SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[_] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material under Rule 14a-12

COLUMBIA FLOATING RATE FUND

COLUMBIA INSTITUTIONAL FLOATING RATE INCOME FUND

COLUMBIA FLOATING RATE ADVANTAGE FUND

(Name of Registrant as Specified in its Charter)

(Name of Person(s) filing Proxy Statement, if other than the Registrant)

Payment of filing fee (check the approximate box):

[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:

[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the

previous filing by registration statement number, or the Form or Schedule
and the date of its filing.

1) Amount Previously Paid:

2) Form, Schedule or Registration Statement No.:

3) Filing Party:

4) Date Filed:

COLUMBIA FLOATING RATE FUND
COLUMBIA INSTITUTIONAL FLOATING RATE INCOME FUND
COLUMBIA FLOATING RATE ADVANTAGE FUND
One Financial Center
Boston, Massachusetts 02111-2621

SUPPLEMENT TO PROXY STATEMENT

The following is a correction to the Proxy Statement for the Funds. Under
the section entitled VOTING RIGHTS, the table following the first
paragraph, is revised in its entirety as follows:

Shares
Fund Outstanding
Columbia Floating Rate Fund 79,779,837.458
Columbia Institutional Floating Rate Income Fund 9,138,921.410
Columbia Floating Rate Advantage Fund 49,657,731.201

761-43/153S-0604 June 21, 2004

COLUMBIA FLOATING RATE FUNDS

June 21, 2004

Dear Shareholder:

A special meeting of shareholders of each of the Columbia Floating Rate
Advantage Fund, the Columbia Floating Rate Fund and the Columbia Institutional
Floating Rate Income Fund (the "Funds") has been called to be held on July 30,
2004 at 10:00 a.m. (Eastern Time) at One Financial Center in Boston,
Massachusetts, for three purposes.

The first purpose is to vote on a proposed new advisory agreement for each
Fund with Highland Capital Management, L.P. On April 15, 2004, the advisory
agreement for each Fund was terminated and each Fund entered into an interim
advisory agreement with Highland Capital after a determination by the Board of
each Fund that it was in the best interest of the Fund's shareholders to do so.
Shareholders of each Fund are being asked to approve a new advisory agreement
with Highland Capital that will become effective immediately upon approval.

The second purpose is to elect new trustees/managers to the Board of
Trustees/Managers of each Fund.

The third purpose is to transact any other business that may properly come
before the meeting.

THE BOARD OF TRUSTEES/MANAGERS OF EACH FUND RECOMMENDS THAT YOU VOTE FOR THE
PROPOSALS.

The enclosed Proxy Statement explains the proposals to be considered in
greater detail. Please read it carefully. Although we hope that you can attend
the special meeting in person, we urge you in any event to vote your shares at
your earliest convenience in order to make sure that you are represented at the
meeting.

YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. YOU CAN
VOTE EASILY AND QUICKLY BY MAIL OR IN PERSON. A SELF-ADDRESSED, POSTAGE-PAID
ENVELOPE HAS BEEN ENCLOSED FOR YOUR CONVENIENCE. PLEASE HELP YOUR FUND AVOID
THE EXPENSE OF A FOLLOW-UP MAILING BY VOTING TODAY!

We appreciate your participation and prompt response in these matters and
thank you for your continued support.

Sincerely,

/s/
J. Kevin Connaughton
President

761-60/082S-0604

COLUMBIA FLOATING RATE FUND
COLUMBIA INSTITUTIONAL FLOATING RATE INCOME FUND
COLUMBIA FLOATING RATE ADVANTAGE FUND
One Financial Center
Boston, Massachusetts 02111-2621

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON JULY 30, 2004

To the Shareholders:

A special meeting of the shareholders (the "Meeting") of each of Columbia
Floating Rate Fund, Columbia Institutional Floating Rate Income Fund and
Columbia Floating Rate Advantage Fund will be held on July 30, 2004 at 10:00
a.m., Eastern Time, at One Financial Center, Boston, Massachusetts 02111-2621,
for the following purposes:

1. To approve new advisory agreements between Highland Capital
Management, L.P. and each of Columbia Floating Rate Limited Liability
Company and Columbia Floating Rate Advantage Fund.

2. To elect new trustees/managers to the Board of Trustees/Managers of
each of Columbia Floating Rate Fund, Columbia Institutional Floating Rate
Income Fund, Columbia Floating Rate Limited Liability Company and Columbia
Floating Rate Advantage Fund.

3. To transact any other business as may properly come before the
Meeting, or any adjournments thereof.

Shareholders of record at the close of business on June 1, 2004 are entitled
to notice of, and to vote at, the Meeting. Your attention is called to the
accompanying Proxy Statement. Regardless of whether you plan to attend the
Meeting, PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY so
that a quorum will be present and a maximum number of shares may be voted. If
you are present at the Meeting, you may change your vote, if desired, at that
time.

By the Order of the Trustees/Managers

/s/

David A. Rozenson, Secretary

Dated: June 21, 2004

YOUR BOARD OF TRUSTEES/MANAGERS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR
OF THE PROPOSALS.

COLUMBIA FLOATING RATE FUND

COLUMBIA INSTITUTIONAL FLOATING RATE INCOME FUND

COLUMBIA FLOATING RATE ADVANTAGE FUND

One Financial Center

Boston, Massachusetts 02111-2621

PROXY STATEMENT

SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON JULY 30, 2004

A special meeting of shareholders (the "Meeting") of each of Columbia
Floating Rate Fund (the "Floating Rate Fund"), Columbia Institutional Floating
Rate Income Fund (the "Institutional Fund") and Columbia Floating Rate
Advantage Fund (the "Advantage Fund" and, together with the Floating Rate Fund,
the Institutional Fund and the Floating Rate LLC (as defined herein), each a
"Fund" and collectively, the "Funds"), will be held on July 30, 2004 at 10:00
a.m., Eastern Time, at One Financial Center, Boston, Massachusetts 02111-2621,
for the following purposes (each a "Proposal" and collectively, the
"Proposals"), each of which is described below:

1. To approve new advisory agreements between Highland Capital
Management, L.P. ("Highland") and each of Columbia Floating Rate Limited
Liability Company (the "Floating Rate LLC") and the Advantage Fund.

2. To elect new trustees/managers to the Board of Trustees/Managers of
each of the Floating Rate Fund, the Institutional Fund, the Floating Rate
LLC and the Advantage Fund.

3. To transact any other business as may properly come before the
Meeting, or any adjournments thereof.

Solicitation of Proxies

This solicitation of proxies is being made by the Board of Trustees/Managers
(the "Board") of each of the Funds in connection with the sale by Columbia
Management Advisors, Inc. ("Columbia") of certain of the assets of its bank
loan asset management group to Highland. Solicitation of proxies is being made
primarily by the mailing of this Notice and Proxy Statement with its enclosures
on or about June 21, 2004. Shareholders of record at the

close of business on June 1, 2004 (the "Record Date") are entitled to notice
of, and to vote at, the Meeting. Shareholders of the Funds whose shares are
held by nominees, such as brokers, can vote their proxies by contacting their
respective nominees. In addition to the solicitation of proxies by mail,
officers and agents of the Funds and their affiliates may, without additional
compensation, solicit proxies by telephone, telegraph, facsimile, or oral
communication. Solicitation may also be made by Investor Connect, a division of
The Altman Group, a paid proxy solicitation firm. The costs of soliciting the
proxies, estimated to be approximately ten thousand U.S. dollars (US$10,000),
will be borne by Columbia and Highland pursuant to the terms of the Asset
Purchase Agreement (as defined herein), and not by the Funds.

A shareholder may revoke the accompanying proxy at any time prior to its use
by filing with the appropriate Fund a written revocation or duly executed proxy
bearing a later date. In addition, any shareholder who attends the Meeting in
person may vote by ballot at the Meeting, thereby canceling any proxy
previously given. The persons named in the accompanying proxy will vote as
directed by the proxy, but in the absence of voting directions in any proxy
that is signed and returned, they intend to vote "FOR" the Proposals and may
vote in their discretion with respect to other matters not now known to the
Board of Trustees/Managers of the Funds that may be presented at the Meeting.

If you have questions regarding the meeting agenda or the execution of the
proxy, call a representative toll-free at 800-870-0252.

Master/Feeder Structure and Voting

The Floating Rate Fund and the Institutional Fund are "feeder funds" of the
Floating Rate LLC, which means that they invest substantially all of their
assets in shares of the Floating Rate LLC. The Floating Rate Fund and the
Institutional Fund do not have advisory contracts of their own, but
shareholders of such Funds are entitled to vote, as a single class, on the
advisory contract for the Floating Rate LLC. The Floating Rate Fund and the
Institutional Fund have their own trustees, but shareholders of such Funds are
entitled to vote, as a single class, on the proposed managers for the Floating
Rate LLC. The Floating Rate Fund and the Institutional Fund are the only feeder
funds of the Floating Rate LLC. Accordingly, shareholders of the Floating Rate
Fund and the Institutional Fund are being asked to vote on the advisory
contract and the proposed managers for the Floating Rate LLC.

Shareholder Voting Summary

The following table summarizes the Proposals and the Funds whose
shareholders need to vote with respect thereto. With respect to the Floating
Rate LLC, each Proposal may be voted on by shareholders of both the Floating
Rate Fund and the Institutional Fund, voting as one aggregate class.

Columbia Columbia
Columbia Institutional Floating Rate
Floating Floating Rate Advantage
Rate Fund Income Fund Fund
------------------------------------------------------------------------------

Proposal 1: Approval of New Advisory Contracts
----------------------------------------------

------------------------------------------------------------------------------

New Advisory Contract for Columbia
Floating Rate Limited Liability
Company........................... (check mark) (check mark)
------------------------------------------------------------------------------

New Advisory Contract for Columbia
Floating Rate Advantage Fund...... (check mark)
------------------------------------------------------------------------------

Proposal 2: Election of Trustees/Managers
-----------------------------------------
------------------------------------------------------------------------------

Election of Trustees for Columbia
Floating Rate Fund................ (check mark)
------------------------------------------------------------------------------

Election of Trustees for Columbia
Institutional Floating Rate Income
Fund.............................. (check mark)
------------------------------------------------------------------------------

Election of Managers for Columbia
Floating Rate Limited Liability
Company........................... (check mark) (check mark)
------------------------------------------------------------------------------

Election of Trustees for Columbia
Floating Rate Advantage Fund...... (check mark)

Voting Rights

Shareholders of each Fund at the close of business on the Record Date will
be entitled to be present and to give voting instructions for the relevant Fund
at the Meeting and any adjournments thereof with respect to their shares owned
as of the Record Date. Shareholders of each Fund will be entitled to cast one
vote on the Proposal and on each other matter that they are entitled to vote
upon at the Meeting for each share owned on the Record

Date. Shareholders of each Fund will also be entitled to cast a proportionate
fractional vote on the Proposal and on each other matter that they are entitled
to vote upon at the Meeting for each fractional share owned on the Record Date.
As of the Record Date, each of the Funds have the following numbers of shares
outstanding, which in each case equals the number of votes to which the
shareholders of such Fund are entitled:

Shares
Fund Outstanding
---- --------------

Columbia Floating Rate Fund..................... 79,779,837.458
Columbia Institutional Floating Rate Income Fund 9,138,921.410
Columbia Floating Rate Advantage Fund........... 49,657,731.201

Thirty (30) per centum of the outstanding shares of each Fund on the Record
Date, represented in person or by proxy, must be present to constitute a quorum.

If a quorum for any Fund is not present at the Meeting, or if a quorum is
present but sufficient votes to approve a Proposal in which that Fund's
shareholders are voting have not been received, the persons named as proxies
may propose one or more adjournments of the Meeting as to that Fund to permit
further solicitation of proxies. Any adjournment will require the affirmative
vote of a majority of the shares of that Fund represented at the Meeting in
person or by proxy. In that case, the persons named as proxies will vote all
proxies that they are entitled to vote FOR such an adjournment; provided,
however, that any proxies required to be voted against any Proposal will be
voted AGAINST such adjournment.

The Funds expect that, before the Meeting, broker-dealer firms holding
shares of the Funds in "street name" for their customers will request voting
instructions from their customers and beneficial owners. If these instructions
are not received by the date specified in the broker-dealer firms' proxy
solicitation materials, the Funds understand that the broker-dealers that are
members of the New York Stock Exchange might be able to vote on the items to be
considered at the Meeting on behalf of their customers and beneficial owners
under the rules of the New York Stock Exchange.

In determining whether a quorum is present, the tellers will count shares
represented by proxies that reflect abstentions, and "broker non-votes," as
shares that are present and entitled to vote. Since these shares will be counted

as present, but not as voting in favor of any Proposal, for purposes other than
adjournment, these shares will have the same effect as if they cast votes
against the Proposal. "Broker non-votes" are shares held by brokers or nominees
as to which (i) the broker or nominee does not have discretionary voting power
and (ii) the broker or nominee has not received instructions from the
beneficial owner or other person who is entitled to instruct how the shares
will be voted.

Dissenting shareholders have no rights of appraisal or similar rights.

Beneficial Owners

Appendix A to this Proxy Statement lists the persons that, to the knowledge
of the Funds, owned beneficially 5% or more of the outstanding shares of any
class of any Fund as of the Record Date. A shareholder who owns beneficially,
directly or indirectly, more than 25% of any Fund's voting securities may be
deemed a "control person" (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of such Fund. The Trustees/Managers and officers of
each Fund, in the aggregate, owned less than one (1) per centum of each Fund's
outstanding shares as of the Record Date. The Board of Trustees/Managers of the
Funds is aware of no arrangements the operation of which at a subsequent date
may result in a change in control of any Fund.

Expenses

The expenses incurred in connection with the solicitation of proxies for the
Meeting, including preparation, filing, printing, mailing, solicitation, legal
fees, out-of-pocket expenses and expenses of any proxy solicitation firm will
be paid by Columbia and Highland pursuant to the terms of the Asset Purchase
Agreement (as defined herein).

Shareholder Reports

Each Fund will furnish, without charge, a copy of its most recent annual
report, and its most recent semiannual report subsequent to such annual report,
to its shareholders on request. Requests for a report should be directed to
such Fund by mail to One Financial Center, Boston, Massachusetts 02111-2621, by
calling 1-800-345-6611 or by visiting www.columbiafunds.com.

PROPOSAL 1
TO APPROVE NEW ADVISORY AGREEMENTS

COLUMBIA FLOATING RATE FUND
COLUMBIA INSTITUTIONAL FLOATING RATE INCOME FUND
COLUMBIA FLOATING RATE ADVANTAGE FUND

Background

On April 9, 2004, Columbia and Highland entered into an agreement (the
"Asset Purchase Agreement") to sell certain of the assets of Columbia's bank
loan asset management group (the "BLAM Group"), insofar as it relates to the
Funds, to Highland (such transaction, the "Sale"). The Sale closed on April 15,
2004 (the "Closing Date"). Upon completion of the Sale, the advisory agreements
between Columbia and each of the Floating Rate LLC and the Advantage Fund (the
"Prior Advisory Agreements") were terminated, and interim advisory agreements
between Highland and each of the Floating Rate LLC and the Advantage Fund (the
"Interim Advisory Agreements") took effect. Unless the Interim Advisory
Agreements are otherwise terminated, they will continue in effect (a) until new
advisory agreements between Highland and each of the Floating Rate LLC and the
Advantage Fund are approved by the shareholders of the appropriate Funds (each
a "New Advisory Agreement" and collectively, the "New Advisory Agreements") or
(b) for 150 days from the Closing Date, whichever is sooner. Accordingly,
shareholders of the Advantage Fund are being asked to approve a New Advisory
Agreement for the Advantage Fund, and shareholders of the Floating Rate Fund
and the Institutional Fund are being asked, as a single class, to approve a New
Advisory Agreement for the Floating Rate LLC, each to be effective immediately
after such approval.

At a meeting held on March 29, 2004, the Board of Trustees/Managers,
including the Trustees/Managers who are not "interested persons" of the Funds
(the "Independent Trustees/Managers"), as such term is defined in the 1940 Act,
approved the New Advisory Agreements by an unanimous vote of the
Trustees/Managers present, subject to shareholder approval. A description of
the New Advisory Agreements is provided below under the caption "The New
Advisory Agreements." Such description is only a summary and is qualified in
its entirety by reference to the forms of the New Advisory Agreements attached
to this Proxy Statement in Appendix B. In addition, a summary of the
considerations of the Board of Trustees/Managers

with respect to the New Advisory Agreements is provided below under the caption
"Trustees'/Managers' Considerations."

In approving the New Advisory Agreements, the Trustees/Managers took into
account that there will be no change in advisory fees paid by the Funds. The
Trustees/Managers also considered that the expenses incurred in connection with
the Meeting would be split between Columbia and Highland and that no such
expenses will be paid by the Funds or their shareholders. Furthermore, based on
the representations of Highland regarding its intentions, the Trustees/Managers
do not currently anticipate that there will be substantial changes in the
investment policies of the Funds.

The New Advisory Agreements

THE NEW ADVISORY AGREEMENTS WILL NOT RESULT IN A CHANGE IN ADVISORY FEES
PAID BY THE FUNDS. Under the New Advisory Agreements, Highland will, among
other things: (i) continuously furnish an investment program for the Advantage
Fund and the Floating Rate LLC; (ii) place orders for the purchase and sale of
securities for the accounts of the Advantage Fund and the Floating Rate LLC;
(iii) provide for certain facilities and administrative services; (iv) arrange
for the provision and maintenance of an insurance bond against larceny and
embezzlement by officers and employees of the Advantage Fund and the Floating
Rate LLC; and (v) generally manage, supervise and conduct the affairs and
business of the Advantage Fund and the Floating Rate LLC. The Advantage Fund
and the Floating Rate LLC will be responsible for expenses related to, among
other things: (i) fund organization; (ii) shareholder servicing, custodial,
depository, accounting, pricing and trustee services; (iii) bookkeeping,
accounting and auditing; (iv) brokerage and related costs; (v) taxes; (vi)
registration and filing fees; (vii) preparation and printing of certificates
relating to the issuance of securities, prospectuses and marketing materials;
(viii) shareholder and Board meetings and the preparation, printing and mailing
of proxy statements, reports and other communications to shareholders; (ix)
maintenance of books and records; (x) insurance; (xi) legal counsel in
connection with matters relating to the Advantage Fund and the Floating Rate
LLC; and (xii) interest on borrowings by the Advantage Fund and the Floating
Rate LLC. Forms of the New Advisory Agreements are attached to this Proxy
Statement in Appendix B, and the description set forth in this Proxy Statement
of the New Advisory Agreements is qualified in its entirety by reference to
Appendix B.

Under the New Advisory Agreements, subject to the supervision of the
Trustees/Managers of the Funds, Highland will manage the investment of the
assets of the Funds in accordance with the Funds' Prospectuses (the
"Prospectuses") and Statements of Additional Information, and in compliance
with the 1940 Act and the rules, regulations and orders thereunder.

Under each of the New Advisory Agreements, Highland will be entitled to
compensation at the same rates as under the Prior Advisory Agreements. Highland
will be entitled to receive from the Advantage Fund a monthly fee, computed and
accrued daily, at the annual rate of 0.45% of the average net assets of the
Advantage Fund for the first one billion U.S. dollars (US$1,000,000,000), 0.40%
of the average net assets of the Advantage Fund for the next one billion U.S.
dollars (US$1,000,000,000) and 0.35% of the average net assets of the Advantage
Fund that exceed two billion U.S. dollars (US$2,000,000,000). Highland will be
entitled to receive from the Floating Rate LLC a monthly fee, computed and
accrued daily, at the annual rate of 0.45% of the average net assets of the
Floating Rate LLC.

During the fiscal year ended August 31, 2003, the investment adviser for the
Advantage Fund received one million one hundred seventy-eight thousand U.S.
dollars (US$1,178,000) from the Advantage Fund in total advisory fees pursuant
to its Prior Advisory Agreement, and the investment adviser for the Floating
Rate LLC received two million seventy-two thousand U.S. dollars (US$2,072,000)
from the Floating Rate LLC in total advisory fees pursuant to its Prior
Advisory Agreement.

The New Advisory Agreements will continue in effect for a period not to
exceed two years from their effective dates, and thereafter shall continue
automatically for successive annual periods, provided that such continuance is
specifically approved with respect to each Fund to which they apply at least
annually by (i) the Board of Trustees/Managers of such Fund or (ii) the vote of
a "majority of the outstanding voting securities" (as defined in the 1940 Act)
of such Fund; provided, that in either event such continuance also is approved
by a majority of the Independent Trustees/Managers of such Fund, by vote cast
in person at a meeting called for the purpose of voting on such approval. Each
New Advisory Agreement generally provides that it may be terminated at any
time, without penalty, by (i) the Board of Trustees/Managers of the Fund to
which it applies, (ii) the vote of a "majority of the outstanding voting
securities" (as defined in the 1940 Act) of the Fund to

which it applies or (iii) by Highland, in each case on not more than sixty (60)
days' nor less than thirty (30) days' written notice. Each New Advisory
Agreement also shall terminate automatically in the event of its "assignment"
(as defined in the 1940 Act). Each New Advisory Agreement may be amended only
by a written instrument and only upon approval by the vote of a "majority of
the outstanding voting securities" (as defined in the 1940 Act) of the Fund to
which it applies.

Highland will carry out its duties under the New Advisory Agreements at its
own expense. Each Fund will pay its own ordinary operating and activity
expenses, such as legal and auditing fees, fees of the adviser, the
administrator, the custodian, accounting services and third-party shareholder
servicing agents, the cost of communicating with shareholders and registration
fees, as well as other operating expenses such as interest, taxes, brokerage,
insurance, bonding, compensation of Independent Trustees/Managers of such Fund
and extraordinary expenses.

Like the Prior Advisory Agreements, the New Advisory Agreements provide that
in the absence of willful misfeasance, bad faith or gross negligence in the
performance (or reckless disregard) of its obligations or duties thereunder on
the part of Highland, Highland shall not be subject to liability to the Funds
party to such agreements or to any shareholder of such Funds for any error of
judgment or mistake of law, for any loss arising out of any investment or for
any act or omission in the execution and management of such Funds.

The Interim Advisory Agreements

The Interim Advisory Agreements were entered into on April 15, 2004.
Shareholder approval of the Interim Advisory Agreements is not required under
the 1940 Act. There are no material differences between the provisions of the
Interim Advisory Agreements and the provisions of the New Advisory Agreements,
except that each Interim Advisory Agreement (i) provides for the commencement
of full advisory responsibilities effective immediately after the Closing Date;
(ii) will terminate automatically upon the close of business on the 150th day
following the Closing Date; (iii) can be terminated at any time, without the
payment of penalty, by either the Board of Trustees/Managers of the Fund to
which it applies or by vote of a "majority of the outstanding voting
securities" (as defined in the 1940 Act) of the Fund to which it applies, in
either case upon ten (10) days' written notice to Highland; and (iv) provides
that any compensation earned under such Interim

Advisory Agreement will be held in an interest-bearing escrow account, with
such compensation (including interest earned thereon) to be paid to Highland if
holders of a "majority of the outstanding voting securities" (as defined in the
1940 Act) of the Fund to which it applies approve such Fund's New Advisory
Agreement by the close of business on the 150th day following the Closing Date.
If such Fund's New Advisory Agreement is not approved by holders of a "majority
of the outstanding voting securities" (as defined in the 1940 Act) of such
Fund, Highland will be paid, out of the escrow account, the lesser of (i) any
costs incurred in performing the Interim Advisory Agreement (plus interest
earned on that amount while in escrow), or (ii) the total amount in the escrow
account (plus interest earned thereon). The Trustees/Managers of the Funds
approved the Interim Advisory Agreements on March 29, 2004.

Covenants Regarding Certain Legal Requirements Under the 1940 Act

Highland has made certain covenants regarding compliance with Section 15(f)
of the 1940 Act, which provides in pertinent part that the investment adviser
or any of its affiliated persons may receive any amount or benefit in
connection with certain transactions involving an assignment of an investment
advisory agreement as long as two conditions are satisfied. The first condition
requires that no "unfair burden" may be imposed on the investment company as a
result of such transactions, or as a result of any express or implied terms,
conditions or understandings applicable to such transactions. The term "unfair
burden," as defined in the 1940 Act, includes any arrangement during the
two-year period after the change in control whereby the investment adviser (or
predecessor or successor adviser), or any interested person of any such
adviser, receives or is entitled to receive any compensation, directly or
indirectly, from such investment company or its security holders (other than
fees for bona fide investment advisory or other services) or from any person in
connection with the purchase or sale of securities or other property to, from
or on behalf of such investment company (other than bona fide ordinary fees for
principal underwriting services). No such compensation arrangements were
contemplated in the Sale. Highland has agreed with Columbia to use its
reasonable best efforts to ensure that neither the Sale nor any terms,
conditions or understandings applicable thereto will cause the imposition of an
"unfair burden" on the Funds. There will be no increase in rates of fees or
other compensation during the applicable two-year period.

The second condition requires that, during the three-year period immediately
following consummation of such transactions, at least seventy-five (75) per
centum of the investment company's board of trustees must not be "interested
persons" (as defined in the 1940 Act) of the investment adviser or predecessor
investment adviser. The Board of Trustees/Managers of the Funds currently
satisfies, the Nominees (as hereinafter defined), if elected, would satisfy,
and Highland has agreed with Columbia to use its reasonable best efforts to
ensure continued satisfaction of, such seventy-five (75) per centum requirement.

Information Regarding Highland

Highland is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended. Highland specializes in credit and special
situation investing, and as of March 31, 2004 managed $7,660,000,000 in
leveraged loans, high-yield bonds, structured products and other assets for
banks, insurance companies, pension plans, foundations and high-net-worth
individuals. Current portfolios include structured investment vehicles,
separate accounts and hedge funds. Additionally, Highland manages two
closed-end registered investment companies listed on the New York Stock
Exchange. Highland's principal office address is 13455 Noel Road, Suite 1300,
Dallas, Texas 75240. Highland also maintains an office at 245 Park Avenue, 39th
Floor, New York, New York 10167.

Highland's principal executive officers and general partners and the
principal occupation of each are shown below.

Name Principal Occupation Address
---- -------------------- -------

James Dondero........ President and 13455 Noel Road,
Managing Partner Suite 1300
Dallas, Texas 75240
Mark Okada........... Chief Investment Officer 13455 Noel Road,
Suite 1300
Dallas, Texas 75240
Todd Travers......... Senior Portfolio Manager 13455 Noel Road,
Suite 1300
Dallas, Texas 75240
Strand Advisors, Inc. General Partner 13455 Noel Road,
Suite 1300
Dallas, Texas 75240

Highland's Parent is shown below, along with its basis of control. For
purposes of this Proxy Statement, the term "Parent" has the meaning ascribed to
it in Item 22(a)(1)(ix) of Schedule 14A under the Securities Exchange Act of
1934 (the "Exchange Act").

Highland Parent Basis of Control Immediate Parent Basis of Control
--------------- ---------------- ---------------- ----------------

Strand Advisors, Inc. General Partner None None

Mr. Dougherty, a Nominee, is a senior portfolio manager for Highland.
Highland does not manage any other funds having an investment objective similar
to that of the Funds.

Broker Affiliations

Fleet Securities, Inc. is the parent company of Quick & Reilly, Inc., and
both Fleet Securities, Inc. and Quick & Reilly, Inc. were deemed to be
Affiliated Brokers of the Funds for the fiscal year ended August 31, 2003
because all of Fleet Securities, Inc., Quick & Reilly, Inc. and Columbia (at
that time the investment adviser for the Funds) were indirectly owned by
FleetBoston Financial Corporation. No Fund paid commissions to any Affiliated
Broker during the fiscal year ended August 31, 2003. For purposes of this proxy
statement, "Affiliated Broker" has the meaning ascribed to it in Item
22(a)(1)(ii) of Schedule 14A under the Exchange Act.

Trustees'/Managers' Considerations

The Board of Trustees/Managers, including a majority of the Independent
Trustees/Managers, approved the New Advisory Agreements and their submission
for shareholder approval by unanimous vote of the Trustees/Managers present at
a meeting on March 29, 2004. The Interim Advisory Agreements became effective
immediately after the Closing Date. Only when the New Advisory Agreements are
approved by the shareholders will the New Advisory Agreements be in effect and
replace the Interim Advisory Agreements.

If the New Advisory Agreements are not approved by the shareholders, the
Trustees/Managers will promptly consider alternatives.

The Board of Trustees/Managers has been presented with information that it
believes demonstrates that the terms of the New Advisory Agreements

are fair to, and in the best interests of, the Funds and the shareholders of
the Funds. Information was presented at the meeting of the Board of
Trustees/Managers on March 29, 2004 with respect to the Sale. Specific details
about the information considered by the Board of Trustees/Managers are provided
below. The Board of Trustees/Managers expects that there will be no diminution
in the scope and quality of advisory services provided to the Funds as a result
of the Sale.

Information considered by the Board of Trustees/Managers in forming the
basis of its recommendation to approve the New Advisory Agreements included,
among other things: (1) the fact that the compensation rates to be received by
Highland under the New Advisory Agreements is the same as the compensation
rates paid under the Prior Advisory Agreements; (2) the experience and
resources of Highland, and Highland's performance history; (3) Highland's
covenant that it will use its reasonable best efforts to ensure that no "unfair
burden" (as defined in the 1940 Act) is imposed on the Funds as a result of the
Sale; (4) Highland's covenant that it will use its reasonable best efforts to
ensure that seventy-five (75) per centum of the Board of Trustees/Managers of
the Funds remain disinterested; and (5) Highland's financial strength and
commitment to the investment advisory business generally.

Related Approvals

Highland has indicated that it may not agree to serve as the investment
adviser for any Fund unless the New Advisory Agreements are approved by the
shareholders of both the Floating Rate Fund and the Advantage Fund. If the
shareholders of either of the Floating Rate Fund or the Advantage Fund do not
vote to approve the New Advisory Agreements, then Highland may or may not agree
to serve as the investment adviser for any Fund that approves its New Advisory
Agreement.

Vote Required and Recommendation

Approval of the Proposal on behalf of the Advantage Fund requires the
affirmative vote of a "majority of the outstanding voting securities" of such
Fund, which for this purpose means the affirmative vote of the lesser of (i)
more than fifty (50) per centum of the outstanding shares of such Fund or (ii)
sixty-seven (67) per centum or more of the shares of such Fund present at the
Meeting if more than fifty (50) per centum of the outstanding shares of such
Fund are represented at the Meeting in person or by proxy.

Approval of the Proposal on behalf of the Floating Rate LLC requires the
affirmative vote of a "majority of the outstanding voting securities" of the
Floating Rate Fund and the Institutional Fund, voting as a single class, which
for this purpose means the affirmative vote of the lesser of (i) more than
fifty (50) per centum of the outstanding shares of the Floating Rate Fund and
the Institutional Fund, voting as a single class, or (ii) sixty-seven (67) per
centum or more of the shares of the Floating Rate Fund and the Institutional
Fund present at the Meeting, voting as a single class, if more than fifty (50)
per centum of the aggregate of the outstanding shares of such Funds are
represented at the Meeting in person or by proxy.

THE BOARD OF TRUSTEES/MANAGERS OF THE FUNDS, INCLUDING THE INDEPENDENT
TRUSTEES/MANAGERS, HAS CONCLUDED THAT THE PROPOSAL IS IN THE BEST INTERESTS OF
THE SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL.

PROPOSAL 2
TO ELECT NEW TRUSTEES/MANAGERS

COLUMBIA FLOATING RATE FUND
COLUMBIA INSTITUTIONAL FLOATING RATE INCOME FUND
COLUMBIA FLOATING RATE ADVANTAGE FUND

Background

In connection with the Sale, the Board of Trustees/Managers is proposed to
be replaced with new Trustees/Managers who are more familiar with Highland and
with the management and operation of other funds advised by Highland. Messrs.
Timothy K. Hui, Scott F. Kavanaugh, James F. Leary, Bryan A. Ward and R. Joseph
Dougherty (the "Nominees") (each of whom has agreed to serve) have been
nominated for election as Trustees/Managers of each of the Funds. With respect
to the Advantage Fund, the Nominees are to be elected by the holders of the
Class A, Class B, Class C and Class Z shareholders, voting together as a single
class. With respect to the Floating Rate Fund, the Nominees are to be elected
by the holders of the Class A, Class B, Class C and Class Z shareholders,
voting together as a single class. With respect to the Institutional Fund, the
Nominees are to be elected by the shareholders. With respect to the Floating
Rate LLC, the Nominees are to be elected by the holders of the Class A, Class
B, Class C and Class Z

shareholders of the Floating Rate Fund and the shareholders of the
Institutional Fund, voting together as a single class. The Nominees will serve
in accordance with the Declaration of Trust, By-laws and Limited Liability
Company Agreement of each Fund, as applicable.

At a meeting held on May 12, 2004, the Board of Trustees/Managers, including
the Independent Trustees/Managers, nominated the Nominees for election by
shareholders. If any one or more of the Nominees are elected by the
shareholders of any one or more of the Funds, then the terms of all current
members of the Board of Trustees/Managers for such Fund(s) will expire. If any
Nominee becomes unavailable for election, the enclosed proxy card may be voted
for a substitute nominee in the discretion of the proxy holder(s).

Required Vote

With respect to the Advantage Fund, the affirmative vote of a plurality of
the holders of shares of beneficial interest of the Advantage Fund present at
the Meeting in person or by proxy is required for the election of each of the
Nominees. With respect to the Floating Rate Fund, the affirmative vote of a
plurality of the holders of shares of beneficial interest of the Floating Rate
Fund present at the Meeting in person or by proxy is required for the election
of each of the Nominees. With respect to the Institutional Fund, the
affirmative vote of a plurality of the holders of shares of beneficial interest
of the Institutional Fund present at the Meeting in person or by proxy is
required for the election of each of the Nominees. With respect to the Floating
Rate LLC, the affirmative vote of a plurality of the holders of shares of
beneficial interest of the Floating Rate Fund and the Institutional Fund
(voting as a single class) present at the Meeting in person or by proxy is
required for the election of each of the Nominees. A plurality vote means that
the persons receiving the highest number of votes will be elected.

Information Regarding the Nominees and the Officers

For information regarding the Nominees and the officers of the Funds, see
Appendix C to this Proxy Statement.

Ownership of Shares of the Funds by Nominees

Appendix D to this Proxy Statement provides information, as of the Record
Date, regarding the beneficial ownership by the Nominees of equity

securities in (a) the Funds, (b) the Funds' "Family of Investment Companies"
(as defined in Item 22(a)(1)(iv) of Schedule 14A under the Exchange Act), (c)
an investment adviser or principal underwriter of the Funds and (d) a person
(other than a fund) in a control relationship with an investment adviser or
principal underwriter of the Funds.

Officer Compensation

No officer of the Funds receives compensation from any Fund.

Committees of the Board of Trustees/Managers of the Funds

The Board is responsible for the overall management and supervision of the
Funds' affairs and for protecting the interests of the Funds' shareholders. The
Board has created several committees to perform specific functions on behalf of
the Funds. The members of each committee, a description of each committee's
functions and a table setting forth the number of meetings held by the Board
and each committee during the fiscal year ended August 31, 2003 appear below.

AUDIT COMMITTEE

Each Fund has an audit committee (the "Audit Committee") comprised only of
Independent Trustees/Managers. Each member of the Audit Committee must be
financially literate and at least one member must have prior accounting or
related financial management expertise. The current members of the Audit
Committee are Ms. Anne-Lee Verville and Messrs. Douglas A. Hacker, Thomas E.
Stitzel and Richard L. Woolworth.

The Audit Committee adopted a written charter on February 10, 2004, which
sets forth the Audit Committee's structure, powers, duties and methods of
operation. A copy of the written Audit Committee charter is attached as
Appendix E to this Proxy Statement.

The Audit Committee serves as an independent and objective party to monitor
the Funds' accounting policies, financial reporting and internal control
systems and the work of the Funds' independent auditors. The Audit Committee
also provides an open means of communication between the independent
accountant, any internal accounting staff and the Board. The

principal functions of the Audit Committee are to assist Board oversight of:
(a) the integrity of each Fund's financial statements, (b) each Fund's
compliance with legal and regulatory requirements, (c) the independent
accountant's qualifications and independence, (d) the performance of the
investment adviser's internal audit function and (e) the independent
accountant. The Audit Committee has direct responsibility for the appointment,
compensation, retention and oversight of the work of the independent accountant
(including resolution of financial reporting disagreements between management
and such independent accountant) for the purpose of preparing or issuing an
audit report or performing other review or attest services for the Funds.

GOVERNANCE COMMITTEE

Each Fund has a governance committee (the "Governance Committee") that
consists of Independent Trustees/Managers and a Trustee/Manager who is an
interested person of such Fund. The members of the Governance Committee are
Messrs. Richard W. Lowry, Patrick J. Simpson, Thomas C. Theobald and William E.
Mayer. Mr. Mayer is deemed to be an interested person of the Funds because of
his affiliation with WR Hambrecht + Co. The Governance Committee performs the
functions typically performed by nominating and compensation committees. Among
other things, the Governance Committee recommends to the Board nominees for
Trustees/Managers and nominees for appointment to various committees, performs
periodic evaluations of the effectiveness of the Board, reviews and recommends
to the Board policies and practices to be followed in carrying out the
Trustees'/Managers' duties and responsibilities and reviews and makes
recommendations to the Board regarding the compensation of the Independent
Trustees/Managers. The Governance Committee has not adopted a written charter.
Members of the Governance Committee who are Independent Trustees/Managers
consider candidates for Trustees/Managers identified by any reasonable source,
including current Independent Trustees/Managers, Fund management, Fund
shareholders and other persons or entities.

ADVISORY FEES AND EXPENSES COMMITTEE

Each Fund has an advisory fees and expenses committee (the "Advisory Fees
and Expenses Committee"). The current members of the Advisory Fees and Expenses
Committee are Ms. Janet Langford Kelly and Messrs. Mayer, Charles R. Nelson and
John J. Neuhauser. The Advisory Fees and Expenses

Committee's functions include reviewing and making recommendations to the Board
regarding contracts requiring the approval of a majority of the Independent
Trustees/Managers and regarding other contracts that may be referred to it by
the Board.

RECORD OF BOARD AND COMMITTEE MEETINGS

The Board and its committees held the following numbers of meetings during
the fiscal year ended August 31, 2003:

Board of Trustees/Managers: 6
Audit Committee: 10
Governance Committee: 4
Advisory Fees and Expenses Committee: 4

During the fiscal year ended August 31, 2003, each of the current
Trustees/Managers attended more than seventy-five (75) per centum of the
meetings of the Board and the committees of which such Trustee/Manager was a
member. The Funds do not have annual shareholder meetings; therefore, the Funds
do not have a policy regarding Trustee/Manager attendance at annual shareholder
meetings.

Audit Committee Report

At a meeting of the Audit Committee of each Fund on December 9, 2003, the
Audit Committee of each of the Funds: (i) reviewed and discussed with
management such Fund's audited financial statements for the most recently
completed fiscal year and (ii) discussed with PricewaterhouseCoopers LLP
("PwC"), the Funds' independent registered public accounting firm, the matters
required to be discussed by Statement on Auditing Standards No. 61 and other
applicable professional standards and regulatory requirements. At a meeting of
the Audit Committee of each Fund on December 9, 2003, the Audit Committee of
each Fund obtained from PwC a formal written statement consistent with
Independence Standards Board Standard No. 1, "Independence Discussions with
Audit Committees," describing all relationships between the independent
accountants and the Funds that might bear on the independent accountants'
independence, discussed with PwC any relationships that may effect its
objectivity and independence, and based on such statement and discussions,
satisfied itself as to the independent accountants' independence. Based on its
review and discussion, the Audit Committee recommended to the Board that the
audited

financial statements for each Fund be included in such Fund's Annual Report to
shareholders.

Based on the recommendation from the Audit Committee and on its own review,
the Board selected PwC as the independent registered public accounting firm for
each of the Funds for the fiscal year ending August 31, 2004. Representatives
of PwC are not expected to be at the Meeting, but have been given the
opportunity to make a statement if they so desire and will be available should
any matter arise requiring their presence.

Audit Committee Pre-Approval of Independent Accountant Services

The Audit Committee is required to pre-approve the engagement of the Funds'
independent accountant to provide audit and non-audit services to each Fund and
non-audit services to the Funds' investment adviser or any entity in a control
relationship with such investment adviser that provides ongoing services to any
of the Funds ("Adviser Affiliate"), if the engagement relates directly to the
operations or financial reporting of the Funds. The engagement may be entered
into pursuant to pre-approval policies and procedures established by the Audit
Committee.

The Funds' Audit Committee has adopted a policy (the "Policy") for the
pre-approval of audit and non-audit services provided to each Fund and
non-audit services provided to its investment adviser and Adviser Affiliates,
if the engagement relates directly to the operations or financial reporting of
the Funds. The Policy sets forth the procedures and conditions pursuant to
which services to be performed by the Funds' independent accountant are to be
pre-approved. Unless a type of service receives general pre-approval under the
Policy, it requires specific pre-approval by the Audit Committee if it is to be
provided by the independent accountant. The Audit Committee may amend the
Policy from time to time and must review and approve the Policy at least
annually.

The Policy provides for the general pre-approval by the Audit Committee of
certain: (i) audit services to the Funds; (ii) audit-related services to the
Funds; (iii) tax services to the Funds; (iv) other services to the Funds; and
(v) non-audit Fund-related services to the Funds' adviser and its Adviser
Affiliates. The Policy requires the Fund treasurer and/or the director of
trustee administration to submit to the Audit Committee, at least annually, a
schedule of the types of services that are subject to general pre-approval.

The schedule must provide a description of each type of service that is subject
to general pre-approval and, when possible, must provide estimated fees for
each instance of provision of each service. The general pre-approval and
related fees will cover the fiscal year of the Funds. At least annually, the
Audit Committee must review and approve the types of services and review the
projected fees for the next year, and may add to or subtract from the list of
pre-approved services from time to time, based on subsequent determinations. 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 any individual Fund. The fee amounts listed on the schedules will
be updated to the extent necessary at each of the other regularly scheduled
meetings of the Audit Committee.

When specific pre-approval is required, management must submit a written
request to the Audit Committee detailing the proposed engagement and explaining
the purpose of using the independent accountant for such engagement. The Audit
Committee reviews the request at its next regularly scheduled meeting. In cases
when the timing of the management request is critical, the chairperson of the
Audit Committee has the authority to approve the request or to call a special
meeting of the Audit Committee to consider the request.

Fees Paid to Independent Accountants

The following table sets forth the aggregate fees billed by PwC for each
Fund's last two fiscal years for professional services rendered for (i) audit
services, including the audit of each Fund's financial statements and services
normally provided in connection with statutory and regulatory filings or
engagements for those fiscal years; (ii) audit-related services associated with
the review of the Funds' semi-annual financial statements, procedures required
by lending organizations and accounting conversions; (iii) tax services
consisting primarily of tax compliance, tax advice and tax planning; and (iv)
other services.

Audit-Related All Other
Fund Fiscal Year Audit Fees Fees Tax Fees Fees
---- ----------- ---------- ------------- -------- ---------

Floating Rate LLC. 2002 $52,075 $2,000 $1,400 $0
2003 $54,570 $4,000 $3,100 $0
Floating Rate Fund 2002 $ 8,800 $2,000 $1,700 $0
2003 $12,710 $4,000 $2,110 $0
Institutional Fund 2002 $ 7,225 $2,000 $2,000 $0
2003 $ 9,060 $4,000 $2,110 $0
Advantage Fund.... 2002 $48,260 $5,000 $1,900 $0
2003.... $51,510 $7,000 $2,610 $0

All of the audit fees, audit-related fees, tax fees and other fees billed by
PwC for services provided to the Funds in the fiscal years ended August 31,
2002 and August 31, 2003 were pre-approved by the Audit Committee. There were
no amounts that were approved by the Audit Committee pursuant to the de minimis
exception. The aggregate amount of fees paid for non-audit services billed to
the Funds, the Funds' investment adviser and Adviser Affiliates was $95,000 for
the fiscal year ended August 31, 2002 and $95,000 for the fiscal year ended
August 31, 2003.

The Audit Committee has determined that the provision of the services
described above to the Funds' investment adviser and Adviser Affiliates is
compatible with maintaining the independence of PwC.

Trustee/Manager Nomination Process

The Nominees were reviewed by the entire Board, in lieu of review by the
Governance Committee. The Board determined that, given the information
available to it regarding the Nominees and the familiarity of the Nominees with
other funds advised by Highland, it was in the best interest of the Funds to
expedite the nomination process by considering the Nominees as

a full Board. All of the Nominees were proposed by Highland. Only one Nominee
is an "interested person" (as defined in the 1940 Act) of the Funds.

The Trustees have adopted a policy relating to the consideration of
candidates for Trustees proposed by shareholders. Under that policy as
currently in effect, members of the Governance Committee who are Independent
Trustees/Managers consider, among other things, whether prospective nominees
have distinguished records in their primary careers, personal and professional
integrity and substantive knowledge in areas important to the Board's
operations, such as a background or education in finance, auditing, securities
law, the workings of the securities markets or investment advice. For
candidates to serve as Independent Trustees/Managers, independence from the
Funds' investment adviser, its affiliates and other principal service providers
is critical, as is an independent and questioning mind set. In each case, the
members of the Governance Committee who are Independent Trustees/Managers will
evaluate whether a candidate is an "interested person" under the 1940 Act.
Members of the Governance Committee who are Independent Trustees/Managers also
consider whether a prospective candidate's workload would be consistent with
regular attendance at Board meetings and would allow him or her to be available
for service on Board committees and to devote the additional time and effort
necessary to stay apprised of Board matters and the rapidly changing regulatory
environment in which the Funds operate. Different substantive areas may assume
greater or lesser significance at particular times, in light of a Board's
present composition and its perceptions about future issues and needs.

Members of the Governance Committee who are Independent Trustees/Managers
initially evaluate prospective candidates on the basis of their resumes,
considered in light of the criteria discussed above. Those prospective
candidates that appear likely to be able to fill a significant need of the
Board are contacted by a member of the Governance Committee who is an
Independent Trustee/Manager by telephone to discuss the position. If there
appears to be sufficient interest, an in-person meeting with one or more of the
members of the Governance Committee who are Independent Trustees/Managers is
arranged. If a member of the Governance Committee who is an Independent
Trustee/Manager, based on the results of such contacts, believes he or she has
identified a viable candidate, he or she airs the matter with the other members
of the Governance Committee who are Independent Trustees/Managers for input.
Any request by Fund management to meet with the

prospective candidate is given appropriate consideration. The Funds do not pay
fees to third parties to assist in finding nominees.

Shareholders of a Fund who wish to nominate a candidate to a Fund's Board
may send information regarding prospective candidates to the Governance
Committee, in care of the relevant Fund, at One Financial Center, Boston,
Massachusetts 02111-2621. The information should include evidence of the
shareholders' Fund ownership, a full listing of the proposed candidate's
education, experience, current employment, date of birth, names and addresses
of at least three professional references, information as to whether the
candidate is an "interested person" under the 1940 Act and such other
information as may be helpful to the members of the Governance Committee who
are Independent Trustees/Managers in evaluating the candidate. All
satisfactorily completed information packages regarding a candidate will be
forwarded to a member of the Governance Committee for consideration.
Recommendations for candidates will be evaluated in light of anticipated
vacancies and whether the number of Trustees/Managers of a Fund is expected to
be increased. All nominations from Fund shareholders will be considered. There
may be times when the Governance Committee does not recruit new Board members.
In such case, shareholder recommendations are maintained on file pending the
active recruitment of Trustees/Managers.

The foregoing policy is subject to change at any time by the
Trustees/Managers.

Legal Proceedings

The Board of Trustees/Managers of the Funds is aware of no material pending
legal proceedings to which any Nominee is a party adverse to any of the Funds
or any affiliated person of any of the Funds. The Board of Trustees/Managers
also is aware of no Nominee who has a material interest adverse to any of the
Funds or to any affiliated person of any of the Funds. The Board of
Trustees/Managers further is aware of no legal proceedings involving any the
Nominees that would be material to an evaluation of the ability or integrity of
any such Nominees and that would require disclosure under Item 401(f) of
Regulation S-K under the Exchange Act.

Certain Related Transactions and Management Indebtedness

There have been no transactions or series of similar transactions, since the
beginning of the Funds' last fiscal year, and there are no currently

proposed transactions, to which any Fund was or is to be a party, in which the
amount involved exceeded $60,000, and in which any officer of any Fund or any
security holder who is known by any Fund to own of record or beneficially more
than five (5) per centum of any class of such Fund's shares, or any member of
the immediately family of any such person, had or will have a direct or
indirect material interest.

No executive officer of the Funds, no corporation or organization for which
any Trustee/Manager, any Nominee or any executive officer of the Funds is an
executive officer, partner or beneficial owner of more than ten (10) per centum
of any class of its equity securities, and no trust or other estate in or for
which any Trustee/Manager, any Nominee or any executive officer of the Funds
has a substantial beneficial interest or serves as trustee has, at any time
since the beginning of the Funds' last fiscal year, been indebted to any of the
Funds in an amount in excess of $60,000.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Funds' Trustees/Managers and
officers, persons who own in excess of ten (10) per centum of any Fund's
outstanding shares and certain officers and directors of any Fund's investment
adviser (collectively, "Section 16 Reporting Persons"), to file with the SEC
initial reports of beneficial ownership and reports of changes in beneficial
ownership of shares of any of the Funds. Section 16 Reporting Persons are
required by SEC regulations to furnish the Funds with copies of all Section
16(a) forms that they file. To the Funds' knowledge, based solely on a review
of the copies of such reports furnished to the Funds, and on representations
made, all Section 16 reporting persons complied with all Section 16(a) filing
requirements applicable to them, except Patrick J. Simpson (no holdings) and
Richard L. Woolworth (no holdings).

GENERAL INFORMATION

Other Matters to Come Before the Meeting

Management of the Funds does not know of any matters to be presented at the
Meeting other than those described in this Proxy Statement. If other business
should properly come before the Meeting, the proxy holders will vote thereon in
accordance with their best judgment.

Adviser

The current adviser to the Funds (under the Interim Advisory Agreements) is
Highland Capital Management, L.P. Its business address is 13455 Noel Road,
Suite 1300, Dallas, Texas 75240.

Principal Underwriter

The current principal underwriter of the Funds' shares is PFPC Distributors,
Inc. Its business address is 400 Bellevue Parkway, Wilmington, Delaware 19809.

Administrator

The current administrator of the Funds is Columbia Management Advisors, Inc.
Its business address is 100 Federal Street, Boston, Massachusetts 02110.

Independent Registered Public Accounting Firm

The current independent registered public accounting firm of the Funds is
PricewaterhouseCoopers LLP. Its business address is 160 Federal Street, Boston,
Massachusetts 02110.

Transactions in Securities of Highland

None of the Nominees have purchased or sold any securities, in an amount
exceeding one (1) per centum of the outstanding securities, of Highland, its
parent company or any subsidiary of either.

Shareholder Proposals

The Funds are not required to hold annual meetings of shareholders and
currently do not intend to hold such meetings unless shareholder action is
required in accordance with the 1940 Act. A shareholder proposal, to be
considered for inclusion in the proxy statement at any subsequent meeting of

shareholders, must be submitted a reasonable time before the proxy statement
for such meeting is mailed. Whether a shareholder proposal is submitted in the
proxy statement will be determined in accordance with applicable federal and
state laws.

Shareholder Communications

Shareholders may communicate with the Trustees/Managers as a group or
individually. Any such communications should be sent to a Fund's Board or to an
individual Trustee/Manager in writing, in care of the secretary of such Fund,
at One Financial Center, Boston, Massachusetts 02111-2621. The secretary of
such Fund may determine not to forward any letter to the Board or to a
Trustee/Manager that does not relate to the business of such Fund.

Proxy Statement Delivery

"Householding" is the term used to describe the practice of delivering one
copy of a document to a household of shareholders instead of delivering one
copy of a document to each shareholder in the household. Shareholders of the
Funds who share a common address and who have not opted out of the householding
process should receive a single copy of the proxy statement together with one
proxy card for each account. If you received more than one copy of the proxy
statement, you may elect to household in the future; if you received a single
copy of the proxy statement, you may opt out of householding in the future; and
you may, in any event, obtain an additional copy of this proxy statement by
writing to the appropriate Fund at the following address: One Financial Center,
Boston, Massachusetts 02111-2621, or by calling the appropriate Fund at the
following number: 1-800-426-3750.

Principal Executive Officers of the Funds

The principal executive officers of the Funds are J. Kevin Connaughton,
President and Treasurer; Vicki L. Benjamin, Chief Accounting Officer; Michael
G. Clarke, Controller; and David A. Rozenson, Secretary. Each officer's mailing
address is One Financial Center, Boston, Massachusetts 02111-2621.

PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.

David A. Rozenson, Secretary

June 21, 2004

APPENDIX A

BENEFICIAL OWNERS OF FUND SHARES
IN EXCESS OF FIVE PER CENTUM

As of the Record Date, to the knowledge of management of the Funds, no
person owned beneficially (or of record) more than five (5) per centum of the
outstanding shares of any class of any of the Funds, except as set forth below:

Shares Beneficially Owned
------------------------
Name of Beneficial Owner Number Percent
------------------------ ------------- -------

COLUMBIA FLOATING RATE FUND

Class B shares:
Merrill Lynch Pierce Fenner & Smith 1,170,265.274 6.00%
For The Sole Benefit Of
Its Customers
Attn Fund Administration #97425
4800 Deer Lake Dr E 2nd Floor
Jacksonville FL 32246-6484

Class C shares:
Merrill Lynch Pierce Fenner & Smith 4,435,699.116 16.56%
For The Sole Benefit Of
Its Customers
Attn Fund Administration #97425
4800 Deer Lake Dr E 2nd Floor
Jacksonville FL 32246-6484

Class Z shares:
Fleet National Bank 723,830.168 5.58%
FBO Columbia Omnibus C/C
Attn Various Accounts
PO Box 92800
Rochester NY 14692-8900

Charles Schwab & Co Inc 5,754,281.992 44.38%
Attn Mutual Funds
101 Montgomery St
San Francisco CA 94104-4122

A-1

Shares Beneficially Owned
------------------------
Name of Beneficial Owner Number Percent
------------------------ ------------- -------

COLUMBIA INSTITUTIONAL
FLOATING RATE INCOME FUND

Shares:
Citibank Trustee 1,938,101.121 21.21%
Evangelical Covenant Church
Retirement Plan
5115 N Francisco Ave Ste 200
Chicago IL 60625-3611

Covenant Benevolent Institution 2,201,493.750 24.09%
5145 N California Ave
Chicago IL 60625-3661

The Firemens Annuity and Benefit 1,346,393.285 14.73%
Fund of Chicago
1 N Franklin St Ste 2500
Chicago IL 60606-3423

Milwaukee County Employees 1,101,945.609 12.06%
Retirement System
901 N 9th St Ste 210C
Milwaukee WI 53233-1425

Amerisure Mutual Insurance Company 600,019.715 6.57%
26777 Halsted Rd
Farmingtn Hls MI 48331-3560

Roy J Carver Charitable Trust 498,913.026 5.46%
202 Iowa Ave
Muscatine IA 52761-3733

Methodist Childrens Home 898,089.962 9.83%
Endowment Fund
C/O Mr Joe Bailey
1111 Herring Ave
Waco TX 76708-3696

A-2

Shares Beneficially Owned
------------------------
Name of Beneficial Owner Number Percent
------------------------ ------------- -------

COLUMBIA FLOATING RATE
ADVANTAGE FUND

Class Z shares:
Fleet National Bank 1,033,584.129 31.73%
FBO Columbia Omnibus C/C
Attn: Various Accounts
P.O. Box 92800
Rochester, NY 14692-8900

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APPENDIX B

NEW ADVISORY AGREEMENTS

1. New Advisory Agreement between Highland Capital Management, L.P. and
Columbia Floating Rate Limited Liability Company.

ADVISORY AGREEMENT

ADVISORY AGREEMENT made as of , 2004, by and between Highland
Capital Management, L.P., a Delaware limited partnership (the "Manager"), and
Columbia Floating Rate Limited Liability Company, a Delaware limited liability
company (the "LLC").

WHEREAS, the LLC is engaged in business as a closed-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (the "1940 Act"), and periodically offers to repurchase its
shares in conformity with the provisions of Rule 23c-3 under the 1940 Act,
which funds are generally referred to as "interval funds"; and

WHEREAS the Manager is engaged principally in the business of rendering
investment management services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended;

NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:

SECTION 1. Appointment of Manager.

The LLC hereby appoints the Manager to act as manager and investment adviser
to the LLC for the period and on the terms herein set forth. The Manager
accepts such appointment and agrees to render the services herein set forth,
for the compensation herein provided.

SECTION 2. Duties of Manager.

The Manager, at its own expense, shall furnish the following services and
facilities to the LLC:

(a) Investment Program. The Manager shall (i) furnish continuously an
investment program for the LLC, (ii) determine (subject

B-1

to the overall supervision and review of the Board of Managers of the LLC
(the "Board")) what investments shall be purchased, held, sold or exchanged
by the LLC and what portion, if any, of the assets of the LLC shall be held
uninvested, and (iii) make changes in the investments of the LLC. The
Manager also shall manage, supervise and conduct the other affairs and
business of the LLC and matters incidental thereto, subject always to the
control of the Board, and to the provisions of the organizational documents
of the LLC, the Registration Statement of the LLC and its securities,
including the Prospectuses and Statements of Additional Information of the
Columbia Floating Rate Fund and the Columbia Institutional Floating Rate
Income Fund (collectively, the "Feeder Funds"), and the 1940 Act, in each
case as from time to time amended and in effect. Subject to the foregoing,
the Manager shall have the authority to engage one or more sub-advisers in
connection with the management of the LLC, which sub-advisers may be
affiliates of the Manager.

(b) Office Space and Facilities. The Manager shall furnish the LLC
office space in the offices of the Manager, or in such other place or places
as may be agreed upon from time to time, and all necessary office
facilities, simple business equipment, supplies, utilities and telephone
service for managing the affairs and investments of the LLC.

(c) Administrative Services. The Manager shall supervise the business
and affairs of the LLC and shall provide such services and facilities as may
be required for the effective administration of the LLC as are not provided
by employees or other agents engaged by the LLC, provided that the Manager
shall not have any obligation to provide under this Agreement any such
services which are the subject of a separate agreement or arrangement
between the LLC and the Manager, or an affiliate of the Manager, or any
third-party administrator.

(d) Fidelity Bond. The Manager shall arrange for providing and
maintaining a bond issued by a reputable insurance company authorized to do
business in the place where the bond is issued against larceny and
embezzlement covering each officer and employee of the LLC who may singly or
jointly with others have access to funds or securities of the LLC, with
direct or indirect authority to draw upon such funds or to direct generally
the disposition of such funds. The bond shall be in such reasonable amount
as a majority of the managers who are not "interested persons" of the LLC,
as defined in the 1940 Act, shall determine, with

B-2

due consideration given to the aggregate assets of the LLC to which any such
officer or employee may have access. The premium for the bond shall be
payable by the LLC in accordance with Section 3(m).

(e) Portfolio Transactions. The Manager shall place all orders for the
purchase and sale of portfolio securities for the account of the LLC with
brokers or dealers selected by the Manager, although the LLC will pay the
actual brokerage commissions on portfolio transactions in accordance with
Section 3(d).

In placing portfolio transactions for the LLC, it is recognized that the
Manager will give primary consideration to securing the most favorable price
and efficient execution. Consistent with this policy, the Manager may consider
the financial responsibility, research and investment information and other
services provided by brokers or dealers who may effect or be a party to any
such transaction or other transactions to which other clients of the Manager
may be a party. It is understood that neither the LLC nor the Manager has
adopted a formula for allocation of the LLC's investment transaction business.
It is also understood that it is desirable for the LLC that the Manager have
access to supplemental investment and market research and security and economic
analysis provided by brokers who may execute brokerage transactions at a higher
cost to the LLC than would otherwise result when allocating brokerage
transactions to other brokers on the basis of seeking the most favorable price
and efficient execution. Therefore, the Manager is authorized to place orders
for the purchase and sale of securities for the LLC with such brokers, subject
to review by the LLC's Board of Managers from time to time with respect to the
extent and continuation of this practice. It is understood that the services
provided by such brokers may be useful or beneficial to the Manager in
connection with its services to other clients.

On occasions when the Manager deems the purchase or sale of a security to be
in the best interest of the LLC as well as other clients, the Manager, to the
extent permitted by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities to be so sold or purchased in order to
obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made by the Manager
in the manner it considers to be the most equitable and consistent with its
fiduciary obligations to the LLC and to such other clients.

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SECTION 3. Allocation of Expense.

Except for the services and facilities to be provided by the Manager as set
forth in Section 2 above, the LLC assumes and shall pay all expenses for all
other LLC operations and activities and shall reimburse the Manager for any
such expenses incurred by the Manager. Unless the Prospectuses or Statements of
Additional Information of the Feeder Funds provide otherwise, the expenses to
be borne by the LLC shall include, without limitation:

(a) all expenses of organizing the LLC;

(b) the charges and expenses of (i) any registrar, stock transfer or
dividend disbursing agent, shareholder servicing agent, custodian or
depository appointed by the LLC for the safekeeping of its cash, portfolio
securities and other property, including the costs of servicing shareholder
investment accounts and bookkeeping, accounting and pricing services,
provided to the LLC (other than those utilized by the Manager in providing
the services described in Section 2), (ii) any agent engaged for the
purposes of conducting auctions with respect to the LLC's taxable auction
rate preferred stock, if any shall be issued, (iii) any institution serving
as trustee with respect to the LLC's Senior Extendible Notes, and (iv) fees
of any stock exchange or any rating agency responsible for rating
outstanding securities of the LLC;

(d) brokerage commissions and other costs incurred in connection with
transactions in the portfolio securities of the LLC, including any portion
of such commissions attributable to brokerage and research services as
defined in Section 28(e) of the Securities Exchange Act of 1934;

(e) taxes, including issuance and transfer taxes, and corporate
registration, filing or other fees payable by the LLC to federal, state or
other governmental agencies;

(f) expenses, including the cost of printing certificates, relating to
the issuance of securities of the LLC;

(g) expenses involved in registering and maintaining registrations of the
LLC and of its securities with the Securities and Exchange Commission and
various states and other jurisdictions, including reimbursement of actual
expenses incurred by the Manager or others in

B-4

performing such functions for the LLC, and including compensation of persons
who are employees of the Manager, in proportion to the relative time spent
on such matters;

(h) expenses of shareholders', unitholders' and managers' meetings,
including meetings of committees, and of preparing, printing and mailing
proxy statements, quarterly reports, semi-annual reports, annual reports and
other communications to existing security holders;

(i) expenses of preparing and printing prospectuses and marketing
materials;

(j) compensation and expenses of the LLC's managers who are not
affiliated with the Manager;

(k) charges and expenses of legal counsel in connection with matters
relating to the LLC, including, without limitation, legal services rendered
in connection with the LLC's corporate and financial structure and relations
with its security holders, issuance of shares of the LLC and registration
and qualification of securities under federal, state and other laws;
(l) the cost and expense of maintaining the books and records of the LLC,
including general ledger accounting;

(m) insurance premiums on fidelity, errors and omissions and other
coverages, including the expense of obtaining and maintaining a fidelity
bond as required by Section 17(g) of the 1940 Act which may also cover the
Manager;

(n) expenses incurred in obtaining and maintaining any surety bond or
similar coverage with respect to securities of the LLC;

(o) interest payable on the LLC's borrowings;

(p) such other non-recurring expenses of the LLC as may arise, including
expenses of actions, suits or proceedings to which the LLC is a party and
expenses resulting from the legal obligation which the LLC may have to
provide indemnity with respect thereto;

(q) expenses and fees reasonably incidental to any of the foregoing
specifically identified expenses; and

(r) all other expenses permitted by the Prospectuses and Statements of
Additional Information of the Feeder Funds as being paid by the LLC.

B-5

SECTION 4. Advisory Fee.

In return for its advisory services, the LLC will pay the Manager a monthly
fee, computed and accrued daily, based on an annual rate of 0.45% of the
average net assets of the LLC. The Manager may waive a portion of its fees. If
this Agreement becomes effective subsequent to the first day of a month or
shall terminate before the last day of a month, compensation for such month
shall be computed in manner consistent with the calculation of the fees payable
on a monthly basis. Subject to the provisions of Section 5 below, the accrued
fees will be payable monthly as promptly as possible after the end of each
month during which this Agreement is in effect. Operating expenses shall not
include brokerage, interest, taxes, deferred organization expenses and
extraordinary expenses, if any.

SECTION 5. Reimbursements.

The parties agree that they may negotiate from time to time for the Manager
to reimburse certain costs and expenses of the LLC. If such an agreement is in
effect, the determination of whether reimbursement for such costs and expenses
is due the LLC from the Manager will be made on an accrual basis once monthly,
and if it is so determined that such reimbursement is due, the accrued amount
of such reimbursement which is due shall serve as an offset to the investment
advisory fee payable monthly by the LLC to the Manager pursuant to Section 4
hereof, and the amount to be paid by the Manager to the LLC as soon as is
practicable at the end of a fiscal year of the LLC shall be equal to the
difference between the aggregate reimbursement due the LLC from the Manager for
that fiscal year and the aggregate offsets made by the LLC against the
aggregate investment advisory fees payable to the Manager pursuant to Section 4
hereof for that fiscal year by virtue of such aggregate reimbursement. The
foregoing limitation on reimbursement of costs and expenses shall exclude
interest, taxes, brokers' charges and expenses, extraordinary costs and
expenses (as determined by the Board in its exercise of its business judgment),
and, if payable by the LLC, the costs and expenses incident to the public
offering or private placement of securities of the LLC, including debt
securities.

SECTION 6. Relations With the LLC.

Subject to and in accordance with the organizational documents of the
Manager and the LLC, as well as their policies and procedures and codes of

B-6

ethics, it is understood that managers, officers, agents and shareholders of
the LLC are or may be interested in the Manager (or any successor thereof) as
directors, officers or otherwise, that partners, officers and agents of the
Manager (or any successor thereof) are or may be interested in the LLC as
managers, officers, agents, shareholders or otherwise, and that the Manager (or
any such successor thereof) is or may be interested in the LLC as a shareholder
or otherwise.

SECTION 7. Liability of Manager.

The Manager shall not be liable to the LLC for any error of judgment or
mistake of law or for any loss suffered by the LLC in connection with the
matters to which this Agreement relates; provided, however, that no provision
of this Agreement shall be deemed to protect the Manager against any liability
to the LLC or its shareholders to which it might otherwise be subject by reason
of any willful misfeasance, bad faith or gross negligence in the performance of
its duties, or the reckless disregard of its obligations and duties under this
Agreement, nor shall any provision hereof be deemed to protect any manager or
officer of the LLC against any such liability to which he might otherwise be
subject by reason of any willful misfeasance, bad faith or gross negligence in
the performance of his duties or the reckless disregard of his obligations and
duties.

SECTION 8. Duration and Termination of This Agreement.

(a) Duration. This Agreement shall become effective on the date first set
forth above, such date being the date on which this Agreement has been executed
following (1) the approval of the Board of Managers of the LLC, including
approval by a vote of a majority of the managers who are not "interested
persons" (as defined in the 1940 Act) of the Manager or the LLC, cast in person
at a meeting called for the purpose of voting on such approval and (2) the
approval by a vote of a majority of the outstanding voting securities of the
Feeder Funds, voting as a single class. Unless terminated as herein provided,
this Agreement shall remain in full force and effect until the date which is
two years after the effective date of this Agreement. Subsequent to such
initial period of effectiveness, this Agreement shall continue in full force
and effect, subject to Section 8(c), for successive one-year periods so long as
such continuance is approved at least annually (a) by either the Board of
Managers of the LLC or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Feeder

B-7

Funds, voting as a single class, and (b) in either event, by the vote of a
majority of the managers of the LLC who are not parties to this Agreement or
"interested persons" (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such approval.

(b) Amendment. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by vote of the holders of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Feeder Funds, voting as a single
class.

(c) Termination. This Agreement may be terminated at any time, without
payment of any penalty, by vote of the Board or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Feeder Funds,
voting as a single class, or by the Manager, in each case on not more than
sixty (60) days' nor less than thirty (30) days' prior written notice to the
other party.

(d) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (as defined in the 1940
Act).

SECTION 9. Services Not Exclusive.

The services of the Manager to the LLC hereunder are not to be deemed
exclusive, and the Manager shall be free to render similar services to others
so long as its services hereunder are not impaired thereby. In addition, the
parties may enter into agreements pursuant to which the Manager provides
administrative or other non-investment advisory services to the LLC, and may be
compensated for such other services.

SECTION 10. Prior Agreements Superseded.

This Agreement supersedes any prior agreement relating to the subject matter
hereof between the parties hereto.

SECTION 11. Notices.

Notices under this Agreement shall be in writing and shall be addressed, and
delivered or mailed postage prepaid, to the other party at such address as

B-8

such other party may designate from time to time for the receipt of such
notices. Until further notice to the other party, the address of each party to
this Agreement for this purpose shall be 13455 Noel Road, Suite 1300, Dallas,
Texas 75240.

SECTION 12. Governing Law; Counterparts.

This Agreement shall be construed in accordance with the laws of the State
of Delaware, and the applicable provisions of the 1940 Act. To the extent that
applicable law of the State of Delaware, or any of the provisions herein,
conflict with applicable provisions of the 1940 Act, the latter shall control.
If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.

SECTION 13. Miscellaneous.

The Manager agrees to advise the LLC of any change of its membership (which
shall mean its general partner) within a reasonable time after such change. If
the Manager enters into a definitive agreement that would result in a change of
control (within the meaning of the 1940 Act) of the Manager, it agrees to give
the LLC the lesser of sixty days' notice and such notice as is reasonably
practicable before consummating the transaction.

B-9

2. New Advisory Agreement between Highland Capital Management, L.P. and
Columbia Floating Rate Advantage Fund.

ADVISORY AGREEMENT

ADVISORY AGREEMENT made as of , 2004, by and between Highland Capital
Management, L.P., a Delaware limited partnership (the "Manager"), and Columbia
Floating Rate Advantage Fund, a Massachusetts business trust (the "Fund").

WHEREAS, the Fund is engaged in business as a closed-end management
investment company and is registered as such under the Investment Company Act
of 1940, as amended (the "1940 Act"), and periodically offers to repurchase its
shares in conformity with the provisions of Rule 23c-3 under the 1940 Act,
which funds are generally referred to as "interval funds"; and

NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:

SECTION 1. Appointment of Manager.

The Fund hereby appoints the Manager to act as manager and investment
adviser to the Fund for the period and on the terms herein set forth. The
Manager accepts such appointment and agrees to render the services herein set
forth, for the compensation herein provided.

SECTION 2. Duties of Manager.

The Manager, at its own expense, shall furnish the following services and
facilities to the Fund:

(a) Investment Program. The Manager shall (i) furnish continuously an
investment program for the Fund, (ii) determine (subject to the overall
supervision and review of the Board of Trustees of the Fund) what
investments shall be purchased, held, sold or exchanged by the Fund and what
portion, if any, of the assets of the

B-10

Fund shall be held uninvested, and (iii) make changes in the investments of
the Fund. The Manager also shall manage, supervise and conduct the other
affairs and business of the Fund and matters incidental thereto, subject
always to the control of the Board of Trustees of the Fund, and to the
provisions of the organizational documents of the Fund, the Registration
Statement of the Fund and its securities, including the Prospectus and
Statement of Additional Information, and the 1940 Act, in each case as from
time to time amended and in effect. Subject to the foregoing, the Manager
shall have the authority to engage one or more sub-advisers in connection
with the management of the Fund, which sub-advisers may be affiliates of the
Manager.

(b) Office Space and Facilities. The Manager shall furnish the Fund
office space in the offices of the Manager, or in such other place or places
as may be agreed upon from time to time, and all necessary office
facilities, simple business equipment, supplies, utilities and telephone
service for managing the affairs and investments of the Fund.

(c) Administrative Services. The Manager shall supervise the business
and affairs of the Fund and shall provide such services and facilities as
may be required for the effective administration of the Fund as are not
provided by employees or other agents engaged by the Fund, provided that the
Manager shall not have any obligation to provide under this Agreement any
such services which are the subject of a separate agreement or arrangement
between the Fund and the Manager, or an affiliate of the Manager, or any
third-party administrator.

(d) Fidelity Bond. The Manager shall arrange for providing and
maintaining a bond issued by a reputable insurance company authorized to do
business in the place where the bond is issued against larceny and
embezzlement covering each officer and employee of the Fund who may singly
or jointly with others have access to funds or securities of the Fund, with
direct or indirect authority to draw upon such funds or to direct generally
the disposition of such funds. The bond shall be in such reasonable amount
as a majority of the Trustees who are not "interested persons" of the Fund,
as defined in the 1940 Act, shall determine, with due consideration given to
the aggregate assets of the Fund to which any such officer or employee may
have access. The premium for the bond shall be payable by the Fund in
accordance with Section 3(m).

(e) Portfolio Transactions. The Manager shall place all orders for the
purchase and sale of portfolio securities for the account of the

B-11

Fund with brokers or dealers selected by the Manager, although the Fund will
pay the actual brokerage commissions on portfolio transactions in accordance
with Section 3(d).

In placing portfolio transactions for the Fund, it is recognized that the
Manager will give primary consideration to securing the most favorable price
and efficient execution. Consistent with this policy, the Manager may consider
the financial responsibility, research and investment information and other
services provided by brokers or dealers who may effect or be a party to any
such transaction or other transactions to which other clients of the Manager
may be a party. It is understood that neither the Fund nor the Manager has
adopted a formula for allocation of the Fund's investment transaction business.
It is also understood that it is desirable for the Fund that the Manager have
access to supplemental investment and market research and security and economic
analysis provided by brokers who may execute brokerage transactions at a higher
cost to the Fund than would otherwise result when allocating brokerage
transactions to other brokers on the basis of seeking the most favorable price
and efficient execution. Therefore, the Manager is authorized to place orders
for the purchase and sale of securities for the Fund with such brokers, subject
to review by the Fund's Board of Trustees from time to time with respect to the
extent and continuation of this practice. It is understood that the services
provided by such brokers may be useful or beneficial to the Manager in
connection with its services to other clients.

On occasions when the Manager deems the purchase or sale of a security to be
in the best interest of the Fund as well as other clients, the Manager, to the
extent permitted by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities to be so sold or purchased in order to
obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made by the Manager
in the manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Fund and to such other clients.

SECTION 3. Allocation of Expense.

Except for the services and facilities to be provided by the Manager as set
forth in Section 2 above, the Fund assumes and shall pay all expenses for

B-12

all other Fund operations and activities and shall reimburse the Manager for
any such expenses incurred by the Manager. Unless the Prospectus or Statement
of Additional Information of the Fund provides otherwise, the expenses to be
borne by the Fund shall include, without limitation:

(a) all expenses of organizing the Fund;

(b) the charges and expenses of (i) any registrar, stock transfer or
dividend disbursing agent, shareholder servicing agent, custodian or
depository appointed by the Fund for the safekeeping of its cash, portfolio
securities and other property, including the costs of servicing shareholder
investment accounts and bookkeeping, accounting and pricing services,
provided to the Fund (other than those utilized by the Manager in providing
the services described in Section 2), (ii) any agent engaged for the
purposes of conducting auctions with respect to the Fund's taxable auction
rate preferred stock, if any shall be issued, (iii) any institution serving
as trustee with respect to the Fund's Senior Extendible Notes, and (iv) fees
of any stock exchange or any rating agency responsible for rating
outstanding securities of the Fund;

(d) brokerage commissions and other costs incurred in connection with
transactions in the portfolio securities of the Fund, including any portion
of such commissions attributable to brokerage and research services as
defined in Section 28(e) of the Securities Exchange Act of 1934;

(e) taxes, including issuance and transfer taxes, and corporate
registration, filing or other fees payable by the Fund to federal, state or
other governmental agencies;

(f) expenses, including the cost of printing certificates, relating to
the issuance of securities of the Fund;

(g) expenses involved in registering and maintaining registrations of the
Fund and of its securities with the Securities and Exchange Commission and
various states and other jurisdictions, including reimbursement of actual
expenses incurred by the Manager or others in performing such functions for
the Fund, and including compensation of persons who are employees of the
Manager, in proportion to the relative time spent on such matters;

B-13

(h) expenses of shareholders' and trustees' meetings, including meetings
of committees, and of preparing, printing and mailing proxy statements,
quarterly reports, semi-annual reports, annual reports and other
communications to existing security holders;

(i) expenses of preparing and printing prospectuses and marketing
materials;

(j) compensation and expenses of trustees who are not affiliated with the
Manager;

(k) charges and expenses of legal counsel in connection with matters
relating to the Fund, including, without limitation, legal services rendered
in connection with the Fund's corporate and financial structure and
relations with its security holders, issuance of shares of the Fund and
registration and qualification of securities under federal, state and other
laws;

(l) the cost and expense of maintaining the books and records of the
Fund, including general ledger accounting;

(n) expenses incurred in obtaining and maintaining any surety bond or
similar coverage with respect to securities of the Fund;

(o) interest payable on Fund borrowings;

(p) such other non-recurring expenses of the Fund as may arise, including
expenses of actions, suits or proceedings to which the Fund is a party and
expenses resulting from the legal obligation which the Fund may have to
provide indemnity with respect thereto;

(q) expenses and fees reasonably incidental to any of the foregoing
specifically identified expenses; and

(r) all other expenses permitted by the Prospectus and Statement of
Additional Information of the Fund as being paid by the Fund.

SECTION 4. Advisory Fee.

In return for its advisory services, the Fund will pay the Manager a monthly
fee, computed and accrued daily, based on an annual rate of 0.45%

B-14

of the average net assets of the Fund for the first one billion dollars
($1,000,000,000), 0.40% of the average net assets of the Fund for the next one
billion dollars ($1,000,000,000), and 0.35% of the average net assets of the
Portfolio over two billion dollars ($2,000,000,000). The Manager may waive a
portion of its fees. If this Agreement becomes effective subsequent to the
first day of a month or shall terminate before the last day of a month,
compensation for such month shall be computed in manner consistent with the
calculation of the fees payable on a monthly basis. Subject to the provisions
of Section 5 below, the accrued fees will be payable monthly as promptly as
possible after the end of each month during which this Agreement is in effect.
Operating expenses shall not include brokerage, interest, taxes, deferred
organization expenses and extraordinary expenses, if any.

SECTION 5. Reimbursements.

The parties agree that they may negotiate from time to time for the Manager
to reimburse certain costs and expenses of the Fund. If such an agreement is in
effect, the determination of whether reimbursement for such costs and expenses
is due the Fund from the Manager will be made on an accrual basis once monthly,
and if it is so determined that such reimbursement is due, the accrued amount
of such reimbursement which is due shall serve as an offset to the investment
advisory fee payable monthly by the Fund to the Manager pursuant to Section 4
hereof, and the amount to be paid by the Manager to the Fund as soon as is
practicable at the end of a fiscal year of the Fund shall be equal to the
difference between the aggregate reimbursement due the Fund from the Manager
for that fiscal year and the aggregate offsets made by the Fund against the
aggregate investment advisory fees payable to the Manager pursuant to Section 4
hereof for that fiscal year by virtue of such aggregate reimbursement. The
foregoing limitation on reimbursement of costs and expenses shall exclude
interest, taxes, brokers' charges and expenses, extraordinary costs and
expenses (as determined by the Board in its exercise of its business judgment),
and, if payable by the Fund, the costs and expenses incident to the public
offering or private placement of securities of the Fund, including debt
securities.

SECTION 6. Relations With Fund.

Subject to and in accordance with the organizational documents of the
Manager and the Fund, as well as their policies and procedures and codes of

B-15

ethics, it is understood that Trustees, officers, agents and shareholders of
the Fund are or may be interested in the Manager (or any successor thereof) as
directors, officers or otherwise, that partners, officers and agents of the
Manager (or any successor thereof) are or may be interested in the Fund as
Trustees, officers, agents, shareholders or otherwise, and that the Manager (or
any such successor thereof) is or may be interested in the Fund as a
shareholder or otherwise.

SECTION 7. Liability of Manager.

The Manager shall not be liable to the Fund for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates; provided, however, that no provision
of this Agreement shall be deemed to protect the Manager against any liability
to the Fund or its shareholders to which it might otherwise be subject by
reason of any willful misfeasance, bad faith or gross negligence in the
performance of its duties, or the reckless disregard of its obligations and
duties under this Agreement, nor shall any provision hereof be deemed to
protect any trustee or officer of the Fund against any such liability to which
he might otherwise be subject by reason of any willful misfeasance, bad faith
or gross negligence in the performance of his duties or the reckless disregard
of his obligations and duties.

SECTION 8. Duration and Termination of This Agreement.

(a) Duration. This Agreement shall become effective on the date first set
forth above, such date being the date on which this Agreement has been executed
following (1) the approval of the Board of Trustees of the Fund, including
approval by a vote of a majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) of the Manager or the Fund, cast in
person at a meeting called for the purpose of voting on such approval and (2)
the approval by a vote of a majority of the outstanding voting securities of
the Fund. Unless terminated as herein provided, this Agreement shall remain in
full force and effect until the date which is two years after the effective
date of this Agreement. Subsequent to such initial period of effectiveness,
this Agreement shall continue in full force and effect, subject to paragraph
8(c), for successive one-year periods so long as such continuance is approved
at least annually (a) by either the Board of Trustees of the Fund or by vote of
a majority of the outstanding voting securities (as defined in the 1940 Act) of
the Fund, voting as a single class, and (b) in

B-16

either event, by the vote of a majority of the trustees of the Fund who are not
parties to this Agreement or "interested persons" (as defined in the 1940 Act)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval.

(c) Termination. This Agreement may be terminated at any time, without
payment of any penalty, by vote of the Trustees or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Fund, voting
as a single class, or by the Manager, in each case on not more than sixty (60)
days' nor less than thirty (30) days' prior written notice to the other party.

(d) Automatic Termination. This Agreement shall automatically and
immediately terminate in the event of its assignment (as defined in the 1940
Act).

SECTION 9. Services Not Exclusive.

The services of the Manager to the Fund hereunder are not to be deemed
exclusive, and the Manager shall be free to render similar services to others
so long as its services hereunder are not impaired thereby. In addition, the
parties may enter into agreements pursuant to which the Manager provides
administrative or other non-investment advisory services to the Fund, and may
be compensated for such other services.

SECTION 10. Prior Agreements Superseded.

This Agreement supersedes any prior agreement relating to the subject matter
hereof between the parties hereto.

B-17

SECTION 11. Notices.

Notices under this Agreement shall be in writing and shall be addressed, and
delivered or mailed postage prepaid, to the other party at such address as such
other party may designate from time to time for the receipt of such notices.
Until further notice to the other party, the address of each party to this
Agreement for this purpose shall be 13455 Noel Road, Suite 1300, Dallas, Texas
75240.

SECTION 12. Governing Law; Counterparts.

SECTION 13. Miscellaneous.

The Manager agrees to advise the Fund of any change of its membership (which
shall mean its general partner) within a reasonable time after such change. If
the Manager enters into a definitive agreement that would result in a change of
control (within the meaning of the 1940 Act) of the Manager, it agrees to give
the Fund the lesser of sixty days' notice and such notice as is reasonably
practicable before consummating the transaction.

B-18

APPENDIX C

NOMINEE AND OFFICER INFORMATION

1. Biographical Information Regarding Nominees and Executive Officers of the
Funds.

The tables on the next pages provide basic biographical information about
the Nominees and the executive officers of the Funds. The address of each
Nominee is 13455 Noel Road, Suite 1300, Dallas, Texas 75240. The address of
each executive officer is One Financial Center, Boston, Massachusetts
02111-2621.

[Please see the following pages.]

C-1

NOMINEES

Number of
Position Year Portfolios
Held with First in Principal Occupation Overseen in
Name/Age Funds Office During Past Five Years Fund Complex Other Directorships Held
-------- --------- -------- ---------------------- ------------ ------------------------

DISINTERESTED NOMINEES
Timothy K. Hui.... Nominee for N/A Assistant Provost for and, since 2 Board member of Prospect
(Age 55) Trustee/ September 1998, Director of Street High Income Portfolio,
Manager Learning Resources of the Inc. and Prospect Street
Philadelphia Biblical Income Shares, Inc.
University.

Scott F. Kavanaugh Nominee for N/A Since March 2003, Sales 2 Board member of Prospect
(Age 43) Trustee/ Representative at Round Hill Street High Income Portfolio,
Manager Securities. From February Inc. and Prospect Street
2003 to July 2003, Executive Income Shares, Inc.
at Provident Funding Mortgage
Corp. From January 2000 to
February 2003, Executive Vice
President, Director and
Treasurer of Commercial
Capital Bank. From April 1998
to February 2003, Managing
Principal and Chief Operating
Officer of Financial
Institutional Partners Mortgage
Co. and Managing Principal
and President of Financial
Institutional Partners, LLC, an
investment banking firm.

C-2

James F. Leary..... Nominee for N/A Since January 1999, Managing 2 Board member of Capstone
(Age 73) Trustee/ Director of Benefit Capital Asset Management Group of
Manager Southwest, Inc., a financial Mutual Funds (nine portfolios);
consulting firm. Board member of Prospect
Street High Income Portfolio,
Inc. and Prospect Street
Income Shares, Inc.

Bryan A. Ward...... Nominee for N/A Since January 2002, Senior 2 Board member of Prospect
(Age 49) Trustee/ Manager of Accenture, LLP, a Street High Income Portfolio,
Manager consulting firm. From Inc. and Prospect Street
September 1998 to December Income Shares, Inc.
2001, Special Projects Advisor,
Contractor and Information
Technology consultant to
Accenture, LLP.

INTERESTED NOMINEE

R. Joseph Dougherty Nominee for N/A Since January 2003, Senior 2 Board member of Prospect
(Age 34) Trustee/ Portfolio Manager of Highland. Street High Income Portfolio,
Manager From January 1999 to January Inc. and Prospect Street
2003, Portfolio Manager of Income Shares, Inc.
Highland. Prior to January
1999, Portfolio Analyst for
Highland.

C-3

OFFICERS

Position
Held with Year First Principal Occupation
Name/Age Funds in Office During Past Five Years
-------- --------- ---------- ----------------------

J. Kevin Connaughton President and 2000 President of the Columbia Funds since February 2004;
(Age 39) Treasurer Treasurer of the Columbia Funds and of the Liberty
All-Star Funds since December 2000; Vice President
of Columbia Management Advisors, Inc. since April
2003; Treasurer of the Galaxy Funds since September
2002; Treasurer of Columbia Multi-Strategy Hedge
Fund, LLC since December 2002 (formerly Chief
Accounting Officer and Controller of the Liberty
Funds and of the Liberty All-Star Funds from
February 1998 to October 2000; Vice President of
Colonial from February 1998 to October 2000).

Vicki L. Benjamin... Chief 2001 Chief Accounting Officer of the Columbia Funds and
(Age 42) Accounting the Liberty All-Star Funds since June 2001; Controller
Officer and Chief Accounting Officer of the Galaxy Funds
since September 2002 (formerly Controller of the
Columbia Funds and of the Liberty All-Star Funds
from May 2002 to May 2004; Vice President,
Corporate Audit, State Street Bank and Trust
Company from May 1998 to April 2001).

C-4

OFFICERS

Position
Held with Year First Principal Occupation
Name/Age Funds in Office During Past Five Years
-------- --------- ---------- ----------------------

Michael G. Clarke Controller 2004 Controller of the Columbia Funds and of the Liberty
(Age 34) All-Star Funds since 2004 (formerly Assistant Treasurer
of the Columbia Funds and of the Liberty All-Star
Funds from June 2002 to May 2004; Vice President,
Product Strategy & Development of Liberty Funds
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 at Deloitte & Touche LLP from May
1997 to August 1999).

David A. Rozenson Secretary 2003 Secretary of the Columbia Funds and of the Liberty All-
(Age 49) Star Funds since December 2003; Senior Counsel, Bank
of America Corporation (formerly FleetBoston
Financial Corporation) since January 1996; Associate
General Counsel, Columbia Management Group since
November 2002.

C-5

2. Positions Held with Affiliates by Officers and Interested Nominees

Each of the Funds' officers and each Nominee who is an "interested person"
(as defined in the 1940 Act) of the Funds holds the positions with the
affiliates and principal underwriter of the Funds that are described below
opposite his or her name.

Name of Affiliate or
Name of Officer or Nominee Principal Underwriter Description of Position Held
-------------------------- --------------------- ----------------------------

R. Joseph Dougherty.... Highland Capital Senior Portfolio
Management, L.P. Manager

3. Arrangements for Selection as Nominee or Officer

All Nominees were reviewed by the Board of Trustees/Managers of the Funds
based on the criteria generally employed by the Funds' Governance Committee to
review candidates for nomination as trustee/manager. There exist no
arrangements or understandings between any Nominee and any other person
pursuant to which any such Nominee was selected as a Nominee. There exist no
arrangements or understandings between any officer of the Funds and any other
person pursuant to which any such officer was selected as an officer.

4. Related Positions Held by Disinterested Nominees

Except as disclosed in the table in Section 1 of this Appendix C, no
disinterested Nominee and no immediate family member thereof holds, or has held
within the past five years, any position, as a director, general partner,
officer, employee or otherwise, with any of the Funds, any fund having the same
investment adviser or principal underwriter as any of the Funds, any fund
having an investment adviser or principal underwriter in a control relationship
with any investment adviser or principal underwriter of any of the Funds, any
investment adviser or principal underwriter of any of the Funds or any person
in a control relationship with any investment adviser or principal underwriter
of any of the Funds.

5. Interests of Disinterested Nominees in Affiliated Persons

Except as disclosed in Appendix D to this Proxy Statement, no disinterested
Nominee, and no immediate family member thereof, has, and at no time in the
past five years had, any direct or indirect interest, the value of which
exceeds $60,000, in any investment adviser or principal underwriter of

C-6

any of the Funds, or in any person (other than a fund) in a control
relationship with any investment adviser or principal underwriter of any of the
Funds.

6. Interests of Disinterested Nominees in Affiliated Transactions

No disinterested Nominee, and no immediate family member thereof, has, and
at no time since the beginning of the past two completed fiscal years of the
Funds had, any direct or indirect material interest in any transaction or
series of similar transactions involving amounts in excess of $60,000 to which
any of the following persons was or is a party: (a) any of the Funds; (b) any
officer of any of the Funds; (c) any fund having the same investment adviser or
principal underwriter as any of the Funds; (d) any fund having an investment
adviser or principal underwriter in a control relationship with any investment
adviser or principal underwriter of any of the Funds; (e) any officer of any
fund having the same investment adviser or principal underwriter as any of the
Funds; (f) any officer of any fund having an investment adviser or principal
underwriter in a control relationship with any investment adviser or principal
underwriter of any of the Funds; (g) any investment adviser or principal
underwriter of any of the Funds; (h) any officer of any investment adviser or
principal underwriter of any of the Funds; (i) any person in a control
relationship with any investment adviser or principal underwriter of any of the
Funds; or (j) any officer of any person in a control relationship with any
investment adviser or principal underwriter of any of the Funds.

7. Relationships of Disinterested Nominees with Affiliated Persons

No disinterested Nominee, and no immediate family member thereof, has, and
at no time since the beginning of the past two completed fiscal years of the
Funds had, any direct or indirect relationship involving amounts in excess of
$60,000 with any of the following persons: (a) any of the Funds; (b) any
officer of any of the Funds; (c) any fund having the same investment adviser or
principal underwriter as any of the Funds; (d) any fund having an investment
adviser or principal underwriter in a control relationship with any investment
adviser or principal underwriter of any of the Funds; (e) any officer of any
fund having the same investment adviser or principal underwriter as any of the
Funds; (f) any officer of any fund having an investment adviser or principal
underwriter in a control relationship with any investment adviser or principal
underwriter of any of the Funds; (g) any investment adviser or principal
underwriter of any of the Funds; (h) any

C-7

officer of any investment adviser or principal underwriter of any of the Funds;
(i) any person in a control relationship with any investment adviser or
principal underwriter of any of the Funds; or (j) any officer of any person in
a control relationship with any investment adviser or principal underwriter of
any of the Funds. For purposes of this Section 7 of this Appendix C,
"relationship" includes payments of property or services to or from any person
specified above; provision of legal services to any person specified above;
provision of investment banking services to any person specified above, other
than as a participating underwriter in a syndicate; and any consulting or other
relationship substantially similar in nature and scope to any of the
relationships listed in this sentence.

8. Potential Associative Conflicts of Interest of the Nominees

No officer of any investment adviser or principal underwriter of any of the
Funds, and no officer of any person in a control relationship with any
investment adviser or principal underwriter of any of the Funds, serves, and at
no time since the beginning of the past two completed fiscal years served, as a
director of any company for which a disinterested Nominee is, or at any time
since the beginning of the past two completed fiscal years was, an officer.

C-8

APPENDIX D

BENEFICIAL OWNERSHIP OF EQUITY SECURITIES BY NOMINEES

1. Beneficial Ownership of Equity Securities by Nominees in Funds and Family of
Investment Companies

The tables below show the dollar range of equity securities of each of the
Funds and the aggregate dollar range of equity securities of all of the funds
in the Funds' "Family of Investment Companies" (as defined in Item 22(a)(1)(iv)
of Schedule 14A under the Exchange Act) owned by each Nominee as of the Record
Date.

COLUMBIA FLOATING RATE FUND

Aggregate Dollar Range
of Equity Securities in
all Funds Overseen by
Dollar Range of Equity Nominee in Family of
Name of Nominee Securities in the Fund Investment Companies
--------------- ---------------------- -----------------------

Timothy K. Hui..... None US$1-$10,000
Scott F. Kavanaugh. None US$10,001-$50,000
James F. Leary..... None US$1-$10,000
Bryan A. Ward...... None US$1-$10,000
R. Joseph Dougherty None Over US$100,000

COLUMBIA INSTITUTIONAL FLOATING RATE INCOME FUND

Timothy K. Hui..... None US$1-$10,000
Scott F. Kavanaugh. None US$10,001-$50,000
James F. Leary..... None US$1-$10,000
Bryan A. Ward...... None US$1-$10,000
R. Joseph Dougherty None Over US$100,000

D-1

COLUMBIA FLOATING RATE ADVANTAGE FUND

Timothy K. Hui..... None US$1-$10,000
Scott F. Kavanaugh. None US$10,001-$50,000
James F. Leary..... None US$1-$10,000
Bryan A. Ward...... None US$1-$10,000
R. Joseph Dougherty None Over US$100,000

2. Beneficial Ownership of Equity Securities by Disinterested Nominees in
Certain Fund Affiliates

No disinterested Nominee of any Fund, and no immediate family member
thereof, owns beneficially any equity securities in the investment adviser or
principal underwriter of any Fund or in any person in a control relationship
with the investment adviser or principal underwriter of any Fund.

D-2

APPENDIX E

AUDIT COMMITTEE CHARTER

COLUMBIA FUNDS

Audit Committee Charter
adopted on February 10, 2004

I. PURPOSE

This Charter has been adopted by the Audit Committee of the Board of
Directors/Trustees (the "Board") of each investment company in the Columbia
Family of Funds complex. The portfolio(s) of any such investment company are
referred to as the "Fund(s)." The primary function of the Audit Committee is to
assist the Board in fulfilling certain of its responsibilities. This Charter
sets forth the duties and responsibilities of the Audit Committee.

The Audit Committee serves as an independent and objective party to monitor
the Funds' accounting policies, financial reporting and internal control
system, and the work of the Funds' independent auditors. The Audit Committee
also serves to provide an open avenue of communication among the independent
auditors, the internal accounting staff of the Funds' investment adviser (the
"Adviser") and the Board.

. Management has the primary responsibility to establish and maintain
systems for accounting, reporting and internal controls, which functions
may be delegated to an accounting service agent, provided management
provides adequate oversight.

. The independent auditors have the primary responsibility to plan and
implement proper audits, with proper consideration given to internal
controls, of the Funds' accounting and reporting practices.

The Audit Committee shall assist Board oversight of (1) the integrity of the
Funds' financial statements, (2) the Funds' compliance with legal and
regulatory requirements, (3) the independent auditors' qualifications and
independence, and (4) the performance of the Funds' internal audit function and
independent auditors. The Audit Committee may have additional functions and
responsibility as deemed appropriate by the Board and the Audit Committee.

Although the Audit Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Audit Committee to plan or

E-1

conduct audits nor to determine that the Funds' financial statements are
complete or accurate or have been prepared in accordance with generally
accepted accounting principles. That is the responsibility of management and
the independent auditors. Nor is it the duty of the Audit Committee to conduct
investigations or to assure compliance with laws, regulations or any code of
ethics approved or adopted by the Board.

II. COMPOSITION

The Audit Committee shall be comprised of three or more independent Board
members. For purposes of this Charter, a Board member shall be deemed to be
independent if he or she (1) is not an "interested person" of the Funds, as
that term is defined in the Investment Company Act of 1940, (2) has not
accepted, directly or indirectly, any consulting, advisory or other
compensatory fee from the Funds except for services as a Board member, (3) is
free from any relationship that, in the opinion of the Board, would interfere
with the exercise of his or her independent judgment as a member of the Audit
Committee, and (4) in the case of a Fund whose shares are listed on the New
York Stock Exchange, Inc. (the "NYSE") or another stock exchange, meets the
independence requirements set forth in NYSE Rule 303.01(B)(3) or the applicable
rule of such exchange.

Each member of the Audit Committee shall be financially literate, or shall
become so within a reasonable period of time after his or her appointment to
the Audit Committee. At least one member shall have accounting or related
financial management expertise.

The members of the Audit Committee shall be appointed by the Board and shall
serve at the pleasure of the Board. Unless a Chair is appointed by the Board,
the members of the Audit Committee may designate a Chair by majority vote.

III. MEETINGS

The Audit Committee shall meet as frequently and at such times as
circumstances dictate. Special meetings (including telephonic meetings) may be
called by the Chair or a majority of the members of the Audit Committee upon
reasonable notice to the other members of the Audit Committee.

E-2

IV. RESPONSIBILITIES AND DUTIES

To fulfill its responsibilities and duties, the Audit Committee shall:

A. Charter. Review this Charter annually and recommend any proposed
changes to the Board.

B. Internal Controls.

1. Review annually with management and the independent auditors their
separate evaluations of the adequacy and effectiveness of the Funds'
system of internal controls.

2. Review with management and the independent auditors:

a. any significant audit findings related to the Funds' systems for
accounting, reporting and internal controls; and

b. any recommendations for the improvement of internal control
procedures or particular areas where new or more detailed
controls or procedures are desirable.

C. Independent Auditors.

1. Selection and Oversight. Be directly responsible for the
appointment, compensation, retention and oversight of the work of the
independent auditors (including resolution of disagreements between
management and the independent auditors regarding financial
reporting) for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Funds. Any
such engagement shall be pursuant to a written engagement letter
approved by the Audit Committee. The independent auditors shall
report directly to the Audit Committee.

2. Pre-approval of Non-audit Services to the Funds. Except as provided
below, pre-approve any engagement of the Funds' independent auditors
to provide any services to the Funds (other than the "prohibited
non-audit services" specified below), including the fees and other
compensation to be paid for such services, unless the engagement to
render such services is entered into pursuant to pre-approval
policies and procedures established by the Audit Committee that are
detailed as to the particular service (provided the Audit

E-3

Committee is informed of each such service)./1/ The Audit Committee
may designate from time to time one or more of its members acting
singly or together, as the Audit Committee may designate, to
pre-approve such services on behalf of the Audit Committee. Unless
and until the Audit Committee designates otherwise, the Chair of the
Audit Committee may grant such pre-approval. Any such delegated
pre-approval shall be reported to the Audit Committee by the member
or members exercising such delegated authority at the next meeting of
the Audit Committee.

The independent auditors shall not perform any of the following
non-audit services for any Fund ("prohibited non-audit services"):

a. Bookkeeping or other services related to the accounting records
or financial statements of the Fund;

b. Financial information systems design and implementation;

c. Appraisal or valuation services, fairness opinions or
contribution-in-kind reports;

d. Actuarial services;

e. Internal audit outsourcing services;

f. Management functions or human resources;

g. Broker or dealer, investment adviser or investment banking
services;

h. Legal services or expert services unrelated to the audit; and

i. Any other services that the Public Company Accounting Oversight
Board determines are impermissible.
- --------
/1/ Pre-approval of non-audit services to a Fund is not required, if:
a. the services were not recognized by management at the time of the
engagement as non-audit services;
b. the aggregate fees for all such non-audit services provided to the Fund
are less than 5% of the total fees paid by the Fund to its independent
auditors during the fiscal year in which the non-audit services are
provided; and
c. such services are promptly brought to the attention of the Audit Committee
by management, and the Audit Committee or its delegate approves them prior
to the completion of the audit.

E-4

3. Pre-approval of Certain Non-audit Services to the Adviser and its
Affiliates. Except as provided below, pre-approve any engagement of
the Funds' independent auditors to provide any services to the
Adviser (not including any subadviser whose role is primarily
portfolio management and is subcontracted or overseen by the Adviser)
or any entity controlling, controlled by or under common control with
the Adviser that provides ongoing services to the Funds if the
engagement relates directly to the operations or financial reporting
of the Funds, including the fees and other compensation to be paid to
the independent auditors./2/ The Audit Committee may designate from
time to time one or more of its members acting singly or together, as
the Audit Committee may designate, to pre-approve such services on
behalf of the Audit Committee. Unless and until the Audit Committee
designates otherwise, the Chair of the Audit Committee may grant such
pre-approval. Any such delegated pre-approval shall be reported to
the Audit Committee by the member or members exercising such
delegated authority at the next meeting of the Audit Committee.

4. Auditor Independence. On an annual basis, request, receive in
writing and review the independent auditors' specific representations
as to their independence, including identification of all significant
relationships the auditors have with the Funds, management, any
affiliates and any material service provider to the Funds and
recommend that the Board take appropriate action, if any, in response
to the independent auditors' report to satisfy itself as to the
independent auditors' independence.
- --------
/2/ Pre-approval of such non-audit services to the Adviser or an affiliate of
the Adviser is not required, if:
a. the services were not recognized by management at the time of the
engagement as non-audit services;
b. the aggregate fees for all such non-audit services provided to the Adviser
and all entities controlling, controlled by or under common control with
the Adviser are less than 5% of the total fees for non-audit services
requiring pre-approval under Section IVC2 or 3 of this Charter paid by the
Funds, the Adviser and all such other entities to its independent auditors
during the fiscal year in which the non-audit services are provided; and
c. such services are promptly brought to the attention of the Audit Committee
by management and the Audit Committee or its delegate approves them prior
to the completion of the audit.

E-5

5. Audit Scope. On an annual basis, meet with the independent auditors
and management to review the arrangements for and scope of the
proposed audits for the current year and the audit procedures to be
utilized.

6. Audit Results. On an annual basis at the conclusion of the audit,
meet with the independent auditors and management to review the audit
results, including any comments or recommendations of the independent
auditors or management regarding their assessment of significant
risks or exposures and the steps taken by management to minimize such
risks to the Funds, any audit problems or difficulties and
management's response, and any deviations from the proposed scope of
the audit previously presented to the Audit Committee.

7. Management Letter. Review any management letter prepared by the
independent auditors and management's response to any such letter.

8. Auditor Report. On an annual basis, obtain and review a report by
the independent auditors describing the independent auditors'
internal quality-control procedures and any material issues raised by
the independent auditors' most recent internal quality-control review
or peer review, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, respecting
one or more independent audits carried out by the independent
auditors, and any steps taken to deal with any such issues.

D. Financial Reporting Processes.

Meet separately and periodically with management, internal auditors (or
other personnel responsible for the internal audit function) and the
independent auditors and review the matters that the auditors believe
should be communicated to the Audit Committee in accordance with
auditing professional standards.

E. Closed-End Funds. With respect to any closed-end Fund:

1. Financial Statements. Review with management and the independent
auditors the Fund's audited annual financial statements and quarterly
unaudited financial statements, including any discussion or analysis
of the Fund's financial

E-6

condition and results of operations, and, recommend to the Board, if
appropriate, that the audited financial statements be included in the
Fund's annual report to shareholders required by Section 30(e) of the
Investment Company Act of 1940 and Rule 30d-1 thereunder.

2. Press Releases. Discuss press releases issued by the Fund to the
extent they are related to financial information of the Fund.

3. Audit Committee Report. Prepare an audit committee report as
required by the Securities and Exchange Commission to be included in
the annual proxy statement.

F. Authority.

1. Information. Have direct access to management and personnel
responsible for the Funds' accounting and financial reporting and for
the Funds' internal controls, as well as to the independent auditors
and the Funds' other service providers.

2. Investigation. Have the authority to investigate any matter brought
to its attention within the scope of its duties and, in its
discretion, to engage independent legal counsel and other advisers,
as it determines necessary to carry out its duties. The Audit
Committee may request any officer or employee of the Adviser, the
Funds' independent auditors, or outside counsel to attend any meeting
of the Audit Committee or to meet with any member of, or consultants
to, the Audit Committee.

3. Funding. Be provided with appropriate funding by the Funds, as
determined by the Audit Committee, for the payment of (a)
compensation to any independent auditors engaged for the purpose of
preparing or issuing an audit report or performing other audit,
review or attest services for the Funds, (b) compensation to any
advisers employed by the Audit Committee, and (c) ordinary
administrative expenses of the Audit Committee that are necessary or
appropriate in carrying out its duties.

4. Code of Ethics. Have the authority to review any violations under
the Columbia Management Group Family of Funds Code of Ethics for
Principal Executive and Senior Financial Officers brought to its
attention by the Chief Legal Officer

E-7

and review any waivers sought by a covered officer under that code.

G. Other Responsibilities.

1. Report to the Board. Report regularly its significant activities to
the Board and make such recommendations with respect to any matters
herein as the Audit Committee may deem necessary or appropriate.

2. Whistleblower Procedures. Establish procedures for the receipt,
retention and treatment of complaints received by the Funds or the
Adviser regarding accounting, internal accounting controls or audit
matters, and for the confidential, anonymous submission by any
employee of the Funds, the Adviser or its affiliates of concerns
regarding questionable accounting or auditing matters.

3. Risk Policies. Discuss policies with respect to risk assessment and
risk management.

4. Hiring Policies. If any Fund proposes to employ any current or
former employee of the independent auditors, set clear policies for
hiring any such person.

5. Necessary Activities. Perform any other activities consistent with
this Charter, the Funds' governing documents and governing law as the
Audit Committee or the Board deems necessary or appropriate.

6. Minutes. Maintain minutes of its meetings.

E-8

IMPORTANT
********************************

IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE STRONGLY
URGE YOU TO REVIEW, COMPLETE AND RETURN YOUR BALLOT AS SOON AS POSSIBLE. YOUR
VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE SIGN AND
DATE BEFORE MAILING.

You may receive additional proxies for other accounts. These are not duplicates:
you should sign and return each proxy card in order for your votes to be
counted.

This proxy card is solicited on behalf of the Board of Trustees/Managers of
Columbia Institutional Floating Rate Income Fund and Columbia Floating Rate
Limited Liability Company for the special meeting of shareholders to be held at
10:00 a.m., Eastern Time on July 30, 2004 at One Financial Center, Boston,
Massachusetts 02111-2621 (the "Meeting").

The signers of this proxy hereby appoint J. Kevin Connaughton, Robert J.
Fitzpatrick, Vincent P. Pietropaolo and David A. Rozenson as proxies, each with
the power to appoint his substitute and to vote the shares held by the
undersigned at the Meeting, and at any adjournment thereof, in the manner
directed with respect to the matters referred to in the Proxy Statement for the
Meeting, receipt of which is hereby acknowledged, and in the proxies'
discretion, upon such other matters as may properly come before the Meeting or
any adjournment thereof.

The Board of Trustees/Managers unanimously recommends a vote "FOR" all matters.

[LOGO] ColumbiaFunds
A Member of Columbia Management Group

Please be sure to sign and date this Proxy.

__________________________
Date

__________________________
Signature

__________________________
Signature (if held jointly)

THESE VOTING INSTRUCTIONS WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS
MADE, THIS VOTING INSTRUCTION WILL BE VOTED "FOR" ALL PROPOSALS.

THE BOARD OF TRUSTEES/MANAGERS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE FOLLOWING
PROPOSALS.

Please indicate your vote by marking the appropriate box. Example: [X]

1. To approve a new Advisory Agreement between Highland Capital Management,
L.P. and Columbia Floating Rate Limited Liability Company.

For Against Abstain
[ ] [ ] [ ]

2. To elect five trustees for Columbia Institutional Floating Rate Income Fund:
Nominees:
(a) Timothy K. Hui
(b) Scott F. Kavanaugh
(c) James F. Leary
(d) Bryan A. Ward
(e) R. Joseph Dougherty

Withheld from All
For All Nominees Nominees
[ ] [ ]

- ------------------------------------------------
For all nominees except as noted above

3. To elect five managers for Columbia Floating Rate Limited Liability Company:
Nominees:
(a) Timothy K. Hui
(b) Scott F. Kavanaugh
(c) James F. Leary
(d) Bryan A. Ward
(e) R. Joseph Dougherty

Withheld from All
For All Nominees Nominees
[ ] [ ]

- ------------------------------------------------
For all nominees except as noted above

MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE NEW ADDRESS AT LEFT [ ]

PLEASE VOTE, SIGN AND DATE THIS PROXY CARD AND RETURN IT IN THE ENCLOSED
ENVELOPE.

NOTE: This proxy must be signed exactly as your name(s) appear(s) hereon. If as
an attorney, executor, guardian or in some representative capacity as an officer
of a corporation, please add titles as such. A proxy with respect to shares held
in the name of two or more persons shall be valid if executed by one of them
unless at or prior to exercise of such proxy Columbia Institutional Floating
Rate Income Fund receives specific written notice to the contrary from any one
of them.

<page>
IMPORTANT
********************************

You may receive additional proxies for other accounts. These are not duplicates:
you should sign and return each proxy card in order for your votes to be
counted.

This proxy card is solicited on behalf of the Board of Trustees/Managers of
Columbia Floating Rate Fund and Columbia Floating Rate Limited Liability Company
for the special meeting of shareholders to be held at 10:00 a.m., Eastern Time
on July 30, 2004 at One Financial Center, Boston, Massachusetts 02111-2621 (the
"Meeting").

The Board of Trustees/Managers unanimously recommends a vote "FOR" all matters.

[LOGO] ColumbiaFunds
A Member of Columbia Management Group

Please be sure to sign and date this Proxy.

___________________________
Date

___________________________
Signature

___________________________
Signature (if held jointly)

THESE VOTING INSTRUCTIONS WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS
MADE, THIS VOTING INSTRUCTION WILL BE VOTED "FOR" ALL PROPOSALS.

THE BOARD OF TRUSTEES/MANAGERS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE FOLLOWING
PROPOSALS.

Please indicate your vote by marking the appropriate box. Example: [X]

1. To approve a new Advisory Agreement between Highland Capital Management,
L.P. and Columbia Floating Rate Limited Liability Company.

For Against Abstain
[ ] [ ] [ ]

2. To elect five trustees for Columbia Floating Rate Fund:
Nominees:
(a) Timothy K. Hui
(b) Scott F. Kavanaugh
(c) James F. Leary
(d) Bryan A. Ward
(e) R. Joseph Dougherty

Withheld from All
For All Nominees Nominees
[ ] [ ]

- ----------------------------------------------------
For all nominees except as noted above

3. To elect five managers for Columbia Floating Rate Limited Liability Company:
Nominees:
(a) Timothy K. Hui
(b) Scott F. Kavanaugh
(c) James F. Leary
(d) Bryan A. Ward
(e) R. Joseph Dougherty

Withheld from All
For All Nominees Nominees
[ ] [ ]

- ----------------------------------------------------
For all nominees except as noted above

MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE NEW ADDRESS AT LEFT [ ]

PLEASE VOTE, SIGN AND DATE THIS PROXY CARD AND RETURN IT IN THE ENCLOSED
ENVELOPE.

NOTE: This proxy must be signed exactly as your name(s) appear(s) hereon. If as
an attorney, executor, guardian or in some representative capacity as an officer
of a corporation, please add titles as such. A proxy with respect to shares held
in the name of two or more persons shall be valid if executed by one of them
unless at or prior to exercise of such proxy Columbia Floating Rate Fund
receives specific written notice to the contrary from any one of them.

<page>
IMPORTANT
********************************

You may receive additional proxies for other accounts. These are not duplicates:
you should sign and return each proxy card in order for your votes to be
counted.

This proxy card is solicited on behalf of the Board of Trustees of Columbia
Floating Rate Advantage Fund for the special meeting of shareholders to be held
at 10:00 a.m., Eastern Time on July 30, 2004 at One Financial Center, Boston,
Massachusetts 02111-2621 (the "Meeting").

The Board of Trustees unanimously recommends a vote "FOR" all matters.

[LOGO] ColumbiaFunds
A Member of Columbia Management Group

Please be sure to sign and date this Proxy.

___________________________
Date

___________________________
Signature

___________________________
Signature (if held jointly)

THESE VOTING INSTRUCTIONS WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS
MADE, THIS VOTING INSTRUCTION WILL BE VOTED "FOR" ALL PROPOSALS.

THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE FOLLOWING
PROPOSALS.

Please indicate your vote by marking the appropriate box. Example: [X]

1. To approve a new Advisory Agreement between Highland Capital Management, L.P.
and Columbia Floating Rate Advantage Fund.

For Against Abstain
[ ] [ ] [ ]

2. To elect five trustees for Columbia Floating Rate Advantage Fund:
Nominees:
(a) Timothy K. Hui
(b) Scott F. Kavanaugh
(c) James F. Leary
(d) Bryan A. Ward
(e) R. Joseph Dougherty

Withheld from All
For All Nominees Nominees
[ ] [ ]

- ------------------------------------------------
For all nominees except as noted above

MARK BOX AT RIGHT FOR ADDRESS CHANGE AND NOTE NEW ADDRESS AT LEFT [ ]

PLEASE VOTE, SIGN AND DATE THIS PROXY CARD AND RETURN IT IN THE ENCLOSED
ENVELOPE.

NOTE: This proxy must be signed exactly as your name(s) appear(s) hereon. If as
an attorney, executor, guardian or in some representative capacity as an officer
of a corporation, please add titles as such. A proxy with respect to shares held
in the name of two or more persons shall be valid if executed by one of them
unless at or prior to exercise of such proxy Columbia Floating Rate Advantage
Fund receives specific written notice to the contrary from any one of them.

<page>
COLUMBIA INSTL FLOATING RATE INC FD SPECIAL MEETING TO BE HELD ON 07/30/04
FOR HOLDERS AS OF 06/01/04
1 1-0001

CUSIP: 197752108 2

DIRECTORS CONTROL NO
---------

DIRECTORS RECOMMEND: A VOTE FOR ELECTION OF THE FOLLOWING NOMINEES 0010100
2 - 01 - TIMOTHY K. HUI*, 02 - SCOTT F. KAVANAUGH*, 03 - JAMES F. LEARY*,
04 - BRYAN A. WARD*, 05-R. JOSEPH DOUGHERTY*, 06-TIMOTHY K. HUI**,
07 - SCOTT F. KAVANUAUGH**, 08 - JAMES F. LEARY**, 09-BRYAN A. WARD**,
10 - R. JOSEPH DOUGHERTY**

PROPOSAL(S) DIRECTORS
RECOMMEND

1 - TO APPROVE A NEW ADVISORY AGREEMENT BETWEEN HIGHLAND CAPITAL --- >>> FOR ----->> 1
MANAGEMENT, L.P. AND COLUMBIA FLOATING RATE LIMITED LIABILITY 0030401
COMPANY.

NOTE SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.

?NOTE?

* TO ELECT FIVE TRUSTEES FOR COLUMBIA INSTITUTIONAL FOATING
RATE INCOME FUND

** TO ELECT FIVE MANAGERS FOR COLUMBIA FLOATING RATE LIMITED
LIABILITY COMPANY.

Mark "FOR" to enroll this account to receive certain future shareholder ---- >>
communications in a single package per household. Mark "AGAINST" if you do not
want to participate. To change your election in the future, call 1-800-542-1061.
See accompanying page for more information about this election.

COLUMBIA INSTL FLOATING RATE INC FD
07/30/04

2 ITEM(S)

DIRECTORS
(MARK "X" FOR ONLY ONE BOX)

FOR ALL NOMINEES

WITHHOLD ALL NOMINEES

WITHOLD AUTHORITY TO VOTE
FOR ANY INDIVIDUAL NOMINEE. WRITE
NUMBER(S) OF NOMINEE(S) BELOW.

USE NUMBER ONLY _____________________________________________________

FOR AGAINST ABSTAIN

PLEASE INDICATE YOUR PROPOSAL SELECTION BY FIRMLY PLACING AN
"X" IN THE APPROPRIATE NUMBERED BOX WITH BLUE OR BLACK INK
ONLY.

SEE VOTING INSTRUCTION NO. __1____ ON REVERSE

ACCOUNT NO.

CUSIP: 197752108

CONTROL NO:

CLIENT NO:

PLACE "X" HERE IF YOU PLAN TO ATTEND
AND VOTE YOUR SHARES AT THE MEETING

51 MERCEDES WAY
EDGEWOOD NY 11717

FOR AGAINST ABSTAIN

COLUMBIA FLOATING RATE ADVANTAGE FD A SPECIAL MEETING TO BE HELD ON 07/30/04
FOR HOLDERS AS OF 06/01/04
1 1-0001

CUSIP: 197644107 2

DIRECTORS CONTROL NO
---------

DIRECTORS RECOMMEND: A VOTE FOR ELECTION OF THE FOLLOWING NOMINEES 0010100
2 - 01 - TIMOTHY K. HUI, 02-SCOTT F. KAVANAUGH, 03-JAMES F. LEARY,
04-BRYAN A. WARD, 05 - R. JOSEPH DOUGHERTY

PROPOSAL(S) DIRECTORS
RECOMMEND

1 - TO APPROVE A NEW ADVISORY AGREEMENT BETWEEN HIGHLAND CAPITAL --- >>> FOR ----->> 1
MANAGEMENT, L.P. AND COLUMBIA FLOATING RATE ADVANTAGE FUND 0030401

NOTE SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.

COLUMBIA FLOATING RATE ADVANTAGE FD A
07/30/04

2 ITEM(S)

DIRECTORS
(MARK "X" FOR ONLY ONE BOX)

FOR ALL NOMINEES

WITHHOLD ALL NOMINEES

WITHOLD AUTHORITY TO VOTE
FOR ANY INDIVIDUAL NOMINEE. WRITE
NUMBER(S) OF NOMINEE(S) BELOW.

USE NUMBER ONLY _____________________________________________________

FOR AGAINST ABSTAIN

PLEASE INDICATE YOUR PROPOSAL SELECTION BY FIRMLY PLACING AN
"X" IN THE APPROPRIATE NUMBERED BOX WITH BLUE OR BLACK INK
ONLY.

SEE VOTING INSTRUCTION NO. __1____ ON REVERSE

ACCOUNT NO.

CUSIP: 197644107

CONTROL NO:

CLIENT NO:

PLACE "X" HERE IF YOU PLAN TO ATTEND
AND VOTE YOUR SHARES AT THE MEETING

51 MERCEDES WAY
EDGEWOOD NY 11717

FOR AGAINST ABSTAIN

COLUMBIA FLOATING RATE FUND - CL A SPECIAL MEETING TO BE HELD ON 07/30/04
FOR HOLDERS AS OF 06/01/04
9 1-0001

CUSIP: 197645104 2

DIRECTORS CONTROL NO
---------
DIRECTORS RECOMMEND: A VOTE FOR ELECTION OF THE FOLLOWING NOMINEES 0010100
2 - 01 - TIMOTHY K. HUI*, 02 - SCOTT F. KAVANAUGH*, 03 - JAMES F. LEARY*,
04 - BRYAN A. WARD*, 05-R. JOSEPH DOUGHERTY*, 06-TIMOTHY K. HUI**,
07 - SCOTT F. KAVANAUGH**, 08 - JAMES F. LEARY**, 09-BRYAN A. WARD**,
10 - R. JOSEPH DOUGHERTY**

PROPOSAL(S) DIRECTORS
RECOMMEND

1 - TO APPROVE A NEW ADVISORY AGREEMENT BETWEEN HIGHLAND CAPITAL --- >>> FOR --->>> 1
MANAGEMENT, L.P. AND COLUMBIA FLOATING RATE LIMITED LIABILITY 0030401
COMPANY.

NOTE SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.

* TO ELECT FIVE TRUSTEES FOR COLUMBIA FLOATING RATE FUND

** TO ELECT FIVE MANAGERS FOR COLUMBIA FLOATING RATE LIMITED
LIABILITY COMPANY.

COLUMBIA INSTL FLOATING RATE FUND - CL A
07/30/04

2 ITEM(S)

DIRECTORS
(MARK "X" FOR ONLY ONE BOX)

FOR ALL NOMINEES

WITHHOLD ALL NOMINEES

WITHOLD AUTHORITY TO VOTE
FOR ANY INDIVIDUAL NOMINEE. WRITE
NUMBER(S) OF NOMINEE(S) BELOW.

USE NUMBER ONLY _____________________________________________________

FOR AGAINST ABSTAIN

PLEASE INDICATE YOUR PROPOSAL SELECTION BY FIRMLY PLACING AN
"X" IN THE APPROPRIATE NUMBERED BOX WITH BLUE OR BLACK INK
ONLY.

SEE VOTING INSTRUCTION NO. __1____ ON REVERSE

ACCOUNT NO.

CUSIP: 197645104

CONTROL NO:

CLIENT NO:

PLACE "X" HERE IF YOU PLAN TO ATTEND
AND VOTE YOUR SHARES AT THE MEETING

51 MERCEDES WAY
EDGEWOOD NY 11717

FOR AGAINST ABSTAIN

Q&A - 2004 Floating Rate Proxy

For Internal Use Only - Do Not Distribute
FOR INTERNAL USE ONLY - DO NOT DISTRIBUTE

Q&A - 2004 Floating Rate Funds Proxy

Q: What is happening to Columbia Floating Rate Fund, the Columbia Floating Rate
Advantage Fund and the Columbia Institutional Floating Rate Income Fund (the
Funds)?

A: The Board of Trustees has approved Highland Capital as the investment advisor
for the Funds on an interim basis. For Highland Capital to become the permanent
investment advisor, shareholder approval is required. Shareholders must also
elect new trustees/managers to the Board of Trustees/Managers of the Funds.

Q: What was the Board of Trustees' rationale for transferring the advisory of
the Funds to Highland Capital?

A: The Board believed it was in the best interest of the Funds' shareholders.
Because Bank of America is so active in the loan marketplace, the number of
loans available to the Funds as long as Columbia remains the Funds' advisor is
limited, which means that the Funds would not be able to effectively pursue
their current investment strategy. The transfer will give each fund the maximum
flexibility to pursue its current investment strategy.

Q: What was the record date used to determine the proxy population?

A: The record date was June 1, 2004.

Q: How will shareholder approval be obtained?

A: A special meeting of shareholders of the Funds will be held on July 30, 2004
at 10 a.m. ET at One Financial Center in Boston, Massachusetts. The purpose of
the meeting is to allow the Funds' shareholders to approve new advisory
agreements between the Funds and Highland Capital as well as to elect new
trustees/managers to the Board of Trustees/Managers for the Funds. A proxy
statement was mailed to shareholders of record on or about June 21, 2004 to
solicit shareholders' votes. Shareholders may vote by returning the proxy card
enclosed with their proxy statement. They may also vote in person at the
shareholder meeting on July 30, 2004. Telephone voting is not available for this
proxy.

Q: What is the timeline and what are the steps for the Funds adopting the new
advisory agreements?

A: Interim advisory agreements between the Funds and Highland Capital are
currently in effect and will remain in effect until the shareholders of the
Funds approve the new advisory agreements or until 150 days have passed -
whichever comes first. Shareholders are being asked to approve a new advisory
agreement for their respective fund on or before the shareholder meeting on July
30, 2004. The new advisory agreements will become effective immediately after
shareholder approval is granted.

The Board of Trustees unanimously recommends that shareholders of the Funds vote
"for" the proposal.

Q: Will the portfolio managers of the Funds change?

A: Yes. Mark Okada, chief investment officer, and Joe Dougherty, senior
portfolio manager, will be primarily responsible for the day-to-day management
of the Funds. Mr. Okada has been affiliated with Highland since 1993 and Mr.
Dougherty has been employed by Highland since 1998. A team of 23
industry-focused investment professionals will support Mr. Okada and Mr.
Dougherty.
<page>

Q: What is their experience/performance?

A: Mr. Okada has over 19 years of experience in the leveraged finance market.
Mr. Okada is CIO at Highland Capital Management. From inception to present,
Highland has grown into one of the largest institutional bank loan asset
managers in the country. Formerly, Mr. Okada served as Manager of Fixed Income
for Protective Life's GIC subsidiary from 1990 to 1993. He was primarily
responsible for the bank loan portfolio and other risk assets. Protective was
one of the first non-bank entrants into the syndicated loan market. From 1986 to
1990, he served as Vice-President, managing over $1 billion of high yield bank
loans, for Hibernia National Bank. Mr. Okada is an honors graduate of the
University of California Los Angeles with degrees in Economics and Psychology.
He completed his credit training at Mitsui. Mr. Okada is a Chartered Financial
Analyst.

Mr. Dougherty is a Senior Portfolio Manager at Highland Capital Management. Mr.
Dougherty heads Highland's retail funds effort and serves as Senior Vice
President of the Firm's two NYSE-listed bond funds, which invest in both
investment grade and high yield debt. In this capacity, Mr. Dougherty oversees
investment decisions for the retail funds, alongside several other Portfolio
Managers, and manages the team dedicated to their day-to-day administration.
Prior to his current duties, Mr. Dougherty served as Portfolio Analyst for
Highland from 1998 to 1999. As a Portfolio Analyst, Mr. Dougherty also helped
follow companies within the Chemical, Retail, Supermarket and Restaurant
sectors. Prior to joining Highland, Mr. Dougherty served as an Investment
Analyst with Sandera Capital Management from 1997 to 1998. Formerly, he was a
Business Development Manager at Akzo Nobel from 1994 to 1996 and a Senior
Accountant at Deloitte & Touche, LLP from 1992 to 1994. He received a BS in
Accounting from Villanova University and an MBA from Southern Methodist
University. Mr. Dougherty is a Chartered Financial Analyst and a Certified
Public Accountant.

Q: Will the objective or the investment strategy of the Funds change?

A: No. Under the new advisory agreements, Highland Capital will continue to
manage the investments of the assets of the Funds in accordance with the Funds'
investment objectives, policies and limitations as stated in the Funds'
prospectuses and statements of additional information. The Trustees do not
anticipate that there will be substantial changes in the way the Funds are
managed or operated.

Q: Was the transfer a result of the recent FleetBoston Financial/Bank of America
merger?

A: Yes. Because Bank of America is so active in the loan marketplace, the number
of loans available to the Funds is limited, which means that the Funds would not
be able to effectively pursue their current investment strategy with Columbia as
their advisor. Transferring the Funds to Highland Capital is in the Funds' best
interest and in the best interest of the shareholders. The transfer will give
each fund the maximum flexibility to pursue its current investment strategy.

SHC-18/113S-0604 (6/04) 04/1459