UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3009
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Columbia Funds Trust II
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(Exact name of registrant as specified in charter)
One Financial Center, Boston, Massachusetts 02111
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(Address of principal executive offices) (Zip code)
Russell L. Kane, Esq.
Columbia Management Group, Inc.
One Financial Center
Boston, MA 02111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-426-3363
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Date of fiscal year end: June 30, 2004
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Date of reporting period: December 31, 2003
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
Columbia Money
Market Fund
Semiannual Report
December 31, 2003
[Photo of woman smiling]
We are Columbia Funds!
INSIDE - Management's discussion of the name changes effective October 13, 2003
Table of Contents
Fund Profile .............................................................. 1
Economic Update ........................................................... 2
Portfolio Manager's Report ................................................ 3
Financial Statements ...................................................... 5
Investment Portfolio ................................................... 6
Statement of Assets and Liabilities .................................... 10
Statement of Operations ................................................ 11
Statement of Changes in Net Assets ..................................... 12
Notes to Financial Statements .......................................... 14
Financial Highlights ................................................... 18
Important Information
About This Report ......................................................... 22
Columbia Funds ............................................................ 23
Economic and market conditions change frequently. There is no assurance that the
trends described in this report will continue or commence.
Not FDIC May Lose Value
Insured No Bank Guarantee
PRESIDENT'S MESSAGE
Columbia Money Market Fund
[Photo of Joseph Palombo]
Dear Shareholder:
As you know, your fund has long been associated with a larger investment
management organization. In the 1990s, it was associated with Liberty Financial,
whose affiliated asset management companies included Colonial, Stein Roe and
Newport. In 2001, these companies became part of the asset management division
of FleetBoston Financial Corporation, which you know as Columbia Management
Group (CMG).
In 2003, six of the asset management firms brought together under the CMG
umbrella were consolidated and renamed Columbia Management Advisors, Inc. On
October 13, 2003, we took the natural next step in this process by changing the
name of our funds from Liberty to Columbia. For example, Liberty Money Market
Fund was changed to Columbia Money Market Fund. We have also modified certain
fund names that existed under both the Liberty and Columbia brands. A complete
list of new fund names and other information related to these changes are
available online at our new website address: www.columbiafunds.com.
A consolidated identity
The consolidation of our management under a single organization and the renaming
of our funds are part of a larger effort to create a consistent identity. Having
taken these additional steps, we believe it will be easier for shareholders to
do business with us. All funds are now listed under "Columbia" in the mutual
fund listings section of your newspaper (depending on the newspaper's listing
requirements). All service inquiries are now handled by Columbia Funds Services,
Inc., the new name of our shareholder service organization.
What has not changed is our commitment to our mutual fund shareholders. We
remain committed to providing the best possible customer service and to offering
a wide variety of mutual funds to help you pursue your long-term financial
goals. Should you have questions, please call Columbia Funds at 800-345-6611.
In the report that follows, portfolio manager Karen Arneil discusses in depth
the investment strategies and other factors that affected your fund's
performance during the period. We encourage you to read the report carefully.
As always, we thank you for your business and we look forward to continuing to
serve your investment needs.
Sincerely,
/s/ Joseph R. Palombo
Joseph R. Palombo
President
Sidebar:
Summary
o For the six-month period ended December 31, 2003, the fund's class A
shares returned 0.12%.
o The fund's return was slightly lower than the average return of its peer
group, the Lipper Money Market Funds Category.
o We believe that the fund's slightly shorter weighted average maturity near
the end of the period accounted for a slim margin of underperformance
against its peers.
OBJECTIVE
Seeks maximum current income
consistent with capital
preservation and the
maintenance of liquidity.
TOTAL NET ASSETS
$535.7 million
Artwork: 2 arrows up
LIPPER MONEY MARKET
CLASS A SHARES FUNDS CATEGORY
0.12% 0.18%
FUND PROFILE
Columbia Money Market Fund
The information below gives you a snapshot of your fund at the end of the
reporting period. Because your fund is actively managed, there is no guarantee
that these breakdowns and percentages will be maintained in the future.
PORTFOLIO BREAKDOWN
AS OF 12/31/03 (%)
US government agency obligations 41.5
Corporate bonds 26.4
Municipal bonds 12.8
Certificate of deposit 8.4
Commercial paper 6.4
Bank notes 4.7
Short-term obligation 0.3
Bar Chart:
PORTFOLIO MATURITY AS OF 12/31/03 (%)
1-4 days 0.7
5-14 days 35.0
15-29 days 17.2
30-59 days 15.1
More than 59 days 32.0
Portfolio breakdown is calculated as a percentage of net assets. Portfolio
maturity is calculated as a percentage of total investments.
1
ECONOMIC UPDATE
Columbia Money Market Fund
After struggling for two years to maintain solid, forward movement, the US
economy steamed ahead during the six-month period ended December 31, 2003. The
Federal Reserve Board's efforts to stimulate the economy through low short-term
interest rates were finally rewarded, but the significant upswing in growth was
the result of a combination of factors. A sizeable tax package gave disposable
income a boost. Income taxes fell across all tax brackets and many taxpayers
received rebate checks during the summer months. Corporate profits rose sharply,
and orders for durable goods exceeded expectations late in the period. Consumer
confidence continued to climb, although not without an occasional setback.
Generally speaking, consumer spending increased and spending was strong going
into the holiday season.
Early in the period, economists began to become optimistic that growth for the
third quarter of 2003 would reflect this renewed vigor. Yet, no one seemed
prepared for how extraordinary that growth might be. When gross domestic product
(GDP) for the third quarter was reported at 7.2%, then revised upward to 8.2%,
it was clear that the economy was firing on all cylinders. The business sector
had finally kicked into gear. Industrial production rose in the second half of
2003 and business spending--especially on technology-related items--showed
strength. Even the labor market improved by year end. After unemployment peaked
at 6.4% in June, it declined to 5.9%.
The US stock market, which had come to life at the end of March, headed sharply
higher in the second half of 2003. The S&P 500 Index returned 15.14% for the
six-month period as all major sectors of the market benefited from renewed
investor enthusiasm and rising corporate profits. Technology and consumer stocks
were the strongest sectors, but telecommunications and health care also picked
up in the last months of the period.
The US bond market experienced extraordinary volatility as interest rates rose
sharply as the economy improved and then came back down in September. High-yield
bonds continued to lead the fixed income markets. The CSFB High Yield Index
returned 9.05% for the six-month period compared to a -0.53% return for the
Lehman Brothers Government/Credit Bond Index. Treasury and mortgage bonds
suffered from the shift in interest rates early in the six-month period, but
picked up some ground in the final month of the period. Municipal bonds also
held onto modest gains. The Lehman Brothers Municipal Bond Index returned 1.45%
for the six-month period.
Money market fund yields fell below 1%, reflecting historically low short-term
interest rates. The Investment Company Institute, which tracks the movement of
assets in and out of mutual funds, reported that money continued to flow out of
money market funds during the year as investors sought alternatives to the low
yields offered by short-term cash equivalents. Net new cash flow to money market
funds turned negative in 2002 for the first time since 1993.
2
Sidebar:
DISTRIBUTIONS DECLARED PER SHARE
7/1/03 - 12/31/03 ($)
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Class A .001
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Class B .001
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Class C .001
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Class Z .001
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7-DAY YIELDS ON 12/31/03 (%)
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Class A 0.69
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Class B 0.14
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Class C 0.30
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Class Z 0.70
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30-DAY YIELDS ON 12/31/03 (%)
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Class A 0.46
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Class B 0.11
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Class C 0.19
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Class Z 0.47
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The 30-day SEC yields reflect the portfolios earning power net of expenses,
expressed as an annualized percentage of the public offering price at end of the
period.
PORTFOLIO MANAGER'S REPORT
Columbia Money Market Fund
For the six-month period ended December 31, 2003, Columbia Money Market Fund
class A shares returned 0.12%. The fund's return was slightly lower than the
average return of its peer group, the Lipper Money Market Funds Category, which
returned 0.18% for the same period.(1) Our decision to reduce the fund's average
maturity near the end of the period accounted for its slight underperformance
against its peer group. However, we believe that our move offers the fund
greater flexibility to take advantage of higher interest rates, if they occur,
in the period ahead.
The minimal returns from money market funds reflect the historically low yields
on short-term Treasury securities throughout the past six months. In late June,
the Federal Reserve Board cut the federal funds rate from 1.25% to just 1%, its
lowest level in over 45 years. The federal funds rate is the rate that member
banks charge each other to borrow funds.
OPPORTUNITIES IN FLOATING RATE NOTES
In an effort to increase returns in a low-yield environment, the fund greatly
increased its exposure to floating rate notes, which now account for over half
the portfolio. Floating rate securities can take the form of corporate debt,
taxable municipal securities, and the debt of federal agencies such as Fannie
Mae and Freddie Mac. The interest rates of these securities are pegged to the
London Inter-Bank Offer Rate (LIBOR), a characteristic that has given floating
rate notes a yield advantage over comparable fixed-rate securities in the
current environment. The fund's move into agency securities was also prompted by
the market's response to Freddie Mac's well-publicized accounting irregularities
during the summer of 2003. Yields on agency securities, which carry minimal
credit risk, were temporarily pushed as high as corporate yields, creating a
buying opportunity early in the six-month period.
FROM BARBELLS TO LADDERS
As of the beginning of the period, the fund maintained a "barbell" structure,
splitting its investments between securities that would mature in under three
months and securities with maturities of one year. The idea was to use the short
end to maintain liquidity while using the longer-term securities to generate
higher yields. As the economy strengthened in the fall, we moved to a more
laddered approach, investing in securities with maturities all across the money
market
(1) Lipper Inc., a widely respected data provider in the industry, calculates
an average total return for mutual funds with similar investment
objectives as those of the fund.
3
Sidebar:
In an effort to increase returns in a low-yield environment, the fund greatly
increased its exposure to floating rate notes, which now account for over half
the portfolio.
Columbia Money Market Fund
spectrum. This laddered structure gives the portfolio a lower weighted average
maturity, which may have cost the fund slightly at the end of the period.
However, it should provide us with added flexibility. By having more money in
securities that mature quickly, the fund is positioned to reinvest the proceeds
from maturing securities at higher rates, if--and when--they move higher in the
period ahead.
[Photo of Karen M. Arneil]
Karen M. Arneil has managed Columbia Money
Market Fund since July 1, 2002.
/s/ Karen M. Arneil
Performance data quoted represents past performance and current performance may
be lower or higher. Past performance is no guarantee of future results. The
investment return and principal value will fluctuate so that shares may be worth
more or less than the original cost. Please visit www.columbiafunds.com for
daily and most recent month-end performance updates.
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.
4
FINANCIAL STATEMENTS
December 31, 2003 (unaudited) Columbia Money Market Fund
A GUIDE TO UNDERSTANDING YOUR FUND'S FINANCIAL STATEMENTS
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Investment Portfolio A list of all of the fund's holdings and their market
value as of the last day of the reporting period. To
show areas of concentration and diversification,
portfolio holdings are organized by type of asset,
industry and country or geographic region (if
applicable).
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Statement of Assets This statement shows the fund's net assets and share
and Liabilities price for each share class. Net assets are calculated by
subtracting all the fund's liabilities (including any
unpaid expenses) from the total of the fund's investment
and non-investment assets. The share price for each
class is calculated by dividing net assets for that
class by the number of outstanding shares in that class.
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Statement of This statement details both the type of income earned by
Operations the fund and the operating and non-operating expenses
charged to the fund. The Statement of Operations also
shows any net gain or loss the fund realized on the
sales of its holdings during the period, as well as any
unrealized gains or losses over the reporting period.
The total of these results represents the fund's net
increase or decrease in net assets from operations.
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Statement of Changes This statement shows how the fund's net assets were
in Net Assets affected by its operations results, distributions to
shareholders and changes in the number of fund shares.
The Statement of Changes in Net Assets also reconciles
changes in the number of shares outstanding.
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Financial Highlights The financial highlights provide an overview of the
fund's investment results, including per-share
analytics, such as net investment income or loss from
operations and distributions; ratios of expenses and net
investment income to average net assets. A separate
table is provided for each share class.
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Notes to Financial These notes disclose information regarding certain fund
Statements background information, significant accounting policies
of the fund, including security valuation and income
accruals and related party transactions.
See notes to investment portfolio. 5
INVESTMENT PORTFOLIO
December 31, 2003 (unaudited) Columbia Money Market Fund
BANK NOTES - 4.7% Par ($) Value ($)
- ------------------------------------------ -----------------------------------------------------------------------------
Bank One NA Illinois,
1.180% 04/13/04 (a) 25,000,000 25,006,017
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TOTAL BANK NOTES (cost of $25,006,017) 25,006,017
CERTIFICATE OF DEPOSITS - 8.4%
- ------------------------------------------ -----------------------------------------------------------------------------
Canadian Imperial,
Bank of Canada,
1.183% 03/15/08 (a) 20,000,000 20,000,000
First Tennessee Bank NA,
1.109% 02/04/04 (a) 10,000,000 9,999,807
Rabobank Nederland NY,
1.330% 04/19/04 15,000,000 15,000,000
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TOTAL CERTIFICATES OF DEPOSITS (cost of $44,999,807) 44,999,807
COMMERCIAL PAPER - 6.4%
- ------------------------------------------ -----------------------------------------------------------------------------
Amstel Funding Corp.,
1.100% 01/15/04 (b) 2,309,000 2,308,012
Fountain Square Commercial Funding Corp.,
1.090% 02/02/04 (b) 7,119,000 7,112,103
Goldman Sachs Group LP,
1.170% 05/28/04 15,000,000 14,927,850
Jupiter Securitization Corp.,
1.090% 01/08/04 (b) 10,000,000 9,997,881
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TOTAL COMMERCIAL PAPER (cost of $34,345,846) 34,345,846
CORPORATE BONDS - 26.4%
- ------------------------------------------ -----------------------------------------------------------------------------
Abbott Laboratories,
5.125% 07/01/04 2,300,000 2,343,286
American Express Credit Corp.:
1.200% 03/05/04 (a) 13,000,000 13,000,000
1.169% 07/19/04 (a)(c) 12,000,000 12,000,000
American Honda Finance Corp.:
1.300% 07/15/04 (a)(c) 12,000,000 12,012,452
1.380% 02/13/04 (a)(c) 5,000,000 5,001,425
1.300% 10/07/04 (a)(c) 5,000,000 5,007,303
Autumn House at Powder Mill, Inc.,
(LOC: SunTrust Bank)
1.100% 02/01/28 (a) 4,000,000 4,000,000
BankUnited Financial Corp.,
(LOC: FHLB)
5.400% 02/02/04 3,000,000 3,010,435
Best One Tire & Services LLC,
(LOC: Fifth Third Bank)
1.250% 02/01/18 (a) 6,635,000 6,635,000
Chargin Valley Partners LLC,
(LOC: Fifth Third Bank)
1.250% 11/01/13 (a) 1,180,000 1,180,000
Citigroup, Inc.,
1.400% 03/09/04 (a) 25,000,000 25,013,562
Congregation Mkor Shalom,
(LOC: Fifth Third Bank)
1.210% 06/01/23 (a) 2,320,000 2,320,000
6 See notes to investment portfolio.
December 31, 2003 (Unaudited) Columbia Money Market Fund
CORPORATE BONDS - (continued) Par ($) Value ($)
- ------------------------------------------ -----------------------------------------------------------------------------
Crescent Paper Tube Co.,
(LOC: Fifth Third Bank)
1.250% 08/01/22 (a) 2,040,000 2,040,000
Cresmont Realty Corp.,
(LOC: Fifth Third Bank)
1.250% 11/01/22 (a) 2,000,000 2,000,000
Dominican Sisters,
(LOC: Fifth Third Bank)
1.250% 10/01/23 (a) 2,875,000 2,875,000
General Electric Capital Corp.:
1.280% 09/16/04 (a) 13,000,000 13,011,499
7.250% 05/03/04 9,390,000 9,576,064
Morgan Stanley Dean Witter & Co.,
1.151% 12/29/04 (a) 12,000,000 12,000,000
PCP Investors LLC,
(LOC: Wells Fargo Bank NA)
1.300% 01/01/24 (a) 2,000,000 2,000,000
Precision Radiotherapy LLC,
(LOC: Fifth Third Bank)
1.250% 08/01/18 (a) 1,430,000 1,430,000
PS Greetings, Inc.,
(LOC: LaSalle Bank)
1.230% 12/01/33 (a) 1,080,000 1,080,000
Shepard Capital LLC,
(LOC: Wachovia Bank)
1.260% 03/15/49 (a) 2,105,000 2,105,000
Skeletal Properties LLC,
(LOC: Fifth Third Bank)
1.250% 11/01/14 (a) 2,000,000 2,000,000
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TOTAL CORPORATE BONDS (cost of $141,641,026) 141,641,026
MUNICIPAL BONDS - 12.8%
- ------------------------------------------ -----------------------------------------------------------------------------
ABAG Finance Authority for Nonprofit Corp.,
California Multifamily Revenue:
Bachenheimer Building Apartments,
(LIQ: FNMA)
1.300% 07/15/32 2,100,000 2,100,000
Darling Florist Building Apartments,
(LIQ: FNMA)
1.300% 07/15/35 1,500,000 1,500,000
Fine Arts Building Apartments,
(LIQ: FNMA)
1.300% 07/15/35 3,800,000 3,800,000
California Statewide Communities
Development Authority, Vineyard
Creek Apartments (LOC: FHLB)
1.180% 12/01/36 3,500,000 3,500,000
City of Baltimore MD,
(FSA INS)/(SPA: Bank of America)
1.200% 10/15/22 4,000,000 4,000,000
First Pentecostal Church, Inc.,
Noblesville, IN,
(LOC: Bank One NA)
1.180% 11/01/26 1,660,000 1,660,000
See notes to investment portfolio. 7
December 31, 2003 (Unaudited) Columbia Money Market Fund
MUNICIPAL BONDS - (continued) Par ($) Value ($)
- ------------------------------------------ -----------------------------------------------------------------------------
Iowa Finance Authority, Health Care
Facilities Revenue, St. Luke's Health
System (LOC: GE Capital Corp.)
1.300% 03/01/18 3,120,000 3,120,000
Iowa Finance Authority, Single
Family Revenue, (GNMA/FNMA)
(SPA: Wells Fargo Bank NA)
1.320% 07/01/32 11,230,000 11,230,000
Michigan State University Revenue,
(SPA: Landesbank Hessen)
1.130% 02/15/33 9,850,000 9,850,000
New Jersey Economic Development
Authority State Pension Funding,
(FSA INS)/(SPA: Dexia)
1.250% 02/15/29 4,000,000 4,000,000
San Antonio Educational Facilities
Revenue Corp., St. Anthony Catholic High
School, (LOC: Bank One NA)
1.220% 12/01/23 1,070,000 1,070,000
Texas State Public Finance,
1.140% 02/10/04 23,000,000 23,000,000
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TOTAL MUNICIPAL BONDS (cost of $68,830,000) 68,830,000
U.S. GOVERNMENT AGENCY OBLIGATIONS - 41.5%
- ------------------------------------------ -----------------------------------------------------------------------------
Federal Home Loan Bank:
1.061% 04/25/05 (a) 7,000,000 6,996,296
1.076% 04/19/05 (a) 15,000,000 14,994,183
3.375% 06/15/04 20,000,000 20,203,024
4.875% 04/16/04 10,000,000 10,101,787
Federal Home Loan Mortgage Corp.:
1.040% 05/20/04 (d) 8,500,000 8,465,622
1.040% 05/28/04 (d) 5,000,000 4,978,622
1.110% 10/07/05 (a) 30,000,000 30,000,000
1.125% 11/07/05 (a) 8,000,000 8,000,000
1.145% 04/02/04 (d) 7,655,000 7,632,601
1.180% 06/21/04 (d) 8,700,000 8,650,951
1.270% 07/23/04 (d) 7,712,000 7,656,499
1.290% 08/12/04 (d) 15,000,000 14,879,600
1.300% 01/09/04 (d) 4,500,000 4,498,700
3.000% 07/15/04 10,000,000 10,101,258
3.500% 02/20/04 25,000,000 25,071,820
Federal National Mortgage Association:
1.100% 03/23/05 (d) 25,000,000 24,993,845
1.610% 12/30/04 15,000,000 15,000,000
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TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS (cost of $222,224,808) 222,224,808
8 See notes to investment portfolio.
December 31, 2003 (Unaudited) Columbia Money Market Fund
SHORT-TERM OBLIGATION - 0.3% Par ($) Value ($)
- ------------------------------------------ -----------------------------------------------------------------------------
Repurchase agreement with State Street Bank
Trust & Co., dated 12/31/03, due 01/02/04 at
0.900% collateralized by a U.S. Government
Agency Obligation maturing 11/15/04, market value
$1,438,767 (repurchase proceeds $1,408,070) 1,408,000 1,408,000
-----------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATION (cost of $1,408,000) 1,408,000
Total Investments - 100.5%
(cost of $538,455,504) (e) 538,455,504
Other Assets & Liabilities, Net - (0.5)% (2,713,343)
Net Assets - 100.0% $535,742,161
Notes to Investment Portfolio:
(a) Floating rate note whose interest rate is reset periodically based on an
index. The rate shown reflects the rate in effect at December 31, 2003.
(b) Represents private placement securities exempt from registration by
Section 4(2) of the Securities Act of 1933. These securities generally are
issued to investors who agree that they are purchasing the securities for
investments and not for public distribution. Any resale by the Fund must
be in an exempt transaction, normally to other institutional investors. At
December 31, 2003, the aggregate value of the Fund's private placement
securities were $19,417,996 which represents 3.6% of net assets. None of
these securities were deemed illiquid.
(c) This security is exempt from registration under Rule 144A of the
Securities Act of 1933 and may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
2003, the value of these securities amounted to $34,021,180 which
represents 6.4% of net assets.
(d) These issuers show the rate of discount at time of purchase.
(e) Cost for both financial statements and federal income tax purposes is the
same.
Acronym Name
------- ----
ABAG Association of Bay Area Government
FHLB Federal Home Loan Bank
FNMA Federal National Mortgage Association
FSA Financial Security Assurance
GNMA Government National Mortgage Association
INS Insured
LIQ Liquidity Agreement
LOC Letter of Credit
SPA Stand-by Purchase Agreement
See notes to financial statements. See notes to investment portfolio. 9
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003 (Unaudited) Columbia Money Market Fund
($)
- ------------------------------ -----------------------------------------------------------------------------
Assets: Investments, at cost 538,455,504
Investments, at value 538,455,504
Cash 8,813
Receivable for:
Fund shares sold 2,155,300
Interest 1,540,407
Expense reimbursement due from Investment Advisor 2,367
Deferred Trustees' compensation plan 8,325
Other assets 6,651
-----------
Total Assets 542,177,367
-----------------------------------------------------------------------------
Liabilities: Payable for:
Investments purchased on a delayed delivery basis 1,685,000
Fund shares repurchased 4,097,124
Distributions 6,391
Investment advisory fee 40,834
Administration fee 120,607
Transfer agent fee 316,813
Pricing and bookkeeping fees 41,911
Distribution and service fees 111,009
Deferred Trustees' fees 8,325
Other liabilities 7,192
-----------
Total Liabilities 6,435,206
Net Assets 535,742,161
-----------------------------------------------------------------------------
Composition of Net Assets: Paid-in capital 535,787,438
Overdistributed net investment income (38,887)
Accumulated net realized loss (6,390)
-----------------------------------------------------------------------------
Net Assets 535,742,161
-----------------------------------------------------------------------------
Class A: Net assets 175,474,498
Shares outstanding 175,527,830
Net asset value and offering price per share 1.00(a)
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Class B: Net assets 89,224,405
Shares outstanding 89,256,616
Net asset value and offering price per share 1.00(a)
-----------------------------------------------------------------------------
Class C: Net assets 13,303,840
Shares outstanding 13,308,849
Net asset value and offering price per share 1.00(a)
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Class Z: Net assets 257,739,418
Shares outstanding 257,991,591
Net asset value and offering price per share 1.00
(a) Redemption price per share is equal to net asset value less any
applicable contingent deferred sales charge.
10 See notes to financial statements.
STATEMENT OF OPERATIONS
For the Six Months Ended December 31, 2003 (Unaudited)
Columbia Money Market Fund
($)
- --------------------------------------------------------------------------------------------------------------
Investment Income: Interest 3,487,119
- --------------------------------------------------------------------------------------------------------------
Expenses: Investment advisory fee 759,017
Administration fee 744,505
Distribution fee:
Class B 395,322
Class C 59,886
Service fee:
Class B 131,774
Class C 19,938
Transfer agent fee 1,322,545
Pricing and bookkeeping fees 95,200
Trustees' fees 11,505
Custody fee 8,346
Other expenses 120,670
---------
Total Operating Expenses 3,668,708
Fees and expenses waived or reimbursed by Investment Advisor:
Class A (86,522)
Class B (494,226)
Class C (27,955)
Class Z (112,278)
Fees waived by the Distributor - Class C (47,924)
Custody earnings credit (986)
---------
Net Expenses 2,898,817
---------
Net Investment Income 588,302
See notes to financial statements. 11
STATEMENT OF CHANGES IN NET ASSETS
December 31, 2003 (Unaudited) Columbia Money Market Fund
(Unaudited)
Six Months
Ended Year Ended
December 31, June 30,
Increase (Decrease) in Net Assets: 2003($) 2003 (a)($)
- ------------------------------------------ ------------------------------------------------------------------------------
Operations: Net investment income 588,302 3,538,268
------------------------------------------------------------------------------
Distributions Declared to Shareholders: From net investment income:
Class A (262,217) (1,493,624)
Class B (52,865) (208,504)
Class C (9,072) (55,169)
Class Z (345,568) (1,763,556)
----------------------------
Total Distributions Declared
to Shareholders (669,722) (3,520,853)
------------------------------------------------------------------------------
Share Transactions: Class A:
Subscriptions 157,291,141 910,150,826
Distributions reinvested 240,703 1,302,088
Redemptions (248,624,605) (855,426,770)
----------------------------
Net Increase (Decrease) (91,092,761) 56,026,144
Class B:
Subscriptions 37,234,561 155,689,122
Distributions reinvested 46,362 158,062
Redemptions (58,817,033) (141,953,170)
----------------------------
Net Increase (Decrease) (21,536,110) 13,894,014
Class C:
Subscriptions 22,377,059 120,063,340
Distributions reinvested 7,340 45,279
Redemptions (26,401,659) (123,559,631)
----------------------------
Net Decrease (4,017,260) (3,451,012)
Class Z:
Subscriptions 104,742,531 262,511,827
Proceeds received in connection with merger -- 338,355,029
Distributions reinvested 332,196 1,710,449
Redemptions (136,732,332) (313,151,895)
----------------------------
Net Increase (Decrease) (31,657,605) 289,425,410
Net Increase (Decrease) from
Share Transactions (148,303,736) 355,894,556
Total Increase (Decrease) in Net Assets (148,385,156) 355,911,971
------------------------------------------------------------------------------
(a) Class Z shares commenced operations on July 29, 2002.
12 See notes to financial statements.
STATEMENT OF CHANGES IN NET ASSETS (continued)
December 31, 2003 (Unaudited) Columbia Money Market Fund
(Unaudited)
Six Months
Ended Year Ended
December 31, June 30,
2003($) 2003 (a)($)
- ------------------------------------------ ------------------------------------------------------------------------------
Net Assets: Beginning of period 684,127,317 328,215,346
End of period (including (overdistributed)
undistributed net investment income of
$(38,887) and $42,533, respectively) 535,742,161 684,127,317
------------------------------------------------------------------------------
Changes in Shares: Class A:
Subscriptions 157,291,141 910,150,825
Issued for distributions reinvested 240,703 1,302,088
Redemptions (248,624,605) (855,426,769)
----------------------------
Net Increase (Decrease) (91,092,761) 56,026,144
Class B:
Subscriptions 37,234,561 155,689,123
Issued for distributions reinvested 46,362 158,062
Redemptions (58,817,033) (141,953,166)
----------------------------
Net Increase (Decrease) (21,536,110) 13,894,019
Class C:
Subscriptions 22,377,059 120,063,342
Issued for distributions reinvested 7,340 45,279
Redemptions (26,401,659) (123,559,630)
----------------------------
Net Decrease (4,017,260) (3,451,009)
Class Z:
Subscriptions 104,742,531 262,735,612
Issued in connection with merger -- 338,355,029
Issued for distributions reinvested 332,196 1,710,449
Redemptions (136,732,332) (313,151,894)
----------------------------
Net Increase (Decrease) (31,657,605) 289,649,196
(a) Class Z shares commenced operations on July 29, 2002.
See notes to financial statements. 13
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 (Unaudited) Columbia Money Market Fund
NOTE 1. ORGANIZATION
Columbia Money Market Fund (the "Fund"), a series of Columbia Funds Trust II
(the "Trust"), is a diversified portfolio. The Trust is a Massachusetts business
trust registered under the Investment Company Act of 1940, as amended, as an
open-end management investment company.
INVESTMENT GOAL
The Fund seeks maximum current income consistent with capital preservation and
the maintenance of liquidity.
FUND SHARES
The Fund may issue an unlimited number of shares, and offers four classes of
shares: Class A, Class B, Class C and Class Z. Each share class has its own
sales charge and expense structure.
Class A shares are sold at net asset value. Class A shares are subject to a
1.00% contingent deferred sales charge ("CDSC") on shares sold within eighteen
months on an original purchase of $1 million to $25 million. Class B shares are
subject to a maximum CDSC of 5.00% based upon the holding period after purchase.
Class B shares will convert to Class A shares in a certain number of years after
purchase, depending on the program under which shares were purchased. Class C
shares are subject to a 1.00% CDSC on shares sold within one year after
purchase. Class Z shares are offered continuously at net asset value. There are
certain restrictions on the purchase of Class Z shares, as described in each
Fund's prospectus.
Effective October 13, 2003, the Fund changed its name from Liberty Money Market
Fund to Columbia Money Market Fund. Also on that date, the Trust changed its
name from Liberty Funds Trust II to Columbia Funds Trust II.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America ("GAAP") requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies consistently followed
by the Fund in the preparation of its financial statements.
SECURITY VALUATION
Securities in the Fund are valued utilizing the amortized cost valuation method
permitted in accordance with Rule 2a-7 under the 1940 Act provided certain
conditions are met. This method involves valuing a portfolio security initially
at its cost and thereafter assuming a constant amortization to maturity of any
discount or premium. Investments in other investment companies are valued at net
asset value.
Investments for which market quotations are not readily available are valued at
fair value as determined in good faith under consistently applied procedures
established by and under the general supervision of the Board of Trustees.
SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date. Cost is determined
and gains (losses) are based upon the specific identification method for both
financial statement and federal income tax purposes.
REPURCHASE AGREEMENTS
The Fund may engage in repurchase agreement transactions with institutions that
the Fund's investment advisor has determined are creditworthy. The Fund, through
its custodian, receives delivery of underlying securities collateralizing a
repurchase agreement. Collateral is at least equal, at all times, to the value
of the repurchase obligation including interest. A repurchase agreement
transaction involves certain risks in the event of default or insolvency of the
counterparty. These risks include possible delays or restrictions upon a Fund's
ability to dispose of the underlying securities and a possible decline in the
value of the underlying securities during the period while the Fund seeks to
assert its rights.
INCOME RECOGNITION
Interest income is recorded on the accrual basis. Premium and discount are
amortized and accreted, respectively, on all debt securities.
14
December 31, 2003 (Unaudited) Columbia Money Market Fund
DETERMINATION OF CLASS NET ASSET VALUES
All income, expenses (other than class-specific expenses, as shown on the
Statement of Operations), and realized and unrealized gains (losses), are
allocated to each class of the Fund on a daily basis for purposes of determining
the net asset value of each class. Income and expenses are allocated to each
class based on the settled shares method, while realized and unrealized gains
(losses) are allocated based on relative net assets of each class.
FEDERAL INCOME TAX STATUS
The Fund intends to qualify each year as a "regulated investment company" under
Subchapter M of the Internal Revenue Code, as amended, and will distribute
substantially all of its taxable or tax-exempt income, if any, for its tax year,
and as such will not be subject to federal income taxes. In addition, by
distributing in each calendar year substantially all of its net investment
income, capital gains and certain other amounts, if any, the Fund will not be
subject to federal excise tax. Therefore, no federal income or excise tax
provision is recorded.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly. Net
realized capital gains, if any, are distributed at least annually. Income and
capital gains dividends are determined in accordance with income tax regulations
and may differ from GAAP.
NOTE 3. FEDERAL TAX INFORMATION
The timing and character of income and capital gain distributions are determined
in accordance with income tax regulations, which may differ from GAAP.
Reclassifications are made to the Fund's capital accounts for permanent tax
differences to reflect income and gains available for distribution (or available
capital loss carryforwards) under income tax regulations.
The tax character of distributions paid during the year ended June 30, 2003 was
as follows:
Distributions paid from
Ordinary income: $3,520,853
As of June 30, 2003, the component of distributable earnings on a tax basis was
as follows:
Undistributed
Ordinary
Income
- --------------------------------------------------------------------------------
$77,786
The following capital loss carryforwards as of June 30, 2003, are available to
reduce taxable income arising from future net realized gains on investments, if
any, to the extent permitted by the Internal Revenue Code:
Year of Capital Loss
Expiration Carryforward
- --------------------------------------------------------------------------------
2005 $ 266
- --------------------------------------------------------------------------------
2006 2,756
- --------------------------------------------------------------------------------
2007 1,437
- --------------------------------------------------------------------------------
2008 1,578
- --------------------------------------------------------------------------------
2009 355
- --------------------------------------------------------------------------------
Total $6,392
- --------------------------------------------------------------------------------
Expired capital loss carryforwards are recorded as a reduction of paid-in
capital.
Of the capital loss carryforwards attributable to the Fund, $33,164 ($29,134
expired June 30, 2003, $266 expiring June 30, 2005, $2,756 expiring June 30,
2006, $13 expiring June 30, 2007 and $995 expiring June 30, 2008) was obtained
in the merger with Stein Roe Cash Reserves Fund, of which $4,030 remains (See
note 6).
NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES
INVESTMENT ADVISORY FEE
Columbia Management Advisors, Inc. ("Columbia"), an indirect, wholly-owned
subsidiary of FleetBoston Financial Corporation, is the investment advisor to
the Fund and receives a monthly fee based on the Fund's average daily net assets
at the following annual rates:
Average Daily Net Assets Fee Rate
- --------------------------------------------------------------------------------
First $500 million 0.250%
- --------------------------------------------------------------------------------
Next $500 million 0.225%
- --------------------------------------------------------------------------------
Over $1 billion 0.200%
- --------------------------------------------------------------------------------
For the period July 1, 2003 through October 31, 2003, Columbia waived investment
advisory fees by 0.08% annually of the Fund's average daily net assets.
For the six months ended December 31, 2003, the Fund's annualized effective
investment advisory fee rate was 0.17%.
15
December 31, 2003 (Unaudited) Columbia Money Market Fund
ADMINISTRATION FEE
Columbia provides administrative and other services for a monthly fee based on
the Fund's average daily net assets at the following annual rates:
Average Daily Net Assets Fee Rate
- --------------------------------------------------------------------------------
First $500 million 0.250%
- --------------------------------------------------------------------------------
Next $500 million 0.200%
- --------------------------------------------------------------------------------
Over $1 billion 0.200%
- --------------------------------------------------------------------------------
For the six months ended December 31, 2003, the Fund's annualized effective
administration fee rate was 0.24%.
PRICING AND BOOKKEEPING FEES
Columbia is responsible for providing pricing and bookkeeping services to the
Fund under a pricing and bookkeeping agreement. Under a separate agreement (the
"Outsourcing Agreement"), Columbia has delegated those functions to State Street
Corporation ("State Street"). Columbia pays the total fees collected to State
Street under the Outsourcing Agreement.
Under its pricing and bookkeeping agreement with the Fund, Columbia receives
from the Fund an annual flat fee of $10,000 paid monthly, and in any month that
the Fund's average daily net assets exceed $50 million, an additional monthly
fee. The additional fee rate is calculated by taking into account the fees
payable to State Street under the Outsourcing Agreement. This rate is applied to
the average daily net assets of the Fund for that month. The Fund also pays
additional fees for pricing services. For the six months ended December 31,
2003, the annualized effective pricing and bookkeeping fee rate was 0.031%.
TRANSFER AGENT FEE
Columbia Funds Services, Inc. (the "Transfer Agent"), formerly Liberty Fund
Services, Inc., an affiliate of Columbia, provides shareholder services for an
annual fee of $33.50 per open account. The Transfer Agent also receives
reimbursement for certain out-of-pocket expenses.
Prior to November 1, 2003, the Transfer Agent was entitled to receive a monthly
transfer agent fee at the annual rate of 0.06% of the Fund's average daily net
assets plus flat-rate charges based on the number of shareholder accounts and
transactions. For the six months ended December 31, 2003, the annualized
effective transfer agent fee rate was 0.25%. The Transfer Agent was also
entitled to receive reimbursement for certain out-of-pocket expenses.
Effective October 13, 2003 Liberty Funds Services, Inc. changed its name to
Columbia Funds Services, Inc.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia,
is the principal underwriter of the Fund. Prior to October 13, 2003, Columbia
Funds Distributor, Inc. was known as Liberty Funds Distributor, Inc. For the six
months ended December 31, 2003, the Distributor has received CDSC of $91,732,
$371,487 and $9,886 on Class A, Class B and Class C share redemptions,
respectively.
The Fund has adopted a 12b-1 plan (the "Plan") which requires the payment of a
monthly service fee to the Distributor at the annual rate of 0.25% of the
average daily net assets of the Fund attributable to Class B and Class C shares.
The Plan also requires the payment of a monthly distribution fee to the
Distributor at the annual rate of 0.75% of the average daily net assets
attributable to Class B and Class C shares only. The Distributor has voluntarily
agreed to waive a portion of the Class C share distribution fee so that it will
not exceed 0.15% annually. In addition, Columbia has voluntarily agreed to waive
a portion of the Class B and Class C share distribution fees.
The CDSC and the fees received from the Plan are used principally as repayment
to the Distributor for amounts paid by the Distributor to dealers who sold such
shares.
CUSTODY CREDITS
The Fund has an agreement with its custodian bank under which custody fees may
be reduced by balance credits. The Fund could have invested a portion of the
assets utilized in connection with the expense offset arrangement in an
income-producing asset if it had not entered into such an agreement.
FEES PAID TO OFFICERS AND TRUSTEES
The Fund pays no compensation to its officers, all of whom are employees of
Columbia or its affiliates.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
16
December 31, 2003 (Unaudited) Columbia Money Market Fund
NOTE 5. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES
LEGAL PROCEEDINGS
Columbia, the Distributor and certain of their affiliates (collectively, "the
Columbia Group") have received information requests and subpoenas from various
regulatory authorities, including the Securities and Exchange Commission ("SEC")
and the New York Attorney General, in connection with their investigations of
late trading and market timing in mutual funds. The Columbia Group has not
uncovered any instances where Columbia or the Distributor was knowingly involved
in late trading of mutual fund shares. The Columbia Group has identified a
limited number of investors who had informal arrangements for trading certain
Columbia Fund shares between 1998 and 2003. A substantial majority of the
trading had ended by October 2002. None of these arrangements exists today.
Information relating to those trading arrangements has been supplied to various
regulatory authorities. To the extent that any Columbia Fund, whose shares were
involved in those trading activities, was harmed by them, the Columbia Group has
undertaken to reimburse such fund.
The SEC staff has issued notices to the effect that it has made a preliminary
determination to recommend that the SEC bring civil enforcement actions,
including injunctive proceedings, against Columbia and the Distributor, alleging
that they have violated certain provisions of the federal securities laws. The
Columbia Group believes that those allegations are based principally on the
trading arrangements referred to above. Columbia and the Distributor are engaged
in discussions with the SEC staff in an effort to reach a satisfactory
resolution of these matters. However, there can be no assurance that such a
resolution will be reached. Any potential resolution of these matters may
include, but not be limited to, sanctions, financial penalties, damages or
injunctions regarding Columbia or the Distributor, and structural changes in the
conduct of their business.
Although the Columbia Group does not believe that these regulatory developments
or their resolution will have a material adverse effect on the Columbia Funds,
or on the ability of Columbia and the Distributor to provide services to the
Columbia Funds, there can be no assurance that these matters or any adverse
publicity or other developments resulting from them will not result in increased
redemptions or reduced sales of Columbia Fund shares, which could increase
transactions costs or operating expenses, or other consequences for the Columbia
Funds.
NOTE 6. BUSINESS COMBINATIONS AND MERGERS
FUND MERGERS
As of the end of business on July 26, 2002, the net assets of Stein Roe Cash
Reserves Fund were transferred to the Fund in a tax-free exchange and
shareholders of Stein Roe Cash Reserves Fund received shares of the Fund in
exchange for their shares as follows:
Net Assets of the Stein Roe Cash
Shares Issued Reserves Fund Received
- --------------------------------------------------------------------------------
338,355,029 $338,355,029
- --------------------------------------------------------------------------------
Net Assets of
Stein Roe Cash Net Assets of
Net Assets Reserves Fund the Fund
of the Fund Immediately Immediately
Prior to Prior to After
Combination Combination Combination
- --------------------------------------------------------------------------------
$354,468,496 $338,355,029 $692,823,525
- --------------------------------------------------------------------------------
CHANGE IN FUND STRUCTURE
Prior to July 29, 2002, the Fund invested substantially all of its assets in the
SR&F Cash Reserves Portfolio (the "Portfolio") as part of a master/feeder
structure. The Portfolio allocated income, expenses, realized and unrealized
gains (losses) to each investor on a daily basis, based on methods in compliance
with the Internal Revenue Service. Prior to the reorganization described above,
the Fund's pro-rata share of the net assets of the Portfolio were distributed to
the Fund based on allocation methods in compliance with the Internal Revenue
Service.
17
FINANCIAL HIGHLIGHTS
Columbia Money Market Fund
Selected data for a share outstanding throughout each period is as follows:
(Unaudited)
Six Months
Ended Year Ended June 30,
December 31, ------------------------------------------------------------------
Class A Shares 2003 2003 (a) 2002 (a) 2001 (a) 2000 (a) 1999 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income 0.001(b) 0.006(b) 0.015 0.052 0.052 0.046
- ------------------------------------------------------------------------------------------------------------------------------------
Less Distributions Declared to Shareholders:
From net investment income (0.001) (0.006) (0.015) (0.052) (0.052) (0.046)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (c) 0.12%(d)(e) 0.60% 1.56% 5.34%(e) 5.26%(e) 4.70%(e)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets/Supplemental Data:
Expenses 0.91%(f)(g) 0.89%(f) 1.01% 0.70% 0.65%(f) 0.68%(f)
Net investment income 0.22%(f)(g) 0.61%(f) 1.54% 5.31% 5.13%(f) 4.61%(f)
Waiver/reimbursement 0.08%(g) -- -- 0.19% 0.19% 0.19%
Net assets, end of period (000's) $175,474 $266,602 $210,616 $189,822 $178,678 $157,790
- ------------------------------------------------------------------------------------------------------------------------------------
(a) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the SR&F Cash Reserves Portfolio, prior to the merger.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(d) Not annualized.
(e) Had the Advisor/Administrator and/or Distributor not waived a portion of
expenses, total return would have been reduced.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
18
Columbia Money Market Fund
Selected data for a share outstanding throughout each period is as follows:
(Unaudited)
Six Months
Ended Year Ended June 30,
December 31, ------------------------------------------------------------------
Class B Shares 2003 2003 (a) 2002 (a) 2001 (a) 2000 (a) 1999 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income 0.001(b) 0.002(b) 0.007 0.042 0.041 0.036
- ------------------------------------------------------------------------------------------------------------------------------------
Less Distributions Declared to Shareholders:
From net investment income (0.001) (0.002) (0.007) (0.042) (0.041) (0.036)
------- -------- ------- ------- ------- -------
Net Asset Value, End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (c)(d) 0.05%(e) 0.17% 0.73% 4.31% 3.99% 3.68%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets/Supplemental Data:
Expenses 1.05%(f)(g) 1.41%(f) 1.84% 1.70% 1.65%(f) 1.68%(f)
Net investment income 0.07%(f)(g) 0.10%(f) 0.71% 4.31% 4.13%(f) 3.61%(f)
Waiver/reimbursement 0.94%(g) 0.56% 0.17% 0.19% 0.19% 0.19%
Net assets, end of period (000's) $89,224 $110,776 $96,827 $80,879 $69,214 $93,821
- ------------------------------------------------------------------------------------------------------------------------------------
(a) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the SR&F Cash Reserves Portfolio, prior to the merger.
(b) Per share data was calculated using average shares outstanding for the
period.
(c) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(d) Had the Advisor/Administrator and/or Distributor not waived a portion of
expenses, total return would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
19
Columbia Money Market Fund
Selected data for a share outstanding throughout each period is as follows:
(Unaudited)
Six Months
Ended Year Ended June 30,
December 31, -----------------------------------------------------------------
Class C Shares 2003 2003 (a) 2002 (a) 2001 (a) 2000 (a) 1999 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income 0.001(b) 0.003(b) 0.011 0.048 0.048 0.042
- ------------------------------------------------------------------------------------------------------------------------------------
Less Distributions Declared to Shareholders:
From net investment income (0.001) (0.003) (0.011) (0.048) (0.048) (0.042)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (c)(d) 0.06%(e) 0.27% 1.16% 4.93% 4.71% 4.30%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets/Supplemental Data:
Expenses 1.04%(f)(g) 1.23%(f) 1.41% 1.10% 1.05%(f) 1.08%(f)
Net investment income 0.09%(f)(g) 0.30%(f) 1.14% 4.91% 4.73%(f) 4.21%(f)
Waiver/reimbursement 0.95%(g) 0.66% 0.60% 0.79% 0.79% 0.79%
Net assets, end of period (000's) $13,304 $17,324 $20,772 $10,010 $ 3,950 $ 2,194
- ------------------------------------------------------------------------------------------------------------------------------------
(a) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the SR&F Cash Reserves Portfolio, prior to the merger.
(b) Per share data was calculated using average shares outstanding for the
period.
(c) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(d) Had the Advisor/Administrator and/or Distributor not waived a portion of
expenses, total return would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
20
Columbia Money Market Fund
Selected data for a share outstanding throughout each period is as follows:
(Unaudited)
Six Months Period
Ended Ended
December 31, June 30,
Class Z Shares 2003 2003 (a)
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 1.000 $ 1.000
- --------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (b) 0.001 0.006
- --------------------------------------------------------------------------------
Less Distributions Declared to Shareholders:
From net investment income (0.001) (0.006)
-------- --------
Net Asset Value, End of Period $ 1.000 $ 1.000
- --------------------------------------------------------------------------------
Total return (c)(d) 0.13%(e) 0.55%
- --------------------------------------------------------------------------------
Ratios to Average Net Assets/Supplemental Data:
Expenses (f)(g) 0.91% 0.89%
Net investment income (f)(g) 0.22% 0.61%
Waiver/reimbursement (g) 0.08% --
Net assets, end of period (000's) $257,739 $289,425
- --------------------------------------------------------------------------------
(a) Class Z shares were initially offered on July 29, 2002. Per share data and
total return reflect activity from that date.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested.
(d) Not annualized.
(e) Had the Advisor/Administrator not waived a portion of expenses, total
return would have been reduced.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
21
IMPORTANT INFORMATION ABOUT THIS REPORT
Columbia Money Market Fund
TRANSFER AGENT
Columbia Funds Services, Inc.
P.O. Box 8081
Boston MA 02266-8081
800.345.6611
DISTRIBUTOR
Columbia Funds Distributor, Inc.
One Financial Center
Boston MA 02111
INVESTMENT ADVISOR
Columbia Management Advisors, Inc.
100 Federal Street
Boston MA 02111
The fund mails one shareholder report to each shareholder address. If you would
like more than one report, please call shareholder services at 800-345-6611 and
additional reports will be sent to you.
This report has been prepared for shareholders of Columbia Money Market Fund.
This report may also be used as sales literature when preceded or accompanied by
the current prospectus which provides details of sales charges, investment
objectives and operating policies of the fund and with the most recent copy of
the Columbia Funds Performance Update.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to its portfolio securities is available (i) without
charge, upon request, by calling 800-345-6611 and (ii) on the Securities and
Exchange Commission's website at http://www.sec.gov.
22
Columbia Funds
Columbia Money Market Fund
--------------------------------------------------
Large Growth Columbia Common Stock
Columbia Growth
Columbia Growth Stock
Columbia Large Cap Growth
Columbia Tax-Managed Growth
Columbia Tax-Managed Growth II
Columbia Young Investor
--------------------------------------------------
Large Value Columbia Disciplined Value
Columbia Growth & Income
Columbia Large Cap Core
Columbia Tax-Managed Value
--------------------------------------------------
Midcap Growth Columbia Acorn Select
Columbia Mid Cap Growth
Columbia Tax-Managed Aggressive Growth
--------------------------------------------------
Midcap Value Columbia Dividend Income
Columbia Mid Cap
Columbia Strategic Investor
--------------------------------------------------
Small Growth Columbia Acorn
Columbia Acorn USA
Columbia Small Company Equity
--------------------------------------------------
Small Value Columbia Small Cap
Columbia Small-Cap Value
--------------------------------------------------
Balanced Columbia Asset Allocation
Columbia Balanced
Columbia Liberty Fund
--------------------------------------------------
Specialty Columbia Real Estate Equity
Columbia Technology
Columbia Utilities
--------------------------------------------------
Taxable Fixed-Income Columbia Contrarian Income
Columbia Corporate Bond
Columbia Federal Securities
Columbia Fixed Income Securities
Columbia High Yield
Columbia High Yield Opportunities
Columbia Income
Columbia Intermediate Bond
Columbia Intermediate Government Income
Columbia Quality Plus Bond
Columbia Short Term Bond
Columbia Strategic Income
--------------------------------------------------
Floating Rate Columbia Floating Rate
Columbia Floating Rate Advantage
--------------------------------------------------
Tax Exempt Columbia High Yield Municipal
Columbia Intermediate Tax-Exempt Bond
Columbia Managed Municipals
Columbia National Municipal Bond
Columbia Tax-Exempt
Columbia Tax-Exempt Insured
23
Columbia Money Market Fund
--------------------------------------------------
Single State Tax Exempt
Columbia California Tax-Exempt
Columbia Connecticut Intermediate Municipal Bond
Columbia Connecticut Tax-Exempt
Columbia Florida Intermediate Municipal Bond
Columbia Massachusetts Intermediate Municipal Bond
Columbia Massachusetts Tax-Exempt
Columbia New Jersey Intermediate Municipal Bond
Columbia New York Intermediate Municipal Bond
Columbia New York Tax-Exempt
Columbia Oregon Municipal Bond
Columbia Pennsylvania Intermediate Municipal Bond
Columbia Rhode Island Intermediate Municipal Bond
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Money Market Columbia Money Market
Columbia Municipal Money Market
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International/Global Columbia Acorn International
Columbia Acorn International Select
Columbia Europe
Columbia Global Equity
Columbia International Stock
Columbia Newport Asia Pacific
Columbia Newport Greater China
Columbia Newport Tiger
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Index Funds Columbia Large Company Index
Columbia Small Company Index
Columbia U.S. Treasury Index
Columbia funds are offered only by prospectus. Please see your financial advisor
for a prospectus, which describes in detail fund objectives, investment
policies, risks, sales charges, fees, liquidity and other matters of interest.
Please read the prospectus carefully before you invest or send money.
For complete product information on any Columbia fund, visit our website at
www.columbiafunds.com.
Columbia Management Group and Columbia Management refer collectively to the
various investment advisory subsidiaries of Columbia Management Group, including
Columbia Management Advisors, Inc., the registered investment advisor, and to
Columbia Funds Distributor, Inc.
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[Photo of hands on keyboard]
eDelivery
Help your fund reduce printing and postage costs! Elect to get your shareholder
reports by electronic delivery. With Columbia's eDelivery program, you receive
an e-mail message when your shareholder report becomes available online. If your
fund account is registered with Columbia Funds, you can sign up quickly and
easily on our website at www.columbiafunds.com.
Please note -- if you own your fund shares through a financial institution,
contact the institution to see if it offers electronic delivery. If you own your
fund shares through a retirement plan, electronic delivery may not be available
to you.
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Columbia Money Market Fund Semiannual Report, December 31, 2003 PRSRT STD
U.S. Postage
PAID
Holliston, MA
Permit NO. 20
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[LOGO] ColumbiaFunds
A Member of Columbia Management Group
(C) 2004 Columbia Funds Distributor, Inc.
One Financial Center, Boston, MA 02111-2621
800.345.6611 www.columbiafunds.com
757-03/735Q-1203 (02/04) 04/0217
ITEM 2. CODE OF ETHICS.
Note applicable at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Note applicable at this time.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Note applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. RESERVED.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable at this time.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer, based on their evaluation of the registrant's disclosure controls
and procedures as of a date within 90 days of the filing of this report,
have concluded that such controls and procedures are adequately designed to
ensure that information required to be disclosed by the registrant in Form
N-CSR is accumulated and communicated to the registrant's management,
including the principal executive officer and principal financial officer,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's last fiscal half-year (the
registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 11. EXHIBITS.
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR: Not
applicable at this time.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) Columbia Funds Trust II
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By (Signature and Title) /s/ J. Kevin Connaughton
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J. Kevin Connaughton, President and Treasurer
Date March 4, 2004
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ J. Kevin Connaughton
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J. Kevin Connaughton, President and Treasurer
Date March 4, 2004
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