related stocks, which also had a negative impact on its return. TECHNOLOGY LED DISAPPOINTMENTS Technology stocks had a strong run in the fourth quarter of 2003 and many of the fund's technology holdings generated gains. Unfortunately, these gains were not sufficient to offset double digit losses in other technology holdings. As the period progressed, the sector lost ground as investors retreated, in general, from more aggressive segments of the stock market. Concerns about the economy, interest rates, terrorism, continued fighting in Iraq and the presidential election weighed on the stock market. Against this backdrop, technology stocks were punished particularly hard for any earnings shortfall. The fund's investments in software stocks, in particular, were disappointments. Veritas Software Corp., lost approximately 39% for the 12-month period. Amkor Technology, Inc., which makes packaging for semiconductors, lost 73%. We eliminated the fund's position in Amkor and brought its technology exposure in line with its benchmark by the end of the period. More generally, we eliminated commodity-type stocks in favor of companies with proprietary products of higher intellectual property content, and therefore, companies that have experienced higher gross margins. ENERGY AND MATERIALS STOCKS HELPED PERFORMANCE The fund benefited from its investments in the energy and materials sectors. Energy stocks were driven higher as the price of oil rose to a record high and drilling activity increased. Among the fund's best energy stocks were National-Oilwell, Inc., a supplier of components for drilling rigs, and XTO Energy, Inc. an oil and gas production company. Although materials stocks were a relatively small position in the fund, good stock selection and an overweight position relative to the benchmark, helped performance. 1 (C)2004 by Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. - -------------------------------------------------------------------------------- [sidebar data]: Summary o For the 12-month period ended October 31, 2004, the fund's class A shares returned negative 1.79% without sales charge. o The fund's returns trailed the Russell MidCap Growth Index and the average return of the Morningstar Mid-Cap Growth Funds Category primarily because of its emphasis on technology stocks, which were the period's weakest performers. o Stock selection in the technology sector and lower-than-benchmark exposure to consumer-related stocks, which were strong, hurt performance. artwork: one arrow down, one arrow up Class A shares -1.79% Russell MidCap Growth Index 8.77% Objective Seeks long-term capital growth while reducing shareholder exposure to taxes Total net assets $10.5 million Net asset value per share as of 10/31/04 ($) - ------------------------------------- Class A 7.68 ===================================== Class B 7.44 ===================================== Class C 7.44 ===================================== Class Z 7.72 ===================================== 4 ------------------------------------------------------------------ Columbia Tax-Managed Aggressive Growth Fund Materials stocks benefited from a continued worldwide economic recovery. Potash Corp of Saskatchewan, Inc., Peabody Energy Corp., Phelps Dodge Corp. and Florida Rock Industries, Inc. logged returns of 35% or higher for the reporting period. Health care stock Elan Corp. Plc was the fund's single best performer during the period. Elan is a biotechnology company that focuses on therapies for neurology, autoimmune diseases and pain. It has several therapies that have shown promise in treating Alzheimer's disease. However, the strong gains from Elan were not enough to offset losses from other health care positions. Overall, the fund's health care investments detracted from performance. Over the past year, health care stocks struggled as reimbursement issues and uncertainty over the outcome of the presidential election clouded the investment environment. We are generally optimistic that the sector has the potential to rebound as these issues are clarified. Kenneth A. Korngiebel has co-managed Columbia Tax-Managed Aggressive Growth Fund since June 2004 and has been with the advisor or its predecessors or affiliate organizations since 1996. /s/ Kenneth A. Korngiebel Trent E. Nevills has co-managed the fund since June 2004 and has been with the advisor or its predecessors or affiliate organizations since 2003. /s/ Trent E. Nevills 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. The fund's approach offers the potential for long-term growth, but also involves the possibility of losses due to the sensitivity of growth stock prices to changes in current or expected earnings. Certain active tax-reduction techniques are used only if the fund's advisor believes they will help the fund achieve its investment goals. On October 13, 2004, the fund's Board of Trustees voted to liquidate the fund. The fund was closed to new investors as of the close of business on November 10, 2004. The fund is scheduled for liquidation on or about December 10, 2004. We thank you for investing in Columbia Funds and look forward to serving you in the future. - -------------------------------------------------------------------------------- [sidebar data]: Top 5 sectors as of 10/31/04 (%) - -------------------------------------- Information technology 26.3 ====================================== Health care 18.8 ====================================== Consumer discretionary 18.3 ====================================== Industrials 11.5 ====================================== Energy 7.2 ====================================== Top 10 holdings as of 10/31/04 (%) - -------------------------------------- Medicis Pharmaceutical Corp. 1.8 ====================================== Potash Corp. of Saskatchewan, Inc. 1.7 ====================================== Marvell Technology Group Ltd. 1.6 ====================================== Yum! Brands, Inc. 1.6 ====================================== DaVita, Inc. 1.5 ====================================== Corporate Executive Board Co. 1.5 ====================================== Advanced Micro Devices, Inc. 1.4 ====================================== Manpower, Inc. 1.4 ====================================== Fisher Scientific International, Inc. 1.4 ====================================== XM Satellite Radio Holdings, Inc. 1.4 ====================================== Holdings discussed in this report as of 10/31/04 (%) - -------------------------------------- VERITAS Software Corp. 0.6 ====================================== National-Oilwell, Inc. 1.3 ====================================== XTO Energy, Inc. 0.9 ====================================== Potash Corp. of Saskatchewan, Inc. 1.7 ====================================== Peabody Energy Corp. 0.7 ====================================== Phelps Dodge Corp. 0.7 ====================================== Florida Rock Industries, Inc. 0.3 ====================================== Elan Corp. PLC 0.9 ====================================== Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. 5 PERFORMANCE INFORMATION ------------------------------------------------------- Columbia Tax-Managed Growth Fund sidebar: Performance of a $10,000 investment 12/30/96 - 10/31/04 ($) - --------------------------------------- sales charge without with ======================================= Class A 13,313 12,548 ======================================= Class B 12,550 12,550 ======================================= Class C 12,550 12,550 ======================================= Class E 13,234 12,639 ======================================= Class F 12,569 12,569 ======================================= Class Z 13,512 n/a ======================================= Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. [mountain chart data]: Value of a $10,000 investment 12/30/96 - 10/31/04 Class A shares Class A shares without with S&P 500 sales charge sales charge Index 12/1996 $10,000 $ 9,425 $10,000 9,960 9,387 9,827 10,386 9,789 10,441 10,227 9,639 10,523 9,672 9,116 10,090 9,959 9,387 10,693 10,723 10,107 11,344 11,239 10,593 11,852 12,131 11,434 12,795 11,595 10,928 12,079 12,349 11,639 12,741 11,943 11,256 12,315 12,221 11,518 12,885 12,389 11,677 13,107 12,627 11,901 13,252 13,500 12,724 14,208 14,086 13,276 14,935 14,076 13,267 15,086 13,728 12,939 14,827 14,036 13,229 15,429 13,926 13,125 15,265 11,674 11,003 13,058 12,429 11,714 13,895 13,281 12,517 15,025 14,204 13,387 15,935 15,048 14,183 16,853 15,227 14,351 17,557 15,029 14,165 17,011 15,743 14,838 17,692 16,080 15,155 18,376 15,732 14,828 17,943 17,002 16,024 18,939 16,575 15,622 18,348 16,456 15,510 18,258 16,148 15,220 17,757 17,051 16,071 18,882 17,240 16,249 19,265 19,275 18,166 20,400 18,342 17,287 19,375 18,510 17,446 19,009 19,532 18,409 20,868 18,720 17,643 20,240 17,827 16,802 19,825 18,709 17,633 20,315 18,670 17,596 19,998 19,900 18,756 21,240 18,907 17,820 20,118 18,232 17,184 20,034 16,130 15,203 18,455 16,319 15,380 18,546 17,459 16,456 19,204 15,366 14,482 17,453 14,166 13,351 16,346 15,187 14,314 17,616 15,128 14,258 17,734 14,821 13,969 17,303 14,673 13,829 17,134 13,681 12,894 16,061 12,183 11,482 14,763 12,580 11,857 15,045 13,642 12,857 16,199 13,691 12,904 16,342 13,354 12,586 16,103 13,136 12,381 15,793 13,672 12,886 16,386 12,829 12,091 15,393 12,749 12,016 15,280 11,608 10,941 14,192 10,825 10,202 13,086 10,913 10,286 13,171 9,892 9,323 11,739 10,785 10,165 12,773 11,460 10,801 13,525 10,666 10,053 12,731 10,527 9,922 12,397 10,478 9,875 12,211 10,617 10,007 12,330 11,520 10,857 13,346 11,986 11,297 14,049 11,877 11,194 14,229 12,205 11,503 14,479 12,522 11,802 14,762 12,254 11,550 14,605 12,988 12,242 15,432 13,117 12,363 15,568 13,673 12,887 16,383 13,902 13,102 16,685 14,060 13,252 16,917 13,901 13,102 16,661 13,573 12,793 16,400 13,732 12,942 16,625 13,880 13,082 16,947 13,215 12,455 16,386 13,165 12,408 16,452 13,205 12,445 16,629 10/2004 13,313 12,548 16,878 The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Standard & Poor's (S&P) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization U.S. stocks. Unlike the fund, indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Index performance is from December 30, 1996.
Average annual total return as of 10/31/04 (%) - -------------------------------------------------------------------------------------------------------------------------------- Share class A B C E F Z ================================================================================================================================ Inception 12/30/96 12/30/96 12/30/96 12/30/96 12/30/96 01/11/99 ================================================================================================================================ Sales charge without with without with without with without with without with without ================================================================================================================================ 1-year 2.52 -3.37 1.77 -3.23 1.77 0.77 2.46 -2.15 1.85 -3.15 2.87 ================================================================================================================================ 5-year -4.83 -5.95 -5.54 -5.92 -5.54 -5.54 -4.92 -5.79 -5.52 -5.90 -4.59 ================================================================================================================================ Life 3.72 2.94 2.94 2.94 2.94 2.94 3.64 3.03 2.96 2.96 3.92 ================================================================================================================================
Average annual total return as of 09/30/04 (%) - -------------------------------------------------------------------------------------------------------------------------------- Share class A B C E F Z ================================================================================================================================ Sales charge without with without with without with without with without with without ================================================================================================================================ 1-year 7.77 1.58 6.90 1.90 6.90 5.90 7.57 2.73 6.89 1.89 8.00 ================================================================================================================================ 5-year -3.95 -5.08 -4.68 -5.07 -4.67 -4.67 -4.03 -4.91 -4.61 -4.99 -3.71 ================================================================================================================================ Life 3.65 2.86 2.87 2.87 2.87 2.87 3.56 2.95 2.88 2.88 3.84 ================================================================================================================================
THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A SHARES AND 4.50% FOR CLASS E SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B AND F SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. ALL RESULTS SHOWN ASSUME REINVESTMENT OF DISTRIBUTIONS. CLASS Z SHARES ARE SOLD AT NET ASSET VALUE WITH NO RULE 12B-1 FEES. PERFORMANCE FOR DIFFERENT SHARE CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH EACH CLASS. Performance results reflect any voluntary waivers or reimbursement of fund expenses by the advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. Class Z share performance information includes returns for the fund's class A shares (as its expense structure more closely resembles that of the newer class) for periods prior to the inception of the newer class of shares. These class A share returns were not restated to reflect any expense differential (e.g., Rule 12b-1 fees) between class A and class Z shares. Had the expense differential been reflected, the returns for the periods prior to the inception of the class Z shares would have been higher. 6 UNDERSTANDING YOUR EXPENSES ----------------------------------------------------- Columbia Tax-Managed Growth Fund 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, and/or Rule 12b-1 fees, and other fund expenses. The information on this page is intended to help you understand your ongoing costs of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. ANALYZING YOUR FUND'S EXPENSES BY SHARE CLASS To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting 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 the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. 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 this reporting period. - -------------------------------------------------------------------------------- [sidebar data]: ESTIMATING YOUR ACTUAL EXPENSES To estimate the expenses that you paid over the period, first you will need your account balance at the end of the period: o For shareholders who receive their account statements from Columbia Funds Services, Inc., your account balance is available online at www.columbiafunds.com or by calling Shareholder Services at 800.345.6611 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 $8,600 at the end of the period, the result would be 8.6 2. In the section of the table below titled "Expenses paid during the period," locate the amount for your share class. You will find this number is in the column labeled "actual." Multiply this number by the result from step 1. Your answer is an estimate of the expenses you paid on your account during the period - --------------------------------------------------------------------------------
May 1, 2004 - October 31, 2004 - ------------------------------------------------------------------------------------------------------------------------- Account value at the Account value at the Expenses paid Fund's annualized beginning of the period ($) end of the period ($) during the period ($) expense ratio (%) ========================================================================================================================= Actual Hypothetical Actual Hypothetical Actual Hypothetical ========================================================================================================================= Class A 1,000.00 1,000.00 981.30 1,018.35 6.72 6.85 1.35 ========================================================================================================================= Class B 1,000.00 1,000.00 977.08 1,014.58 10.44 10.63 2.10 ========================================================================================================================= Class C 1,000.00 1,000.00 977.83 1,014.58 10.44 10.63 2.10 ========================================================================================================================= Class E 1,000.00 1,000.00 980.49 1,017.85 7.22 7.35 1.45 ========================================================================================================================= Class F 1,000.00 1,000.00 977.83 1,014.58 10.44 10.63 2.10 ========================================================================================================================= Class Z 1,000.00 1,000.00 983.01 1,019.61 5.48 5.58 1.10 =========================================================================================================================
Expenses paid during the period are equal to the fund's respective class 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 366. It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the fund 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. COMPARE WITH OTHER FUNDS Since all mutual fund companies are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the fund 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. 7 PERFORMANCE INFORMATION -------------------------------------------------------- Columbia Tax-Managed Growth Fund II sidebar: Performance of a $10,000 investment 03/07/00 - 10/31/04 ($) - -------------------------------------- sales charge without with ====================================== Class A 7,083 6,677 ====================================== Class B 6,842 6,705 ====================================== Class C 6,825 6,825 ====================================== Class Z 7,158 n/a ====================================== Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. [mountain chart data]: Value of a $10,000 investment 03/07/00 - 10/31/04 Class A shares Class A shares without with S&P 500 sales charge sales charge Index 03/2000 $10,000 $ 9,425 $10,000 10,450 9,849 11,061 9,859 9,292 10,728 9,442 8,899 10,508 9,866 9,299 10,768 9,883 9,315 10,600 10,492 9,889 11,258 10,017 9,441 10,664 9,625 9,072 10,619 8,516 8,027 9,782 8,666 8,168 9,830 9,266 8,733 10,179 8,091 7,626 9,251 7,499 7,068 8,664 8,075 7,610 9,337 8,008 7,547 9,400 7,832 7,382 9,171 7,732 7,287 9,082 7,207 6,793 8,513 6,457 6,086 7,825 6,599 6,219 7,975 7,224 6,808 8,586 7,307 6,887 8,662 7,065 6,659 8,535 6,990 6,588 8,371 7,307 6,887 8,685 6,865 6,471 8,159 6,824 6,431 8,099 6,257 5,897 7,522 5,832 5,497 6,936 5,849 5,513 6,981 5,308 5,002 6,222 5,783 5,450 6,770 6,141 5,788 7,169 5,700 5,372 6,748 5,649 5,325 6,571 5,608 5,285 6,472 5,691 5,364 6,535 6,158 5,804 7,074 6,399 6,031 7,447 6,341 5,976 7,542 6,516 6,141 7,675 6,691 6,307 7,824 6,550 6,173 7,741 6,941 6,542 8,179 6,999 6,597 8,251 7,300 6,880 8,684 7,425 6,998 8,844 7,508 7,076 8,967 7,416 6,990 8,831 7,241 6,825 8,693 7,333 6,911 8,812 7,408 6,982 8,983 7,049 6,644 8,685 7,016 6,613 8,720 7,033 6,629 8,814 10/2004 7,083 6,677 8,948 The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Standard & Poor's (S&P) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization U.S. stocks. Unlike the fund, indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Index performance is from March 7, 2000.
Average annual total return as of 10/31/04 (%) - ----------------------------------------------------------------------------------------- Share class A B C Z ========================================================================================= Inception 03/07/00 03/07/00 03/07/00 03/07/00 ========================================================================================= Sales charge without with without with without with without ========================================================================================= 1-year 2.04 -3.85 1.36 -3.64 1.36 0.36 2.38 ========================================================================================= Life -7.14 -8.32 -7.83 -8.23 -7.88 -7.88 -6.93 =========================================================================================
Average annual total return as of 09/30/04 (%) - ----------------------------------------------------------------------------------------- Share class A B C Z ========================================================================================= Sales charge without with without with without with without ========================================================================================= 1-year 7.38 1.20 6.54 1.54 6.55 5.55 7.70 ========================================================================================= Life -7.42 -8.61 -8.12 -8.53 -8.17 -8.17 -7.20 =========================================================================================
THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. ALL RESULTS SHOWN ASSUME REINVESTMENT OF DISTRIBUTIONS. CLASS Z SHARES ARE SOLD AT NET ASSET VALUE WITH NO RULE 12B-1 FEES. PERFORMANCE FOR DIFFERENT SHARE CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH EACH CLASS. Performance results reflect any voluntary waivers or reimbursement of fund expenses by the advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. 8 UNDERSTANDING YOUR EXPENSES ----------------------------------------------------- Columbia Tax-Managed Growth Fund II 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, and/or Rule 12b-1 fees, and other fund expenses. The information on this page is intended to help you understand your ongoing costs of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. ANALYZING YOUR FUND'S EXPENSES BY SHARE CLASS To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting 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 the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. 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 this reporting period. - -------------------------------------------------------------------------------- [sidebar data]: ESTIMATING YOUR ACTUAL EXPENSES To estimate the expenses that you paid over the period, first you will need your account balance at the end of the period: o For shareholders who receive their account statements from Columbia Funds Services, Inc., your account balance is available online at www.columbiafunds.com or by calling Shareholder Services at 800.345.6611 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 $8,600 at the end of the period, the result would be 8.6 2. In the section of the table below titled "Expenses paid during the period," locate the amount for your share class. You will find this number is in the column labeled "actual." Multiply this number by the result from step 1. Your answer is an estimate of the expenses you paid on your account during the period - --------------------------------------------------------------------------------
May 1, 2004 - October 31, 2004 - ------------------------------------------------------------------------------------------------------------------------- Account value at the Account value at the Expenses paid Fund's annualized beginning of the period ($) end of the period ($) during the period ($) expense ratio (%) ========================================================================================================================= Actual Hypothetical Actual Hypothetical Actual Hypothetical ========================================================================================================================= Class A 1,000.00 1,000.00 978.13 1,017.60 7.46 7.61 1.50 ========================================================================================================================= Class B 1,000.00 1,000.00 974.91 1,013.83 11.17 11.39 2.25 ========================================================================================================================= Class C 1,000.00 1,000.00 974.86 1,013.83 11.17 11.39 2.25 ========================================================================================================================= Class Z 1,000.00 1,000.00 979.49 1,018.85 6.22 6.34 1.25 =========================================================================================================================
Expenses paid during the period are equal to the fund's respective class 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 366. Had the Investment Advisor not waived or reimbursed 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 fund 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. COMPARE WITH OTHER FUNDS Since all mutual fund companies are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the fund 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. 9 PORTFOLIO MANAGER'S REPORT ------------------------------------------------------ Columbia Tax-Managed Growth Funds For the 12-month period ended October 31, 2004, Columbia Tax-Managed Growth Fund class A shares returned 2.52% without sales charge. Columbia Tax-Managed Growth Fund II class A shares returned 2.04% without sales charge. The funds underperformed their benchmark, the S&P 500 Index, which returned 9.42% for the period. The funds also trailed their peer group, the Morningstar Large Cap Growth Category, which averaged 3.15%.1 We believe stock selection in the consumer and financial sectors and disappointments from semiconductor stocks in the technology sector accounted for the funds' underperformance relative to their benchmark and peer group. STOCKS PEAK EARLY IN PERIOD Driven by an expanding economy and strong corporate profit growth, large-cap stocks generated positive returns this reporting period. However, the gains were achieved in the first four months of the period. Stock prices peaked in March, then moved sideways to downward as investors became concerned about rising interest rates, sharply higher energy prices, the conflict in Iraq and the outcome of the presidential election. In this environment, media and retail stocks disappointed as the result of a weaker-than-expected recovery in advertising spending and a slow-down in consumer spending growth. We reduced the funds' media exposure by selling their positions in cable television and high-speed Internet provider Comcast Corp. Online auctioneer eBay, Inc. made the sector's only positive contribution to return. The financial sector was also a weak performer for the funds. Rising interest rates took a toll on many financial stocks. New York Community Bank was particularly affected, and we sold the stock during the period. Alleged accounting improprieties hurt financial services firm Federal National Mortgage Association (Fannie Mae) and insurance provider American International Group, Inc. Unusually high catastrophic losses during this year's hurricane season had an adverse impact on the funds' property and casualty insurance holdings. TECHNOLOGY DISAPPOINTMENTS DEPRESSED RETURNS Technology stocks stumbled in 2004 as demand was less robust than expected and earnings were disappointing. Strong stock selection resulted in some attractive gains for the funds. Among the strong technology performers were Affiliated Computer Services, Inc., which provides business processing and information technology outsourcing 1 (C)2004 by Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. - -------------------------------------------------------------------------------- [sidebar data]: Summary o For the 12-month period ended October 31, 2004, the class A shares of Columbia Tax-Managed Growth Fund and Columbia Tax-Managed Growth Fund II returned 2.52% and 2.04% without sales charge, respectively. o The funds underperformed their benchmark, the S&P 500 Index, and their peer group, the Morningstar Large Cap Growth Category. o We believe stock selection in the technology, finance and consumer sectors hurt the funds' performance relative to their benchmark and peer group. Tax-Managed Growth Fund Net asset value per share as of 10/31/04 ($) - -------------------------------------- Class A 13.42 ====================================== Class B 12.65 ====================================== Class C 12.65 ====================================== Class E 13.34 ====================================== Class F 12.67 ====================================== Class Z 13.62 ====================================== Tax-Managed Growth Fund II Net asset value per share as of 10/31/04 ($) - -------------------------------------- Class A 8.50 ====================================== Class B 8.21 ====================================== Class C 8.19 ====================================== Class Z 8.59 ====================================== Tax-Managed Growth Fund Top 5 sectors as of 10/31/04 (%) - -------------------------------------- Information technology 20.2 ====================================== Financials 18.5 ====================================== Health care 17.6 ====================================== Industrials 12.5 ====================================== Consumer discretionary 10.6 ====================================== Tax-Managed Growth Fund II Top 5 sectors as of 10/31/04 (%) - -------------------------------------- Information technology 19.6 ====================================== Health care 17.8 ====================================== Financials 17.7 ====================================== Industrials 12.4 ====================================== Consumer discretionary 10.6 ====================================== Sector breakdowns are calculated as a percentage of net assets. 10 --------------------------------------------------------------- Columbia Tax-Managed Growth Funds services, and network storage systems vendors Network Appliance, Inc. and EMC Corp. Symantec Corp., a leading provider of computer security software, also aided returns, and we took advantage of a price gain to sell the stock at a profit during the period. However, these gains were not enough to offset losses from the funds' semiconductor holdings. We reduced the funds' exposure to semiconductors by eliminating positions in Microchip Technology, Inc. and National Semiconductor Corp. We also pared some of the funds' other semiconductor holdings. STRONGEST GAINS FROM BASIC MATERIALS, INDUSTRIALS AND HEALTH CARE Industrials and basic materials stocks benefited returns as continued economic growth resulted in increased industrial production. The funds' strongest performers were metals producer Phelps Dodge Corp. and machinery makers Eaton Corp., Illinois Tool Works, Inc. and Deere & Co. We sold Phelps Dodge and Deere & Co. when they reached our price objectives. In the health care sector, the funds' investments in equipment, supplies and services stocks, such as St. Jude Medical, Inc., Zimmer Holdings, Inc., Medtronic, Inc. and Express Scripts, Inc. made strong positive contributions. These gains helped offset continued weakness in the pharmaceutical sector, where growth trends have slowed. During the period, we sold the funds' holdings in Pfizer, Inc. and AstraZeneca PLC and replaced them with Caremark Rx, Inc. and Schering-Plough Corp., which we believe have more dynamic growth prospects. POSITIVE OUTLOOK DESPITE CHALLENGES Now that the uncertainty surrounding the presidential election has been resolved, we expect investors to focus once again on the outlook for the economy and corporate profits. Rising interest rates and energy prices remain causes for concern. However, we believe that the economy and corporate profits have the potential to continue to grow in 2005, albeit at a slower pace. Against that favorable backdrop, we believe investors could rotate back into the higher-quality, large-cap stocks that make up the funds'core holdings. William M. Hughes is a senior equity analyst at Stein Roe Investment Counsel, LLC, sub-advisor to the funds. Mr. Hughes is also a member of the investment management team for Columbia Tax-Managed Growth Fund and Columbia Tax-Managed Growth Fund II. No single individual has primary management responsibility over the funds' portfolio securities. /s/ William M. Hughes The funds' approach offers the potential for long-term growth, but also involves the possibility of losses due to the sensitivity of growth stock prices to changes in current or expected earnings. Certain active tax-reduction techniques are used only if the funds' advisor believes they will help the funds achieve their investment goals. The funds expect to distribute taxable income and capital gains from time to time. Market conditions may limit the funds' ability to generate tax losses or to avoid dividend income. The ability to use certain tax-managed techniques may be curtailed or eliminated in the future by tax legislation, regulations, administrative interpretations or court decisions. [sisebar data} : Tax-Managed Growth Fund Top 10 holdings as of 10/31/04 (%) - ----------------------------------------------------- General Electric Co. 3.4 ===================================================== Exxon Mobil Corp. 3.4 ===================================================== Wal-Mart Stores, Inc. 3.4 ===================================================== Bank of America Corp. 3.0 ===================================================== Microsoft Corp. 3.0 ===================================================== Kohl's Corp. 2.7 ===================================================== Lexmark International, Inc. 2.7 ===================================================== Lehman Brothers Holdings, Inc. 2.7 ===================================================== St. Jude Medical, Inc. 2.5 ===================================================== Univision Communications, Inc. 2.5 ===================================================== Tax-Managed Growth Fund II Top 10 holdings as of 10/31/04 (%) - ----------------------------------------------------- General Electric Co. 3.4 ===================================================== Exxon Mobil Corp. 3.4 ===================================================== Wal-Mart Stores, Inc. 3.2 ===================================================== Microsoft Corp. 2.9 ===================================================== Univision Communications, Inc. 2.7 ===================================================== Lehman Brothers Holdings, Inc. 2.6 ===================================================== Kohl's Corp. 2.6 ===================================================== Walgreen Co. 2.6 ===================================================== St. Jude Medical, Inc. 2.5 ===================================================== Lexmark International, Inc. 2.5 ===================================================== Columbia Columbia Tax- Tax- Holdings discussed Managed Managed in this report as Growth Growth of 10/31/04 (%) Fund Fund II - ----------------------------------------------------- eBay, Inc. 1.1 1.1 ===================================================== Federal National Mortgage Association (Fannie Mae) 1.8 1.6 ===================================================== American International Group, Inc. 2.3 2.4 ===================================================== Affiliated Computer Services, Inc. 2.3 2.1 ===================================================== Network Appliance, Inc. 1.4 1.4 ===================================================== EMC Corp. 1.8 1.8 ===================================================== Eaton Corp. 2.3 2.2 ===================================================== Illinois Tool Works, Inc. 2.0 2.0 ===================================================== St. Jude Medical, Inc. 2.5 2.5 ===================================================== Zimmer Holdings, Inc. 1.9 1.9 ===================================================== Medtronic, Inc. 2.3 2.2 ===================================================== Express Scripts, Inc. 1.8 1.9 ===================================================== Caremark Rx, Inc. 1.9 2.0 ===================================================== Schering-Plough Corp. 1.9 1.9 ===================================================== Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. 11 PERFORMANCE INFORMATION --------------------------------------------------------- Columbia Tax-Managed Value Fund sidebar: Performance of a $10,000 investment 06/01/99 - 10/31/04 ($) - ----------------------------------------- sales charge without with ========================================= Class A 9,577 9,026 ========================================= Class B 9,227 9,134 ========================================= Class C 9,227 9,227 ========================================= Class Z 9,718 n/a ========================================= Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. Class A shares Class A shares Russell S&P 500/ without with 1000 Value S&P 500 Barra Value sales charge sales charge Index Index Index 06/1999 $10,000 $ 9,425 $10,000 $10,000 $10,000 10,200 9,614 10,349 10,616 10,427 9,733 9,173 10,046 10,285 10,107 9,358 8,820 9,673 10,234 9,851 8,641 8,144 9,335 9,954 9,466 8,866 8,356 9,873 10,584 10,001 8,799 8,294 9,796 10,799 9,942 8,749 8,246 9,843 11,435 10,316 8,357 7,877 9,522 10,861 9,988 7,741 7,295 8,815 10,656 9,363 8,624 8,128 9,890 11,698 10,340 8,774 8,269 9,776 11,346 10,271 9,215 8,685 9,878 11,113 10,303 8,724 8,222 9,427 11,388 9,896 8,607 8,112 9,545 11,210 10,094 9,090 8,567 10,075 11,906 10,771 9,124 8,599 10,168 11,277 10,769 9,507 8,960 10,418 11,230 10,970 9,440 8,897 10,032 10,345 10,408 9,982 9,408 10,534 10,396 10,944 9,940 9,369 10,574 10,765 11,406 9,906 9,337 10,280 9,783 10,650 9,565 9,015 9,917 9,163 10,229 9,698 9,140 10,403 9,875 10,923 9,881 9,313 10,637 9,941 11,038 9,614 9,061 10,401 9,699 10,680 9,864 9,297 10,379 9,604 10,495 9,814 9,249 9,963 9,003 9,889 9,447 8,903 9,262 8,276 8,949 9,497 8,951 9,182 8,434 8,949 9,863 9,296 9,716 9,081 9,517 9,938 9,367 9,945 9,161 9,662 9,722 9,163 9,868 9,027 9,397 9,596 9,044 9,884 8,853 9,314 10,088 9,507 10,352 9,185 9,791 9,655 9,100 9,996 8,629 9,300 9,621 9,068 10,046 8,565 9,337 8,530 8,039 9,470 7,955 8,748 7,822 7,372 8,589 7,335 7,802 7,897 7,443 8,654 7,383 7,856 6,780 6,391 7,692 6,581 6,958 7,405 6,979 8,262 7,160 7,536 7,997 7,537 8,783 7,581 8,066 7,630 7,192 8,401 7,136 7,647 7,347 6,925 8,198 6,949 7,437 6,923 6,525 7,979 6,845 7,235 6,898 6,501 7,993 6,911 7,226 7,414 6,988 8,696 7,481 7,940 8,014 7,553 9,258 7,875 8,525 8,198 7,726 9,374 7,976 8,587 8,156 7,687 9,513 8,116 8,778 8,289 7,812 9,662 8,275 8,967 8,122 7,655 9,567 8,187 8,805 8,414 7,930 10,152 8,650 9,407 8,497 8,008 10,291 8,727 9,492 9,087 8,564 10,924 9,184 10,078 9,213 8,683 11,117 9,353 10,257 9,456 8,913 11,355 9,483 10,488 9,415 8,873 11,255 9,340 10,416 9,179 8,651 10,980 9,193 10,159 9,179 8,651 11,092 9,319 10,276 9,423 8,881 11,354 9,500 10,499 9,246 8,715 11,194 9,185 10,299 9,347 8,810 11,353 9,222 10,410 9,482 8,936 11,529 9,322 10,607 10/2004 9,577 9,026 11,720 9,462 10,766 The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Russell 1000 Value Index is an unmanaged index that measures the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values. The Standard & Poor's (S&P) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large-capitalization U.S. stocks. The Standard & Poor's (S&P) 500/Barra Value Index is an unmanaged index that tracks the performance of companies in the S&P 500 Index with low price-to-book ratios. The S&P 500 Index and the S&P 500/Barra Value Index were the fund's previous benchmark. Unlike the fund, indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Index performance is from June 1, 1999.
Average annual total return as of 10/31/04 (%) - ------------------------------------------------------------------------------------------ Share class A B C Z ========================================================================================== Inception 06/01/99 06/01/99 06/01/99 06/01/99 ========================================================================================== Sales charge without with without with without with without ========================================================================================== 1-year 13.78 7.24 12.98 7.98 12.98 11.98 14.10 ========================================================================================== 5-year 1.55 0.36 0.86 0.47 0.86 0.86 1.83 ========================================================================================== Life -0.79 -1.87 -1.47 -1.66 -1.47 -1.47 -0.53 ==========================================================================================
Average annual total return as of 09/30/04 (%) - ------------------------------------------------------------------------------------------ Share class A B C Z ========================================================================================== Sales charge without with without with without with without ========================================================================================== 1-year 16.73 10.02 15.98 10.98 15.98 14.98 17.14 ========================================================================================== 5-year 1.88 0.68 1.17 0.79 1.17 1.17 2.18 ========================================================================================== Life -0.99 -2.08 -1.67 -1.85 -1.67 -1.67 -0.71 ==========================================================================================
THE "WITH SALES CHARGE" RETURNS INCLUDE THE MAXIMUM INITIAL SALES CHARGE OF 5.75% FOR CLASS A SHARES, MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5.00% FOR CLASS B SHARES AND 1.00% FOR CLASS C SHARES FOR THE FIRST YEAR ONLY. THE "WITHOUT SALES CHARGE" RETURNS DO NOT INCLUDE THE EFFECT OF SALES CHARGES. IF THEY HAD, RETURNS WOULD BE LOWER. ALL RESULTS SHOWN ASSUME REINVESTMENT OF DISTRIBUTIONS. CLASS Z SHARES ARE SOLD AT NET ASSET VALUE WITH NO RULE 12B-1 FEES. PERFORMANCE FOR DIFFERENT SHARE CLASSES WILL VARY BASED ON DIFFERENCES IN SALES CHARGES AND FEES ASSOCIATED WITH EACH CLASS. Performance results reflect any voluntary waivers or reimbursement of fund expenses by the advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. 12 UNDERSTANDING YOUR EXPENSES ----------------------------------------------------- Columbia Tax-Managed Value Fund 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, and/or Rule 12b-1 fees, and other fund expenses. The information on this page is intended to help you understand your ongoing costs of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. ANALYZING YOUR FUND'S EXPENSES BY SHARE CLASS To illustrate these ongoing costs, we have provided an example and calculated the expenses paid by investors in each share class during the reporting period. The information in the following table is based on an initial investment of $1,000, which is invested at the beginning of the reporting 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 the fund's actual operating expenses and total return for the period. The amount listed in the "hypothetical" column for each share class assumes that the return each year is 5% before expenses and includes the fund's actual expense ratio. 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 this reporting period. - -------------------------------------------------------------------------------- [sidebar data]: ESTIMATING YOUR ACTUAL EXPENSES To estimate the expenses that you paid over the period, first you will need your account balance at the end of the period: o For shareholders who receive their account statements from Columbia Funds Services, Inc., your account balance is available online at www.columbiafunds.com or by calling Shareholder Services at 800.345.6611 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 $8,600 at the end of the period, the result would be 8.6 2. In the section of the table below titled "Expenses paid during the period," locate the amount for your share class. You will find this number is in the column labeled "actual." Multiply this number by the result from step 1. Your answer is an estimate of the expenses you paid on your account during the period - --------------------------------------------------------------------------------
May 1, 2004 - October 31, 2004 - ------------------------------------------------------------------------------------------------------------------------ Account value at the Account value at the Expenses paid Fund's annualized beginning of the period ($) end of the period ($) during the period ($) expense ratio (%) ======================================================================================================================== Actual Hypothetical Actual Hypothetical Actual Hypothetical ======================================================================================================================== Class A 1,000.00 1,000.00 1,045.55 1,017.65 7.66 7.56 1.49 ======================================================================================================================== Class B 1,000.00 1,000.00 1,042.13 1,014.13 11.24 11.09 2.19 ======================================================================================================================== Class C 1,000.00 1,000.00 1,042.13 1,014.13 11.24 11.09 2.19 ======================================================================================================================== Class Z 1,000.00 1,000.00 1,046.90 1,019.15 6.12 6.04 1.19 ========================================================================================================================
Expenses paid during the period are equal to the fund's respective class 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 366. It is important to note that the expense amounts shown in the table are meant to highlight only ongoing costs of investing in the fund 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. COMPARE WITH OTHER FUNDS Since all mutual fund companies are required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the fund 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. 13 PORTFOLIO MANAGERS' REPORT ------------------------------------------------------ Columbia Tax-Managed Value Fund For the 12-month period ended October 31, 2004, Columbia Tax-Managed Value Fund class A shares returned 13.78% without sales charge. The fund's return trailed the Russell 1000 Value Index, which returned 15.45%. It was higher than the average return of the Morningstar Large Value Category, which was 12.14%.1 Favorable results from energy and utility investments helped the portfolio achieve a double-digit gain for the period. SECTOR SELECTION AIDS PERFORMANCE Portfolio performance was led by investments in the utilities sector, which were up approximately 52% during the period. Utilities are generally high-yielding investments, and they became increasingly attractive to investors seeking higher current yields in a favorable tax environment. A number of utility companies improved their credit ratings through restructuring. In particular, TXU Corp. engineered a successful sale of non-strategic assets, improving its financial condition and enabling the company to preserve its dividend. An overweight position in the energy sector also contributed favorably to portfolio performance. The price of oil went higher and stayed higher longer than many people expected, resulting in substantial profits for companies such as BPPLC, ConocoPhillips and Halliburton Co. Because we believe these profits may not be sustainable, we reduced the fund's position in the sector late in the period, taking advantage of the group's price appreciation. LIMITING THE IMPACT OF UNDERPERFORMING SECTORS The worst performing sector during the period was technology, which rose only 5.6% for the twelve-month period. Corporate spending on new computer systems and software has been disappointing, as many companies have been paying out dividends, buying back stock or stockpiling cash as an alternative to spending. Because technology companies tend not to pay generous dividends, they were out of favor with investors for much of the period. The weakness in technology shares had a limited impact on the portfolio, because we maintained a market weight of approximately 6% of total assets. However, the financial sector, which accounts for 30% of the fund's assets was up only slightly during the period and consequently held down overall returns. Financial stocks tend not to perform well during periods of rising short-term interest rates, which occurred in the second half of the period. In addition, capital market activities slowed 1 (C)2004 by Morningstar, Inc. All rights reserved. The information contained herein is the proprietary information of Morningstar, Inc., may not be copied or redistributed for any purpose and may only be used for noncommercial, personal purposes. The information contained herein is not represented or warranted to be accurate, correct, complete or timely. Morningstar, Inc. shall not be responsible for investment decisions, damages or other losses resulting from the use of this information. Past performance is no guarantee of future performance. Morningstar, Inc. has not granted consent for it to be considered or deemed an "expert" under the Securities Act of 1933. Morningstar Categories compare the performance of funds with similar investment objectives and strategies. - -------------------------------------------------------------------------------- [sidebar data]: Summary o For the 12-month period ended October 31, 2004, the fund's class A shares returned 13.78% without sales charge. o The fund's return was below its benchmark, the Russell 1000 Value Index, but above the average for other funds in its category. o The fund benefited from effective sector management, highlighting strong performers such as energy while underweighting financial stocks and the consumer discretionary sector. artwork: 2 arrows up Class A shares 13.78% Russell 1000 Value Index 15.45% Objective Seeks long-term capital growth while reducing shareholder exposure to taxes Total net assets $73.1 million Net asset value per share as of 10/31/04 ($) - ------------------------------------------ Class A 11.40 ========================================== Class B 11.07 ========================================== Class C 11.07 ========================================== Class Z 11.53 ========================================== Distributions declared per share 11/01/03 - 10/31/04 ($) - ------------------------------------------ Class A 0.09 ========================================== Class B 0.00* ========================================== Class C 0.00* ========================================== Class Z 0.12 ========================================== * Rounds to less than $0.01 per share. 14 ------------------------------------------------------------- Columbia Tax-Managed Value Fund down over the past year, and the banking industry experienced soft loan demand at a time when many companies were content to let cash build up on their balance sheets. Consumer discretionary stocks were a drag on fund performance. However, we did well to keep the fund's exposure in the sector lower than the fund's benchmark because consumer stocks were weak during the period. We eliminated the fund's position in General Motors Corp. and held back on investments in the retail sector. Our view was that as the refinancing boom tailed off and the effect of the 2003 tax credit waned, consumers would lose some of their spending strength and that consumer-oriented companies would suffer as a result. The sector's weak performance supported that view. A TEMPERED OUTLOOK FOR VALUE INVESTMENTS While value-oriented investments have outperformed significantly over the past twelve months, our outlook is more restrained today. We believe that value stocks are fairly valued at current levels. With rising interest rates likely to constrain the market as a whole, we plan to continue to manage the fund with a value-oriented eye to finding quality companies trading at reasonable prices. Gregory M. Miller has co-managed Columbia Tax-Managed Value Fund since April 2003 and has been with the advisor or its predecessors or affiliate organizations since 1985. /s/ Gregory M. Miller Richard Dahlberg has co-managed the fund since October 2003 and has been with the advisor since September 2003. /s/ Richard Dahlberg Brian Cunningham has co-managed the fund since November 2003 and has been with the advisor or its predecessors or affiliate organizations since 1987. /s/ Brian Cunningham An investment in the fund may present certain risks, including stock market fluctuations that occur in response to economic and business developments. Value stocks are securities of companies that may have experienced adverse business or industry developments or may be subject to special risks that have caused the stocks to be out of favor. If the advisor's assessment of a company's prospects is wrong, the price of its stock may not approach the value the advisor has placed on it. Certain active tax-reduction techniques are used only if the fund's advisor believes they will help the fund achieve its investment goals. The fund expects to distribute taxable income and capital gains from time to time. Market conditions may limit the fund's ability to generate tax losses or to avoid dividend income. The ability to use certain tax-management techniques may be curtailed or eliminated in the future by tax legislation, regulations, administrative interpretations or court decisions. - -------------------------------------------------------------------------------- [sidebar data]: Top 5 sectors as of 10/31/04 (%) - -------------------------------------- Financials 29.7 ====================================== Energy 13.9 ====================================== Industrials 11.8 ====================================== Consumer staples 10.5 ====================================== Consumer discretionary 6.7 ====================================== Top 10 holdings as of 10/31/04 (%) - -------------------------------------- Citigroup, Inc. 4.1 ====================================== Exxon Mobil Corp. 3.7 ====================================== ConocoPhillips 3.0 ====================================== JPMorgan Chase & Co. 2.9 ====================================== BP PLC 2.8 ====================================== General Electric Co. 2.8 ====================================== U.S. Bancorp 2.2 ====================================== SBC Communications, Inc. 2.2 ====================================== Wells Fargo & Co. 2.2 ====================================== TXU Corp. 2.1 ====================================== Holdings discussed in this report as of 10/31/04 (%) - -------------------------------------- TXU Corp. 2.1 ====================================== BPPLC 2.8 ====================================== ConocoPhillips 3.0 ====================================== Halliburton Co. 1.2 ====================================== Your fund is actively managed and the composition of its portfolio will change over time. Information provided is calculated as a percentage of net assets. 15 FINANCIAL STATEMENTS ------------------------------------------------------------ October 31, 2004 Columbia Tax-Managed Funds
A GUIDE TO UNDERSTANDING YOUR FUND'S FINANCIAL STATEMENTS - ------------------------------------------------------------------------------------------------------------------ INVESTMENT PORTFOLIO The investment portfolio details all of the fund's holdings and their market value as of the last day of the reporting period. Portfolio holdings are organized by type of asset, industry, country or geographic region (if applicable) to demonstrate areas of concentration and diversification. - ------------------------------------------------------------------------------------------------------------------ STATEMENT OF ASSETS AND LIABILITIES This statement details the fund's assets, liabilities, net assets and share price for each share class as of the last day of the reporting period. Net assets are calculated by subtracting all the fund's liabilities (including any unpaid expenses) from the total of the fund's investment and non-investment assets. The share price for each class is calculated by dividing net assets for that class by the number of shares outstanding in that class as of the last day of the reporting period. - ------------------------------------------------------------------------------------------------------------------ STATEMENT OF OPERATIONS This statement details income earned by the fund and the expenses accrued by the fund during the reporting period. The Statement of Operations also shows any net gain or loss the fund realized on the sales of its holdings during the period, as well as any unrealized gains or losses recognized over the period. The total of these results represents the fund's net increase or decrease in net assets from operations. - ------------------------------------------------------------------------------------------------------------------ STATEMENT OF CHANGES IN NET ASSETS This statement demonstrates how the fund's net assets were affected by its operating results, distributions to shareholders and shareholder transactions (e.g., subscriptions, redemptions and dividend reinvestments) during the reporting period. The Statement of Changes in Net Assets also details changes in the number of shares outstanding. - ------------------------------------------------------------------------------------------------------------------ NOTES TO FINANCIAL STATEMENTS These notes disclose the organizational background of the fund, its significant accounting policies (including those surrounding security valuation, income recognition and distributions to shareholders), federal tax information, fees and compensation paid to affiliates and significant risks and contingencies. - ------------------------------------------------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS The financial highlights demonstrate how the fund's net asset value per share was affected by the fund's operating results. The financial highlights table also discloses the classes' performance and certain key ratios (e.g., class expenses and net investment income as a percentage of average net assets).
16 INVESTMENT PORTFOLIO ------------------------------------------------------------ October 31, 2004 Columbia Tax-Managed Aggressive Growth Fund Shares Value ($) - -------------------------------------------------------------------------------- COMMON STOCKS - 99.6% CONSUMER DISCRETIONARY - 18.3% Auto Components - 0.5% Autoliv, Inc. 1,260 53,865 ---------- Auto Components Total 53,865 Hotels, Restaurants & Leisure - 5.7% Applebee's International, Inc. 2,580 59,005 Cheesecake Factory, Inc. (a) 1,390 60,340 Four Seasons Hotels, Inc. 540 36,515 Harrah's Entertainment, Inc. 1,610 94,217 Hilton Hotels Corp. 5,210 103,679 Marriott International, Inc., Class A 1,380 75,196 Yum! Brands, Inc. 3,810 165,735 ---------- Hotels, Restaurants & Leisure Total 594,687 Household Durables - 2.0% Centex Corp. 1,340 69,600 D.R. Horton, Inc. 2,290 68,700 Harman International Industries, Inc. 350 42,063 Pulte Homes, Inc. 580 31,830 ---------- Household Durables Total 212,193 Leisure Equipment & Products - 0.4% Marvel Enterprises, Inc. (a) 3,000 46,200 ---------- Leisure Equipment & Products Total 46,200 Media - 3.1% Grupo Televisa SA, ADR 820 45,100 Lamar Advertising Co., Class A (a) 1,320 54,674 Sirius Satellite Radio, Inc. (a) 7,100 27,690 Univision Communications, Inc., Class A (a) 1,670 51,703 XM Satellite Radio Holdings, Inc., Class A (a) 4,600 148,672 ---------- Media Total 327,839 Specialty Retail - 5.3% Bed Bath & Beyond, Inc. (a) 1,220 49,764 Chico's FAS, Inc. (a) 3,340 133,700 PETCO Animal Supplies, Inc. (a) 1,760 62,955 PETsMART, Inc. 2,720 86,986 Staples, Inc. 4,080 121,339 Urban Outfitters, Inc. (a) 2,350 96,350 ---------- Specialty Retail Total 551,094 Textiles, Apparel & Luxury Goods - 1.3% Coach, Inc. (a) 2,930 136,626 ---------- Textiles, Apparel & Luxury Goods Total 136,626 ---------- CONSUMER DISCRETIONARY TOTAL 1,922,504 CONSUMER STAPLES - 3.8% Food & Staples Retailing - 0.7% Whole Foods Market, Inc. 920 74,915 ---------- Food & Staples Retailing Total 74,915 Shares Value ($) - -------------------------------------------------------------------------------- Food Products - 2.6% Bunge Ltd. 2,800 133,644 Dean Foods Co. (a) 2,850 85,073 Hershey Foods Corp. 1,060 53,731 ---------- Food Products Total 272,448 Personal Products - 0.5% Alberto-Culver Co. 1,180 52,935 ---------- Personal Products Total 52,935 ---------- CONSUMER STAPLES TOTAL 400,298 ENERGY - 7.2% Energy Equipment & Services - 4.6% Baker Hughes, Inc. 2,330 99,794 BJ Services Co. 1,760 89,760 Nabors Industries Ltd. (a) 1,060 52,067 National-Oilwell, Inc. (a) 3,930 132,480 Patterson-UTI Energy, Inc. 1,810 34,806 Weatherford International Ltd. (a) 1,480 77,345 ---------- Energy Equipment & Services Total 486,252 Oil & Gas - 2.6% Apache Corp. 1,060 53,742 EOG Resources, Inc. 630 41,933 Murphy Oil Corp. 420 33,608 Ultra Petroleum Corp. (a) 1,000 48,600 XTO Energy, Inc. 2,920 97,470 ---------- Oil & Gas Total 275,353 ---------- ENERGY TOTAL 761,605 FINANCIALS - 4.6% Capital Markets - 0.8% E*TRADE Financial Corp. (a) 6,640 85,656 ---------- Capital Markets Total 85,656 Commercial Banks - 2.1% North Fork Bancorporation, Inc. 1,450 63,945 TCF Financial Corp. 2,870 90,462 Zions Bancorporation 940 62,200 ---------- Commercial Banks Total 216,607 Insurance - 1.1% Ambac Financial Group, Inc. 1,530 119,432 ---------- Insurance Total 119,432 Real Estate - 0.6% St. Joe Co. 1,280 65,152 ---------- Real Estate Total 65,152 ---------- FINANCIALS TOTAL 486,847 See Accompanying Notes to Financial Statements. 17 - -------------------------------------------------------------------------------- October 31, 2004 Columbia Tax-Managed Aggressive Growth Fund Shares Value ($) - -------------------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) HEALTH CARE - 18.8% Biotechnology - 3.3% Amylin Pharmaceuticals, Inc. (a) 4,390 93,507 Gen-Probe, Inc. (a) 2,150 75,336 Genzyme Corp. (a) 2,160 113,335 Martek Biosciences Corp. (a) 1,370 64,467 ---------- Biotechnology Total 346,645 Health Care Equipment & Supplies - 6.4% Beckman Coulter, Inc. 1,030 61,285 Biomet, Inc. 2,490 116,233 Fisher Scientific International, Inc. (a) 2,600 149,136 Kinetic Concepts, Inc. (a) 2,850 142,016 Thermo Electron Corp. (a) 4,040 117,160 Varian Medical Systems, Inc. (a) 2,160 86,724 ---------- Health Care Equipment & Supplies Total 672,554 Health Care Providers & Services - 4.1% Accredo Health, Inc. (a) 2,340 53,890 Anthem, Inc. (a) 700 56,280 Community Health Systems, Inc. (a) 2,040 54,713 DaVita, Inc. (a) 5,310 157,282 McKesson Corp. 1,990 53,053 UnitedHealth Group, Inc. 719 52,056 ---------- Health Care Providers & Services Total 427,274 Pharmaceuticals - 5.0% Elan Corp. PLC, ADR (a) 3,800 98,040 Endo Pharmaceuticals Holdings, Inc. (a) 3,230 70,414 IVAX Corp. (a) 3,075 55,657 Medicis Pharmaceutical Corp., Class A 4,720 191,962 Nektar Therapeutics (a) 3,860 55,623 Teva Pharmaceutical Industries Ltd., ADR 2,110 54,860 ---------- Pharmaceuticals Total 526,556 ---------- HEALTH CARE TOTAL 1,973,029 INDUSTRIALS - 11.5% Aerospace & Defense - 1.1% L-3 Communications Holdings, Inc. 730 48,129 United Defense Industries, Inc. (a) 1,560 62,618 ---------- Aerospace & Defense Total 110,747 Air Freight & Logistics - 1.3% C.H. Robinson Worldwide, Inc. 1,380 74,437 Expeditors International of Washington, Inc. 1,110 63,381 ---------- Air Freight & Logistics Total 137,818 Shares Value ($) - -------------------------------------------------------------------------------- Building Products - 0.5% Masco Corp. 1,530 52,418 ---------- Building Products Total 52,418 Commercial Services & Supplies - 7.8% Avery Dennison Corp. 1,000 60,840 Career Education Corp. (a) 930 29,174 ChoicePoint, Inc. (a) 3,270 136,130 Cintas Corp. 1,240 53,494 Corporate Executive Board Co. 2,400 152,760 Education Management Corp. (a) 2,530 67,855 Iron Mountain, Inc. (a) 3,420 113,031 Manpower, Inc. 3,350 151,587 Robert Half International, Inc. 2,090 55,448 ---------- Commercial Services & Supplies Total 820,319 Construction & Engineering - 0.8% Jacobs Engineering Group, Inc. (a) 2,120 86,348 ---------- Construction & Engineering Total 86,348 ---------- INDUSTRIALS TOTAL 1,207,650 INFORMATION TECHNOLOGY - 26.3% Communications Equipment - 3.7% Avocent Corp. (a) 1,310 46,636 Comverse Technology, Inc. (a) 4,780 98,659 Harris Corp. 900 55,377 Juniper Networks, Inc. (a) 4,500 119,745 Polycom, Inc. (a) 3,300 68,145 ---------- Communications Equipment Total 388,562 Computers & Peripherals - 1.5% Lexmark International, Inc., Class A (a) 560 46,542 SanDisk Corp. (a) 5,000 104,350 ---------- Computers & Peripherals Total 150,892 Electronic Equipment & Instruments - 1.0% CDW Corp. 890 55,207 FLIR Systems, Inc. (a) 890 47,357 ---------- Electronic Equipment & Instruments Total 102,564 Internet Software & Services - 0.7% Ask Jeeves, Inc. (a) 2,870 73,989 ---------- Internet Software & Services Total 73,989 IT Services - 1.4% Cognizant Technology Solutions Corp., Class A (a) 2,970 100,980 SunGard Data Systems, Inc. (a) 1,880 49,801 ---------- IT Services Total 150,781 See Accompanying Notes to Financial Statements. 18 - -------------------------------------------------------------------------------- October 31, 2004 Columbia Tax-Managed Aggressive Growth Fund Shares Value ($) - -------------------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) INFORMATION TECHNOLOGY - (continued) Office Electronics - 1.0% Zebra Technologies Corp., Class A (a) 1,920 101,741 ---------- Office Electronics Total 101,741 Semiconductors & Semiconductor Equipment - 8.9% Advanced Micro Devices, Inc. (a) 9,040 152,053 Altera Corp. (a) 2,200 50,006 Broadcom Corp., Class A (a) 5,100 137,955 Linear Technology Corp. 3,020 114,398 Marvell Technology Group Ltd. (a) 5,930 169,420 Microchip Technology, Inc. 2,580 78,045 National Semiconductor Corp. 2,180 36,406 NVIDIA Corp. (a) 5,620 81,321 Silicon Laboratories, Inc. (a) 3,860 115,684 ---------- Semiconductors & Semiconductor Equipment Total 935,288 Software - 8.1% Amdocs Ltd. (a) 3,180 79,977 BMC Software, Inc. (a) 4,320 81,734 Business Objects SA, ADR (a) 850 21,692 Check Point Software Technologies Ltd. (a) 4,140 93,651 Citrix Systems, Inc. (a) 4,470 107,861 Hyperion Solutions Corp. (a) 2,650 106,344 Intuit, Inc. (a) 1,260 57,154 Mercury Interactive Corp. (a) 2,950 128,118 Novell, Inc. (a) 7,950 57,161 Shanda Interactive Entertainment Ltd., ADR (a) 1,800 54,700 VERITAS Software Corp. (a) 3,010 65,859 ---------- Software Total 854,251 ---------- INFORMATION TECHNOLOGY TOTAL 2,758,068 MATERIALS - 5.2% Chemicals - 1.7% Potash Corp. of Saskatchewan, Inc. 2,600 173,654 ---------- Chemicals Total 173,654 Construction Materials - 0.3% Florida Rock Industries, Inc. 710 36,671 ---------- Construction Materials Total 36,671 Metals & Mining - 3.2% Allegheny Technologies, Inc. 1,960 32,948 Freeport-McMoRan Copper & Gold, Inc., Class B 1,530 55,417 Inco Ltd. (a) 2,620 92,748 Peabody Energy Corp. 1,190 75,898 Phelps Dodge Corp. 880 77,035 ---------- Metals & Mining Total 334,046 ---------- MATERIALS TOTAL 544,371 Shares Value ($) - -------------------------------------------------------------------------------- TELECOMMUNICATION SERVICES - 3.9% Wireless Telecommunication Services - 3.9% American Tower Corp., Class A (a) 2,670 45,897 Crown Castle International Corp. (a) 6,060 92,779 Millicom International Cellular SA (a) 4,380 87,031 Nextel Partners, Inc., Class A (a) 4,450 74,938 VimpelCom, ADR (a) 310 35,340 Western Wireless Corp., Class A (a) 2,460 71,684 ---------- Wireless Telecommunication Services Total 407,669 ---------- TELECOMMUNICATION SERVICES TOTAL 407,669 TOTAL COMMON STOCKS (cost of $9,409,107) 10,462,041 TOTAL INVESTMENTS - 99.6% (COST OF $9,409,107) (B) 10,462,041 OTHER ASSETS & Liabilities, Net - 0.4% 44,372 Net Assets - 100.0% 10,506,413 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Cost for federal income tax purposes is $9,433,227. SECTOR % OF NET ASSETS ------ --------------- Information Technology 26.3% Health Care 18.8 Consumer Discretionary 18.3 Industrials 11.5 Energy 7.2 Materials 5.2 Financials 4.6 Telecommunication Services 3.9 Consumer Staples 3.8 Other Assets &Liabilities, Net 0.4 -------------- 100.0% ACRONYM NAME ------- ---- ADR American Depositary Receipt See Accompanying Notes to Financial Statements. 19 INVESTMENT PORTFOLIO ------------------------------------------------------------ October 31, 2004 Columbia Tax-Managed Growth Fund Shares Value ($) - -------------------------------------------------------------------------------- COMMON STOCKS - 98.6% CONSUMER DISCRETIONARY - 10.6% Internet & Catalog Retail - 1.1% eBay, Inc. (a) 32,000 3,123,520 ---------- Internet & Catalog Retail Total 3,123,520 Media - 4.5% Univision Communications, Inc., Class A (a) 221,000 6,842,160 Viacom, Inc., Class B 154,872 5,651,279 ---------- Media Total 12,493,439 Multiline Retail - 2.7% Kohl's Corp. (a) 148,000 7,512,480 ---------- Multiline Retail Total 7,512,480 Specialty Retail - 2.3% Lowe's Companies, Inc. 114,000 6,415,920 ---------- Specialty Retail Total 6,415,920 ---------- CONSUMER DISCRETIONARY TOTAL 29,545,359 CONSUMER STAPLES - 9.0% Food & Staples Retailing - 5.8% Wal-Mart Stores, Inc. 173,800 9,371,296 Walgreen Co. 190,000 6,819,100 ---------- Food & Staples Retailing Total 16,190,396 Household Products - 3.2% Colgate-Palmolive Co. 79,000 3,524,980 Procter & Gamble Co. 103,000 5,271,540 ---------- Household Products Total 8,796,520 ---------- CONSUMER STAPLES TOTAL 24,986,916 ENERGY - 8.5% Energy Equipment & Services - 3.1% Nabors Industries Ltd. (a) 105,000 5,157,600 Schlumberger Ltd. 54,000 3,398,760 ---------- Energy Equipment & Services Total 8,556,360 Oil & Gas - 5.4% Apache Corp. 115,000 5,830,500 Exxon Mobil Corp. 191,000 9,401,020 ---------- Oil & Gas Total 15,231,520 ---------- ENERGY TOTAL 23,787,880 FINANCIALS - 18.5% Capital Markets - 5.1% Lehman Brothers Holdings, Inc. 90,000 7,393,500 Merrill Lynch & Co., Inc. 125,100 6,747,894 ---------- Capital Markets Total 14,141,394 Shares Value ($) - -------------------------------------------------------------------------------- Commercial Banks - 3.0% Bank of America Corp. (b) 188,600 8,447,394 ---------- Commercial Banks Total 8,447,394 Diversified Financial Services - 1.3% Citigroup, Inc. 82,155 3,645,217 ---------- Diversified Financial Services Total 3,645,217 Insurance - 7.3% American International Group, Inc.107,854 6,547,816 Chubb Corp. 61,000 4,399,930 RenaissanceRe Holdings Ltd. 135,080 6,324,446 XL Capital Ltd., Class A 42,500 3,081,250 ---------- Insurance Total 20,353,442 Thrifts & Mortgage Finance - 1.8% Fannie Mae 69,200 4,854,380 ---------- Thrifts & Mortgage Finance Total 4,854,380 ---------- FINANCIALS TOTAL 51,441,827 HEALTH CARE - 17.6% Biotechnology - 1.9% Amgen, Inc. (a) 93,800 5,327,840 ---------- Biotechnology Total 5,327,840 Health Care Equipment & Supplies - 6.7% Medtronic, Inc. 123,500 6,312,085 St. Jude Medical, Inc. (a) 90,300 6,914,271 Zimmer Holdings, Inc. (a) 70,000 5,431,300 ---------- Health Care Equipment & Supplies Total 18,657,656 Health Care Providers & Services - 3.7% Caremark Rx, Inc. (a) 180,000 5,394,600 Express Scripts, Inc. (a) 77,500 4,960,000 ---------- Health Care Providers & Services Total 10,354,600 Pharmaceuticals - 5.3% Eli Lilly & Co. 81,000 4,447,710 Schering-Plough Corp. 300,000 5,433,000 Teva Pharmaceutical Industries Ltd., ADR 185,000 4,810,000 ---------- Pharmaceuticals Total 14,690,710 ---------- HEALTH CARE TOTAL 49,030,806 INDUSTRIALS - 12.5% Aerospace & Defense - 1.1% Goodrich Corp. 99,500 3,067,585 ---------- Aerospace & Defense Total 3,067,585 Commercial Services & Supplies - 1.5% Waste Management, Inc. 144,000 4,101,120 ---------- Commercial Services & Supplies Total 4,101,120 See Accompanying Notes to Financial Statements. 20 - -------------------------------------------------------------------------------- October 31, 2004 Columbia Tax-Managed Growth Fund Shares Value ($) - -------------------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) INDUSTRIALS - (continued) Electrical Equipment - 2.2% Emerson Electric Co. 96,300 6,168,015 ---------- Electrical Equipment Total 6,168,015 Industrial Conglomerates - 3.4% General Electric Co. 278,500 9,502,420 ---------- Industrial Conglomerates Total 9,502,420 Machinery - 4.3% Eaton Corp. 101,000 6,458,950 Illinois Tool Works, Inc. 61,600 5,684,448 ---------- Machinery Total 12,143,398 ---------- INDUSTRIALS TOTAL 34,982,538 INFORMATION TECHNOLOGY - 20.2% Communications Equipment - 1.8% Cisco Systems, Inc. (a) 264,000 5,071,440 ---------- Communications Equipment Total 5,071,440 Computers & Peripherals - 7.4% Dell, Inc. (a) 117,000 4,102,020 EMC Corp. (a) 400,000 5,148,000 Lexmark International, Inc., Class A (a) 89,000 7,396,790 Network Appliance, Inc. (a) 165,000 4,037,550 ---------- Computers & Peripherals Total 20,684,360 IT Services - 2.3% Affiliated Computer Services, Inc., Class A (a) 117,000 6,382,350 ---------- IT Services Total 6,382,350 Semiconductors & Semiconductor Equipment - 4.2% Intel Corp. 240,000 5,342,400 Texas Instruments, Inc. 151,975 3,715,789 Xilinx, Inc. 83,000 2,539,800 ---------- Semiconductors & Semiconductor Equipment Total 11,597,989 Software - 4.5% Electronic Arts, Inc. (a) 94,000 4,222,480 Microsoft Corp. 296,700 8,304,633 ---------- Software Total 12,527,113 ---------- INFORMATION TECHNOLOGY TOTAL 56,263,252 MATERIALS - 1.7% Chemicals - 1.7% Ecolab, Inc. 137,000 4,637,450 ---------- Chemicals Total 4,637,450 ---------- MATERIALS TOTAL 4,637,450 TOTAL COMMON STOCKS (cost of $227,419,349) 274,676,028 Par ($) Value ($) - -------------------------------------------------------------------------------- SHORT-TERM OBLIGATION - 0.7% Repurchase agreement with State Street Bank & Trust Co., dated 10/29/04, due 11/01/04 at 1.750%, collateralized by a U.S. Treasury Bond maturing 08/15/17, market value $2,109,779 (repurchase proceeds $2,068,302) 2,068,000 2,068,000 ---------- Total Short-Term Obligation (cost of $2,068,000) 2,068,000 TOTAL INVESTMENTS - 99.3% (COST OF $229,487,349) (C) 276,744,028 OTHER ASSETS & Liabilities, Net - 0.7% 1,955,911 Net Assets - 100.0% 278,699,939 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Investments in affiliates as of October 31, 2004: Security Name: Bank of America Corp. (As a result of the acquisition of FleetBoston Financial Corp., effective April 1, 2004, Bank of America Corp. became the parent company of the Investment Advisor). Shares as of 10/31/03: 86,300 Shares purchased prior to 04/01/04: 41,500 Shares sold: (33,500) Shares acquired through a 2 for 1 stock split: 94,300 Shares as of 10/31/04: 188,600 Net realized loss*: $ (39) Dividend income earned*: $ 160,310 Value at end of period: $8,447,394 * Represents activity for the period April 1, 2004 through October 31, 2004 (See Note 6). (c) Cost for federal income tax purposes is $231,070,052. SECTOR % OF NET ASSETS ------ --------------- Information Technology 20.2% Financials 18.5 Health Care 17.6 Industrials 12.5 Consumer Discretionary 10.6 Consumer Staples 9.0 Energy 8.5 Materials 1.7 Cash Equivalents and Other Assets & Liabilities, Net 1.4 --------------- 100.0% ACRONYM NAME ------- ---- ADR American Depositary Receipt See Accompanying Notes to Financial Statements. 21 INVESTMENT PORTFOLIO ------------------------------------------------------------ October 31, 2004 Columbia Tax-Managed Growth Fund II Shares Value ($) - -------------------------------------------------------------------------------- COMMON STOCKS - 97.5% CONSUMER DISCRETIONARY - 10.6% Internet & Catalog Retail - 1.1% eBay, Inc. (a) 4,400 429,484 ---------- Internet & Catalog Retail Total 429,484 Media - 4.6% Univision Communications, Inc., Class A (a) 34,130 1,056,665 Viacom, Inc., Class B 20,900 762,641 ---------- Media Total 1,819,306 Multiline Retail - 2.6% Kohl's Corp. (a) 20,400 1,035,504 ---------- Multiline Retail Total 1,035,504 Specialty Retail - 2.3% Lowe's Companies, Inc. 16,600 934,248 ---------- Specialty Retail Total 934,248 ---------- CONSUMER DISCRETIONARY TOTAL 4,218,542 CONSUMER STAPLES - 9.3% Food & Staples Retailing - 5.8% Wal-Mart Stores, Inc. 23,870 1,287,070 Walgreen Co. 28,500 1,022,865 ---------- Food & Staples Retailing Total 2,309,935 Household Products - 3.5% Colgate-Palmolive Co. 11,400 508,668 Procter & Gamble Co. 17,200 880,296 ---------- Household Products Total 1,388,964 ---------- CONSUMER STAPLES TOTAL 3,698,899 ENERGY - 8.4% Energy Equipment & Services - 3.0% Nabors Industries Ltd. (a) 14,400 707,328 Schlumberger Ltd. 7,500 472,050 ---------- Energy Equipment & Services Total 1,179,378 Oil & Gas - 5.4% Apache Corp. 16,000 811,200 Exxon Mobil Corp. 27,000 1,328,940 ---------- Oil & Gas Total 2,140,140 ---------- ENERGY TOTAL 3,319,518 FINANCIALS - 17.7% Capital Markets - 5.0% Lehman Brothers Holdings, Inc. 12,700 1,043,305 Merrill Lynch & Co., Inc. 17,200 927,768 ---------- Capital Markets Total 1,971,073 Shares Value ($) - -------------------------------------------------------------------------------- Commercial Banks - 2.3% Bank of America Corp. (b) 20,600 922,674 ---------- Commercial Banks Total 922,674 Diversified Financial Services - 1.2% Citigroup, Inc. 10,800 479,196 ---------- Diversified Financial Services Total 479,196 Insurance - 7.6% American International Group, Inc. 15,663 950,901 Chubb Corp. 8,350 602,285 RenaissanceRe Holdings Ltd. 18,950 887,239 XL Capital Ltd., Class A 7,700 558,250 ---------- Insurance Total 2,998,675 Thrifts & Mortgage Finance - 1.6% Fannie Mae 9,085 637,313 ---------- Thrifts & Mortgage Finance Total 637,313 ---------- FINANCIALS TOTAL 7,008,931 HEALTH CARE - 17.8% Biotechnology - 2.1% Amgen, Inc. (a) 14,400 817,920 ---------- Biotechnology Total 817,920 Health Care Equipment & Supplies - 6.7% Medtronic, Inc. 17,300 884,203 St. Jude Medical, Inc. (a) 13,000 995,410 Zimmer Holdings, Inc. (a) 9,900 768,141 ---------- Health Care Equipment & Supplies Total 2,647,754 Health Care Providers & Services - 3.9% Caremark Rx, Inc. (a) 26,000 779,220 Express Scripts, Inc. (a) 12,000 768,000 ---------- Health Care Providers & Services Total 1,547,220 Pharmaceuticals - 5.1% Eli Lilly & Co. 11,300 620,483 Schering-Plough Corp. 41,000 742,510 Teva Pharmaceutical Industries Ltd., ADR 25,800 670,800 ---------- Pharmaceuticals Total 2,033,793 ---------- HEALTH CARE TOTAL 7,046,687 INDUSTRIALS - 12.4% Aerospace & Defense - 1.0% Goodrich Corp. 13,500 416,205 ---------- Aerospace & Defense Total 416,205 Commercial Services & Supplies - 1.7% Waste Management, Inc. 23,000 655,040 ---------- Commercial Services & Supplies Total 655,040 See Accompanying Notes to Financial Statements. 22 - -------------------------------------------------------------------------------- October 31, 2004 Columbia Tax-Managed Growth Fund II Shares Value ($) - -------------------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) INDUSTRIALS - (continued) Electrical Equipment - 2.1% Emerson Electric Co. 13,100 839,055 ---------- Electrical Equipment Total 839,055 Industrial Conglomerates - 3.4% General Electric Co. 39,500 1,347,740 ---------- Industrial Conglomerates Total 1,347,740 Machinery - 4.2% Eaton Corp. 13,500 863,325 Illinois Tool Works, Inc. 8,600 793,607 ---------- Machinery Total 1,656,932 ---------- INDUSTRIALS TOTAL 4,914,972 INFORMATION TECHNOLOGY - 19.6% Communications Equipment - 1.7% Cisco Systems, Inc. (a) 36,395 699,148 ---------- Communications Equipment Total 699,148 Computers & Peripherals - 7.1% Dell, Inc. (a) 16,500 578,490 EMC Corp. (a) 54,000 694,980 Lexmark International, Inc., Class A (a) 11,700 972,387 Network Appliance, Inc. (a) 23,000 562,810 ---------- Computers & Peripherals Total 2,808,667 IT Services - 2.1% Affiliated Computer Services, Inc., Class A (a) 15,000 818,250 ---------- IT Services Total 818,250 Semiconductors & Semiconductor Equipment - 4.2% Intel Corp. 33,200 739,032 Texas Instruments, Inc. 20,350 497,558 Xilinx, Inc. 13,700 419,220 ---------- Semiconductors & Semiconductor Equipment Total 1,655,810 Software - 4.5% Electronic Arts, Inc. (a) 14,000 628,880 Microsoft Corp. 41,600 1,164,384 ---------- Software Total 1,793,264 ---------- INFORMATION TECHNOLOGY TOTAL 7,775,139 MATERIALS - 1.7% Chemicals - 1.7% Ecolab, Inc. 19,400 656,690 ---------- Chemicals Total 656,690 MATERIALS TOTAL 656,690 TOTAL COMMON STOCKS (cost of $34,871,013) 38,639,378 Par ($) Value ($) - -------------------------------------------------------------------------------- Short-Term Obligation - 1.4% Repurchase agreement with State Street Bank & Trust Co., dated 10/29/04, due 11/01/04 at 1.750%, collateralized by a U.S. Treasury Bond maturing 08/15/17, market value $587,258 (repurchase proceeds $573,084) 573,000 573,000 ---------- TOTAL SHORT-TERM OBLIGATION (COST OF $573,000) 573,000 TOTAL INVESTMENTS - 98.9% (COST OF $35,444,013) (C) 39,212,378 OTHER ASSETS & LIABILITIES, NET - 1.1% 439,680 NET ASSETS - 100.0% 39,652,058 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Investments in affiliates as of October 31, 2004: Security name: Bank of America Corp. (As a result of the acquisition of FleetBoston Financial Corp., effective April 1, 2004, Bank of America Corp. became the parent company of the Investment Advisor). Shares as of 10/31/03: 12,100 Shares purchased prior to 04/01/04: 2,800 Shares sold: (4,600) Shares acquired through a 2 for 1 stock split: 10,300 Shares as of 10/31/04: 20,600 Net realized loss*: $ (5) Dividend income earned*: $ 17,510 Value at end of period: $922,674 * Represents activity for the period April 1, 2004 through October 31, 2004 (See Note 6). (c) Cost for federal income tax purposes is $35,625,074. SECTOR % OF NET ASSETS ------ --------------- Information Technology 19.6% Health Care 17.8 Financials 17.7 Industrials 12.4 Consumer Discretionary 10.6 Consumer Staples 9.3 Energy 8.4 Materials 1.7 Cash Equivalents and Other Assets & Liabilities, Net 2.5 -------------- 100.0% ACRONYM NAME ------- ---- ADR American Depositary Receipt See Accompanying Notes to Financial Statements. 23 INVESTMENT PORTFOLIO - -------------------------------------------------------------------------------- October 31, 2004 Columbia Tax-Managed Value Fund Shares Value ($) - -------------------------------------------------------------------------------- COMMON STOCKS - 97.8% CONSUMER DISCRETIONARY - 6.7% Hotels, Restaurants & Leisure - 0.9% Harrah's Entertainment, Inc. 4,034 236,069 McDonald's Corp. 13,312 388,045 ---------- Hotels, Restaurants & Leisure Total 624,114 Media - 3.5% Clear Channel Communications, Inc. 15,161 506,378 McGraw-Hill Companies, Inc. 10,156 875,955 Time Warner, Inc. (a) 51,352 854,497 Viacom, Inc., Class A 9,168 339,766 ---------- Media Total 2,576,596 Multiline Retail - 0.2% May Department Stores Co. 6,987 182,081 ---------- Multiline Retail Total 182,081 Specialty Retail - 2.1% Home Depot, Inc. 9,231 379,210 Limited Brands 17,765 440,217 Office Depot, Inc. (a) 43,944 711,453 ---------- Specialty Retail Total 1,530,880 ---------- CONSUMER DISCRETIONARY TOTAL 4,913,671 CONSUMER STAPLES - 10.5% Beverages - 1.8% PepsiCo, Inc. 26,629 1,320,266 ---------- Beverages Total 1,320,266 Food & Staples Retailing - 1.5% Costco Wholesale Corp. 22,622 1,084,499 ---------- Food & Staples Retailing Total 1,084,499 Food Products - 2.4% ConAgra Foods, Inc. 27,746 732,495 Kraft Foods, Inc., Class A 29,514 983,111 ---------- Food Products Total 1,715,606 Household Products - 3.8% Clorox Co. 17,222 940,321 Kimberly-Clark Corp. 15,406 919,276 Procter & Gamble Co. 18,264 934,752 ---------- Household Products Total 2,794,349 Tobacco - 1.0% Altria Group, Inc. 15,136 733,490 ---------- Tobacco Total 733,490 ---------- CONSUMER STAPLES TOTAL 7,648,210 Shares Value ($) - -------------------------------------------------------------------------------- ENERGY - 13.9% Energy Equipment & Services - 1.2% Halliburton Co. 24,317 900,702 ---------- Energy Equipment & Services Total 900,702 Oil & Gas - 12.7% BP PLC, ADR 34,806 2,027,449 ChevronTexaco Corp. 7,596 403,044 ConocoPhillips 26,307 2,217,943 Exxon Mobil Corp. 55,617 2,737,469 Marathon Oil Corp. 26,491 1,009,572 Royal Dutch Petroleum Co., N.Y. Registered Shares 16,538 897,021 ---------- Oil & Gas Total 9,292,498 ---------- ENERGY TOTAL 10,193,200 FINANCIALS - 29.7% Capital Markets - 3.9% Bank of New York Co., Inc. 31,425 1,020,055 Goldman Sachs Group, Inc. 6,733 662,392 Morgan Stanley 12,997 664,017 State Street Corp. 11,056 498,073 ---------- Capital Markets Total 2,844,537 Commercial Banks - 6.8% National City Corp. 19,539 761,435 U.S. Bancorp 56,867 1,626,965 Wachovia Corp. 19,848 976,720 Wells Fargo & Co. 26,565 1,586,462 ---------- Commercial Banks Total 4,951,582 Consumer Finance - 0.8% MBNA Corp. 22,733 582,647 ---------- Consumer Finance Total 582,647 Diversified Financial Services - 7.1% Citigroup, Inc. 67,980 3,016,273 JPMorgan Chase & Co. 55,789 2,153,455 ---------- Diversified Financial Services Total 5,169,728 Insurance - 7.7% AFLAC, Inc. 11,096 398,124 Ambac Financial Group, Inc. 9,853 769,125 American International Group, Inc. 22,731 1,379,999 Chubb Corp. 5,343 385,391 Hartford Financial Services Group, Inc. 9,459 553,162 Lincoln National Corp. 19,952 873,898 Willis Group Holdings Ltd. 12,135 436,253 XL Capital Ltd., Class A 11,322 820,845 ---------- Insurance Total 5,616,797 See Accompanying Notes to Financial Statements. 24 - -------------------------------------------------------------------------------- October 31, 2004 Columbia Tax-Managed Value Fund Shares Value ($) - -------------------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) FINANCIALS - (continued) Real Estate - 1.8% Archstone-Smith Trust, REIT 13,344 447,691 Avalonbay Communities, Inc., REIT 6,112 400,153 Kimco Realty Corp., REIT 9,117 497,332 ---------- Real Estate Total 1,345,176 Thrifts & Mortgage Finance - 1.6% Countrywide Financial Corp. 14,332 457,621 Freddie Mac 11,385 758,241 ---------- Thrifts & Mortgage Finance Total 1,215,862 ---------- FINANCIALS TOTAL 21,726,329 HEALTH CARE - 4.4% Health Care Providers & Services - 1.6% Aetna, Inc. 12,486 1,186,170 ---------- Health Care Providers & Services Total 1,186,170 Pharmaceuticals - 2.8% Bristol-Myers Squibb Co. 13,822 323,849 Johnson & Johnson 7,328 427,809 Merck & Co., Inc. 16,383 512,952 Pfizer, Inc. 26,617 770,562 ---------- Pharmaceuticals Total 2,035,172 ---------- HEALTH CARE TOTAL 3,221,342 INDUSTRIALS - 11.8% Aerospace & Defense - 3.7% General Dynamics Corp. 9,431 963,094 Raytheon Co. 11,300 412,224 United Technologies Corp. 13,831 1,283,793 ---------- Aerospace & Defense Total 2,659,111 Commercial Services & Supplies - 1.8% Cendant Corp. 16,972 349,453 Republic Services, Inc. 6,552 201,802 Waste Management, Inc. 27,463 782,146 ---------- Commercial Services & Supplies Total 1,333,401 Industrial Conglomerates - 4.5% General Electric Co. 59,314 2,023,794 Textron, Inc. 18,680 1,273,042 ---------- Industrial Conglomerates Total 3,296,836 Shares Value ($) - -------------------------------------------------------------------------------- Machinery - 1.8% Deere & Co. 11,793 704,985 Eaton Corp. 1,100 70,345 Ingersoll-Rand Co., Class A 7,740 529,726 ---------- Machinery Total 1,305,056 ---------- INDUSTRIALS TOTAL 8,594,404 INFORMATION TECHNOLOGY - 6.2% Communications Equipment - 1.1% Nokia Oyj, ADR 53,528 825,402 ---------- Communications Equipment Total 825,402 Computers & Peripherals - 2.1% International Business Machines Corp. 8,561 768,350 Lexmark International, Inc., Class A (a) 9,273 770,679 ---------- Computers & Peripherals Total 1,539,029 IT Services - 1.2% Accenture Ltd., Class A (a) 37,666 911,894 ---------- IT Services Total 911,894 Office Electronics - 1.3% Xerox Corp. (a) 62,893 928,929 ---------- Office Electronics Total 928,929 Software - 0.5% Microsoft Corp. 12,655 354,213 ---------- Software Total 354,213 ---------- INFORMATION TECHNOLOGY TOTAL 4,559,467 MATERIALS - 3.3% Chemicals - 1.4% Air Products & Chemicals, Inc. 19,318 1,027,331 ---------- Chemicals Total 1,027,331 Paper & Forest Products - 1.9% MeadWestvaco Corp. 24,616 776,143 Weyerhaeuser Co. 9,806 614,248 ---------- Paper & Forest Products Total 1,390,391 ---------- MATERIALS TOTAL 2,417,722 TELECOMMUNICATION SERVICES - 4.8% Diversified Telecommunication Services - 4.8% BellSouth Corp. 21,793 581,219 SBC Communications, Inc. 63,624 1,607,142 Verizon Communications, Inc. 34,686 1,356,223 ---------- Diversified Telecommunication Services Total 3,544,584 ---------- TELECOMMUNICATION SERVICES TOTAL 3,544,584 See Accompanying Notes to Financial Statements. 25 - -------------------------------------------------------------------------------- October 31, 2004 Columbia Tax-Managed Value Fund Shares Value ($) - -------------------------------------------------------------------------------- COMMON STOCKS - (CONTINUED) UTILITIES - 6.5% Electric Utilities - 6.5% American Electric Power Co., Inc. 25,310 833,458 Consolidated Edison, Inc. 28,704 1,247,189 Entergy Corp. 11,382 743,927 PG&E Corp. (a) 12,146 389,158 TXU Corp. 24,962 1,528,174 ---------- Electric Utilities Total 4,741,906 ---------- UTILITIES TOTAL 4,741,906 TOTAL COMMON STOCKS (cost of $58,558,382) 71,560,835 INVESTMENT COMPANY - 1.6% iShares Russell 1000 Value Index Fund 19,180 1,180,529 ---------- TOTAL INVESTMENT COMPANY (cost of $1,163,958) 1,180,529 Par ($) Value ($) - -------------------------------------------------------------------------------- SHORT-TERM OBLIGATION - 0.5% Repurchase agreement with State Street Bank & Trust Co., dated 10/29/04, due 11/01/04 at 1.750%, collateralized by a U.S. Treasury Bond maturing 08/15/17, market value $377,005 (repurchase proceeds $367,054) 367,000 367,000 ---------- TOTAL SHORT-TERM OBLIGATION (COST OF $367,000) 367,000 TOTAL INVESTMENTS - 99.9% (COST OF $60,089,340) (B) 73,108,364 OTHER ASSETS & LIABILITIES, NET - 0.1% 41,343 NET ASSETS - 100.0% 73,149,707 NOTES TO INVESTMENT PORTFOLIO: (a) Non-income producing security. (b) Cost for federal income tax purposes is $60,125,688. SECTOR % OF NET ASSETS ------ --------------- Financials 29.7% Energy 13.9 Industrials 11.8 Consumer Staples 10.5 Consumer Discretionary 6.7 Utilities 6.5 Information Technology 6.2 Telecommunication Services 4.8 Health Care 4.4 Materials 3.3 Investment Company 1.6 Cash Equivalents and Other Assets & Liabilities, Net 0.6 -------------- 100.0% ACRONYM NAME ------- ---- ADR American Depositary Receipt REIT Real Estate Investment Trust See Accompanying Notes to Financial Statements. 26 STATEMENTS OF ASSETS AND LIABILITIES - -------------------------------------------------------------------------------- October 31, 2004 Columbia Tax-Managed Funds
COLUMBIA TAX-MANAGED COLUMBIA COLUMBIA COLUMBIA AGGRESSIVE TAX-MANAGED TAX-MANAGED TAX-MANAGED GROWTH GROWTH GROWTH VALUE FUND ($) FUND ($) FUND II ($) FUND ($) - ------------------------------------------------------------------------------------------------------------------------------- ASSETS Unaffiliated investments, at cost 9,409,107 224,134,546 34,927,971 60,089,340 Affiliated investments, at cost -- 5,352,803 516,042 -- ----------- ----------- ----------- ----------- Unaffiliated investments, at value 10,462,041 268,296,634 38,289,704 73,108,364 Affiliated investments, at value -- 8,447,394 922,674 -- Cash 13,097 205 420 170 Receivable for: Investments sold 176,763 5,443,993 974,159 571,976 Fund shares sold 75 51,197 329 7,429 Interest -- 302 84 54 Dividends 2,624 123,355 17,469 162,319 Expense reimbursement due from Investment Advisor -- -- -- 14 Deferred Trustees' compensation plan 2,422 16,383 3,408 5,107 ----------- ----------- ----------- ----------- Total Assets 10,657,022 282,379,463 40,208,247 73,855,433 - ------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Expense reimbursement due to Investment Advisor 19,683 -- 38,139 -- Payable for: Investments purchased 43,253 2,015,256 251,907 401,360 Fund shares repurchased 34,555 1,132,842 165,663 137,238 Investment advisory fee 7,238 148,391 27,780 50,720 Administration fee 382 64,040 2,096 3,883 Transfer agent fee 3,517 73,999 12,996 23,933 Pricing and bookkeeping fees 1,233 7,966 1,333 3,261 Trustees' fees -- 748 78 1,267 Audit fee 20,590 23,834 20,580 20,130 Custody fee 2,000 2,170 837 2,016 Distribution and service fees 6,564 171,444 26,189 47,170 Deferred Trustees' fees 2,422 16,383 3,408 5,107 Other liabilities 9,172 22,451 5,183 9,641 ----------- ----------- ----------- ----------- Total Liabilities 150,609 3,679,524 556,189 705,726 NET ASSETS 10,506,413 278,699,939 39,652,058 73,149,707 - ------------------------------------------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS Paid-in capital 22,283,385 397,691,481 65,921,776 81,926,664 Undistributed net investment income (accumulated net investment loss) (2,309) (17,221) (3,316) 198,251 Accumulated net realized loss (12,827,597)(166,231,000) (30,034,767) (21,994,232) Net unrealized appreciation on investments 1,052,934 47,256,679 3,768,365 13,019,024 ----------- ----------- ----------- ----------- NET ASSETS 10,506,413 278,699,939 39,652,058 73,149,707
See Accompanying Notes to Financial Statements. 27 STATEMENTS OF ASSETS AND LIABILITIES - -------------------------------------------------------------------------------- Columbia Tax-Managed Funds
Columbia Tax-Managed Columbia Columbia Columbia Aggressive Tax-Managed Tax-Managed Tax-Managed Growth Growth Growth Value Fund ($) Fund ($) Fund II ($) Fund ($) - ------------------------------------------------------------------------------------------------------------------------------- CLASS A Net assets 2,624,010 62,390,146 6,634,208 14,522,286 Shares outstanding 341,890 4,648,149 780,085 1,274,026 Net asset value per share (a) 7.68 13.42 8.50 11.40 Maximum sales charge 5.75% 5.75% 5.75% 5.75% Maximum offering price per share (b) (net asset value/0.9425) 8.15 14.24 9.02 12.10 - ------------------------------------------------------------------------------------------------------------------------------- CLASS B Net assets 6,442,178 173,189,499 26,583,682 46,717,034 Shares outstanding 865,879 13,691,396 3,239,127 4,221,252 Net asset value and offering price per share (a) 7.44 12.65 8.21 11.07 - ------------------------------------------------------------------------------------------------------------------------------- CLASS C Net assets 1,410,091 25,415,672 5,388,940 11,863,680 Shares outstanding 189,596 2,009,541 658,089 1,072,111 Net asset value and offering price per share (a) 7.44 12.65 8.19 11.07 - ------------------------------------------------------------------------------------------------------------------------------- CLASS E Net assets -- 7,064,750 -- -- Shares outstanding -- 529,676 -- -- Net asset value per share (a) -- 13.34 -- -- Maximum sales charge -- 4.50% -- -- Maximum offering price per share (b) (net asset value/0.9550) -- 13.97 -- -- - ------------------------------------------------------------------------------------------------------------------------------- CLASS F Net assets -- 10,353,474 -- -- Shares outstanding -- 817,444 -- -- Net asset value and offering price per share (a) -- 12.67 -- -- - ------------------------------------------------------------------------------------------------------------------------------- CLASS Z Net assets 30,134 286,398 1,045,228 46,707 Shares outstanding 3,904 21,035 121,677 4,050 Net asset value, offering and redemption price per share 7.72 13.62 8.59 11.53
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. See Accompanying Notes to Financial Statements. 28
STATEMENTS OF OPERATIONS - -------------------------------------------------------------------------------- For the Year Ended October 31, 2004 Columbia Tax-Managed Funds COLUMBIA TAX-MANAGED COLUMBIA COLUMBIA COLUMBIA AGGRESSIVE TAX-MANAGED TAX-MANAGED TAX-MANAGED GROWTH GROWTH GROWTH VALUE FUND ($) FUND ($) FUND II ($) FUND ($) - ------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Dividends 37,875 3,236,075 461,599 1,855,044 Dividends from affiliates -- 160,310 17,510 -- Interest 2,867 69,403 10,347 8,784 Foreign withholding tax (331) (15,199) (2,148) (14,637) ----------- ----------- ----------- ----------- Total Investment Income 40,411 3,450,589 487,308 1,849,191 - ------------------------------------------------------------------------------------------------------------------------------- EXPENSES Investment advisory fee 96,720 1,899,661 357,436 631,984 Administration fee 6,045 791,526 22,340 39,499 Distribution fee: Class A 1,465 -- -- 8,025 Class B 56,901 1,504,955 226,640 374,240 Class C 11,337 217,747 46,654 97,545 Class E -- 7,204 -- -- Class F -- 79,922 -- -- Service fee: Class A 7,324 171,640 18,027 40,125 Class B 18,967 501,652 75,547 124,747 Class C 3,779 72,583 15,551 32,516 Class E -- 18,010 -- -- Class F -- 26,640 -- -- Transfer agent fee 34,431 591,177 88,223 140,203 Pricing and bookkeeping fees 12,544 87,330 12,537 31,209 Trustees' fees 7,427 15,876 7,707 8,587 Custody fee 11,687 12,074 4,446 9,605 Audit fee 26,009 27,403 25,999 20,549 Registration fees 46,734 75,191 49,387 46,317 Non-recurring costs (See Note 9) 566 15,281 2,152 3,769 Other expenses 5,389 115,320 21,779 34,338 ----------- ----------- ----------- ----------- Total Expenses 347,325 6,231,192 974,425 1,643,258 Fees and expenses waived or reimbursed by Investment Advisor (95,814) -- (31,354) -- Non-recurring costs assumed by Investment Advisor (See Note 9) (566) (15,281) (2,152) (3,769) Custody earnings credit (47) (17) (5) (4) ----------- ----------- ----------- ----------- Net Expenses 250,898 6,215,894 940,914 1,639,485 ----------- ----------- ----------- ----------- NET INVESTMENT INCOME (LOSS) (210,487) (2,765,305) (453,606) 209,706 - ------------------------------------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on: Unaffiliated investment 1,682,143 24,338,909 2,350,273 5,025,651 Investment company shares -- -- -- (13,677) Foreign currency transactions (1,067) -- -- -- Net realized loss on the disposal of investments in violation of investment restrictions (See Note 6) -- -- -- -- ----------- ----------- ----------- ----------- Net realized gain 1,681,076 24,338,909 2,350,273 5,011,974 Net change in unrealized appreciation/depreciation on investments (1,703,771) (14,071,268) (1,028,589) 4,760,872 ----------- ----------- ----------- ----------- NET GAIN (LOSS) (22,695) 10,267,641 1,321,684 9,772,846 ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS (233,182) 7,502,336 868,078 9,982,552 ----------- ----------- ----------- -----------
See Accompanying Notes to Financial Statements. 29 STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- Columbia Tax-Managed Funds
COLUMBIA TAX-MANAGED COLUMBIA TAX-MANAGED AGGRESSIVE GROWTH FUND GROWTH FUND ---------------------- ---------------------- YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, ---------------------- ---------------------- INCREASE (DECREASE) IN NET ASSETS: 2004 ($) 2003 ($) 2004 ($) 2003 ($) - ------------------------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) (210,487) (219,729) (2,765,305) (2,735,267) Net realized gain (loss) on investments and foreign currency transactions 1,681,076 39,575 24,338,909 (14,431,179) Net realized loss on the disposal of investments in violation of investment restrictions (See Note 6) -- -- -- -- Net change in unrealized appreciation/depreciation on investments (1,703,771) 2,524,929 (14,071,268) 73,959,918 ----------- ----------- ----------- ----------- Net Increase (Decrease) from Operations (233,182) 2,344,775 7,502,336 56,793,472 - ------------------------------------------------------------------------------------------------------------------------------- SHARE TRANSACTIONS Class A: Subscriptions 617,825 2,125,101 11,000,198 6,638,498 Redemptions (1,813,881) (1,688,965) (20,308,238) (15,690,904) ----------- ----------- ----------- ----------- Net Increase (Decrease) (1,196,056) 436,136 (9,308,040) (9,052,406) ----------- ----------- ----------- ----------- Class B: Subscriptions 198,982 671,525 3,075,969 6,283,356 Redemptions (2,214,998) (1,759,818) (47,951,084) (46,212,326) ----------- ----------- ----------- ----------- Net Decrease (2,016,016) (1,088,293) (44,875,115) (39,928,970) ----------- ----------- ----------- ----------- Class C: Subscriptions 98,764 81,847 1,928,453 2,908,437 Redemptions (297,042) (418,954) (7,167,373) (8,956,641) ----------- ----------- ----------- ----------- Net Decrease (198,278) (337,107) (5,238,920) (6,048,204) ----------- ----------- ----------- ----------- Class E: Subscriptions -- -- 172,365 105,637 Redemptions -- -- (181,336) (150,292) ----------- ----------- ----------- ----------- Net Decrease -- -- (8,971) (44,655) ----------- ----------- ----------- ----------- Class F: Subscriptions -- -- 248,351 197,836 Redemptions -- -- (345,689) (330,673) ----------- ----------- ----------- ----------- Net Decrease -- -- (97,338) (132,837) ----------- ----------- ----------- ----------- Class Z: Subscriptions 55,048 11,910 2,300 482,349 Redemptions (38,021) -- (171,734) (154,915) ----------- ----------- ----------- ----------- Net Increase (Decrease) 17,027 11,910 (169,434) 327,434 ----------- ----------- ----------- ----------- Net Decrease from Share Transactions (3,393,323) (977,354) (59,697,818) (54,879,638) ----------- ----------- ----------- ----------- Total Increase (Decrease) in Net Assets (3,626,505) 1,367,421 (52,195,482) 1,913,834 ----------- ----------- ----------- ----------- - ------------------------------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of period 14,132,918 12,765,497 330,895,421 328,981,587 ----------- ----------- ----------- ----------- End of period 10,506,413 14,132,918 278,699,939 330,895,421 ----------- ----------- ----------- ----------- Accumulated net investment loss, at end of period (2,309) (986) (17,221) (16,158) ----------- ----------- ----------- -----------
See Accompanying Notes to Financial Statements. 30 STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- Columbia Tax-Managed Funds
COLUMBIA TAX-MANAGED COLUMBIA TAX-MANAGED GROWTH FUND II VALUE FUND ---------------------- ---------------------- YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, ---------------------- ---------------------- INCREASE (DECREASE) IN NET ASSETS: 2004 ($) 2003 ($) 2004 ($) 2003 ($) - ------------------------------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) (453,606) (417,616) 209,706 144,918 Net realized gain (loss) on investments and foreign currency transactions 2,350,273 (2,632,362) 5,011,974 (11,323,355) Net realized loss on the disposal of investments in violation of investment restrictions (See Note 6) -- -- -- -- Net change in unrealized appreciation/depreciation on investments (1,028,589) 10,813,804 4,760,872 21,142,163 ----------- ----------- ----------- ----------- Net Increase (Decrease) from Operations 868,078 7,763,826 9,982,552 9,963,726 - ------------------------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income: Class A -- -- (137,968) -- Class B -- -- (9,533) -- Class C -- -- (2,579) -- Class Z -- -- (379) -- ----------- ----------- ----------- ----------- Total Distributions Declared to Shareholders -- -- (150,459) -- - ------------------------------------------------------------------------------------------------------------------------------- SHARE TRANSACTIONS Class A: Subscriptions 1,081,802 1,444,961 1,585,454 3,592,454 Distributions reinvested -- -- 118,332 -- Redemptions (2,159,097) (2,899,754) (5,932,375) (8,719,434) ----------- ----------- ----------- ----------- Net Decrease (1,077,295) (1,454,793) (4,228,589) (5,126,980) ----------- ----------- ----------- ----------- Class B: Subscriptions 981,443 1,882,364 1,722,973 3,240,450 Distributions reinvested -- -- 8,561 -- Redemptions (6,508,801) (6,472,623) (11,291,464) (11,898,465) ----------- ----------- ----------- ----------- Net Decrease (5,527,358) (4,590,259) (9,559,930) (8,658,015) ----------- ----------- ----------- ----------- Class C: Subscriptions 668,640 713,546 927,117 1,542,556 Distributions reinvested -- -- 2,136 -- Redemptions (1,829,185) (1,816,426) (4,380,201) (7,135,678) ----------- ----------- ----------- ----------- Net Decrease (1,160,545) (1,102,880) (3,450,948) (5,593,122) ----------- ----------- ----------- ----------- Class Z: Subscriptions 210,800 41,354 11,000 28,960 Distributions reinvested -- -- 379 -- Redemptions (8,127) (248,762) (1,175) -- ----------- ----------- ----------- ----------- Net Increase (Decrease) 202,673 (207,408) 10,204 28,960 ----------- ----------- ----------- ----------- Net Decrease from Share Transactions (7,562,525) (7,355,340) (17,229,263) (19,349,157) ----------- ----------- ----------- ----------- Total Increase (Decrease) in Net Assets (6,694,447) 408,486 (7,397,170) (9,385,431) - ------------------------------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of period 46,346,505 45,938,019 80,546,877 89,932,308 ----------- ----------- ----------- ----------- End of period 39,652,058 46,346,505 73,149,707 80,546,877 ----------- ----------- ----------- ----------- Undistributed net investment income (accumulated net investment loss), at end of period (3,316) (2,387) 198,251 141,865 ----------- ----------- ----------- -----------
See Accompanying Notes to Financial Statements. 31 STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- Columbia Tax-Managed Funds
COLUMBIA TAX-MANAGED COLUMBIA TAX-MANAGED AGGRESSIVE GROWTH FUND GROWTH FUND ---------------------- ---------------------- YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, ---------------------- ---------------------- INCREASE (DECREASE) IN NET ASSETS: 2004 2003 2004 2003 - ------------------------------------------------------------------------------------------------------------------------------- CHANGES IN SHARES Class A: Subscriptions 79,645 306,687 805,638 560,514 Redemptions (228,857) (254,160) (1,487,273) (1,375,186) ----------- ----------- ----------- ----------- Net Increase (Decrease) (149,212) 52,527 (681,635) (814,672) ----------- ----------- ----------- ----------- Class B: Subscriptions 26,292 105,120 237,700 587,037 Redemptions (291,707) (274,407) (3,724,010) (4,268,593) ----------- ----------- ----------- ----------- Net Decrease (265,415) (169,287) (3,486,310) (3,681,556) ----------- ----------- ----------- ----------- Class C: Subscriptions 13,155 12,186 149,808 270,413 Redemptions (39,117) (64,957) (557,500) (820,762) ----------- ----------- ----------- ----------- Net Decrease (25,962) (52,771) (407,692) (550,349) ----------- ----------- ----------- ----------- Class E: Subscriptions -- -- 12,662 8,644 Redemptions -- -- (13,603) (13,658) ----------- ----------- ----------- ----------- Net Decrease -- -- (941) (5,014) ----------- ----------- ----------- ----------- Class F: Subscriptions -- -- 19,307 17,598 Redemptions -- -- (26,808) (29,586) ----------- ----------- ----------- ----------- Net Decrease -- -- (7,501) (11,988) ----------- ----------- ----------- ----------- Class Z: Subscriptions 6,871 1,861 174 40,880 Redemptions (5,292) -- (12,481) (14,872) ----------- ----------- ----------- ----------- Net Increase (Decrease) 1,579 1,861 (12,307) 26,008 ----------- ----------- ----------- -----------
See Accompanying Notes to Financial Statements. 32 STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- Columbia Tax-Managed Funds
COLUMBIA TAX-MANAGED COLUMBIA TAX-MANAGED GROWTH FUND II VALUE FUND ---------------------- ---------------------- YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, ---------------------- ---------------------- INCREASE (DECREASE) IN NET ASSETS: 2004 2003 2004 2003 - ------------------------------------------------------------------------------------------------------------------------------- CHANGES IN SHARES Class A: Subscriptions 125,099 201,123 144,681 393,479 Issued for distributions reinvested -- -- 11,163 -- Redemptions (247,337) (407,311) (537,879) (961,953) ----------- ----------- ----------- ----------- Net Decrease (122,238) (206,188) (382,035) (568,474) ----------- ----------- ----------- ----------- Class B: Subscriptions 116,667 266,693 163,438 359,993 Issued for distributions reinvested -- -- 827 -- Redemptions (775,086) (911,307) (1,058,576) (1,316,603) ----------- ----------- ----------- ----------- Net Decrease (658,419) (644,614) (894,311) (956,610) ----------- ----------- ----------- ----------- Class C: Subscriptions 79,377 100,076 86,814 169,090 Issued for distributions reinvested -- -- 206 -- Redemptions (218,906) (258,061) (410,804) (785,239) ----------- ----------- ----------- ----------- Net Decrease (139,529) (157,985) (323,784) (616,149) ----------- ----------- ----------- ----------- Class Z: Subscriptions 23,586 5,807 1,008 3,007 Issued for distributions reinvested -- -- 36 -- Redemptions (937) (34,998) (105) -- ----------- ----------- ----------- ----------- Net Increase (Decrease) 22,649 (29,191) 939 3,007 ----------- ----------- ----------- -----------
See Accompanying Notes to Financial Statements. 33 NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- October 31, 2004 Columbia Tax-Managed Funds NOTE 1. ORGANIZATION Columbia Funds Trust I (the "Trust") is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. Information presented in these financial statements pertains to the following diversified portfolios (individually referred to as a "Fund", collectively referred to as the "Funds"): Columbia Tax-Managed Aggressive Growth Fund Columbia Tax-Managed Growth Fund Columbia Tax-Managed Growth Fund II Columbia Tax-Managed Value Fund INVESTMENT GOAL Each Fund seeks long-term capital growth while reducing shareholder exposure to taxes. Columbia Tax-Managed Aggressive Growth Fund invests primarily in common stocks of small capitalization and middle capitalization companies that the Fund's investment advisor believes have long-term growth potential. Columbia Tax-Managed Growth Fund, Columbia Tax-Managed Growth Fund II and Columbia Tax-Managed Value Fund invest primarily in large capitalization and middle capitalization stocks. FUND SHARES The Funds may issue an unlimited number of shares. Columbia Tax-Managed Aggressive Growth Fund, Columbia Tax-Managed Growth Fund II, and Columbia Tax-Managed Value Fund each offer four classes of shares: Class A, Class B, Class C and Class Z. Columbia Tax-Managed Growth Fund offers six classes of shares: Class A, Class B, Class C, Class E, Class F and Class Z. Each share class has its own sales charge and expense structure. Class A shares are subject to a maximum front-end sales charge of 5.75% based on the amount of initial investment. Class A shares purchased without an initial sales charge are subject to a 1.00% contingent deferred sales charge ("CDSC") on shares sold within eighteen months on an original purchase of $1 million to $25 million. Class B shares are subject to a maximum CDSC of 5.00% based upon the holding period after purchase. Class B shares will convert to Class A shares in a certain number of years after purchase, depending on the program under which shares were purchased. Class C shares are subject to a 1.00% CDSC on shares sold within one year after purchase. Class E and Class F shares are trust shares. Such shares are held in an irrevocable trust on behalf of the shareholder until a trust termination date, as specified by the shareholder. At such time, the shares pass to the shareholder's beneficiary. Class E shares are subject to a maximum front-end sales charge of 4.50% based on the amount of initial investment. Class E shares purchased without an initial sales charge are subject to a 1.00% CDSC on shares sold within eighteen months on an original purchase of $500,000 to $5 million. Class F shares are subject to a maximum CDSC of 5.00% based upon the holding period after purchase. Class F shares will convert into Class E shares after eight years. Class Z shares are offered continuously at net asset value. There are certain restrictions on the purchase of Class Z shares, as described in each Fund's prospectus. NOTE 2. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. SECURITY VALUATION Equity securities and investment companies are valued at the last sale price on the principal exchange on which they trade, except for securities traded on the NASDAQ, which are valued at the NASDAQ official close price. Unlisted securities or listed securities for which there were no sales during the day are valued at the closing bid price on such exchanges or over-the-counter markets. Short-term debt obligations maturing within 60 days are valued at amortized cost, which approximates market value. Investments for which market quotations are not readily available, or quotations which management 34 - -------------------------------------------------------------------------------- October 31, 2004 Columbia Tax-Managed Funds believes are not appropriate, are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Trustees. SECURITY TRANSACTIONS Security transactions are accounted for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes. REPURCHASE AGREEMENTS Each Fund may engage in repurchase agreement transactions with institutions that the Funds' investment advisor has determined are creditworthy. Each Fund, through its custodian, receives delivery of underlying securities collateralizing a repurchase agreement. Collateral is at least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon each Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Funds seek to assert their rights. INCOME RECOGNITION Interest income is recorded on the accrual basis. Corporate actions and dividend income are recorded on the ex-date. Awards from class action litigation are recorded as a reduction of cost if the Funds still own the applicable securities on the payment date. 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. Effective May 1, 2004, the Columbia Tax-Managed Value Fund adopted the policy to reduce cost of investments for financial statement purposes by the distributions received in excess of income from REITs. The cumulative effect of this accounting change did not impact the net assets of the Fund, but resulted in reclassifications as follows: Decrease in Undistributed Decrease in Cost Net Investment Income ================================================================================ $2,493 $2,493 ================================================================================ The effect of the change for the year ended October 31, 2004 is as follows: Decrease in Cost Decrease in Dividend Income ================================================================================ $3,017 $3,017 ================================================================================ FOREIGN CURRENCY TRANSACTIONS The values of all assets and liabilities quoted in foreign currencies are translated into U.S. dollars at that day's exchange rates. Net realized and unrealized gains (losses) on foreign currency transactions include gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and payment dates on dividends, interest income and foreign withholding taxes. For financial statement purposes, the Funds do not distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains (losses) on investments. DETERMINATION OF CLASS NET ASSET VALUES All income, expenses (other than class-specific expenses, as shown on the Statements of Operations), and realized and unrealized gains (losses), are allocated to each class of the Funds on a daily basis, based on the relative net assets of each class, for purposes of determining the net asset value of each class. FEDERAL INCOME TAX STATUS Each Fund intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its taxable income, if any, for its tax year, and as such will not be subject to federal income taxes. In addition, each Fund intends to distribute in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, such that each Fund should not be 35 - -------------------------------------------------------------------------------- October 31, 2004 Columbia Tax-Managed Funds subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded. DISTRIBUTIONS TO SHAREHOLDERS The Funds are managed using investment strategies that are designed to reduce (but not eliminate) the Funds' payment of taxable distributions to shareholders. From time to time, the Funds expect to distribute taxable income and capital gains. Distributions to shareholders are recorded on ex-date. Net realized capital gains, if any, are distributed at least annually. NOTE 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 each 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 October 31, 2004, permanent differences resulting primarily from differing treatments for net operating losses, foreign currency transactions and REIT adjustments were identified and reclassified among the components of the Funds' net assets as follows: Undistributed Net Investment Income Accumulated (Accumulated Net Net Realized Paid-In Investment Loss) Loss Capital ================================================================================ Columbia Tax-Managed Aggressive Growth Fund$ 209,164 $1,067 $ (210,231) ================================================================================ Columbia Tax-Managed Growth Fund 2,764,242 -- (2,764,242) ================================================================================ Columbia Tax-Managed Growth Fund II 452,677 -- (452,677) ================================================================================ Columbia Tax-Managed Value Fund (368) 366 2 ================================================================================ Net investment income and net realized gains (losses), as disclosed on the Statements of Operations, and net assets were not affected by these reclassifications. The tax character of distributions paid during the year ended October 31, 2004 was as follows: Ordinary Long-Term Tax Return Income Capital Gains of Capital ================================================================================ Columbia Tax-Managed Aggressive Growth Fund $ -- $-- $-- ================================================================================ Columbia Tax-Managed Growth Fund -- -- -- ================================================================================ Columbia Tax-Managed Growth Fund II -- -- -- ================================================================================ Columbia Tax-Managed Value Fund 150,459 -- -- ================================================================================ For the year ended October 31, 2003, the Funds did not distribute any taxable income or capital gains. As of October 31, 2004, the components of distributable earnings on a tax basis were as follows: Undistributed Undistributed Net Ordinary Long-Term Unrealized Income Capital Gains Appreciation* ================================================================================ Columbia Tax-Managed Aggressive Growth Fund $ -- $-- $ 1,028,814 ================================================================================ Columbia Tax-Managed Growth Fund -- -- 45,673,976 ================================================================================ Columbia Tax-Managed Growth Fund II -- -- 3,587,304 ================================================================================ Columbia Tax-Managed Value Fund 203,115 -- 12,982,676 ================================================================================ * The difference between book-basis and tax-basis net unrealized appreciation is primarily due to deferral of losses from wash sales. 36 - -------------------------------------------------------------------------------- October 31, 2004 Columbia Tax-Managed Funds Unrealized appreciation and depreciation at October 31, 2004, based on cost of investments for federal income tax purposes, was: Unrealized Unrealized Net Unrealized Appreciation Depreciation Appreciation ================================================================================ Columbia Tax-Managed Aggressive Growth Fund$ 1,334,383 $ (305,569) $ 1,028,814 ================================================================================ Columbia Tax-Managed Growth Fund 54,421,213 (8,747,237) 45,673,976 ================================================================================ Columbia Tax-Managed Growth Fund II 6,003,910 (2,416,606) 3,587,304 ================================================================================ Columbia Tax-Managed Value Fund 14,268,803 (1,286,127) 12,982,676 ================================================================================ The following capital loss carryforwards may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code: Columbia Columbia Columbia Tax-Managed Tax-Managed Tax-Managed Columbia Aggressive Growth Growth Tax-Managed Expiring in: Growth Fund* Fund Fund II Value Fund ================================================================================ 2008 $ -- $ 5,548,322 $ -- $ -- ================================================================================ 2009 9,983,709 90,676,212 17,627,867 -- ================================================================================ 2010 2,819,769 55,723,137 9,577,005 10,685,137 ================================================================================ 2011 -- 12,700,626 2,648,834 11,272,748 ================================================================================ Total $12,803,478 $164,648,297 $29,853,706 $21,957,885 ================================================================================ * Columbia Tax-Managed Aggressive Growth Fund is expected to liquidate on or about December 10, 2004. The capital loss carryforward for this Fund will not be utilized. Capital loss carryforwards utilized during the year ended October 31, 2004 were as follows: Columbia Tax-Managed Aggressive Growth Fund $ 1,650,310 ================================================================================ Columbia Tax-Managed Growth Fund 22,969,197 ================================================================================ Columbia Tax-Managed Growth Fund II 2,037,668 ================================================================================ Columbia Tax-Managed Value Fund 4,904,665 ================================================================================ NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES Columbia Management Advisors, Inc. ("Columbia") is the investment advisor to the Funds. Prior to April 1, 2004, Columbia was an indirect, wholly owned subsidiary of FleetBoston Financial Corporation ("FleetBoston"). Effective April 1, 2004, FleetBoston, including the Funds' investment advisor, transfer agent and distributor, was acquired by Bank of America Corporation ("BOA"). The acquisition did not change the way the Funds are managed, the investment personnel assigned to manage the Funds or the fees paid by the Funds. INVESTMENT ADVISORY FEE Columbia receives a monthly investment advisory fee based on each Fund's average daily net assets at the following annual rates: Fees on Fees on Fees on Average Average Average Daily Daily Daily Net Assets Net Assets Net Assets First Next Over $500 Million $500 Million $1 Billion ================================================================================ Columbia Tax-Managed Aggressive Growth Fund 0.80% 0.75% 0.70% ================================================================================ Columbia Tax-Managed Growth Fund 0.60% 0.55% 0.50% ================================================================================ Columbia Tax-Managed Growth Fund II 0.80% 0.75% 0.70% ================================================================================ Columbia Tax-Managed Value Fund 0.80% 0.75% 0.70% ================================================================================ SUB-ADVISORY FEE Stein Roe Investment Counsel LLC ("SRIC") has been retained by Columbia as sub-advisor to Columbia Tax-Managed Growth Fund and Columbia Tax-Managed Growth Fund II to manage the day-to-day investment operations of the two Funds. Columbia, out of the investment advisory fee it receives, pays SRIC a monthly sub-advisory fee equal to a base rate of 0.20% annually of the average daily net assets for each of the two Funds. This base fee of 0.20% can be adjusted quarterly to an annual rate as high as 0.25% or to an annual rate as low as 0.15% depending on the investment performance, as determined by Morningstar, Inc.'s Large Blend category, of each Fund over a specified period of time. In addition, Columbia's contract with SRIC provides that SRIC shall not receive a fee less than $350,000 per annum in the aggregate for managing both Columbia Tax-Managed Growth Fund and Columbia Tax-Managed Growth Fund II. ADMINISTRATION FEE Columbia provides administrative and other services to the Funds for a monthly administration fee based on each Fund's average daily net assets at the following annual rates: Columbia Tax-Managed Aggressive Growth Fund 0.05% ================================================================================ Columbia Tax-Managed Growth Fund 0.25% ================================================================================ Columbia Tax-Managed Growth Fund II 0.05% ================================================================================ Columbia Tax-Managed Value Fund 0.05% ================================================================================ 37 - -------------------------------------------------------------------------------- October 31, 2004 Columbia Tax-Managed Funds PRICING AND BOOKKEEPING FEES Columbia is responsible for providing pricing and bookkeeping services to the Funds under a pricing and bookkeeping agreement. Under a separate agreement (the "Outsourcing Agreement"), Columbia has delegated those functions to State Street Corporation ("State Street"). As a result Columbia pays the total fees collected to State Street under the Outsourcing Agreement. Under its pricing and bookkeeping agreement with the Funds, Columbia receives from each Fund an annual flat fee of $10,000 paid monthly, and in any month that a Fund's average daily net assets exceed $50 million, an additional monthly fee. The additional fee rate is calculated by taking into account the fees payable to State Street under the Outsourcing Agreement. This rate is applied to the average daily net assets of the Fund for that month. The Funds also pay additional fees for pricing services based on the number of securities held by each Fund. For the year ended October 31, 2004, the effective pricing and bookkeeping fee rates for the Funds, inclusive of out-of-pocket expenses, were as follows: Columbia Tax-Managed Aggressive Growth Fund 0.104% ================================================================================ Columbia Tax-Managed Growth Fund 0.028% ================================================================================ Columbia Tax-Managed Growth Fund II 0.028% ================================================================================ Columbia Tax-Managed Value Fund 0.040% ================================================================================ TRANSFER AGENT FEE Columbia Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services to the Funds and has subcontracted 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 $28.00 per open account. The Transfer Agent also receives reimbursement for certain out-of-pocket expenses. For the year ended October 31, 2004, the Funds' effective transfer agent fee rates, inclusive of out-of-pocket fees, were as follows: Columbia Tax-Managed Aggressive Growth Fund 0.29% ================================================================================ Columbia Tax-Managed Growth Fund 0.19% ================================================================================ Columbia Tax-Managed Growth Fund II 0.20% ================================================================================ Columbia Tax-Managed Value Fund 0.18% ================================================================================ UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia, is the principal underwriter of the Funds. For the year ended October 31, 2004, the Distributor has retained net underwriting discounts and CDSC fees as follows: Front-End Sales Charge ================================================================================ Class A Class E ================================================================================ Columbia Tax-Managed Aggressive Growth Fund $ 1,028 $ -- ================================================================================ Columbia Tax-Managed Growth Fund 10,836 -- ================================================================================ Columbia Tax-Managed Growth Fund II 3,622 -- ================================================================================ Columbia Tax-Managed Value Fund 3,754 -- ================================================================================ CDSC ================================================================================ Class A Class B Class C Class E Class F ================================================================================ Columbia Tax-Managed Aggressive Growth Fund $ 50 $ 35,535 $ 71 $-- $-- ================================================================================ Columbia Tax-Managed Growth Fund -- 595,135 770 -- -- ================================================================================ Columbia Tax-Managed Growth Fund II -- 129,401 115 -- -- ================================================================================ Columbia Tax-Managed Value Fund -- 177,676 1,234 -- -- ================================================================================ The Funds have adopted a 12b-1 plan (the "Plan") which requires the payment of a monthly service and distribution fee to the Distributor based on the average daily net assets of each Fund at the following annual rates: Distribution Fees: Class A Class B Class C Class E Class F ================================================================================ Columbia Tax-Managed Aggressive Growth Fund 0.05% 0.75% 0.75% N/A N/A ================================================================================ Columbia Tax-Managed Growth Fund N/A 0.75% 0.75% 0.10% 0.75% ================================================================================ Columbia Tax-Managed Growth Fund II N/A 0.75% 0.75% N/A N/A ================================================================================ Columbia Tax-Managed Value Fund 0.05% 0.75% 0.75% N/A N/A ================================================================================ 38 - -------------------------------------------------------------------------------- October 31, 2004 Columbia Tax-Managed Funds Service Fees: Class A Class B Class C Class E Class F ================================================================================ Columbia Tax-Managed Aggressive Growth Fund 0.25% 0.25% 0.25% N/A N/A ================================================================================ Columbia Tax-Managed Growth Fund 0.25% 0.25% 0.25% 0.25% 0.25% ================================================================================ Columbia Tax-Managed Growth Fund II 0.25% 0.25% 0.25% N/A N/A ================================================================================ Columbia Tax-Managed Value Fund 0.25% 0.25% 0.25% N/A N/A ================================================================================ The CDSC and the fees received from the Plan are used principally as repayment to the Distributor for amounts paid by the Distributor to dealers who sold such shares. FEE WAIVERS Columbia has voluntarily agreed to waive fees and reimburse the Funds listed below for certain expenses so that total expenses (exclusive of service fees, distribution fees, brokerage commissions, interest, taxes and extraordinary expenses, if any) would not exceed certain expense limitations. For the year ended October 31, 2004, total expenses were limited to the following percentages annually of the Funds' average daily net assets: Average Daily Average Daily Net Assets Net Assets First Over $100 Million $100 Million ================================================================================ Columbia Tax-Managed Aggressive Growth Fund 1.25% 1.25% ================================================================================ Columbia Tax-Managed Growth Fund II 1.25% 1.50% ================================================================================ CUSTODY CREDITS Each Fund has an agreement with its custodian bank under which custody fees may be reduced by balance credits. 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. FEES PAID TO OFFICERS AND TRUSTEES With the exception of one officer, all officers of the Funds are employees of Columbia or its affiliates and receive no compensation from the Funds. Effective August 23, 2004, the Board of Trustees appointed a Chief Compliance Officer to the Funds in accordance with federal securities regulations. Each Fund, along with other affiliated funds, will pay its pro-rata share of the expenses associated with the Office of the Chief Compliance Officer. Each Fund's fee will not exceed $15,000 per year. The Funds' Trustees may participate in a deferred compensation plan which may be terminated at any time. Obligations of the plan will be paid solely out of the Funds' assets. OTHER Columbia provides certain services to the Funds related to Sarbanes-Oxley compliance. For the year ended October 31, 2004, the Funds paid fees to Columbia for such services as follows: Columbia Tax-Managed Aggressive Growth Fund $1,308 ================================================================================ Columbia Tax-Managed Growth Fund 1,808 ================================================================================ Columbia Tax-Managed Growth Fund II 1,359 ================================================================================ Columbia Tax-Managed Value Fund 1,417 ================================================================================ These amounts are included in "Other expenses" on the Statements of Operations. NOTE 5. PORTFOLIO INFORMATION For the year ended October 31, 2004, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were as follows: Purchases Sales ================================================================================ Columbia Tax-Managed Aggressive Growth Fund $ 15,307,518 $ 18,476,483 ================================================================================ Columbia Tax-Managed Growth Fund 122,357,799 178,418,440 ================================================================================ Columbia Tax-Managed Growth Fund II 16,674,701 24,382,886 ================================================================================ Columbia Tax-Managed Value Fund 29,718,314 44,196,653 ================================================================================ NOTE 6. OTHER During the period April 1, 2004 through October 31, 2004, Columbia Tax-Managed Growth Fund and Columbia Tax-Managed Growth Fund II purchased shares of Bank of America Corp. in violation of investment restrictions. The shares that caused that violation were sold at a loss of $39 and $5 for Columbia Tax-Managed Growth Fund and Columbia Tax-Managed Growth Fund II, respectively. The Funds have been reimbursed by SRIC. NOTE 7. OTHER RELATED PARTY TRANSACTIONS During the year ended October 31, 2004, Columbia Tax-Managed Growth Fund and Columbia Tax-Managed Growth Fund II used Bank of America 39 - -------------------------------------------------------------------------------- October 31, 2004 Columbia Tax-Managed Funds Securities, a wholly owned subsidiary of BOA, as a broker. Total commissions paid to Bank of America Securities during the year were $500 and $50 for Columbia Tax-Managed Growth Fund and Columbia Tax-Managed Growth Fund II, respectively. NOTE 8. LINE OF CREDIT The Funds and certain other affiliated funds participate in a $350,000,000 committed unsecured revolving line of credit provided by State Street Bank and Trust Company. Borrowings under the line of credit will be used for temporary or emergency purposes 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. For the year ended October 31, 2004, the Funds did not borrow under this arrangement. NOTE 9. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES INDUSTRY FOCUS The Funds may focus their investments in certain industries, subjecting them to greater risk than funds that are more diversified. LEGAL PROCEEDINGS Columbia, the Distributor, and certain of their affiliates (collectively, "The Columbia Group") have received information requests and subpoenas from various regulatory and law enforcement authorities in connection with their investigations of late trading and market timing in mutual funds as well as other industry wide issues. The Columbia Group has not uncovered any instances where Columbia or the Distributor were knowingly involved in late trading of mutual fund shares. On February 24, 2004, the Securities and Exchange Commission ("SEC") filed a civil complaint in the United States District Court for the District of Massachusetts against Columbia and the Distributor, alleging that they had violated certain provisions of the federal securities laws in connection with trading activity in mutual fund shares. Also on February 24, 2004, the New York Attorney General ("NYAG") filed a civil complaint in New York Supreme Court, County of New York against Columbia and the Distributor alleging that Columbia and the Distributor had violated certain New York anti-fraud statutes. If either Columbia or the Distributor is unsuccessful in its defense of these proceedings, it could be barred from serving as an investment advisor or distributor for any investment company registered under the Investment Company Act of 1940, as amended (a "registered investment company"). Such results could prevent Columbia, the Distributor or any company that is an affiliated person of Columbia and the Distributor from serving as an investment advisor or distributor for any registered investment company, including your fund. Your fund has been informed by Columbia and the Distributor that, if these results occur, they will seek exemptive relief from the SEC to permit them to continue to serve as your fund's investment advisor and distributor. There is no assurance that such exemptive relief will be granted. On March 15, 2004, Columbia and the Distributor entered into agreements in principle with the SEC Division of Enforcement and NYAG in settlement of the charges. Under the agreements, Columbia and the Distributor agreed, among other things, to the following conditions: payment of $70 million in disgorgement; payment of $70 million in civil penalties; an order requiring Columbia and the Distributor to cease and desist from violations of the antifraud provisions and other provisions of the federal securities laws; governance changes designed to maintain the independence of the mutual fund boards of trustees and ensure compliance with securities laws and their fiduciary duties; and retention of an independent consultant to review Columbia's and the Distributor's compliance policies and procedures. The agreement requires the final approval of the SEC. In a separate agreement with the NYAG, the Columbia Group and its affiliate Banc of America Capital Management, LLC have agreed to collectively reduce mutual fund fees by $160 million over a five-year period. As a result of these matters or any adverse publicity or other developments resulting from them, there may be increased redemptions or reduced sales of fund shares, which could increase transaction costs or operating expenses, or have other adverse consequences for the funds. In connection with the events described in detail above, various parties have filed suit against certain 40 - -------------------------------------------------------------------------------- October 31, 2004 Columbia Tax-Managed Funds funds, their Boards and/or FleetBoston (and affiliated entities). More than 300 cases (including those filed against entities unaffiliated with the funds, their Boards and/or FleetBoston and its affiliated entities) have been consolidated in a multi-district proceeding and transferred to the Federal District Court in Maryland. Recently, certain Columbia funds and affiliated entities have been named as defendants in several derivative actions under various sections of the Investment Company Act of 1940, as amended, alleging, among other things, that the fees and expenses paid by those funds are excessive. The funds and the other defendants to these actions, including Columbia and various of its affiliates, certain other mutual funds advised by Columbia and its affiliates, and various directors of such funds, have denied these allegations and are contesting the plaintiffs' claims. These suits and certain regulatory investigations are ongoing, however, based on currently available information, Columbia believes that these lawsuits are without merit, that the likelihood they will have a material adverse impact on any fund is remote, and that the lawsuits are not likely to materially affect its ability to provide investment management services to its clients, including the funds. For the year ended October 31, 2004, Columbia has assumed legal, consulting services and Trustees' fees incurred by the Funds in connection with these matters as follows: Columbia Tax-Managed Aggressive Growth Fund $ 566 ================================================================================ Columbia Tax-Managed Growth Fund 15,281 ================================================================================ Columbia Tax-Managed Growth Fund II 2,152 ================================================================================ Columbia Tax-Managed Value Fund 3,769 ================================================================================ NOTE 10. SUBSEQUENT EVENT On October 13, 2004, the Board of Trustees of the Columbia Tax-Managed Aggressive Growth Fund voted to liquidate the Fund. The Fund was closed to new investors as of the close of business on November 10, 2004. The effective date of the liquidation is expected to be on or about December 10, 2004. 41 FINANCIAL HIGHLIGHTS ------------------------------------------------------------ Columbia Tax-Managed Aggressive Growth Fund Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31, ====================================================================== CLASS A SHARES 2004 2003 2002 2001 2000 (A) ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $7.82 $6.44 $7.01 $12.36 $11.59 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.09) (0.08) (0.09) (0.09) (0.04) Net realized and unrealized gain (loss) on investments and foreign currency (0.05) 1.46 (0.48) (5.26) 0.81 -------- -------- -------- -------- -------- Total from investment operations (0.14) 1.38 (0.57) (5.35) 0.77 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $7.68 $7.82 $6.44 $7.01 $12.36 Total return (c)(d) (1.79)% 21.43% (8.13)% (43.28)% 6.64%(e) - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 1.55% 1.55% 1.55% 1.55% 1.55%(g) Net investment loss (f) (1.21)% (1.25)% (1.27)% (1.05)% (1.19)%(g) Waiver/reimbursement 0.79% 1.02% 0.69% 0.85% 1.82%(g) Portfolio turnover rate 129% 116% 121% 188% 47%(e) Net assets, end of period (000's) $2,624 $3,838 $2,825 $4,043 $5,227 - ------------------------------------------------------------------------------------------------------------------------------------
(a)The Fund commenced investment operations on July 24, 2000. The activity shown is from the effective date of registration (August 1, 2000) with the Securities and Exchange Commission. (b)Per share data was calculated using average shares outstanding during the period. (c)Total return at net asset value assuming no initial sales charge or contingent deferred sales charge. (d)Had the Investment Advisor/Administrator not waived or reimbursed a portion of expenses, total return would have been reduced. (e)Not annualized. (f)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g)Annualized.
YEAR ENDED OCTOBER 31, ====================================================================== CLASS B SHARES 2004 2003 2002 2001 2000 (A) ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $7.63 $6.33 $6.95 $12.34 $11.59 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.15) (0.13) (0.14) (0.15) (0.06) Net realized and unrealized gain (loss) on investments and foreign currency (0.04) 1.43 (0.48) (5.24) 0.81 -------- -------- -------- -------- -------- Total from investment operations (0.19) 1.30 (0.62) (5.39) 0.75 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $7.44 $7.63 $6.33 $6.95 $12.34 Total return (c)(d) (2.49)% 20.54% (8.92)% (43.68)% 6.47%(e) - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 2.25% 2.25% 2.25% 2.25% 2.25%(g) Net investment loss (f) (1.91)% (1.95)% (1.97)% (1.75)% (1.89)%(g) Waiver/reimbursement 0.79% 1.02% 0.69% 0.85% 1.82%(g) Portfolio turnover rate 129% 116% 121% 188% 47%(e) Net assets, end of period (000's) $6,442 $8,632 $8,238 $10,979 $18,080 - ------------------------------------------------------------------------------------------------------------------------------------
(a)The Fund commenced investment operations on July 24, 2000. The activity shown is from the effective date of registration (August 1, 2000) with the Securities and Exchange Commission. (b)Per share data was calculated using average shares outstanding during the period. (c)Total return at net asset value assuming no contingent deferred sales charge. (d)Had the Investment Advisor/Administrator not waived or reimbursed a portion of expenses, total return would have been reduced. (e)Not annualized. (f)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g)Annualized. 42 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Columbia Tax-Managed Aggressive Growth Fund Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31, ====================================================================== CLASS C SHARES 2004 2003 2002 2001 2000 (A) ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $7.63 $6.33 $6.95 $12.34 $11.59 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.15) (0.13) (0.14) (0.15) (0.06) Net realized and unrealized gain (loss) on investments and foreign currency (0.04) 1.43 (0.48) (5.24) 0.81 -------- -------- -------- -------- -------- Total from investment operations (0.19) 1.30 (0.62) (5.39) 0.75 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $7.44 $7.63 $6.33 $6.95 $12.34 Total return (c)(d) (2.49)% 20.54% (8.92)% (43.68)% 6.47%(e) - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 2.25% 2.25% 2.25% 2.25% 2.25%(g) Net investment loss (f) (1.91)% (1.95)% (1.97)% (1.75)% (1.89)%(g) Waiver/reimbursement 0.79% 1.02% 0.69% 0.85% 1.82%(g) Portfolio turnover rate 129% 116% 121% 188% 47%(e) Net assets, end of period (000's) $1,410 $1,644 $1,699 $2,508 $1,567 - ------------------------------------------------------------------------------------------------------------------------------------
(a)The Fund commenced investment operations on July 24, 2000. The activity shown is from the effective date of registration (August 1, 2000) with the Securities and Exchange Commission. (b)Per share data was calculated using average shares outstanding during the period. (c)Total return at net asset value assuming no contingent deferred sales charge. (d)Had the Investment Advisor/Administrator not waived or reimbursed a portion of expenses, total return would have been reduced. (e)Not annualized. (f)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g)Annualized.
YEAR ENDED OCTOBER 31, ====================================================================== CLASS Z SHARES 2004 2003 2002 2001 2000 (A) ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $7.83 $6.43 $7.03 $12.37 $11.59 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.07) (0.07) (0.07) (0.07) (0.03) Net realized and unrealized gain (loss) on investments and foreign currency (0.04) 1.47 (0.53) (5.27) 0.81 -------- -------- -------- -------- -------- Total from investment operations (0.11) 1.40 (0.60) (5.34) 0.78 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $7.72 $7.83 $6.43 $7.03 $12.37 Total return (c)(d) (1.40)% 21.77% (8.53)% (43.17)% 6.73%(e) - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 1.25% 1.25% 1.25% 1.25% 1.25%(g) Net investment loss (f) (0.91)% (0.95)% (0.97)% (0.75)% (0.89)%(g) Waiver/reimbursement 0.79% 1.02% 0.69% 0.85% 1.82%(g) Portfolio turnover rate 129% 116% 121% 188% 47%(e) Net assets, end of period (000's) $30 $18 $3 $61 $128 - ------------------------------------------------------------------------------------------------------------------------------------
(a)The Fund commenced investment operations on July 24, 2000. The activity shown is from the effective date of registration (August 1, 2000) with the Securities and Exchange Commission. (b)Per share data was calculated using average shares outstanding during the period. (c)Total return at net asset value. (d)Had the Investment Advisor/Administrator not waived or reimbursed a portion of expenses, total return would have been reduced. (e)Not annualized. (f)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g)Annualized. 43 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Columbia Tax-Managed Growth Fund Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31, ====================================================================== CLASS A SHARES 2004 2003 2002 2001 2000 ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $13.09 $10.87 $12.68 $18.38 $17.19 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (a) (0.04) (0.03) (0.02) (0.06) (0.12) Net realized and unrealized gain (loss) on investments 0.37 2.25 (1.79) (5.64) 1.31 -------- -------- -------- -------- -------- Total from investment operations 0.33 2.22 (1.81) (5.70) 1.19 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $13.42 $13.09 $10.87 $12.68 $18.38 Total return (b) 2.52%(c) 20.42% (14.27)% (31.01)% 6.92% - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (d) 1.39% 1.42% 1.41% 1.39% 1.44% Net investment loss (d) (0.30)% (0.28)% (0.18)% (0.38)% (0.67)% Portfolio turnover rate 40% 39% 42% 82% 69% Net assets, end of period (000's) $62,390 $69,764 $66,760 $102,403 $163,502 - ------------------------------------------------------------------------------------------------------------------------------------
(a)Per share data was calculated using average shares outstanding during the period. (b)Total return at net asset value assuming no initial sales charge or contingent deferred sales charge. (c)Total return includes a voluntary reimbursement by the Investment Advisor for a realized investment loss on an investment not meeting the Fund's investment restrictions. This reimbursement had an impact of less than 0.01% on the Fund's Class A shares total return. (d)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%.
YEAR ENDED OCTOBER 31, ====================================================================== CLASS B SHARES 2004 2003 2002 2001 2000 ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $12.43 $10.39 $12.22 $17.85 $16.82 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (a) (0.14) (0.11) (0.11) (0.17) (0.26) Net realized and unrealized gain (loss) on investments 0.36 2.15 (1.72) (5.46) 1.29 -------- -------- -------- -------- -------- Total from investment operations 0.22 2.04 (1.83) (5.63) 1.03 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $12.65 $12.43 $10.39 $12.22 $17.85 Total return (b) 1.77%(c) 19.63% (14.98)% (31.54)% 6.12% - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (d) 2.14% 2.17% 2.16% 2.14% 2.19% Net investment loss (d) (1.05)% (1.03)% (0.93)% (1.13)% (1.42)% Portfolio turnover rate 40% 39% 42% 82% 69% Net assets, end of period (000's) $173,189 $213,481 $216,801 $327,645 $532,082 - ------------------------------------------------------------------------------------------------------------------------------------
(a)Per share data was calculated using average shares outstanding during the period. (b)Total return at net asset value assuming no contingent deferred sales charge. (c)Total return includes a voluntary reimbursement by the Investment Advisor for a realized investment loss on an investment not meeting the Fund's investment restrictions. This reimbursement had an impact of less than 0.01% on the Fund's Class B shares total return. (d)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. 44 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Columbia Tax-Managed Growth Fund Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31, ====================================================================== CLASS C SHARES 2004 2003 2002 2001 2000 ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $12.43 $10.39 $12.21 $17.85 $16.82 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (a) (0.14) (0.11) (0.11) (0.17) (0.26) Net realized and unrealized gain (loss) on investments 0.36 2.15 (1.71) (5.47) 1.29 -------- -------- -------- -------- -------- Total from investment operations 0.22 2.04 (1.82) (5.64) 1.03 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $12.65 $12.43 $10.39 $12.21 $17.85 Total return (b) 1.77%(c) 19.63% (14.91)% (31.60)% 6.12% - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (d) 2.14% 2.17% 2.16% 2.14% 2.19% Net investment loss (d) (1.05)% (1.03)% (0.93)% (1.13)% (1.42)% Portfolio turnover rate 40% 39% 42% 82% 69% Net assets, end of period (000's) $25,416 $30,035 $30,837 $47,069 $80,232 - ------------------------------------------------------------------------------------------------------------------------------------
(a)Per share data was calculated using average shares outstanding during the period. (b)Total return at net asset value assuming no contingent deferred sales charge. (c)Total return includes a voluntary reimbursement by the Investment Advisor for a realized investment loss on an investment not meeting the Fund's investment restrictions. This reimbursement had an impact of less than 0.01% on the Fund's Class C shares total return. (d)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%.
YEAR ENDED OCTOBER 31, ====================================================================== CLASS E SHARES 2004 2003 2002 2001 2000 (A) ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $13.02 $10.82 $12.63 $18.34 $17.17 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.05) (0.04) (0.03) (0.07) (0.14) Net realized and unrealized gain (loss) on investments 0.37 2.24 (1.78) (5.64) 1.31 -------- -------- -------- -------- -------- Total from investment operations 0.32 2.20 (1.81) (5.71) 1.17 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $13.34 $13.02 $10.82 $12.63 $18.34 Total return (c) 2.46%(d) 20.33% (14.33)% (31.13)% 6.81% - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (e) 1.49% 1.52% 1.51% 1.49% 1.54% Net investment loss (e) (0.40)% (0.38)% (0.28)% (0.48)% (0.77)% Portfolio turnover rate 40% 39% 42% 82% 69% Net assets, end of period (000's) $7,065 $6,908 $5,794 $6,820 $9,171 - ------------------------------------------------------------------------------------------------------------------------------------
(a)Class E shares were collapsed into Class G shares on February 28, 2000, which were then redesignated Class E shares. (b)Per share data was calculated using average shares outstanding during the period. (c)Total return at net asset value assuming no initial sales charge or contingent deferred sales charge. (d)Total return includes a voluntary reimbursement by the Investment Advisor for a realized investment loss on an investment not meeting the Fund's investment restrictions. This reimbursement had an impact of less than 0.01% on the Fund's Class E shares total return. (e)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. 45 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Columbia Tax-Managed Growth Fund
Selected data for a share outstanding throughout each period is as follows: YEAR ENDED OCTOBER 31, ====================================================================== CLASS F SHARES 2004 2003 2002 2001 2000 (A) ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $12.44 $10.41 $12.23 $17.87 $16.83 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.14) (0.11) (0.11) (0.17) (0.26) Net realized and unrealized gain (loss) on investments 0.37 2.14 (1.71) (5.47) 1.30 -------- -------- -------- -------- -------- Total from investment operations 0.23 2.03 (1.82) (5.64) 1.04 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $12.67 $12.44 $10.41 $12.23 $17.87 Total return (c) 1.85%(d) 19.50% (14.88)% (31.56)% 6.18% - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (e) 2.14% 2.17% 2.16% 2.14% 2.19% Net investment loss (e) (1.05)% (1.03)% (0.93)% (1.13)% (1.42)% Portfolio turnover rate 40% 39% 42% 82% 69% Net assets, end of period (000's) $10,353 $10,265 $8,709 $10,101 $13,368 - ------------------------------------------------------------------------------------------------------------------------------------
(a)Class F shares were collapsed into Class H shares on February 28, 2000, which were then redesignated Class F shares. (b)Per share data was calculated using average shares outstanding during the period. (c)Total return at net asset value assuming no contingent deferred sales charge. (d)Total return includes a voluntary reimbursement by the Investment Advisor for a realized investment loss on an investment not meeting the Fund's investment restrictions. This reimbursement had an impact of less than 0.01% on the Fund's Class F shares total return. (e)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%.
YEAR ENDED OCTOBER 31, ====================================================================== CLASS Z SHARES 2004 2003 2002 2001 2000 ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $13.24 $10.96 $12.76 $18.46 $17.23 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (a) (0.01) (0.01) 0.01 (0.02) (0.08) Net realized and unrealized gain (loss) on investments 0.39 2.29 (1.81) (5.68) 1.31 -------- -------- -------- -------- -------- Total from investment operations 0.38 2.28 (1.80) (5.70) 1.23 - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $13.62 $13.24 $10.96 $12.76 $18.46 Total return (b) 2.87%(c) 20.80% (14.11)% (30.88)% 7.14% - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (d) 1.14% 1.17% 1.16% 1.14% 1.19% Net investment income (loss) (d) (0.06)% (0.03)% 0.07% (0.13)% (0.42)% Portfolio turnover rate 40% 39% 42% 82% 69% Net assets, end of period (000's) $286 $442 $80 $915 $1,941 - ------------------------------------------------------------------------------------------------------------------------------------
(a)Per share data was calculated using average shares outstanding during the period. (b)Total return at net asset value. (c)Total return includes a voluntary reimbursement by the Investment Advisor for a realized investment loss on an investment not meeting the Fund's investment restrictions. This reimbursement had an impact of less than 0.01% on the Fund's Class Z shares total return. (d)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. 46 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Columbia Tax-Managed Growth Fund II Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31, ====================================================================== CLASS A SHARES 2004 2003 2002 2001 2000 (A) ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $8.33 $6.94 $7.92 $11.55 $12.00 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.04) (0.02) (0.02) (0.04) (0.07) Net realized and unrealized gain (loss) on investments 0.21 1.41 (0.96) (3.59) (0.38) -------- -------- -------- -------- -------- Total from investment operations 0.17 1.39 (0.98) (3.63) (0.45) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $8.50 $8.33 $6.94 $7.92 $11.55 Total return (c)(d) 2.04%(e) 20.03% (12.37)% (31.43)% (3.75)%(f) - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (g) 1.50% 1.50% 1.50% 1.50% 1.50%(h) Net investment loss (g) (0.41)% (0.33)% (0.29)% (0.42)% (0.84)%(h) Waiver/reimbursement 0.07% 0.25% 0.20% 0.16% 0.62%(h) Portfolio turnover rate 38% 36% 49% 90% 32%(f) Net assets, end of period (000's) $6,634 $7,515 $7,692 $9,486 $6,769 - ------------------------------------------------------------------------------------------------------------------------------------
(a)The Fund commenced investment operations on March 7, 2000. (b)Per share data was calculated using average shares outstanding during the period. (c)Total return at net asset value assuming no initial sales charge or contingent deferred sales charge. (d)Had the Investment Advisor/Administrator not waived or reimbursed a portion of expenses, total return would have been reduced. (e)Total return includes a voluntary reimbursement by the Investment Advisor for a realized investment loss on an investment not meeting the Fund's investment restrictions. This reimbursement had an impact of less than 0.01% on the Fund's Class A shares total return. (f)Not annualized. (g)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h)Annualized.
YEAR ENDED OCTOBER 31, ====================================================================== CLASS B SHARES 2004 2003 2002 2001 2000 (A) ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $8.10 $6.80 $7.82 $11.51 $12.00 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.10) (0.08) (0.08) (0.11) (0.12) Net realized and unrealized gain (loss) on investments 0.21 1.38 (0.94) (3.58) (0.37) -------- -------- -------- -------- -------- Total from investment operations 0.11 1.30 (1.02) (3.69) (0.49) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $8.21 $8.10 $6.80 $7.82 $11.51 Total return (c)(d) 1.36%(e) 19.12% (13.04)% (32.06)% (4.08)%(f) - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (g) 2.25% 2.25% 2.25% 2.25% 2.25%(h) Net investment loss (g) (1.16)% (1.08)% (1.04)% (1.17)% (1.59)%(h) Waiver/reimbursement 0.07% 0.25% 0.20% 0.16% 0.62%(h) Portfolio turnover rate 38% 36% 49% 90% 32%(f) Net assets, end of period (000's) $26,584 $31,557 $30,871 $42,391 $50,859 - ------------------------------------------------------------------------------------------------------------------------------------
(a) The Fund commenced investment operations on March 7, 2000. (b)Per share data was calculated using average shares outstanding during the period. (c)Total return at net asset value assuming no contingent deferred sales charge. (d)Had the Investment Advisor/Administrator not waived or reimbursed a portion of expenses, total return would have been reduced. (e)Total return includes a voluntary reimbursement by the Investment Advisor for a realized investment loss on an investment not meeting the Fund's investment restrictions. This reimbursement had an impact of less than 0.01% on the Fund's Class B shares total return. (f)Not annualized. (g)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h)Annualized. 47 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Columbia Tax-Managed Growth Fund II Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31, ====================================================================== CLASS C SHARES 2004 2003 2002 2001 2000 (A) ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $8.08 $6.78 $7.80 $11.50 $12.00 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.10) (0.08) (0.08) (0.11) (0.12) Net realized and unrealized gain (loss) on investments 0.21 1.38 (0.94) (3.59) (0.38) -------- -------- -------- -------- -------- Total from investment operations 0.11 1.30 (1.02) (3.70) (0.50) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $8.19 $8.08 $6.78 $7.80 $11.50 Total return (c)(d) 1.36%(e) 19.17% (13.08)% (32.17)% (4.17)%(f) - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (g) 2.25% 2.25% 2.25% 2.25% 2.25%(h) Net investment loss (g) (1.16)% (1.08)% (1.04)% (1.17)% (1.59)%(h) Waiver/reimbursement 0.07% 0.25% 0.20% 0.16% 0.62%(h) Portfolio turnover rate 38% 36% 49% 90% 32%(f) Net assets, end of period (000's) $5,389 $6,444 $6,481 $8,994 $5,801 - ------------------------------------------------------------------------------------------------------------------------------------
(a)The Fund commenced investment operations on March 7, 2000. (b)Per share data was calculated using average shares outstanding during the period. (c)Total return at net asset value assuming no contingent deferred sales charge. (d)Had the Investment Advisor/Administrator not waived or reimbursed a portion of expenses, total return would have been reduced. (e)Total return includes a voluntary reimbursement by the Investment Advisor for a realized investment loss on an investment not meeting the Fund's investment restrictions. This reimbursement had an impact of less than 0.01% on the Fund's Class C shares total return. (f)Not annualized. (g)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h)Annualized.
YEAR ENDED OCTOBER 31, ====================================================================== CLASS Z SHARES 2004 2003 2002 2001 2000 (A) ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $8.39 $6.97 $7.95 $11.58 $12.00 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment loss (b) (0.01) (0.01) --(c) (0.02) (0.05) Net realized and unrealized gain (loss) on investments 0.21 1.43 (0.98) (3.61) (0.37) -------- -------- -------- -------- -------- Total from investment operations 0.20 1.42 (0.98) (3.63) (0.42) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $8.59 $8.39 $6.97 $7.95 $11.58 Total return (d)(e) 2.38%(f) 20.37% (12.33)% (31.35)% (3.50)%(g) - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (h) 1.25% 1.25% 1.25% 1.25% 1.25%(i) Net investment loss (h) (0.16)% (0.08)% (0.04)% (0.17)% (0.59)%(i) Waiver/reimbursement 0.07% 0.25% 0.20% 0.16% 0.62%(i) Portfolio turnover rate 38% 36% 49% 90% 32%(g) Net assets, end of period (000's) $1,045 $831 $894 $1,211 $4,740 - ------------------------------------------------------------------------------------------------------------------------------------
(a)The Fund commenced investment operations on March 7, 2000. (b)Per share data was calculated using average shares outstanding during the period. (c)Rounds to less than $0.01 per share. (d)Had the Investment Advisor/Administrator not waived or reimbursed a portion of expenses, total return would have been reduced. (e)Total return at net asset value. (f)Total return includes a voluntary reimbursement by the Investment Advisor for a realized investment loss on an investment not meeting the Fund's investment restrictions. This reimbursement had an impact of less than 0.01% on the Fund's Class Z shares total return. (g)Not annualized. (h)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (i)Annualized. 48 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Columbia Tax-Managed Value Fund Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31, ====================================================================== CLASS A SHARES 2004 2003 2002 2001 2000 ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $10.10 $8.89 $11.40 $11.41 $10.64 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.09 0.07 0.04 0.04 0.04 Net realized and unrealized gain (loss) on investments 1.30 1.14 (2.55) (0.05) 0.73 -------- -------- -------- -------- -------- Total from investment operations 1.39 1.21 (2.51) (0.01) 0.77 - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.09) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $11.40 $10.10 $8.89 $11.40 $11.41 Total return (b) 13.78% 13.61% (22.02)% (0.09)% 7.24% - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (c) 1.52% 1.70% 1.61% 1.71% 1.80% Net investment income (c) 0.82% 0.72% 0.34% 0.32% 0.39% Portfolio turnover rate 38% 68% 72% 47% 76% Net assets, end of period (000's) $14,522 $16,725 $19,767 $25,694 $14,017 - ------------------------------------------------------------------------------------------------------------------------------------
(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)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%.
YEAR ENDED OCTOBER 31, ====================================================================== CLASS B SHARES 2004 2003 2002 2001 2000 ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $9.80 $8.68 $11.22 $11.30 $10.61 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (a) 0.01 --(b) (0.04) (0.04) (0.03) Net realized and unrealized gain (loss) on investments 1.26 1.12 (2.50) (0.04) 0.72 -------- -------- -------- -------- -------- Total from investment operations 1.27 1.12 (2.54) (0.08) 0.69 - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (--)(b) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $11.07 $9.80 $8.68 $11.22 $11.30 Total return (c) 12.98% 12.90% (22.64)% (0.71)% 6.50% - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (d) 2.22% 2.40% 2.31% 2.41% 2.50% Net investment income (loss) (d) 0.12% 0.02% (0.36)% (0.38)% (0.31)% Portfolio turnover rate 38% 68% 72% 47% 76% Net assets, end of period (000's) $46,717 $50,117 $52,701 $69,720 $49,112 - ------------------------------------------------------------------------------------------------------------------------------------
(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 contingent deferred sales charge. (d)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. 49 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Columbia Tax-Managed Value Fund Selected data for a share outstanding throughout each period is as follows:
YEAR ENDED OCTOBER 31, ====================================================================== CLASS C SHARES 2004 2003 2002 2001 2000 ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $9.80 $8.68 $11.22 $11.30 $10.61 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (a) 0.01 --(b) (0.04) (0.04) (0.03) Net realized and unrealized gain (loss) on investments 1.26 1.12 (2.50) (0.04) 0.72 -------- -------- -------- -------- -------- Total from investment operations 1.27 1.12 (2.54) (0.08) 0.69 - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (--)(b) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $11.07 $9.80 $8.68 $11.22 $11.30 Total return (c) 12.98% 12.90% (22.64)% (0.71)% 6.50% - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (d) 2.22% 2.40% 2.31% 2.41% 2.50% Net investment income (loss) (d) 0.12% 0.02% (0.36)% (0.38)% (0.31)% Portfolio turnover rate 38% 68% 72% 47% 76% Net assets, end of period (000's) $11,864 $13,674 $17,463 $21,367 $10,331 - ------------------------------------------------------------------------------------------------------------------------------------
(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 contingent deferred sales charge. (d)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%.
YEAR ENDED OCTOBER 31, ====================================================================== CLASS Z SHARES 2004 2003 2002 2001 2000 ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $10.22 $8.96 $11.46 $11.43 $10.65 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (a) 0.13 0.10 0.07 0.07 0.07 Net realized and unrealized gain (loss) on investments 1.30 1.16 (2.57) (0.04) 0.71 -------- -------- -------- -------- -------- Total from investment operations 1.43 1.26 (2.50) 0.03 0.78 - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.12) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $11.53 $10.22 $8.96 $11.46 $11.43 Total return (b) 14.10% 14.06% (21.82)% 0.26% 7.32% - ------------------------------------------------------------------------------------------------------------------------------------ RATIO TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (c) 1.22% 1.40% 1.31% 1.41% 1.50% Net investment income (c) 1.12% 1.02% 0.64% 0.62% 0.69% Portfolio turnover rate 38% 68% 72% 47% 76% Net assets, end of period (000's) $47 $32 $1 $1 $1 - ------------------------------------------------------------------------------------------------------------------------------------
(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)The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. 50 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------- Columbia Tax-Managed Funds TO THE TRUSTEES OF COLUMBIA FUNDS TRUST I AND THE SHAREHOLDERS OF: COLUMBIA TAX-MANAGED AGGRESSIVE GROWTH FUND COLUMBIA TAX-MANAGED GROWTH FUND COLUMBIA TAX-MANAGED GROWTH FUND II COLUMBIA TAX-MANAGED VALUE FUND In our opinion, the accompanying statements of assets and liabilities, including the investment portfolios, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the above Funds (the "Funds") at October 31, 2004, and the results of their operations, the changes in their net assets, and their financial highlights for the periods indicated, except for Columbia Tax-Managed Aggressive Growth Fund and Columbia Tax-Managed Growth Fund II which is for the year then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States), which require that we plan and perform the audits 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 October 31, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial statements and financial highlights of the Columbia Tax-Managed Aggressive Growth Fund and the Columbia Tax-Managed Growth Fund II as of October 31, 2003 and for fiscal periods ending on or prior to October 31, 2003 were audited by other independent accountants, whose report dated December 9, 2003 expressed an unqualified opinion on those statements and highlights. The Trustees of the Columbia Tax-Managed Aggressive Growth Fund approved a plan of liquidation for the Fund as described in Note 10. PricewaterhouseCoopers LLP Boston, Massachusetts December 21, 2004 51 UNAUDITED INFORMATION ----------------------------------------------------------- Columbia Tax-Managed Funds FEDERAL INCOME TAX INFORMATION COLUMBIA TAX-MANAGED VALUE FUND 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 November 1, 2003 to October 31, 2004 may represent qualified dividend income. Final information will be provided in your 2004 1099-Div Form. 100.00% of the ordinary income distributed by the Fund, for the year ended October 31, 2004, qualifies for the corporate dividends received deduction. 52 TRUSTEES AND OFFICERS ----------------------------------------------------------- Columbia Tax-Managed Funds The Trustees/Directors serve terms of indefinite duration. The names, addresses and ages of the Trustees/Directors and officers of the Funds in the Columbia Funds Complex, the year each was first elected or appointed to office, their principal business occupations during at least the last five years, the number of portfolios overseen by each Trustee/Director and other directorships they hold are shown below. Each officer listed below serves as an officer of each Fund in the Columbia Funds Complex.
NAME, ADDRESS AND AGE, POSITION WITH FUNDS, PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA YEAR FIRST ELECTED OR APPOINTED TO OFFICE/1/ FUNDS COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD DISINTERESTED TRUSTEES DOUGLAS A. HACKER (age 49) Executive Vice President-Strategy of United Airlines (airline) since December 2002 P.O. Box 66100 (formerly President of UAL Loyalty Services (airline) from September 2001 to Chicago, IL 60666 December 2002; Executive Vice President and Chief Financial Officer of United Trustee (since 1996) Airlines from March 1999 to September 2001;Senior Vice President-Finance from March 1993 to July 1999). Oversees 118, None ----------------------------------------------------------------------------------- JANET LANGFORD KELLY (age 47) Adjunct Professor of Law, Northwestern University, since September 2004; Private 9534 W. Gull Lake Drive Investor since March 2004 (formerly Chief Administrative Officer and Senior Vice Richland, MI 49083-8530 President, Kmart Holding Corporation (consumer goods), from September 2003 to Trustee (since 1996) March 2004; Executive Vice President - Corporate Development and Administration, General Counsel and Secretary, Kellogg Company (food manufacturer), from September 1999 to August 2003; Senior Vice President, Secretary and General Counsel, Sara Lee Corporation (branded, packaged, consumer-products manufacturer) from January 1995 to September 1999). Oversees 118, None ----------------------------------------------------------------------------------- RICHARD W. LOWRY (age 68) Private Investor since August 1987 (formerly Chairman and Chief Executive Officer, 10701 Charleston Drive U. S. Plywood Corporation (building products manufacturer)). Oversees 120/3/, None Vero Beach, FL 32963 Trustee (since 1995) ----------------------------------------------------------------------------------- CHARLES R. NELSON (age 62) Professor of Economics, University of Washington, since January 1976; Ford and Department of Economics Louisa Van Voorhis Professor of Political Economy, University of Washington, since University of Washington September 1993 (formerly Director, Institute for Economic Research, University of Seattle, WA 98195 Washington from September 2001 to June 2003) Adjunct Professor of Statistics, Trustee (since 1981) University of Washington, since September 1980; Associate Editor, Journal of Money Credit and Banking, since September 1993; consultant on econometric and statistical matters. Oversees 118, None ----------------------------------------------------------------------------------- JOHN J. NEUHAUSER (age 61) Academic Vice President and Dean of Faculties since August 1999, Boston College 84 College Road (formerly Dean, Boston College School of Management from September 1977 to Chestnut Hill, MA 02467-3838 September 1999). Oversees 121/3/, /4/, Saucony, Inc. (athletic footwear) Trustee (since 1985) ----------------------------------------------------------------------------------- PATRICK J. SIMPSON (age 60) Partner, Perkins Coie LLP (law firm). Oversees 118, None 1120 N.W. Couch Street Tenth Floor Portland, OR 97209-4128 Trustee (since 2000) -----------------------------------------------------------------------------------
53 - -------------------------------------------------------------------------------- Columbia Tax-Managed Funds
NAME, ADDRESS AND AGE, POSITION WITH FUNDS, PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS, NUMBER OF PORTFOLIOS IN COLUMBIA YEAR FIRST ELECTED OR APPOINTED TO OFFICE/1/ FUNDS COMPLEX OVERSEEN BY TRUSTEE/DIRECTOR, OTHER DIRECTORSHIPS HELD DISINTERESTED TRUSTEES THOMAS E. STITZEL (age 68) Business Consultant since 1999 (formerly Professor of Finance from 1975 to 1999, 2208 Tawny Woods Place College of Business, Boise State University); Chartered Financial Analyst. Boise, ID 83706 Oversees 118, None. Trustee (since 1998) ----------------------------------------------------------------------------------- THOMAS C. THEOBALD (age 67) Partner and Senior Advisor, Chicago Growth Partners (private equity investing) 303 W. Madison since September 2004 (formerly Managing Director, William Blair Capital Partners Suite 2500 (private equity investing) from September 1994 to September 2004). Oversees 118, Chicago, IL 60606 Anixter International (network support equipment distributor); Ventas, Inc. (real Trustee and Chairman of the Board/5/ estate investment trust); Jones Lang LaSalle (real estate management services) and (since 1996) Ambac Financial Group (financial guaranty insurance) ----------------------------------------------------------------------------------- ANNE-LEE VERVILLE (age 59) Retired since 1997 (formerly General Manager, Global Education Industry, IBM 359 Stickney Hill Road Corporation (computer and technology) from 1994 to 1997). Oversees 119/4/, Chairman Hopkinton, NH 03229 of the Board of Directors, Enesco Group, Inc. (designer, importer and distributor Trustee (since 1998) of giftware and collectibles) ----------------------------------------------------------------------------------- RICHARD L. WOOLWORTH (age 63) Retired since December 2003 (formerly Chairman and Chief Executive Officer, The 100 S.W. Market Street #1500 Regence Group (regional health insurer); Chairman and Chief Executive Officer, Portland, OR 97207 BlueCross BlueShield of Oregon; Certified Public Accountant, Arthur Young & Trustee (since 1991) Company). Oversees 118, Northwest Natural Gas Co. (natural gas service provider) ----------------------------------------------------------------------------------- INTERESTED TRUSTEE WILLIAM E. MAYER/2/ (age 64) Partner, Park Avenue Equity Partners (private equity) since February 1999 399 Park Avenue (formerly Partner, Development Capital LLC from November 1996 to February 1999). Suite 3204 Oversees 120/3/, Lee Enterprises (print media), WR Hambrecht + Co. (financial New York, NY 10022 service provider); First Health (healthcare); Reader's Digest (publishing); Trustee (since 1994) OPENFIELD Solutions (retail industry technology provider) -----------------------------------------------------------------------------------
1 In December 2000, the boards of each of the former Liberty Funds and former Stein Roe Funds were combined into one board of trustees responsible for the oversight of both fund groups (collectively, the "Liberty Board"). In October 2003, the trustees on the Liberty Board were elected to the boards of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the "CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and Richard L. Woolworth, who had been directors on the Columbia Board and trustees on the CMG Funds Board, were appointed to serve as trustees of the Liberty Board. The date shown is the earliest date on which a trustee/director was elected or appointed to the board of a Fund in the Columbia Funds Complex. 2 Mr. Mayer is an "interested person" (as defined in the Investment Company Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht + Co. 3 Messrs. Lowry, Neuhauser and Mayer also serve as directors/trustees of the Liberty All-Star Funds, currently consisting of 2 funds, which are advised by an affiliate of the Advisor. 4 Mr. Neuhauser and Ms. Verville also serve as disinterested directors of Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the Advisor. 5 Mr. Theobald was appointed as Chairman of the Board effective December 10, 2003. The Statement of Additional Information includes additional information about the Trustees of the Funds and is available, without change, upon request by calling 800-426-3750. 54 - -------------------------------------------------------------------------------- Columbia Tax-Managed Funds
NAME, ADDRESS AND AGE, POSITION WITH COLUMBIA FUNDS, YEAR FIRST ELECTED OR APPOINTED TO OFFICE PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS OFFICERS CHRISTOPHER L. WILSON (age 47) Head of Mutual Funds of the Advisor since August 2004; President of the Columbia One Financial Center Funds since October 2004 (formerly President and Chief Executive Officer, CDC IXIS Boston, MA 02111 Asset Management Services, Inc. from September 1998 to August 2004). President (since 2004) ----------------------------------------------------------------------------------- J. Kevin Connaughton (age 40) Treasurer of the Columbia Funds and of the Liberty All-Star Funds since December One Financial Center 2000; Vice President of the Advisor since April 2003 (formerly President of the Boston, MA 02111 Columbia Funds from February 2004 to October 2004; Chief Accounting Officer and Treasurer (since 2000) Controller of the Liberty Funds and of the Liberty All-Star Funds from February 1998 to October 2000); Treasurer of the Galaxy Funds since September 2002; (formerly Treasurer from December 2002 to December 2004 and President from February 2004 to December 2004 of Columbia Management Multi-Strategy Hedge Fund, LLC; Vice President of Colonial Management Associates, Inc. from February 1998 to October 2000). ----------------------------------------------------------------------------------- MARY JOAN HOENE (age 54) Senior Vice President and Chief Compliance Officer of the Columbia Funds and of the 40 West 57th Street Liberty All-Star Funds since August 2004 (formerly Partner, Carter, Ledyard & New York, NY 10019 Milburn LLP from January 2001 to August 2004; Counsel, Carter, Ledyard & Milburn Senior Vice President and LLP from November 1999 to December 2000; Vice President and Counsel, Equitable Life Chief Compliance Officer Assurance Society of the United States from April 1998 to November 1999). (since 2004) ----------------------------------------------------------------------------------- MICHAEL G. CLARKE (age 34) Chief Accounting Officer of the Columbia Funds and of the Liberty All-Star Funds One Financial Center since October 2004 (formerly Controller of the Columbia Funds and of the Liberty Boston, MA 02111 All-Star Funds from May 2004 to October 2004; Assistant Treasurer from June, 2002 Chief Accounting Officer to May 2004; Vice President, Product Strategy & Development of the Liberty Funds (since 2004) Group from February 2001 to June 2002; Assistant Treasurer of the Liberty Funds and of the Liberty All-Star Funds from August 1999 to February 2001; Audit Manager, Deloitte & Touche LLP from May 1997 to August 1999). ----------------------------------------------------------------------------------- JEFFREY R. COLEMAN (age 35) Controller of the Columbia Funds and of the Liberty All-Star Funds since October One Financial Center 2004 (formerly Vice President of CDC IXIS Asset Management Services, Inc. and Boston, MA 02111 Deputy Treasurer of the CDC Nvest Funds and Loomis Sayles Funds from February 2003 Controller (since 2004) to September 2004; Assistant Vice President of CDC IXIS Asset Management Services, Inc. and Assistant Treasurer of the CDC Nvest Funds from August 2000 to February 2003; Tax Manager of PFPC Inc. from November 1996 to August 2000). ----------------------------------------------------------------------------------- R. SCOTT HENDERSON (Age 45) Secretary of the Columbia Funds since December 2004 (formerly Of Counsel, Bingham One Financial Center McCutchen from April 2001 to September 2004; Executive Director and General Boston, MA 02111 Counsel, Massachusetts Pension Reserves Investment Management Board from September Secretary (since 2004) 1997 to March 2001). -----------------------------------------------------------------------------------
55 This page intentionally left blank. IMPORTANT INFORMATION ABOUT THIS REPORT - -------------------------------------------------------------------------------- Columbia Tax-Managed Funds TRANSFER AGENT Columbia Funds Services, Inc. P.O. Box 8081 Boston MA 02266-8081 800.345.6611 DISTRIBUTOR Columbia Funds Distributor, Inc. One Financial Center Boston MA 02111 INVESTMENT ADVISOR Columbia Management Advisors, Inc. 100 Federal Street Boston MA 02110 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers LLP 125 High Street Boston MA 02110 The funds mail one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800-345-6611 and additional reports will be sent to you. This report has been prepared for shareholders of Columbia Tax-Managed Funds. This report may also be used as sales literature when preceded or accompanied by the current prospectus which provides details of sales charges, investment objectives and operating policies of the funds and with the most recent copy of the Columbia Funds Performance Update. A description of the Funds' proxy voting policies and procedures is available (i) on the Funds' website, www.columbiamanagement.com; (ii) on the Securities and Exchange Commission's website at www.sec.gov, and (iii) without charge, upon request, by calling 800-368-0346. Information regarding how the Funds voted proxies relating to portfolio securities during the 12-month period ended June 30, 2004 is available from the SEC's website. Information regarding how the Funds voted proxies relating to portfolio securities is also available from the Funds' 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' Forms N-Q are 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, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Please note that on March 1, 2004, Ernst & Young LLP ("E&Y") resigned as the independent registered public accounting firm for Columbia Tax-Managed Aggressive Growth Fund and Columbia Tax-Managed Growth Fund II. During the two most recent fiscal years, E&Y's audit reports contained no adverse opinion or disclaimer of opinion; nor were its reports qualified or modified as to uncertainty, audit scope, or accounting principle. Further, in connection with its audits for the two most recent fiscal years and through March 1, 2004, there were no disagreements between the funds and E&Y on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which if not resolved to the satisfaction of E&Y would have caused it to make reference to the disagreement in its report on the financial statements for such years. Effective March 1, 2004, PricewaterhouseCoopers LLP was appointed by the audit committee of the Board of Trustees as the independent registered public accounting firm of the funds for the fiscal year ended October 31, 2004. Columbia Management is the primary investment management division of Bank of America Corporation. Columbia Management entities furnish investment management services and advise institutional and mutual fund portfolios. 57 [eDelivery LOGO] Help your fund reduce printing and postage costs! Elect to get your shareholder reports by electronic delivery. With Columbia's eDelivery program, you receive an e-mail message when your shareholder report becomes available online. If your fund account is registered with Columbia Funds, you can sign up quickly and easily on our website at www.columbiafunds.com. Please note -- if you own your fund shares through a financial institution, contact the institution to see if it offers electronic delivery. If you own your fund shares through a retirement plan, electronic delivery may not be available to you. COLUMBIA TAX-MANAGED FUNDS Annual Report, October 31, 2004 PRSRT STD U.S. Postage PAID Holliston, MA Permit NO. 20 [LOGO]: COLUMBIA FUNDS A MEMBER OF COLUMBIA MANAGEMENT [C] 2004 COLUMBIA FUNDS DISTRIBUTOR, INC. ONE FINANCIAL CENTER, BOSTON, MA 02111-2621 800.345.6611 WWW.COLUMBIAFUNDS.COM TM-02/442T-1004 (12/04) 04/3598 ITEM 2. CODE OF ETHICS. (a) The registrant has, as of the end of the period covered by this report, adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. (b) During the period covered by this report, there were not any amendments to a provision of the code of ethics adopted in 2(a) above. (c) During the period covered by this report, there were not any waivers or implicit waivers to a provision of the code of ethics adopted in 2(a) above. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's Board of Trustees has determined that Douglas A. Hacker, Thomas E. Stitzel, Anne-Lee Verville and Richard L. Woolworth, each of whom are members of the registrant's Board of Trustees and Audit Committee, each qualify as an audit committee financial expert. Mr. Hacker, Mr. Stitzel, Ms. Verville and Mr. Woolworth are each independent trustees, as defined in paragraph (a)(2) of this item's instructions and collectively constitute the entire Audit Committee. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Fee information below is disclosed in aggregate for the four series of the registrant whose reports to stockholders are included in this annual filing. Effective March 1, 2004, two of the series of the registrant included in this filing engaged a new independent accountant. Unless otherwise noted, fees disclosed below represent fees paid or accrued to the current and predecessor principal accountants while each was engaged by the registrant. (a) Aggregate Audit Fees billed by the principal accountant for professional services rendered during the fiscal years ended October 31, 2004 and October 31, 2003 are approximately as follows: 2004 2003 $71,780 $81,840 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 October 31, 2004 and October 31, 2003 are approximately as follows: 2004 2003 $14,000 $16,000 Audit-Related Fees include amounts for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported in Audit Fees above. In both fiscal years 2004 and 2003, Audit-Related Fees include certain agreed-upon procedures performed for semi-annual shareholder reports. The "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X became effective on May 6, 2003. For the registrant, the percentage of Audit-Related services that were approved under the "de minimis" exception during the fiscal years ended October 31, 2004 and October 31, 2003 was zero. The pre-approval requirements 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 became effective on May 6, 2003. During the fiscal years ended October 31, 2004 and October 31, 2003, there were no Audit-Related Fees that were approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. The percentage of Audit-Related 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 the fiscal years ended October 31, 2004 and October 31, 2003 was zero. (c) Aggregate Tax Fees billed by the principal accountant for professional services rendered during the fiscal years ended October 31, 2004 and October 31, 2003 are approximately as follows: 2004 2003 $8,600 $9,064 Tax Fees in both fiscal years 2004 and 2003 consist primarily of the review of annual tax returns and include amounts for professional services by the principal accountant for tax compliance, tax advice and tax planning. The "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X became effective on May 6, 2003. For the registrant, the percentage of Tax Fees that were approved under the "de minimis" exception during the fiscal years ended October 31, 2004 and October 31, 2003 was zero. The pre-approval requirements 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 became effective on May 6, 2003. During the fiscal years ended October 31, 2004 and October 31, 2003, there were no Tax Fees that were approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. The percentage of Tax 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 the fiscal years ended October 31, 2004 and October 31, 2003 was zero. (d) Aggregate All Other Fees billed by the principal accountant for professional services rendered during the fiscal years ended October 31, 2004 and October 31, 2003 are as follows: 2004 2003 $0 $0 All Other Fees include amounts for products and services provided by the principal accountant, other than the services reported in (a)-(c) above. The "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X became effective on May 6, 2003. For the registrant, the percentage of All Other Fees that were approved under the "de minimis" exception during the fiscal years ended October 31, 2004 and October 31, 2003 was zero. The pre-approval requirements 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 became effective on May 6, 2003. During the fiscal year ended October 31, 2004, All Other Fees that were approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X were approximately $95,000 (note that fees were paid to the current principal accountant). During the fiscal year ended October 31, 2003, All Other Fees that would have been subject to pre-approval had paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X been applicable at the time the services were provided, were approximately $95,000 (note that fees were paid to the current principal accountant). For both fiscal years, All Other Fees relate to internal controls reviews of the registrant's transfer agent. The percentage of 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 the fiscal years ended October 31, 2004 and October 31, 2003 was zero. (e)(1) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES I. GENERAL OVERVIEW The Audit Committee of the registrant has adopted a formal policy (the "Policy") which sets forth the procedures and the conditions pursuant to which the Audit Committee will 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. The adviser and control affiliates are collectively referred to as "Adviser Entities." The Audit Committee uses a combination of specific (on a case-by-case basis as potential services are contemplated) and general (pre-determined list of permitted services) pre-approvals. Unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee if it is to be provided by the independent auditor. The Policy does not delegate the Audit Committee's responsibilities to pre-approve services performed by the independent auditor to management. II. GENERAL PROCEDURES On an annual basis, the Fund Treasurer and/or Director of Trustee Administration shall submit to the Audit Committee a schedule of the types of Fund Services and Fund-related Adviser Services that are subject to general pre-approval. These schedules will provide a description of each type of service that is subject to general pre-approval and, where possible, will provide estimated fees for each instance of providing each service. This general pre-approval and related fees (where provided) will generally cover a one-year period (for example, from July 1 through August 31 of the following year). The Audit Committee will review and approve the types of services and review the projected fees for the next one-year period and may add to, or subtract from, the list of general pre-approved services from time to time, based on subsequent determinations. This approval acknowledges that the Audit Committee is in agreement with the specific types of services that the independent auditor will be permitted to perform. The fee amounts will be updated to the extent necessary at other regularly scheduled meetings of the Audit Committee. In addition to the fees for each individual service, the Audit Committee has the authority to implement a fee cap on the aggregate amount of non-audit services provided to an individual fund. If, subsequent to general pre-approval, a fund, its investment adviser or a control affiliate determines that it would like to engage the independent auditor to perform a service that requires pre-approval and that is not included in the general pre-approval list, the specific pre-approval procedure shall be as follows: o A brief written request shall be prepared by management detailing the proposed engagement with explanation as to why the work is proposed to be performed by the independent auditor; o The request should be addressed to the Audit Committee with copies to the Fund Treasurer and/or Director of Trustee Administration; o The Fund Treasurer and/or Director of Trustee Administration will arrange for a discussion of the service to be included on the agenda for the next regularly scheduled Audit Committee meeting, when the Committee will discuss the proposed engagement and approve or deny the request. o If the timing of the project is critical and the project needs to commence before the next regularly scheduled meeting, the Chairperson of the Audit Committee may approve or deny the request on behalf of the Audit Committee, or, in the Chairperson's discretion, determine to call a special meeting of the Audit Committee for the purpose of considering the proposal. Should the Chairperson of the Audit Committee be unavailable, any other member of the Audit Committee may serve as an alternate for the purpose of approving or denying the request. Discussion with the Chairperson (or alternate, if necessary) will be arranged by the Fund Treasurer and/or Director of Trustee Administration. The independent auditor will not commence any such project unless and until specific approval has been given. III. CERTAIN OTHER SERVICES PROVIDED TO ADVISER ENTITIES The Audit Committee recognizes that there are cases where services proposed to be provided by the independent auditor to the adviser or control affiliates are not Fund-related Adviser Services within the meaning of the Policy, but nonetheless may be relevant to the Audit Committee's ongoing evaluation of the auditor's independence and objectivity with respect to its audit services to the funds. As a result, in all cases where an Adviser Entity engages the independent auditor to provide audit or non-audit services that are not Fund Services or Fund-related Adviser Services, were not subject to pre-approval by the Audit Committee, and the projected fees for any such engagement (or the aggregate of all such engagements during the period covered by the Policy) exceeds a pre-determined threshold established by the Audit Committee; the independent auditor, Fund Treasurer and/or Director of Trustee Administration will notify the Audit Committee not later than its next meeting. Such notification shall include a general description of the services provided, the entity that is to be the recipient of such services, the timing of the engagement, the entity's reasons for selecting the independent auditor, and the projected fees. Such information will allow the Audit Committee to consider whether non-audit services provided to the adviser and Adviser Entities, which were not subject to Audit Committee pre-approval, are compatible with maintaining the auditor's independence with respect to the Funds. IV. REPORTING TO THE AUDIT COMMITTEE The Fund Treasurer or Director of Trustee Administration shall report to the Audit Committee at each of its regular meetings regarding all Fund Services or Fund-related Adviser Services initiated since the last such report was rendered, including: o A general description of the services, and o Actual billed and projected fees, and o The means by which such Fund Services or Fund-related Adviser Services were pre-approved by the Audit Committee. In addition, the independent auditor shall report to the Audit Committee annually, and no more than 90 days prior to the filing of audit reports with the SEC, all non-audit services provided to entities in the funds' "investment company complex," as defined by SEC rules, that did not require pre-approval under the Policy. V. AMENDMENTS; ANNUAL APPROVAL BY AUDIT COMMITTEE The Policy may be amended from time to time by the Audit Committee. Prompt notice of any amendments will be provided to the independent auditor, Fund Treasurer and Director of Trustee Administration. The Policy shall be reviewed and approved at least annually by the Audit Committee. ***** (e)(2) This information has been included in items (b)-(d) above. (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 October 31, 2004 and October 31, 2003 are disclosed in (b)-(d) above. All non-audit fees billed by the registrant's accountant for services rendered to the registrant's 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 for the fiscal years ended October 31, 2004 and October 31, 2003 are also disclosed in (b)-(d) above. Such fees were approximately $95,000 and $95,000, respectively. (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 yet 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 Funds Trust I ----------------------------------------------------------------- By (Signature and Title) /s/ Christopher L. Wilson ----------------------------------------------------- Christopher L. Wilson, President Date December 27, 2004 ------------------------------------------------------------------------- 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/ Christopher L. Wilson ----------------------------------------------------- Christopher L. Wilson, President Date December 27, 2004 ------------------------------------------------------------------------- By (Signature and Title) /s/ J. Kevin Connaughton ----------------------------------------------------- J. Kevin Connaughton, Treasurer Date December 27, 2004 ------------------------------------------------------------------------- EX-99.CODE ETH 2 file002.txt CODE OF ETHICS COLUMBIA MANAGEMENT GROUP FAMILY OF FUNDS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS I. COVERED OFFICERS/PURPOSE OF THE CODE This Code of Ethics (the "Code") for the investment companies within the Columbia Management Group fund complex (collectively the "Funds" and each, a "Fund") applies to the Funds' Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, and Director of Trustee Administration (the "Covered Officers") for the purpose of promoting: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely and understandable disclosure in reports and documents that a Fund files with, or submits to, the Securities and Exchange Commission ("SEC"), and in other public communications made by a Fund; o compliance with applicable laws and governmental rules and regulations; o the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and o accountability for adherence to the Code. Each Covered Officer shall adhere to a high standard of business ethics and shall be sensitive to situations that may give rise to actual or apparent conflicts of interest. II. ADMINISTRATION OF THE CODE The Boards of Trustees and Boards of Directors of the Funds (collectively, the "Board") shall designate an individual to be primarily responsible for the administration of the Code (the "Code Officer"). The Code shall be administered by the Columbia Management Group Compliance Department. In the absence of the Code Officer, his or her designee shall serve as the Code Officer, but only on a temporary basis. Each Fund has designated a chief legal officer (the "Chief Legal Officer") for purposes of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. The Chief Legal Officer of a Fund shall assist the Fund's Code Officer in administration of this Code. The Chief Legal Officer shall be responsible for applying this Code to specific situations in which questions are presented under it (in consultation with Fund counsel, where appropriate) and has the authority to interpret this Code in any particular situation. However, any waivers sought by a Covered Officer must be approved by each Audit Committee of the Funds (collectively, the "Audit Committee"). III. MANAGING CONFLICTS OF INTEREST OVERVIEW. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his/her service to, a Fund. For example, a conflict of interest would arise if a Covered Officer, or a family member, receives improper personal benefits as a result of the Covered Officer's position with a Fund. Certain conflicts of interest arise out of the relationships between Covered Officers and a Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940 (the "Company Act") and the Investment Advisers Act of 1940 (the "Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with a Fund because of their status as "affiliated persons" of the Fund. A Fund's and its investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of those provisions. This Code does not, and is not intended to, repeat or replace those programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts may arise from, or as a result of, the contractual relationship between a Fund and its investment adviser, administrator, principal underwriter, pricing and bookkeeping agent and/or transfer agent (each, a "Service Provider") of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for a Fund or for a Service Provider, or for both), be involved in establishing policies and implementing decisions that will have different effects on the Service Provider and a Fund. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Fund and the Service Provider and is consistent with the performance by the Covered Officers of their duties as officers of a Fund. In addition, it is recognized by the Board that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions of the Company Act and the Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of a Fund. Each Covered Officer must: o not use personal influence or personal relationships improperly to influence investment decisions or financial reporting by a Fund whereby the Covered Officer or an immediate family member would benefit personally to the detriment of a Fund; and o not cause a Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer or an immediate family member rather than the benefit of the Fund.1. There are some conflict of interest situations that must be approved by the Code Officer, after consultation with the Chief Legal Officer. Those situations include, but are not limited to,: o service as director on the board of any public or private company; o the receipt of any gifts in excess of $100 in the aggregate from a third party that does or seeks to do business with the Funds during any 12-month period; o the receipt of any entertainment from any company with which a Fund has current or prospective business dealings, unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; o any material ownership interest in, or any consulting or employment relationship with, any Fund service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; o a direct or indirect material financial interest in commissions, transaction charges or spreads paid by a Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. IV. DISCLOSURE AND COMPLIANCE Each Covered Officer shall: o be familiar with the disclosure requirements generally applicable to the Funds; - ---------------------- 1 For purposes of this Code, personal trading activity of the Covered Officers shall be monitored in accordance with the Columbia Management Group Code of Ethics. Each Covered Officer shall be considered an "Access Person" under such Code. The term "immediate family" shall have the same meaning as provided in such Code. o not knowingly misrepresent, or cause others to misrepresent, facts about any Fund to others, whether within or outside the Fund, including to the Fund's trustees and auditors, and to governmental regulators and self-regulatory organizations; o to the extent appropriate within his/her area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and o promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. V. REPORTING AND ACCOUNTABILITY Each Covered Officer must: o upon adoption of the Code (or after becoming a Covered Officer), affirm in writing to the Board that he/she has received, read and understands the Code; o annually affirm to the Board compliance with the requirements of the Code; o not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; o notify the Chief Legal Officer and the Code Officer promptly if he/she knows of any violation of this Code; and o respond to the trustee and officer questionnaires circulated periodically in connection with the preparation of disclosure documents for the Funds. The Code Officer shall maintain records of all activities related to this Code. The Funds will follow the procedures set forth below in investigating and enforcing this Code: o The Chief Legal Officer and/or the Code Officer will take all appropriate action to investigate any potential violation reported to him/her; o If, after such investigation, the Chief Legal Officer and the Code Officer believes that no violation has occurred, the Code Officer will notify the person(s) reporting the potential violation, and no further action is required; o Any matter that the Chief Legal Officer and/or the Code Officer believes is a violation will be reported to the Audit Committee; o If the Audit Committee concurs that a violation has occurred, it will inform and make a recommendation to the Board, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to the Chief Executive Officer of Columbia Management Group; or a recommendation to sanction or dismiss the Covered Officer; o The Audit Committee will be responsible for granting waivers in its sole discretion; o Any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. The Chief Legal Officer shall: o report to the Audit Committee quarterly any approvals provided in accordance with Section III of this Code; and o report to the Audit Committee quarterly any violations of, or material issues arising under, this Code. VI. OTHER POLICIES AND PROCEDURES This Code shall be the sole code of ethics adopted by the Funds for the purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other polices or procedures of the Funds or the Funds' Service Providers govern or purport to govern the behavior or activities (including, but not limited to, personal trading activities) of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Funds' and their investment advisers' and principal underwriter's codes of ethics under Rule 17j-1 under the Company Act and any policies and procedures of the Service Providers are separate requirements applicable to the Covered Officers and are not part of this Code. VII. AMENDMENTS All material amendments to this Code must be approved or ratified by the Board, including a majority of independent directors. VIII. CONFIDENTIALITY All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Board, the Covered Officers, the Chief Legal Officer, the Code Officer, outside audit firms and legal counsel to the Funds, and senior management of Columbia Management Group. IX. INTERNAL USE The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion. EX-99.CERT 3 file003.txt CERTIFICATIONS I, Christopher L. Wilson, certify that: 1. I have reviewed this report on Form N-CSR of Columbia Funds Trust I; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's 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; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: December 27, 2004 /s/ Christopher L. Wilson -------------------------------- Christopher L. Wilson, President I, J. Kevin Connaughton, certify that: 1. I have reviewed this report on Form N-CSR of Columbia Funds Trust I; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's second fiscal quarter of this period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: December 27, 2004 /s/ J. Kevin Connaughton ------------------------------- J. Kevin Connaughton, Treasurer EX-99.906CERT 4 file004.txt CERTIFICATIONS CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Certified Shareholder Report of Columbia Funds Trust I (the "Trust") on Form N-CSR for the period ending October 31, 2004, as filed with the Securities and Exchange Commission on the date hereof ("the Report"), the undersigned hereby certifies that, to his knowledge: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust. Date: December 27, 2004 /s/ Christopher L. Wilson -------------------------------- Christopher L. Wilson, President Date: December 27, 2004 /s/ J. Kevin Connaughton --------------------------------- J. Kevin Connaughton, Treasurer A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission (the "Commission") or its staff upon request. This certification is being furnished to the Commission solely pursuant to 18 U.S.C. ss.1350 and is not being filed as part of the Form N-CSR with the Commission. -----END PRIVACY-ENHANCED MESSAGE-----