UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-09095 --------------------- Columbia Funds Trust IX ------------------------------------------------------------------------------ (Exact name of registrant as specified in charter) One Financial Center, Boston, Massachusetts 02111 - ------------------------------------------------------------------------------ (Address of principal executive offices) (Zip code) Russell L. Kane, Esq. Columbia Management Group, Inc. One Financial Center Boston, MA 02111 - ------------------------------------------------------------------------------ (Name and address of agent for service) Registrant's telephone number, including area code: 1-617-426-3363 ------------------- Date of fiscal year end: June 30, 2004 ------------------ Date of reporting period: December 31, 2003 ----------------- 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 HIGH YIELD MUNICIPAL FUND SEMIANNUAL REPORT DECEMBER 31, 2003 photo of: woman in playground WE ARE COLUMBIA FUNDS! INSIDE - Management's discussion of the name changes effective October 13, 2003 PRESIDENT'S MESSAGE Columbia High Yield Municipal Fund photo of: Joseph R. 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 High Yield Municipal Fund was changed to Columbia High Yield Municipal 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 Maureen Newman 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 Table of Contents Fund Profile ................................1 Performance Information .....................2 Economic Update .............................3 Portfolio Manager's Report ..................4 Financial Statements ........................6 Investment Portfolio .....................7 Statement of Assets and Liabilities .....34 Statement of Operations .................35 Statement of Changes in Net Assets ......36 Notes to Financial Statements ...........38 Financial Highlights ....................44 Important Information About This Report ..........................48 Columbia Funds .............................49 Economic and market conditions change frequently. There is no assurance that the trends described in this report will continue or commence. Not FDIC Insured o May Lose Value o No Bank Guarantee FUND PROFILE Columbia High Yield Municipal 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. QUALITY BREAKDOWN AS OF 12/31/03 (%) AAA 24.6 AA 1.5 A 11.0 BBB 18.6 BB 4.7 B 0.7 CCC 1.0 CC 0.3 Non-rated 33.3 Cash equivalent 4.3 [bar chart] MATURITY BREAKDOWN AS OF 12/31/03 (%) 0-1 years 0.2 1-3 years 0.6 3-5 years 5.3 5-7 years 5.3 7-10 years 7.2 10-15 years 18.8 15-20 years 21.2 20-25 years 17.7 25 years and over 19.4 Cash equivalent 4.3 Quality and maturity breakdowns are calculated as a percentage of total investments including short term obligations. Ratings shown in the quality breakdown represent the highest rating assigned to a particular bond by one of the following nationally-recognized rating agencies: Standard & Poor's Corporation, Moody's Investors Service, Inc. or Fitch Investors Service, Inc. Maturity breakdown is based on each security's effective maturity, which reflects pre-refundings, mandatory puts and other conditions that affect a bond's maturity. (C) 2004 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. The Morningstar Style Box(TM) reveals a fund's investment strategy. For equity funds the vertical axis shows the market capitalization of the stocks owned and the horizontal axis shows investment style (value, blend or growth). For fixed-income funds the vertical axis shows the average credit quality of the bonds owned, and the horizontal axis shows interest rate sensitivity as measured by a bond's duration (short, intermediate or long). All of these numbers are drawn from the data most recently provided by the fund and entered into Morningstar's database as of month-end. Although the data are gathered from reliable sources, Morningstar cannot guarantee completeness and accuracy. As of 12/31/2003. sidebar: SUMMARY o For the six-month period ended December 31, 2003, the fund's class A shares (without sales charge) returned 2.48%. o The fund beat the 1.45% return of its benchmark, the Lehman Brothers Municipal Bond Index, but fell behind the 3.08% average return of its peer group, the Lipper Current High Yield Municipal Debt Fund Category. o The fund benefited from strong security selection and high income, but we believe it was hindered by below-average stakes in the top performing airlines and tobacco sectors. OBJECTIVE Seeks high level of total return consisting of current income exempt from federal income tax and opportunities for capital appreciation TOTAL NET ASSETS $451.4 million artwork: 2 arrows up LEHMAN BROTHERS MUNICIPAL CLASS A SHARES BOND INDEX 2.48% 1.45% style box: Long Maturity; Med Quality 1 PERFORMANCE INFORMATION Columbia High Yield Municipal Fund Value of a $10,000 investment 01/01/94 - 12/31/03 mountain chart: Class A shares Class A Shares Lehman Brothers without with Municipal sales charge sale charge Bond Index 01/1994 $10,000 $9,525 $10,000 10,098 9,618 10,114 9,889 9,419 9,852 9,488 9,038 9,451 9,553 9,099 9,531 9,677 9,218 9,614 9,681 9,221 9,556 9,798 9,333 9,731 9,837 9,370 9,765 9,726 9,264 9,621 9,587 9,132 9,450 9,413 8,966 9,279 9,598 9,142 9,483 9,946 9,473 9,754 10,182 9,699 10,038 10,270 9,782 10,153 10,284 9,796 10,166 10,597 10,093 10,490 10,510 10,011 10,399 10,610 10,106 10,497 10,719 10,210 10,631 10,779 10,267 10,698 10,955 10,434 10,853 11,159 10,629 11,033 11,298 10,761 11,139 11,375 10,835 11,224 11,282 10,746 11,147 11,154 10,624 11,005 11,121 10,592 10,974 11,137 10,608 10,969 11,231 10,697 11,089 11,287 10,751 11,189 11,314 10,777 11,186 11,469 10,924 11,343 11,596 11,046 11,471 11,782 11,222 11,681 11,804 11,244 11,632 11,834 11,272 11,654 11,929 11,362 11,761 11,824 11,262 11,605 11,912 11,346 11,702 12,097 11,522 11,879 12,229 11,648 12,006 12,519 11,924 12,339 12,462 11,870 12,223 12,586 11,988 12,368 12,666 12,064 12,447 12,755 12,149 12,521 12,932 12,318 12,704 13,056 12,436 12,835 13,077 12,456 12,838 13,082 12,461 12,850 13,054 12,434 12,792 13,223 12,595 12,994 13,248 12,619 13,045 13,285 12,654 13,078 13,446 12,808 13,280 13,548 12,905 13,446 13,529 12,887 13,446 13,577 12,932 13,493 13,615 12,968 13,527 13,732 13,080 13,688 13,696 13,046 13,628 13,736 13,083 13,647 13,785 13,131 13,681 13,813 13,157 13,602 13,671 13,021 13,406 13,710 13,059 13,454 13,575 12,930 13,346 13,554 12,910 13,352 13,370 12,735 13,208 13,457 12,818 13,348 13,322 12,689 13,247 13,216 12,588 13,189 13,323 12,690 13,342 13,503 12,861 13,633 13,478 12,838 13,553 13,407 12,770 13,482 13,644 12,996 13,839 13,802 13,147 14,032 13,986 13,322 14,248 13,937 13,275 14,174 14,016 13,351 14,328 14,051 13,384 14,437 14,247 13,570 14,794 14,325 13,645 14,940 14,335 13,654 14,988 14,430 13,744 15,123 14,281 13,603 14,960 14,415 13,731 15,121 14,538 13,847 15,222 14,791 14,088 15,448 15,177 14,456 15,703 15,010 14,297 15,649 15,160 14,440 15,835 15,072 14,356 15,702 14,970 14,259 15,553 15,134 14,415 15,822 15,287 14,561 16,012 15,056 14,341 15,698 15,342 14,614 16,004 15,396 14,665 16,102 15,545 14,807 16,273 15,668 14,924 16,483 15,792 15,042 16,681 15,972 15,213 17,046 15,662 14,918 16,763 15,733 14,985 16,692 15,915 15,159 17,045 15,877 15,123 17,002 16,098 15,333 17,240 16,103 15,338 17,250 16,267 15,494 17,364 16,574 15,787 17,771 16,571 15,784 17,696 16,167 15,399 17,077 16,278 15,505 17,205 16,609 15,820 17,710 16,629 15,839 17,622 16,858 16,057 17,805 12/2003 16,976 16,165 17,951 All results shown assume reinvestment of distributions. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. The Lehman Brothers Municipal Bond Index is a unmanaged index considered representative of the broad market for investment-grade, tax-exempt bonds with a maturity of at least one year, issued on or after January 1, 1991, with deal size greater than $50 million and a maturity size of at least $5 million, and having a fixed rate coupon. Unlike the fund, indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%) SHARE CLASS A B C Z - ------------------------------------------------------------------------------------------------------------------ INCEPTION 7/31/00 7/15/02 7/15/02 3/5/84 - ------------------------------------------------------------------------------------------------------------------ SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT - ------------------------------------------------------------------------------------------------------------------ 6-month cumulative 2.48 -2.38 2.09 -2.91 2.17 1.17 2.59 1-year 6.69 1.65 5.89 0.89 6.05 5.05 6.93 5-year 4.52 3.50 4.28 3.96 4.33 4.33 4.71 10-year 5.43 4.92 5.32 5.32 5.34 5.34 5.53 All results shown assume reinvestment of distributions. The "with sales charge" returns include the maximum 4.75% charge for class A shares, the appropriate class B contingent deferred sales charge for the holding period after purchase as follows: through first year - 5%, second year - 4%, third year - 3%, fourth year - 3%, fifth year - 2%, sixth year - 1%, thereafter - 0%, and the class C contingent deferred sales charge of 1% for the first year only. Performance for different share classes will vary based on differences in sales charges and fees associated with each class. Performance results reflect any voluntary waivers or reimbursement of fund expenses by the advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. Class A share (newer class shares) performance information includes returns of the fund's class Z shares (the oldest existing fund class) for periods prior to the inception of the newer class shares. Class B and C share (newer class shares) performance information includes returns of the fund's class A shares for periods prior to the inception of the newer class shares. These class A and Z share returns are not restated to reflect any expense differential (e.g., rule 12b-1 fees) between class A and class Z shares and the newer class shares. Had the expense differential been reflected, the returns for the periods prior to the inception of class A, class B and class C shares would have been lower. sidebar: PERFORMANCE OF A $10,000 INVESTMENT 01/01/94 - 12/31/03 ($) sales charge: without with Class A 16,976 16,165 Class B 16,787 16,787 Class C 16,824 16,824 Class Z 17,132 n/a Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. 2 ECONOMIC UPDATE Columbia High Yield Municipal 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 Reserves 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 in July 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 negative 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. 3 PORTFOLIO MANAGER'S REPORT Columbia High Yield Municipal Fund For the six-month period ended December 31, 2003, class A shares of Columbia High Yield Municipal Fund returned 2.48% without sales charge. The fund beat the 1.45% return of its benchmark, the Lehman Brothers Municipal Bond Index, as high-yield municipal bonds outpaced the higher-quality issues in the index. The fund, however, came out behind the 3.08% average return of its peer group, the Lipper Current High Yield Municipal Debt Fund Category.1 We believe the fund's below-average stakes in the airline and tobacco sectors, which were strong performers, hampered returns somewhat. STRONG DEMAND FOR HIGH-YIELD MUNICIPAL BONDS High-yield municipal bonds had the wind at their backs during the period, as an improving economy and low interest rates bolstered investor demand. A brighter economic outlook also helped credit quality for many issuers, in turn boosting bond prices. High-yield municipal bonds, which are less sensitive to interest rate changes than other bond sectors, held up particularly well in July as interest rates rose sharply and taxable bond prices sank. For the six-month period, high-yield municipal bonds beat both Treasuries and insured municipal bonds. POSITIVE SECURITY SELECTION AND HIGH INCOME The fund benefited from good security selection in a number of sectors. Standouts included bonds issued by HealthEast, a Minnesota hospital, which rallied as financial performance improved. We later trimmed our position to 0.3% of net assets.2 The fund also owned several airline bonds, including bonds issued by US Airways and American Airlines (0.3% and 0.1% of net assets, respectively) that rallied nicely during the period. The fund's relatively high income further aided performance. Among its higher-yielding holdings was Seminole Tribe Convention Center (0.6% of net assets), a hotel and newly renovated casino in Florida. In addition, inverse floaters--bonds with coupons (or stated interest rates) that move in the opposite direction of short-term interest rates--were a good source of income for the fund. LESS FAVORABLE CONDITIONS FOR MULTI-FAMILY HOUSING AND NURSING HOME BONDS Multi-family housing bonds, which are basically bonds issued to fund the construction of apartment buildings, did poorly as low mortgage rates enabled many renters to buy their own homes. With occupancy rates falling, issuers found they had little ability to raise rents. We sold one bond, but kept the rest, expecting that a lack of new apartment construction would eventually help the group. Bonds issued by Metro Health also hurt performance due to the bankruptcy of the nursing home. We sold one of the two issues we owned, reducing the position to less than 0.1% of net assets by the end of the period. 1 Lipper Inc., a widely respected data provider in the industry, calculates an average total return for mutual funds with similar investment objectives as the fund. 2 Holdings are disclosed as of 12/31/03, and are subject to change. sidebar: NET ASSET VALUE PER SHARE AS OF 12/31/03 ($) Class A 11.26 Class B 11.26 Class C 11.26 Class Z 11.26 DISTRIBUTIONS DECLARED PER SHARE 7/1/03- 12/31/03 ($) Class A 0.26 Class B 0.22 Class C 0.23 Class Z 0.28 A portion of the fund's income may be subject to the alternative minimum tax. The fund may at times purchase municipal securities at a discount. Some or all of this discount may be included in the fund's ordinary income, and is taxable when distributed. SEC YIELDS AS OF 12/31/03 (%) Class A 4.83 Class B 4.27 Class C 4.44 Class Z 5.28 The 30-day SEC yields reflect the portfolio's earning power net of expenses, expressed as an annualized percentage of the public offering price per share. TAXABLE-EQUIVALENT SEC YIELDS AS OF 12/31/03 (%) Class A 7.43 Class B 6.57 Class C 6.83 Class Z 8.12 Taxable-equivalent SEC yields are based on the combined maximum effective 35.0% federal and state income tax rate. This tax rate does not reflect the phase out of exemption or the reduction of otherwise allowable deductions that occur when adjusted gross income exceeds certain levels. 4 Columbia High Yield Municipal Fund INCREASED EXPOSURE TO ECONOMICALLY SENSITIVE SECTORS As new assets flowed into the fund, we added income by buying lower-quality bonds. Our focus was on bonds that should have the potential to do well in an economic recovery, including debt issued by paper companies such as Weyerhauser and International Paper (0.6% and 0.5% of net assets, respectively). We also boosted the fund's stake in electric utilities bonds that were trading at attractive prices. In this regard, we bought bonds issued by Tampa Electric and SCANA in South Carolina (0.3% and 0.4% of net assets, respectively). We made some changes to our health care mix--trimming nursing home bonds, adding new hospital bonds and eliminating debt issued by Pascack Valley Hospital, a New Jersey hospital with credit concerns. If the economy continues to improve gradually, with slowly rising interest rates and a relatively decent supply of bonds, it would create a favorable environment for high-yield municipal bonds. With that scenario in mind, we plan to increase the fund's exposure to economically sensitive sectors while maintaining its focus on generating high current income. photo of: Maureen G. Newman Maureen G. Newman has managed the Columbia High Yield Municipal Fund since November 1998. /s/ Maureen G. Newman Tax-exempt investing offers current tax-free income, but it also involves certain risks. Investing in high-yield bonds involves greater risk of loss due to credit deterioration than higher-quality bonds. The value of the fund will be affected by interest rate changes and the creditworthiness of issues held in the fund. The manager seeks to identify opportunities and attempts to react quickly to market changes. callout If the economy continues to improve gradually, with slowly rising interest rates and a relatively decent supply of bonds, it would create a favorable environment for high yield municipal bonds. 5 FINANCIAL STATEMENTS December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund A GUIDE TO UNDERSTANDING YOUR FUND'S FINANCIAL STATEMENTS INVESTMENT A list of all of the fund's holdings and their market value as of PORTFOLIO 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). STATEMENT OF This statement shows the fund's net assets and share price for ASSETS AND each share class. Net assets are calculated by subtracting all LIABILITIES 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. STATEMENT OF This statement details both the type of income earned by the OPERATIONS 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. STATEMENT OF This statement shows how the fund's net assets were affected CHANGES IN by its operations results, distributions to shareholders and NET ASSETS changes in the number of fund shares. The Statement of Changes in Net Assets also reconciles changes in the number of shares outstanding. FINANCIAL The financial highlights provide an overview of the fund's HIGHLIGHTS 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. The financial highlights also detail the fund's portfolio turnover rate, which is a measure of trading activity. A separate table is provided for each share class. NOTES TO These notes disclose information regarding certain fund FINANCIAL background information, significant accounting policies of the STATEMENTS fund, including security valuation and income accruals and related party transactions. 6 INVESTMENT PORTFOLIO December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - 93.4% EDUCATION - 4.7% EDUCATION - 3.0% Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- CA California Statewide Communities Development Authority: Crossroads School, Series 1998, 6.000% 08/01/28 1,005,000 1,046,446 San Francisco Art Institute, Series 2002, 7.375% 04/01/32 750,000 767,767 CA Pasadena Community College District, Election of 2002, Series 2003 A, 5.000% 06/01/19 1,290,000 1,377,823 IL State Development Finance Authority, Latin School of Chicago Project, Series 1998, 5.650% 08/01/28 1,725,000 1,747,511 IL University of Illinois, Certificate of Participation, Utilities Infrastructure Projects, Series 2001 A, 5.500% 08/15/16 1,425,000 1,576,990 MA Health & Educational Facilities Authority, Massachusetts Institute of Technology, Series 2002 K, 5.500% 07/01/32 2,160,000 2,487,780 MA State Development Finance Agency, Western New England College, Series 2002, 6.125% 12/01/32 300,000 306,915 NH Business Finance Authority, Proctor Academy Project, Series 1998 A, 5.400% 06/01/17 1,000,000 1,030,560 OH University of Cincinnati, Series 2003 C, 5.000% 06/01/21 1,000,000 1,056,080 WV State University, Series 2000 A: (a) 04/01/19 1,250,000 602,800 (a) 04/01/25 2,750,000 906,345 VT State Education & Health Buildings Agency, Vermont Law School Project, Series 2003 A, 5.500% 01/01/33 500,000 481,100 ----------------------------------------------------------------------------- Education Total 13,388,117 STUDENT LOAN - 1.7% - ------------------------------------------ ----------------------------------------------------------------------------- OH Student Loan Funding Corporation, Series 1992 B, 6.750% 01/01/07 1,075,000 1,077,515 NE Nebhelp, Inc., Series 1993 A-6, 6.450% 06/01/18 4,000,000 4,393,480 See notes to investment portfolio. 7 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) EDUCATION - (CONTINUED) STUDENT LOAN - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- NM State Educational Assistance Foundation, Series 1996 A-2, 6.650% 11/01/25 1,955,000 1,961,021 TX Brazos Higher Educational Facilities Authority, Series 1993 C-2, 5.875% 06/01/04 390,000 391,424 ----------------------------------------------------------------------------- Student Loan Total 7,823,440 ----------- EDUCATION TOTAL 21,211,557 HEALTHCARE - 24.4% CONGREGATE CARE RETIREMENT - 7.7% - ------------------------------------------ ----------------------------------------------------------------------------- CA La Verne, Brethren Hillcrest Homes, Series 2003 B, 6.625% 02/15/25 685,000 681,082 CA Statewide Community Development Authority, Eskaton Village - Grass Valley, Series 2000, 8.250% 11/15/31 (b) 1,750,000 1,898,732 CT State Development Authority, The Elim Park Baptist, Inc. Project, Series 2003, 5.850% 12/01/33 660,000 670,283 FL Capital Projects Finance Authority, Glenridge on Palmer Ranch, Series 2002 A, 8.000% 06/01/32 1,250,000 1,292,237 FL Lee County Industrial Development Authority, Shell Point Village Project, Series 1999 A, 5.500% 11/15/29 1,200,000 1,161,336 FL Orange County Health Facilities Authority, Orlando Lutheran Towers, Inc., Series 1996, 8.625% 07/01/20 1,500,000 1,568,940 FL Palm Beach County Health Facilities Authority Revenue, Abbey Delray South, Series 2003, 5.350% 10/01/14 1,250,000 1,269,825 GA Savannah Economic Development Authority, 1st Mortgage, Marshes of Skidaway, Series 2003 A, 7.400% 01/01/34 1,000,000 996,280 HI State Department of Budget & Finance, Kahala Nui Project, Series 2003 A: 7.875% 11/15/23 250,000 252,892 8.000% 11/15/33 1,000,000 1,013,020 See notes to investment portfolio. 8 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) HEALTHCARE - (CONTINUED) CONGREGATE CARE RETIREMENT - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- IL State Health Facilities Authority, Lutheran Senior Ministries, Series 2001, 7.375% 08/15/31 550,000 569,041 Washington and Jane Smith Community Series 2003 A, 7.000% 11/15/32 1,000,000 1,000,230 MA Boston Industrial Development Financing Authority, Springhouse, Inc., Series 1998, 5.875% 07/01/20 235,000 232,817 MA State Development Finance Agency, Loomis Community Project: Series 1999 A, 5.625% 07/01/15 650,000 635,200 Series 2002 A, 6.900% 03/01/32 220,000 227,711 MO State Health & Educational Facilities Authority, Lutheran Senior Services, Series 1997, 5.750% 02/01/17 2,000,000 2,059,280 NH State Higher Educational & Health Facilities Authority, Rivermead at Peterborough, Series 1998: 5.625% 07/01/18 500,000 470,155 5.750% 07/01/28 1,665,000 1,499,416 NJ State Economic Development Authority: Seabrook Village, Inc., Series 2000 A, 8.250% 11/15/30 1,125,000 1,210,973 Winchester Gardens, Series 1996 A, 8.625% 11/01/25 2,000,000 2,128,740 PA State Authority for Industrial Development, Baptist Home of Philadelphia, Series 1998, 5.500% 11/15/18 530,000 483,800 PA Chartiers Valley Industrial & Commercial Development Authority, Asbury Health Center: Asbury Health Center, Series 1999, 6.375% 12/01/24 750,000 741,660 Friendship Village of South Hills, Series 2003 A, 5.750% 08/15/20 1,000,000 986,250 PA Delaware County Authority, Dunwoody Village, Series 2003 A, 5.375% 04/01/17 750,000 780,143 PA Lancaster Industrial Development Authority, Garden Spot Village Project, Series 2000 A, 7.625% 05/01/31 825,000 873,172 TN Metropolitan Government, Nashville and Davidson County, Blakeford at Green Hills, Series 1998, 5.650% 07/01/24 1,825,000 1,675,131 See notes to investment portfolio. 9 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) HEALTHCARE - (CONTINUED) CONGREGATE CARE RETIREMENT - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- TN Shelby County Health Educational & Housing Facilities Board, Germantown Village, Series 2003 A, 7.250% 12/01/34 1,350,000 1,346,490 TX Abilene Health Facilities Development Corp., Sears Methodist Retirement Obligation Group: Series 1998 A, 5.900% 11/15/25 1,350,000 1,273,698 Series 2003 A, 7.000% 11/15/33 300,000 305,154 WI State Health & Educational Facilities Authority: Attic Angel Obligated Group, Series 1998, 5.750% 11/15/27 2,125,000 1,913,350 Clement Manor, Series 1998, 5.750% 08/15/24 2,200,000 1,996,808 Lutheran Program for the Aging, Series 1998, 5.700% 03/01/28 750,000 677,122 Three Pillars Senior Living Communities, Series 2003, 5.600% 08/15/23 790,000 786,224 ----------------------------------------------------------------------------- Congregate Care Retirement Total 34,677,192 HEALTH SERVICES - 0.7% - ------------------------------------------ ----------------------------------------------------------------------------- IL State Health Facilities Authority, Midwest Physicians Group, Ltd., Series 1998, 5.500% 11/15/19 90,000 71,151 MA State Development Finance Agency, Boston Biomedical Research Institute, Series 1999: 5.650% 02/01/19 370,000 359,026 5.750% 02/01/29 550,000 546,502 MA State Health & Educational Facilities Authority, Civic Investments, Inc., Series 2002 A, 9.000% 12/15/15 1,500,000 1,715,760 MN Minneapolis & St. Paul Housing Redevelopment Authority, Healthpartners Project, Series 2003, 5.875% 12/01/29 400,000 403,716 ----------------------------------------------------------------------------- Health Services Total 3,096,155 HOSPITALS - 11.3% - ------------------------------------------ ----------------------------------------------------------------------------- AZ Health Facilities Authority, Phoenix Memorial Hospital, Series 1991, 8.125% 06/01/12 (c) 2,167,774 346,844 AZ Yavapai County Industrial Development Authority, Yavapai Regional Medical Center, Series 2003 A, 6.000% 08/01/33 425,000 434,290 See notes to investment portfolio. 10 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) HEALTHCARE - (CONTINUED) HOSPITALS - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- CA Abag Finance Authority for Nonprofit Corps., San Diego Hospital Association, Series 2003 C, 5.375% 03/01/21 500,000 498,020 CA State Health Facilities Financing Authority Revenue, Stanford Hospital & Clinics Project, Series 2003 A, 5.000% 11/15/23 (d) 1,500,000 1,512,720 CA Whittier Health Facilities Revenue, Presbyterian Intercommunity Hospital, Series 2002, 5.750% 06/01/31 1,000,000 1,025,630 CO La Junta, Arkansas Valley Regional Medical Center Project, Series 1999, 6.100% 04/01/24 900,000 903,852 CO State Health Care Facilities Authority: National Jewish Medical & Research Center, Series 1998, 5.375% 01/01/23 1,080,000 1,074,276 Parkview Medical Center, Inc. Project, Series 2001, 6.600% 09/01/25 300,000 315,372 FL Hillsborough County Industrial Development Authority, Tampa General Hospital Project, Series 2003 B, 5.250% 10/01/34 1,000,000 969,950 FL Miami Health Facilities Authority, Catholic Health East, Series 2003 B, 5.125% 11/15/24 1,000,000 991,710 FL Orange County Health Facilities Authority, Orlando Regional Healthcare System: Series 1999 E, 6.000% 10/01/26 875,000 911,855 Series 2002, 5.750% 12/01/32 350,000 360,308 FL South Lake County Hospital District, South Lake Hospital, Inc., Series 2003: 6.375% 10/01/28 750,000 761,047 6.375% 10/01/34 500,000 506,560 FL West Orange Healthcare District, Series 2001 A, 5.650% 02/01/22 1,450,000 1,467,733 IL Southwestern Illinois Development Authority, Anderson Hospital, Series 1999: 5.500% 08/15/20 500,000 495,135 5.625% 08/15/29 250,000 241,595 IL State Health Facilities Authority, Thorek Hospital & Medical Center, Series 1998, 5.375% 08/15/28 500,000 445,575 See notes to investment portfolio. 11 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) HEALTHCARE - (CONTINUED) HOSPITALS - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- MA State Health & Educational Facilities Authority: Jordan Hospital: Series 1998 D, 01/05/00 10/01/18 600,000 534,804 Series 2003 E, 6.750% 10/01/33 750,000 738,735 Milford-Whitinsville Hospital, Series 2002 D, 6.350% 07/15/32 500,000 502,040 MDState Health & Higher Educational Facilities Authority, Adventist HealthCare, Series 2003 A: 5.000% 01/01/16 400,000 398,216 5.750% 01/01/25 600,000 606,822 MI Dickinson County, Series 1999, 5.800% 11/01/24 1,000,000 994,410 MI Flint Hospital Building Authority, Hurley Medical Center: Series 1998 A, 5.375% 07/01/20 465,000 406,898 Series 1998 B, 5.375% 07/01/28 1,050,000 859,320 MI State Hospital Finance Authority, Oakwood Obligated Group, Series 2003, 5.500% 11/01/18 1,600,000 1,655,152 MN State Medical Center Gross Revenue, Weiner Memorial Medical Center Project, Series 2003 A, 6.000% 11/01/28 500,000 510,370 MN St. Paul Housing & Redevelopment Authority, HealthEast Project, Series 1993 B, 6.625% 11/01/17 240,000 240,722 MN Washington Housing & Redevelopment Authority, HealthEast Project, Series 1998, 5.250% 11/15/12 1,100,000 1,075,074 MO State Health & Educational Facilities Authority, Lake Regional Health System Project, Series 2003, 5.700% 02/15/34 1,000,000 1,007,570 NC State Medical Care Commission, Stanly Memorial Hospital Project, Series 1999, 6.375% 10/01/29 1,000,000 1,075,410 NH State Higher Educational & Health Facilities Authority, Littleton Hospital Assoc., Inc.: Series 1998 A: 5.900% 05/01/18 500,000 435,940 6.000% 05/01/28 1,000,000 837,560 Series 1998 B, 5.900% 05/01/28 675,000 557,807 Catholic Medical Center, Series 2002 A, 6.125% 07/01/32 400,000 407,912 See notes to investment portfolio. 12 >PAGE> December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund Municipal Bonds - (continued) HEALTHCARE - (continued) Hospitals - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- NJ State Health Care Facilities Financing Authority Revenue, Health Systems, Series 2003 A, 5.750% 07/01/23 (d) 1,250,000 1,294,388 NV Henderson Health Care Facilities Revenue, Catholic Healthcare West, Series 1998: 5.125% 07/01/28 540,000 490,023 5.375% 07/01/26 790,000 744,322 NY State Dormitory Authority Revenue: Memorial Sloan-Kettering Cancer Center, Series 2001-1: (a) 07/01/25 3,600,000 1,268,748 (a) 07/01/26 4,400,000 1,474,044 North Shore - Long Island Jewish Medical Center, Series 2003, 5.500% 05/01/33 400,000 415,012 Winthrop/South Nassau Health University Hospital, Series 2003, 5.500% 07/01/23 650,000 666,926 OH Belmont County Health Systems Revenue, Ohio Valley Medical Center, Inc., Series 1998, 5.700% 01/01/13 1,500,000 1,337,340 OH Highland County Joint Township Hospital District, Series 1999, 6.750% 12/01/29 1,900,000 1,808,154 OH Lakewood Hospital Improvement Revenue, Lakewood Hospital Association, Series 2003, 5.500% 02/15/15 1,250,000 1,330,100 OH Miami County, Upper Valley Medical Center, Inc.: Series 1996 A, 6.250% 05/15/16 500,000 521,075 Series 1996 C, 6.250% 05/15/13 285,000 298,974 Series 1996 D, 6.375% 05/15/26 1,015,000 1,039,918 OH Sandusky County, Memorial Hospital, Series 1998, 5.150% 01/01/10 250,000 247,840 OK State Development Finance Authority, Duncan Regional Hospital Project, Series 2003 A, 5.125% 12/01/23 (d) 2,000,000 1,974,120 See notes to investment portfolio. 13 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) HEALTHCARE - (CONTINUED) HOSPITALS - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- OK Stillwater Medical Center Authority, Series 2003, 5.625% 05/15/23 1,000,000 988,890 PA Allegheny County Hospital Development Authority, Ohio Valley General Hospital, Series 1997, 5.450% 01/01/28 1,550,000 1,447,886 PA Pottsville Hospital Authority, Pottsville Hospital & Warne Clinic, Series 1998, 5.625% 07/01/24 800,000 691,800 TX Knox County Health, Educational & Housing Facilities Board, Revenue, East Tennessee Hospital, Series 2003 B, 5.750% 07/01/33 250,000 254,207 TX Richardson Hospital Authority, Baylor Richardson Medical Center, Series 1998, 5.625% 12/01/28 450,000 454,208 TX Tyler Health Facilities Development Corp., Mother Frances Hospital, Series 2001, 6.000% 07/01/31 750,000 766,763 VA Augusta County Industrial Development Authority, Augusta Health Care, Inc., Series 2003, 5.250% 09/01/19 2,000,000 2,169,560 WA Skagit County Public Hospital District No. 1, Series 2003, 6.000% 12/01/23 1,000,000 996,490 WA State Health Care Facilities Authority, Kadlec Medical Center, Series 2001, 5.875% 12/01/21 600,000 651,144 WI State Health & Educational Facilities Authority: Aurora Health Care Inc., Series 2003, 6.400% 04/15/33 700,000 737,051 Wheaton Franciscan Services, Series 2002, 5.750% 08/15/30 1,050,000 1,092,231 ----------------------------------------------------------------------------- Hospitals Total 51,268,448 INTERMEDIATE CARE FACILITIES - 1.2% - ------------------------------------------ ----------------------------------------------------------------------------- IL State Development Finance Authority, Hoosier Care, Inc. Project, Series 1999 A, 7.125% 06/01/34 1,470,000 1,213,353 IN State Health Facilities Financing Authority, Hoosier Care, Inc. Project, Series 1999 A, 7.125% 06/01/34 1,210,000 998,746 See notes to investment portfolio. 14 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) HEALTHCARE - (CONTINUED) INTERMEDIATE CARE FACILITIES - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- LA State Public Facilities Authority Revenue, Progressive Healthcare Providers, Inc., Series 1998, 6.375% 10/01/28 2,000,000 1,468,140 PA State Economic Development Financing Authority, Northwestern Human Services, Series 1998 A, 5.250% 06/01/14 2,150,000 1,851,086 ----------------------------------------------------------------------------- Intermediate Care Facilities Total 5,531,325 NURSING HOME - 3.5% - ------------------------------------------ ----------------------------------------------------------------------------- AK Juneau, St. Ann's Care Center Project, Series 1999, 6.875% 12/01/25 1,750,000 1,786,295 CO State Health Facilities Authority, Volunteers of America Care Facilities, Inc.: Series 1998 A, 5.750% 07/01/20 700,000 632,478 Series 1999 A: 5.750% 07/01/10 890,000 874,550 6.000% 07/01/29 520,000 465,764 DE State Economic Development Authority, Churchman's Village Project, Series 1991, 10.000% 03/01/21 680,000 681,360 DE Sussex County, State Healthcare Facilities Project, Series 1999, 7.600% 01/01/24 955,000 816,334 IA State Finance Authority, Care Initiatives Project: Series 1996, 9.250% 07/01/25 495,000 590,837 Series 1998 B: 5.500% 07/01/08 480,000 478,416 5.750% 07/01/18 600,000 538,458 5.750% 07/01/28 1,475,000 1,264,414 MA State Development Finance Agency, Alliance Health Care Facilities, Series 1999 A, 7.100% 07/01/32 2,250,000 2,193,323 MA State Industrial Finance Agency, GF/Mass. Inc., Series 1994, 8.300% 07/01/23 895,000 908,962 MI Cheboygan, Metro Health Foundation, Inc. Project, Series 1993, 11.000% 11/01/22 (c) 600,000 156,000 MN Carlton, Inter-Faith Social Services, Inc. Project, Series 2000: 7.500% 04/01/19 250,000 260,395 7.750% 04/01/29 275,000 288,241 See notes to investment portfolio. 15 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) HEALTHCARE - (CONTINUED) NURSING HOME - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- MN Sartell, Foundation for Healthcare Project, Series 1999 A, 6.625% 09/01/29 1,500,000 1,439,820 PA Chester County Industrial Development Authority, RHA/PA Nursing Home, Series 2002, 8.500% 05/01/32 400,000 390,136 PA Delaware County Authority, Main Line & Haverford Nursing, Series 1992, 9.000% 08/01/22 (c) 50,000 30,000 PA Lackawanna County Industry Development Authority, Greenridge Nursing Center Project, Series 1990, 10.500% 12/01/10 145,000 129,556 PA Luzerne County Industrial Development Authority, Millville Nursing Center Project, Series 1990, 10.500% 12/01/12 185,000 164,822 TX Kirbyville Health Facilities Development Corp., Heartway III: Series 1997 A, 10.000% 03/20/18 (e) 539,213 323,528 Series 1997 B, 6.000% 03/20/04 (e) 100,000 5,000 WA Kitsap County Consolidated Housing Authority, Martha and Mary Health Services, Series 1996, 7.100% 02/20/36 1,000,000 1,204,830 ----------------------------------------------------------------------------- Nursing Homes Total 15,623,519 ----------- HEALTHCARE TOTAL 110,196,639 HOUSING - 6.2% ASSISTED LIVING/SENIOR - 2.8% - ------------------------------------------ ----------------------------------------------------------------------------- CA Abag Finance Authority for Nonprofit Corps., Eskaton Gold River Lodge, Series 1998: 6.375% 11/15/15 (b) 710,000 671,695 6.375% 11/15/28 (b) 550,000 489,445 DE Kent County Assisted Living Facilities, Heritage at Dover Project, Series 1999, 7.625% 01/01/30 2,445,000 2,064,876 GA Columbus Housing Authority, The Gardens at Calvary Project, Series 1999, 7.000% 11/15/29 2,000,000 1,582,640 IL State Development Finance Authority, Care Institute, Inc., Series 1995, 8.250% 06/01/25 1,915,000 1,900,446 MN Roseville Elderly Care Facility, Care Institute, Inc. Project, Series 1993, 7.750% 11/01/23 (e) 1,270,000 825,500 See notes to investment portfolio. 16 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) HOUSING - (CONTINUED) ASSISTED LIVING/SENIOR - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- NC State Medical Care Commission, DePaul Community Facilities Project, Series 1999, 7.625% 11/01/29 1,965,000 2,030,395 NY Huntington Housing Authority, Gurwin Jewish Senior Center, Series 1999 A: 5.875% 05/01/19 1,900,000 1,753,168 6.000% 05/01/29 625,000 559,212 TX Bell County Health Facility Development Corp., Care Institute, Inc., Series 1994, 9.000% 11/01/24 945,000 957,493 ----------------------------------------------------------------------------- Assisted Living/Senior Total 12,834,870 MULTI-FAMILY - 3.1% - ------------------------------------------ ----------------------------------------------------------------------------- CO State Health Facilities Authority, Birchwood Manor Project, Series 1991 A, 7.250% 04/01/11 460,000 462,121 DE Wilmington, Electra Arms Senior Association Project, Series 1994 A, 6.250% 06/01/28 945,000 769,532 FL Broward County Housing Finance Authority, Chaves Lake Apartment Project, Series 2000 A, 7.500% 07/01/40 1,250,000 1,265,587 FL Clay County Housing Finance Authority, Madison Commons Apartments Project, Series 2000 A, 7.450% 07/01/40 1,245,000 1,260,550 GA Clayton County Housing Authority, Magnolia Park Apartments Project, Series 1999 A, 6.250% 06/01/30 1,750,000 1,099,385 IL State Development Finance Authority, Catholic Charities Housing Development Corp., Series 1993 C, 5.950% 01/01/09 1,400,000 1,433,586 IN New Castle, Raintree Apartments, Series 1988 B, (a) 03/01/18 30,625,000 76,563 MN Lakeville Multi-Family Revenue, Series 1989, 9.875% 02/01/20 700,000 700,742 MN Washington County Housing & Redevelopment Authority, Cottages of Aspen Project, Series 1992, 9.250% 06/01/22 460,000 470,566 MN White Bear Lake Multi-Family Revenue, Series 1989, 9.750% 07/15/19 750,000 753,352 See notes to investment portfolio. 17 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) HOUSING - (CONTINUED) MULTI-FAMILY - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- NCRaleigh Multi-Family Revenue, Cedar Point Apartments, Series 1999 A: 5.100% 11/01/10 250,000 134,392 5.875% 11/01/24 200,000 119,552 Pass Through Certificates, Series 1993, 8.500% 12/01/16 455,481 450,271 SC State Housing Finance & Development Authority, Westbridge Apartments Project, Series 1990, 9.500% 09/01/20 579,000 578,734 TN Franklin Industrial Development Board, Landings Apartment Project, Series 1996 B, 8.750% 04/01/27 1,595,000 1,655,626 TX El Paso County Housing Finance Corp., American Village Communities: Series 2000 C, 8.000% 12/01/32 585,000 593,857 Series 2000 D, 10.000% 12/01/32 690,000 712,805 TX State Affordable Housing Corp., NHT/GTEX LLC Project, Series 2001 C, 10.000% 10/01/31 (e) 1,565,000 937,294 VA Alexandria Redevelopment & Housing Authority, Article 1 Associates LLP, Series 1990 A, 10.000% 01/01/21 500,000 429,060 ----------------------------------------------------------------------------- Multi-Family Total 13,903,575 SINGLE FAMILY - 0.3% - ------------------------------------------ ----------------------------------------------------------------------------- CO Housing and Finance Authority: Series 1995 D-1, 7.375% 06/01/26 405,000 406,596 Series 1997 A-2, 7.250% 05/01/27 155,000 159,008 IA State Housing Finance Authority, Series 1984 A, (a) 09/01/16 920,000 225,483 ID State Housing Agency, Series 1990 B, 7.500% 07/01/24 440,000 440,000 ----------------------------------------------------------------------------- Single Family Total 1,231,087 ----------- HOUSING TOTAL 27,969,532 INDUSTRIAL - 6.0% FOOD PRODUCTS - 1.4% - ------------------------------------------ ----------------------------------------------------------------------------- IN Hammond, American Maize Products Co. Project, Series 1994 A, 8.000% 12/01/24 1,760,000 1,896,558 See notes to investment portfolio. 18 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) INDUSTRIAL - (CONTINUED) FOOD PRODUCTS - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- LA Port Lake Charles, Continental Grain Co., Project, Series 1993, 7.500% 07/01/13 2,000,000 2,033,400 MI State Strategic Fund, Michigan Sugar Co.: Carollton Project, Series 1998 C, 6.550% 11/01/25 1,500,000 1,302,330 Sebewaing Project, Series 1998 A, 6.250% 11/01/15 1,000,000 938,510 ----------------------------------------------------------------------------- Food Products Total 6,170,798 FOREST PRODUCTS - 2.3% - ------------------------------------------ ----------------------------------------------------------------------------- AL Camden Industrial Development Board, Weyerhaeuser Company, Series 2003 B, 6.375% 12/01/24 275,000 295,254 AL Courtland Industrial Development Board International Paper Co., Series 2003 B, 6.250% 08/01/25 2,000,000 2,118,860 GA Rockdale County Development Authority, Solid Waste Disposal, Visy Paper, Inc., Series 1993, 7.500% 01/01/26 2,800,000 2,835,812 LA Beauregard Parish, Boise Cascade Project, Series 2002, 6.800% 02/01/27 1,750,000 1,756,737 MI Delta County Economic Development Corp., Mead Westvaco Escambia Project, Series 2002 B, 6.450% 04/15/23 750,000 783,142 MS Lowndes County, Weyerhaeuser Corp., Series 1992 A, 6.800% 04/01/22 1,995,000 2,351,646 VA Bedford County Industrial Development Revenue, Nekoosa Packaging Corp. Project, Series 1998, 5.600% 12/01/25 400,000 337,880 ----------------------------------------------------------------------------- Forest Products Total 10,479,331 MANUFACTURING - 0.6% - ------------------------------------------ ----------------------------------------------------------------------------- IL Will-Kankakee Regional Development Authority, Flanders Corp./Precisionaire, Series 1997, 6.500% 12/15/17 815,000 808,496 KS Wichita Airport Authority, Cessna Citation Service Center, Series 2002 A, 6.250% 06/15/32 1,875,000 1,988,906 ----------------------------------------------------------------------------- Manufacturing Total 2,797,402 METALS & MINING - 0.3% - ------------------------------------------ ----------------------------------------------------------------------------- NV State Department of Business & Industry, Wheeling-Pittsburgh Steel Corp., Series 1999 A, 8.000% 09/01/14 500,000 383,260 See notes to investment portfolio. 19 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) INDUSTRIAL - (CONTINUED) METALS & Mining - (continued) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- VA Greensville County Industrial Development Authority, Wheeling Steel, Series 1999 A: 6.375% 04/01/04 160,000 158,144 7.000% 04/01/14 930,000 713,022 ----------------------------------------------------------------------------- Metals & Mining Total 1,254,426 OIL AND GAS - 1.4% - ------------------------------------------ ----------------------------------------------------------------------------- NV Clark County Industrial Development Revenue, Southwest Gas Corp. Project, Series 2003 E, 5.800% 03/01/38 1,750,000 1,889,878 TX Gulf Coast Industrial Development Authority, Citgo Petroleum Project, Series 1998, 8.000% 04/01/28 875,000 908,976 TX Texas City Industrial Development Corp., Arco Pipe Line Co. Project, Series 1990, 7.375% 10/01/20 2,000,000 2,619,440 VI Government of United States Virgin Islands, Hovensa Coker Project, Series 2002, 6.500% 07/01/21 125,000 130,551 VI Public Finance Authority, Hovensa Refinery, Series 2003, 6.125% 07/01/22 875,000 893,156 ----------------------------------------------------------------------------- Oil and Gas Total 6,442,001 ----------- INDUSTRIAL TOTAL 27,143,958 OTHER - 7.2% OTHER - 1.7% - ------------------------------------------ ----------------------------------------------------------------------------- CA Golden State Tobacco Securitization Authority: Series 2003 A-1: 6.250% 06/01/33 1,225,000 1,171,100 6.750% 06/01/39 235,000 231,191 Series 2003 B, 5.500% 06/01/43 1,250,000 1,228,188 LA Tobacco Settlement Financing Corp., Series 2001 B, 5.875% 05/15/39 1,000,000 871,660 NJ State Economic Development Authority, Motor Vehicle Commission, Series 2003 A, (a) 07/01/14 2,500,000 1,624,175 NY Convention Center Operating Corp., Yale Building Project, Series 2003, (a) 06/01/08 2,100,000 1,657,530 SC Tobacco Settlement Revenue Management Authority, Series 2001 B, 6.375% 05/15/28 1,000,000 940,390 ----------------------------------------------------------------------------- Other Total 7,724,234 See notes to investment portfolio. 20 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) OTHER - (CONTINUED) REFUNDED/ESCROWED (F) - 5.5% Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- CO Adams County, Series 1991 B: 11.250% 09/01/11 (g) 905,000 1,342,416 11.250% 09/01/12 1,440,000 2,273,069 CO State Department of Transportation Revenue: Series 2001 832R-B, 9.630% 06/15/15 2,000,000 2,678,160 CT State Development Authority, New Haven Residuals, Series 1996, 8.250% 12/01/06 460,000 518,908 FL Tampa Bay, Utility Systems Revenue, Series 1999, 5.750% 10/01/23 (h) 7,500,000 10,181,550 GA Forsyth County Hospital Authority, Baptist Hospital Worth County, Series 1998, 6.000% 10/01/08 755,000 831,610 GA State Municipal Electric Authority, Series 1991 V, 6.600% 01/01/18 690,000 865,557 NC Eastern Municipal Power Agency, Series 1991 A, 6.500% 01/01/18 3,320,000 4,252,787 NC Lincoln County, Lincoln County Hospital Project, Series 1991, 9.000% 05/01/07 160,000 180,525 TN Shelby County Health Educational & Housing Facilities Board, Open Arms Care Corp.: Series 1992 A, 9.750% 08/01/19 290,000 365,397 Series 1992 C, 9.750% 08/01/19 290,000 365,472 WV State Hospital Finance Authority, Charleston Medical Center, Series 2000 A, 6.750% 09/01/30 925,000 1,146,861 ----------------------------------------------------------------------------- Refunded/Escrow Total 25,002,312 ----------- OTHER TOTAL 32,726,546 OTHER REVENUE - 1.5% HOTEL - 0.5% - ------------------------------------------ ----------------------------------------------------------------------------- PA Philadelphia Authority for Industrial Development, Doubletree Project, Series 1997 A, 6.500% 10/01/27 2,000,000 1,990,460 ----------------------------------------------------------------------------- Hotel Total 1,990,460 RECREATION - 0.9% - ------------------------------------------ ----------------------------------------------------------------------------- CA Agua Caliente Band of Cahuilla Indians, Series 2003, 6.000% 07/01/18 1,000,000 1,009,730 See notes to investment portfolio. 21 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) OTHER REVENUE - (CONTINUED) RECREATION - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- CT Mohegan Indians Tribe, Gaming Authority, Series 2001, 6.250% 01/01/31 475,000 504,113 FL Capital Trust Agency, Seminole Tribe Convention Center, Series 2002 A, 10.000% 10/01/33 2,050,000 2,538,925 NM Red River Sports Facilities Revenue, Red River Ski Area Project, Series 1998, 6.450% 06/01/07 170,000 172,676 ----------------------------------------------------------------------------- Recreation Total 4,225,444 RETAIL - 0.1% - ------------------------------------------ ----------------------------------------------------------------------------- OH Lake County, North Madison Properties, Ltd. Project, Series 1993, 8.819% 09/01/11 485,000 481,649 ----------------------------------------------------------------------------- Retail Total 481,649 ----------- OTHER REVENUE TOTAL 6,697,553 RESOURCE RECOVERY - 1.3% DISPOSAL - 0.5% - ------------------------------------------ ----------------------------------------------------------------------------- IL Development Finance Authority, Waste Management, Inc. Project, Series 1997, 5.050% 01/01/10 250,000 259,757 MA State Development Finance Agency, Peabody Monofill Associates, Inc. Project, Series 1994, 9.000% 09/01/05 330,000 342,167 UT Carbon County, Solid Waste Disposal Revenue, Laidlaw Environmental, Series 1997 A, 7.450% 07/01/17 1,500,000 1,534,065 ----------------------------------------------------------------------------- Disposal Total 2,135,989 RESOURCE RECOVERY - 0.8% - ------------------------------------------ ----------------------------------------------------------------------------- MA State Development Finance Agency, Ogden Haverhill Project: Series 1998 A, 5.500% 12/01/13 500,000 497,965 Series 1999 A, 6.700% 12/01/14 750,000 795,263 PA Delaware County Industrial Development Authority, American Ref-Fuel Co., Series 1997 A, 6.200% 07/01/19 2,225,000 2,304,143 ----------------------------------------------------------------------------- Resource Recovery Total 3,597,371 ----------- RESOURCE RECOVERY TOTAL 5,733,360 TAX-BACKED - 17.6% LOCAL APPROPRIATED - 1.6% - ------------------------------------------ ----------------------------------------------------------------------------- CA Compton Certificates of Participation, Civic Center & Captial Improvements, Series 1997 A, 5.500% 09/01/15 1,500,000 1,572,660 See notes to investment portfolio. 22 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) TAX-BACKED - (CONTINUED) LOCAL APPROPRIATED - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- CA Southeast Resource Recovery Facilities Authority, Series 2003 B, 5.375% 12/01/18 2,000,000 2,148,280 MO St. Louis Industrial Development Authority, St. Louis Convention Center Hotel, Series 2000, (a) 07/15/18 3,000,000 1,526,610 SC Berkeley County School District, Securing Assets for Education, Series 2003, 5.000% 12/01/28 2,000,000 1,991,160 ----------------------------------------------------------------------------- Local Appropriated Total 7,238,710 LOCAL GENERAL OBLIGATIONS - 5.0% - ------------------------------------------ ----------------------------------------------------------------------------- CA East Side Union High School District, Series 2003 B, 5.100% 02/01/20 1,320,000 1,461,121 CA Empire Union School District, Series 1987-1 A, (a) 10/01/21 1,665,000 690,575 CA Los Angeles Community College District, Series 2003 B, 5.000% 08/01/19 2,000,000 2,138,120 CA Los Angeles Unified School District: Series 1997 E, 5.125% 01/01/27 3,800,000 3,944,476 Series 2002, 5.750% 07/01/16 800,000 947,944 CA Modesto High School District, Series 2002 A, (a) 08/01/19 2,650,000 1,259,651 CA Rocklin Unified School District, Election of 2002, Series 2003, (a) 08/01/17 3,130,000 1,678,619 CA William S. Hart Union High School District, Series 2003 A, 5.000% 09/01/19 1,625,000 1,737,986 CO Red Sky Ranch Metropolitan District, Series, 2003, 6.050% 12/01/33 1,000,000 1,003,350 NY New York City: Series 1995 B, 7.250% 08/15/07 1,000,000 1,160,650 Series 2003 J, 5.500% 06/01/18 1,500,000 1,642,980 OH Dublin City School District, Series 2003, 5.000% 12/01/20 2,450,000 2,607,560 TX Dallas County Flood Control District, Series 2002, 7.250% 04/01/32 1,000,000 1,027,840 See notes to investment portfolio. 23 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) TAX-BACKED - (CONTINUED) LOCAL GENERAL OBLIGATIONS - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- WA Clark County School District #37 Vancouver, Series 2001B, (a) 12/01/18 2,500,000 1,239,325 ----------------------------------------------------------------------------- Local General Obligations Total 22,540,197 SPECIAL NON-PROPERTY TAX - 3.6% - ------------------------------------------ ----------------------------------------------------------------------------- CO State Department of Transportation Revenue, Series 2001 832R-A, 9.630% 06/15/14 3,000,000 3,853,410 FL Northern Palm Beach County Improvement District, Series 1999: 5.900% 08/01/19 500,000 565,265 6.000% 08/01/29 750,000 850,493 MO St. Louis County Industrial Development Authority, Kiel Center Arena, Series 1992, 7.875% 12/01/24 3,000,000 3,066,990 NY State Thruway Authority, Series 2003 A, 5.000% 03/15/20 3,500,000 3,719,975 PR Commonwealth Highway & Transportation Authority, Series 2003 AA: 5.500% 07/01/18 1,225,000 1,430,114 5.500% 07/01/19 2,320,000 2,707,370 ----------------------------------------------------------------------------- Special Non-Property Tax Total 16,193,617 SPECIAL PROPERTY TAX - 4.4% - ------------------------------------------ ----------------------------------------------------------------------------- CA Carson Improvement Board Act 1915, Series 1992, 7.375% 09/02/22 140,000 141,729 CA Huntington Beach Community Facilities District, Grand Coast Resort, Series 2000-1, 6.450% 09/01/31 1,250,000 1,294,350 CA Irvine Improvement Bond Act 1915, No. 00-18-GRP 3, Series 2003, 5.550% 09/02/26 500,000 502,930 CA Oceanside Community Development Commissions, Downtown Redevelopment Project, Series 2003, 5.700% 09/01/25 500,000 501,650 CA Orange County Community Facilities District, Ladera Ranch: Series 1999 A, 6.500% 08/15/21 1,000,000 1,046,870 Series 2003 A, 5.550% 08/15/33 1,000,000 995,610 See notes to investment portfolio. 24 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) TAX-BACKED - (CONTINUED) SPECIAL PROPERTY TAX - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- CA Orange County Improvement Bond Act 1915, Phase IV, No. 01-1-B, Series 2003, 5.750% 09/02/33 1,000,000 1,012,470 CA Pleasanton Joint Powers Financing Authority, Series 1993 B, 6.750% 09/02/17 1,740,000 1,789,590 CA Redwood City Community Facilities District, 1 Redwood, Series 2003 B, 6.000% 09/01/33 700,000 718,501 CA Temecula Valley Unified School District, Series 2003, 6.125% 09/01/33 600,000 608,226 FL Brandy Creek Community Development District, Series 2003 A, 6.350% 05/01/34 1,000,000 1,010,220 FL Celebration Community Development District, Series 2003A, 6.400% 05/01/34 1,000,000 1,028,540 FL Colonial Country Club Community Development District, Series 2003, 6.400% 05/01/33 750,000 772,628 FL Double Branch Community Development District: Series 2002 A, 6.700% 05/01/34 700,000 729,932 Series 2003 B, 5.375% 05/01/08 1,190,000 1,205,327 FL Heritage Palms Community Development District, Series 1999, 6.250% 11/01/04 475,000 479,346 FL Islands at Doral Southwest Community Development District, Series 2003, 6.375% 05/01/35 770,000 791,460 FL Lexington Oaks Community Development District: Series 1998 A, 6.125% 05/01/19 260,000 264,293 Series 1998 B, 5.500% 05/01/05 130,000 130,861 Series 2000 A: 7.200% 05/01/30 685,000 721,880 6.700% 05/01/33 250,000 260,432 FL Orlando, Conroy Road Interchange Project, Series 1998 A: 5.500% 05/01/10 325,000 333,408 5.800% 05/01/26 600,000 605,394 See notes to investment portfolio. 25 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) TAX-BACKED - (CONTINUED) SPECIAL PROPERTY TAX - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- FL Stoneybrook Community Development District: Series 1998 A, 6.100% 05/01/19 805,000 818,669 Series 1998 B, 5.700% 05/01/08 105,000 106,210 FL Westchester Community Development District, Series 2003, 6.125% 05/01/35 800,000 793,856 MI Pontiac Finance Authority, Development Area No. 3, Series 2002, 6.375% 06/01/31 1,000,000 1,008,330 ----------------------------------------------------------------------------- Special Property Tax Total 19,672,712 STATE APPROPRIATED - 0.5% - ------------------------------------------ ----------------------------------------------------------------------------- NY Triborough Bridge & Tunnel Authority, Javits Convention Center Project, Series 1990 E, 7.250% 01/01/10 2,000,000 2,309,100 ----------------------------------------------------------------------------- State Appropriated Total 2,309,100 STATE GENERAL OBLIGATIONS - 2.5% - ------------------------------------------ ----------------------------------------------------------------------------- CA State, Series 2003: 5.250% 02/01/18 2,000,000 2,144,320 5.250% 02/01/20 (d) 2,000,000 2,125,420 MA Massachusetts Bay Transportation Authority, Series 1992 B, 6.200% 03/01/16 5,825,000 7,101,257 ----------------------------------------------------------------------------- State General Obligations Total 11,370,997 ----------- TAX-BACKED TOTAL 79,325,333 TRANSPORTATION - 8.0% AIR TRANSPORTATION - 3.3% - ------------------------------------------ ----------------------------------------------------------------------------- CA Los Angeles Regional Airports Improvement Corp., American Airlines, Inc., Series 2002 C, 7.500% 12/01/24 500,000 495,260 FL Capital Trust Agency, Air Cargo Orlando Project, Series 2003, 6.750% 01/01/32 650,000 617,091 IL Chicago O'Hare International Airport, United Airlines, Inc., Series 2000 A, 6.750% 11/01/11 (c) 1,600,000 438,032 IN Indianapolis Airport Authority, Federal Express Corp. Project, Series 1994, 7.100% 01/15/17 1,000,000 1,044,720 KY Kenton County Airport Board, Delta Airlines, Inc. Project, Series 1992, 7.500% 02/01/20 500,000 499,035 MA State Port Authority, Delta Airlines, Inc., Series 2001 A, 5.500% 01/01/16 2,935,000 3,162,228 See notes to investment portfolio. 26 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) TRANSPORTATION - (CONTINUED) AIR TRANSPORTATION - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- MN Minneapolis & St. Paul Metropolitan Airports Commission, Northwest Airlines Project: Series 2001 A, 7.000% 04/01/25 825,000 775,162 Series 2001 B, 6.500% 04/01/25 500,000 486,555 NC Charlotte, US Airway, Inc.: Series 1998, 5.600% 07/01/27 500,000 326,750 Series 2000, 7.750% 02/01/28 1,250,000 1,130,150 NJ State Economic Development Authority, Continental Airlines, Inc. Project, Series 2003, 9.000% 06/01/33 1,000,000 1,070,790 PA Philadelphia Authority for Industrial Development, Aero Philadelphia, Series 1999: 5.250% 01/01/09 350,000 329,462 5.500% 01/01/24 1,000,000 794,660 TX Alliance Airport Authority, AMR Corp., Series 1991, 7.000% 12/01/11 2,070,000 1,880,098 TX Houston Industrial Development Corp., United Parcel Service, Series 2002, 6.000% 03/01/23 1,100,000 1,117,105 WA Port Seattle, Northwest Airlines, Inc. Project, Series 2001, 7.250% 04/01/30 925,000 881,913 ----------------------------------------------------------------------------- Air Transportation Total 15,049,011 AIRPORT - 1.4% - ------------------------------------------ ----------------------------------------------------------------------------- DC Metropolitan Washington Airports Authority, Series 2003 A, 5.000% 10/01/33 1,500,000 1,518,360 NC Charlotte Airport Revenue, Series 1999, 10.680% 04/20/19 (g) 4,000,000 4,941,280 ----------------------------------------------------------------------------- Airport Total 6,459,640 PORTS - 1.5% - ------------------------------------------ ----------------------------------------------------------------------------- WA Port of Seattle: Series 2000 A, 10.580% 02/01/10 1,250,000 1,623,375 Series 2000 B, 10.580% 02/01/11 3,750,000 4,895,475 ----------------------------------------------------------------------------- Ports Total 6,518,850 See notes to investment portfolio. 27 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) TRANSPORTATION - (CONTINUED) TOLL FACILITIES - 1.4% Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- CO E-470 Public Highway Authority, Series 2000 B: (a) 09/01/18 4,000,000 2,012,440 (a) 09/01/35 17,500,000 1,706,600 CO Northwest Parkway Public Highway Authority, Series 2001 D, 7.125% 06/15/41 1,750,000 1,784,667 MA State Turnpike Authority, Series 1997 C (a) 01/01/20 2,000,000 939,860 ----------------------------------------------------------------------------- Toll Facilities Total 6,443,567 TRANSPORTATION - 0.4% - ------------------------------------------ ----------------------------------------------------------------------------- NV State Department of Business & Industry, Las Vegas Monorail Project, Series 2000, 7.375% 01/01/40 1,750,000 1,750,297 ----------------------------------------------------------------------------- Transportation Total 1,750,297 ----------- TRANSPORTATION TOTAL 36,221,365 UTILITY - 16.5% INDEPENDENT POWER PRODUCER - 4.1% - ------------------------------------------ ----------------------------------------------------------------------------- MI Midland County Economic Development Corp., Series 2000 A, 6.875% 07/23/09 1,650,000 1,721,148 NY Port Authority of New York & New Jersey, KAIC Power Project, Series 1996, 6.750% 10/01/11 1,000,000 1,049,780 PA Carbon City Industrial Development Panther Creek Partners Project, Series 2000, 6.650% 05/01/10 1,000,000 1,086,450 PA State Economic Development Financing Authority, Colver Project, Series 1994 D, 7.150% 12/01/18 1,650,000 1,719,515 PA State Economic Development Financing Authority, Northampton Generating: Series 1994 A, 6.500% 01/01/13 3,000,000 3,049,560 Series 1994 B, 6.750% 01/01/07 3,000,000 3,094,890 VA Pittsylvania County Industrial Development Authority, Multi-trade of Pittsylvania, Series 1994 A: 7.450% 01/01/09 3,500,000 3,508,260 7.500% 01/01/14 500,000 498,950 7.550% 01/01/19 2,600,000 2,586,532 ----------------------------------------------------------------------------- Independent Power Producer Total 18,315,085 See notes to investment portfolio. 28 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) UTILITY - (CONTINUED) INVESTOR OWNED - 4.1% Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- AZ Maricopa County Pollution Control Corp., El Paso Electric Co. Project, Series 2002 A, 6.250% 05/01/37 1,000,000 1,047,860 FL Polk County Industrial Development Authority, Tampa Electric Co. Project, Series 1996, 5.850% 12/01/30 1,500,000 1,500,795 IL State Development Finance Authority Pollution Control Revenue, Peoples Gas Light & Coke Co., Series 2003 E, 4.875% 11/01/38 2,500,000 2,547,300 IN Petersburg, Indiana Power & Light Co.: Series 1991, 5.750% 08/01/21 1,000,000 987,640 Series 1995, 6.625% 12/01/24 255,000 261,168 LA Calcasieu Parish Industrial Development Board, Entergy Gulf States, Inc., Series 1999, 5.450% 07/01/10 500,000 503,635 LA West Feliciana Parish, Entergy Gulf States, Inc., Series 1999 B, 6.600% 09/01/28 250,000 254,767 MS State Business Finance Corp., Systems Energy Resources, Inc. Project, Series 1999, 5.900% 05/01/22 1,500,000 1,503,840 MT Forsyth Pollution Control Revenue, Portland General Electric Co., Series 1998 A, 5.200% 05/01/33 375,000 387,731 NM Farmington Pollution Control Revenue, Tucson Electric Power Co., Series 1997 A, 6.950% 10/01/20 2,000,000 2,099,700 PA Beaver County Industrial Development Authority, Toledo Edison Co. Project, Series 1995, 7.625% 05/01/20 2,000,000 2,152,840 SC Berkeley County Pollution Control Facilities Revenue, South Carolina Generating Co. Project, Series 2003, 4.875% 10/01/14 1,500,000 1,594,785 TX Brazos River Authority, Texas Utilities Electric Co. Project: Series 2001 C, 5.750% 05/01/36 650,000 681,226 Series 2003 C, 6.750% 10/01/38 1,650,000 1,743,192 See notes to investment portfolio. 29 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) UTILITY - (CONTINUED) INVESTOR OWNED - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- WY Converse County Pollution Control Revenue, PacifiCorp, Series 1988, 3.900% 01/01/14 1,500,000 1,461,480 ----------------------------------------------------------------------------- Investor Owned Total 18,727,959 JOINT POWER AUTHORITY - 1.6% - ------------------------------------------ ----------------------------------------------------------------------------- GA State Municipal Electric Authority, Series 1991 V, 6.600% 01/01/18 3,375,000 4,151,318 NC Eastern Municipal Power Agency: Series 1991 A, 6.500% 01/01/18 1,680,000 2,001,031 Series 2003 C, 5.375% 01/01/17 1,000,000 1,057,350 ----------------------------------------------------------------------------- Joint Power Authority Total 7,209,699 MUNICIPAL ELECTRIC - 5.0% - ------------------------------------------ ----------------------------------------------------------------------------- MN Western Municipal Power Agency, Series 2003 B, 5.000% 01/01/15 (d) 500,000 557,825 NY Long Island Power Authority: Series 1998-8 C, 5.000% 04/01/10 2,000,000 2,233,340 Series 2003 A, 5.000% 06/01/09 2,000,000 2,187,040 PR Electric Power Authority, Series 1998 NN, 5.500% 07/01/20 1,005,000 1,131,198 TX Lower Colorado River Authority, Series 1999 A, 5.500% 05/15/21 15,000,000 16,488,300 ----------------------------------------------------------------------------- Municipal Electric Total 22,597,703 WATER & SEWER - 1.7% - ------------------------------------------ ----------------------------------------------------------------------------- CA State Department of Water Resources, Cent Valley Project, Series Series 2002 X, 5.500% 12/01/17 1,300,000 1,512,576 FL Key West Sewer Revenue, Series 2003, 5.250% 10/01/18 1,000,000 1,111,130 MO Water System Revenue, V Lakes Utility District, Series 1994, 8.250% 07/15/24 400,000 390,488 NH State Industrial Development Authority, Pennichuck Water Works, Inc. Project, Series 1988, 7.500% 07/01/18 470,000 529,573 See notes to investment portfolio. 30 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund MUNICIPAL BONDS - (CONTINUED) UTILITY - (CONTINUED) WATER & SEWER - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- PA Dauphin County Industrial Development Authority, Dauphin Water Supply Co., Series 1992 A, 6.900% 06/01/24 3,200,000 3,990,176 ----------------------------------------------------------------------------- Water & Sewer Total 7,533,943 ----------- UTILITY TOTAL 74,384,389 TOTAL MUNICIPAL BONDS (COST OF $412,570,380) 421,610,232 MUNICIPAL PREFERRED STOCKS - 0.8% HOUSING - 0.8% MULTI-FAMILY - 0.8% Shares - ------------------------------------------ ----------------------------------------------------------------------------- Charter Municipal Mortgage Acceptance Co.: 6.625% 06/30/49 (i) 2,000,000 2,137,380 7.600% 11/30/50 (i) 1,500,000 1,640,040 TOTAL MUNICIPAL PREFERRED STOCKS (COST OF $3,500,000) 3,777,420 SHORT-TERM OBLIGATIONS - 4.2% VARIABLE RATE DEMAND NOTES (J) - 4.2% Par ($) - ------------------------------------------ ----------------------------------------------------------------------------- AZ Phoenix Industrial Development Authority, Valley of the Sun YMCA Project, Series 2001, 1.370% 01/01/31 1,400,000 1,400,000 IA Hills Healthcare Revenue, Mercy Hospital Project, Series 2002, 1.320% 08/01/32 10,000 10,000 IA State Finance Authority, Drake University Project, Series 2001, 1.370% 07/01/31 800,000 800,000 Village Court Associates: Series 1985 A, 1.300% 11/01/15 300,000 300,000 Series 1985 B, 1.300% 11/01/15 100,000 100,000 IA Woodbury County, Siouxland Medical Education Foundation, Series 1996, 1.350% 11/01/16 1,500,000 1,500,000 ID State Health Facilities Authority Revenue, St. Luke's Regional Medical Center Project, Series 1995, 1.320% 05/01/22 200,000 200,000 IL Quad Cities Regional Economic Development Authority, Two Rivers YMCA Project, Series 2002 1.370% 12/01/31 1,900,000 1,900,000 See notes to investment portfolio. 31 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund SHORT-TERM OBLIGATIONS - (CONTINUED) VARIABLE RATE DEMAND NOTES (J) - (CONTINUED) Par ($) Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- IL State Health Facilities Authority Revenue: Bromenn Healthcare Inc., Series 2002, 1.320% 08/15/32 700,000 700,000 OSF Healthcare System, Series 2002, 1.330% 11/15/27 1,500,000 1,500,000 IN State Development Financing Authority Revenue, Cathedral High School, Series 2001, 1.370% 09/02/26 600,000 600,000 IN State Health Facilities Financing Authority Revenue, Fayette Memorial Hospital Association, Series 2002 A, 1.370% 10/01/32 3,400,000 3,400,000 MN State Department of Revenue: Brooklyn Center, Brookdale Corp. II Project, Series 2001, 1.370% 12/01/14 900,000 900,000 Mankato, Bethany Lutheran College, Series 2000 B, 1.370% 11/01/15 400,000 400,000 MO State Health & Education Facilities Revenue, Washington University, Series 1996 C, 1.320% 09/01/30 1,500,000 1,500,000 ND Ward County Health Care Facilities Revenue, Trinity Health, Series 2002 A, 1.370% 07/01/29 195,000 195,000 NY New York City, Series 1993 A-4, 1.300% 08/01/22 300,000 300,000 UT Eagle Mountain Gas & Electric Revenue, Series 2001, 1.300% 12/01/25 700,000 700,000 WI State Health & Education Facilities Authority: ProHealth Care Inc., Series 2001 B, 1.320% 08/15/30 400,000 400,000 Riverview Hospital Association, Series 2001, 1.370% 10/01/30 600,000 600,000 WY Lincoln County Pollution Control Revenue, Exxon Project, Series 1984 D, 1.140% 11/01/04 1,000,000 1,000,000 WY Uinta County Pollution Control Revenue, Chevron Corporation, Series 1992, 1.300% 12/01/22 600,000 600,000 ----------------------------------------------------------------------------- TOTAL SHORT-TERM OBLIGATIONS (COST OF $19,005,000) 19,005,000 See notes to investment portfolio. 32 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund Value ($) - ------------------------------------------ ----------------------------------------------------------------------------- TOTAL INVESTMENTS - 98.4% (COST OF $435,075,380)(K) 444,392,652 OTHER ASSETS & Liabilities, Net - 1.6% 6,960,229 Net Assets - 100.0% 451,352,881 Notes To Investment Portfolio: (a) Zero coupon bond. (b) Denotes a restricted security, which is subject to restrictions on resale under federal securities laws. At December 31, 2003, the value of these securities amounted to $3,059,872, which represents 0.7% of net assets. ACQUISITION ACQUISITION SECURITY DATE COST ------------------------------------------------------------------------ CA Abag Finance Authority for Nonprofit Corps., Eskaton Gold River Lodge, Series 1998: 6.375% 11/15/15 07/30/98 $ 706,431 6.375% 11/15/28 07/30/98 541,288 CA Statewide Community Development Authority, Eskaton Village - Grass Valley, Series 2000, 8.250% 11/15/31 09/08/00 1,750,000 --------- $2,997,719 ========= (c) As of December 31, 2003, the Fund held securities of certain issuers that have filed for bankruptcy protection under Chapter 11, representing 0.2% of net assets. These issuers are in default of certain debt covenants. Income is not being accrued. (d) Security purchased on a delayed delivery basis. (e) This issuer is in default of certain debt covenants. Income is not being fully accrued. (f) The fund has been informed that each issuer has placed direct obligations of the U.S. Government in an irrevocable trust solely for the purpose of the payment of principal and interest. (g) These securities, or a portion thereof, with a total market value of $1,832,665 are being used to collateralized open futures contracts. (h) Variable rate security. The rate reported is the rate in effect at December 31, 2003. (i) These securities are exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2003, the value of these securities amounted to $3,777,420 or 0.8% of net assets. (j) Variable rate demand notes (VRDN) are considered short-term obligations. Interest rates change periodically on specified dates. These securities are payable on demand and are secured either by letters of credits or other credit support agreements from banks. The rates listed are as of December 31, 2003. (k) Cost for federal income tax purposes is $434,789,943. Short futures contracts open at December 31, 2003: PAR VALUE UNREALIZED COVERED BY EXPIRATION DEPRECIATION TYPE CONTRACTS MONTH AT 12/31/03 ---------------------------------------------------------------------------- 10 Year U.S. Treasury Notes $94,600,000 Mar-04 $(905,949) ACRONYM NAME ------------------------------------------------------------- Abag Association of Bay Area Government See notes to financial statements. 33 STATEMENT OF ASSETS AND LIABILITIES December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund ($) - ------------------------------------------ ---------------------------------------------------------------------------- ASSETS Investments, at cost 435,075,380 Investments, at value 444,392,652 Cash 1,987,638 Receivable for: Fund shares sold 1,723,307 Interest 7,329,330 Deferred Trustees' compensation plan 10,891 Other assets 29,498 ----------- Total Assets 455,473,316 LIABILITIES Payable for: Investments purchased on a delayed delivery basis 1,969,810 Fund shares repurchased 475,867 Futures variation margin 147,812 Distributions 970,668 Investment advisory fee 154,981 Administration fee 43,243 Transfer agent fee 45,164 Registration fee 210,856 Distribution and service fees 53,719 Deferred Trustees' fees 10,891 Other liabilities 37,424 ----------- Total Liabilities 4,120,435 NET ASSETS 451,352,881 ---------------------------------------------------------------------------- COMPOSITION OF NET ASSETS Paid-in capital 465,394,651 Undistributed net investment income 40,183 Accumulated net realized loss (22,493,276) Net unrealized appreciation (depreciation) on: Investments 9,317,272 Futures contracts (905,949) NET ASSETS 451,352,881 ---------------------------------------------------------------------------- CLASS A Net assets 80,319,967 Shares outstanding 7,132,129 Net asset value per share 11.26 Maximum offering price per share ($11.26/0.9525) 11.82 CLASS B Net assets 46,604,781 Shares outstanding 4,138,297 Net asset value and offering price per share 11.26 CLASS C Net assets 10,903,896 Shares outstanding 968,241 Net asset value and offering price per share 11.26 CLASS Z Net assets 313,524,237 Shares outstanding 27,840,543 Net asset value, offering and redemption price per share 11.26 See notes to financial statements. 34 STATEMENT OF OPERATIONS For the Six Months Ended December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund ($) - ------------------------------------------ ---------------------------------------------------------------------------- INVESTMENT INCOME Dividends 5,023 Interest 12,650,568 ----------- Total Investment Income 12,655,591 ---------------------------------------------------------------------------- EXPENSES Investment advisory fee 877,622 Administration fee 247,684 Distribution fee: Class B 184,818 Class C 37,599 Service fee: Class A 78,476 Class B 49,285 Class C 9,979 Transfer agent fee 281,951 Pricing and bookkeeping fees 69,695 Trustees' fees 7,144 Custody fee 9,720 Other expenses 127,320 ----------- Total Operating Expenses 1,981,293 Fees waived by Distributor - Class C (7,660) Custody earnings credit (1,616) ----------- Net Expenses 1,972,017 ----------- Net Investment Income 10,683,574 ---------------------------------------------------------------------------- NET REALIZED AND UNREALIZED Net realized gain (loss) on: GAIN (LOSS) ON INVESTMENTS Investments (3,170,618) AND FUTURES CONTRACTS Futures contracts 1,681,240 ----------- Net realized loss (1,489,378) Net change in unrealized appreciation/depreciation on: Investments 3,467,587 Futures contracts (1,096,199) ----------- Net change in unrealized appreciation/depreciation 2,371,388 ----------- Net Gain 882,010 ----------- Net Increase in Net Assets from Operations 11,565,584 See notes to financial statements. 35 STATEMENT OF CHANGES IN NET ASSETS December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund (UNAUDITED) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, INCREASE (DECREASE) IN NET ASSETS: 2003($) 2003(A)($) - ------------------------------------------ ----------------------------------------------------------------------------- OPERATIONS: Net investment income 10,683,574 18,325,751 Net realized loss on investments and futures contracts (1,489,378) (3,496,306) Net change in unrealized appreciation/depreciation on investments and futures contracts 2,371,388 6,334,881 ----------- ----------- Net Increase from Operations 11,565,584 21,164,326 ----------------------------------------------------------------------------- DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income: Class A (1,846,315) (4,696,423) Class B (974,031) (3,013,907) Class C (203,843) (296,718) Class Z (6,972,273) (13,994,707) ----------- ----------- Total Distributions Declared to Shareholders (9,996,462) (22,001,755) ----------------------------------------------------------------------------- SHARE TRANSACTIONS: Class A: Subscriptions 8,571,169 18,354,905 Proceeds received in connection with merger -- 76,068,209 Distributions reinvested 769,996 2,010,003 Redemptions (7,481,767) (17,674,390) ----------- ----------- Net Increase 1,859,398 78,758,727 Class B: Subscriptions 2,848,179 7,804,555 Proceeds received in connection with merger -- 58,601,899 Distributions reinvested 413,031 1,355,241 Redemptions (7,943,781) (16,111,056) ----------- ----------- Net Increase (Decrease) (4,682,571) 51,650,639 Class C: Subscriptions 2,943,876 6,010,197 Proceeds received in connection with merger -- 4,760,489 Distributions reinvested 87,734 110,517 Redemptions (1,283,105) (1,770,277) ----------- ----------- Net Increase 1,748,505 9,110,926 Class Z: Subscriptions 99,281,622 81,763,744 Distributions reinvested 3,403,668 10,235,595 Redemptions (35,348,314) (60,473,287) ----------- ----------- Net Increase 67,336,976 31,526,052 Net Increase from Share Transactions 66,262,308 171,046,344 Total Increase in Net Assets 67,831,430 170,208,915 ----------------------------------------------------------------------------- (a) On July 29, 2002, the existing Fund Class S shares were redesignated Class Z shares. Class B and Class C shares were initially offered on July 15, 2002. See notes to financial statements. 36 STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund (UNAUDITED) SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, 2003($) 2003(A)($) - ------------------------------------------ ----------------------------------------------------------------------------- NET ASSETS: Beginning of period 383,521,451 213,312,536 End of period (including undistributed (overdistributed) net investment income of $40,183 and $(646,929), respectively) 451,352,881 383,521,451 ----------------------------------------------------------------------------- CHANGES IN SHARES: Class A: Subscriptions 771,628 1,639,804 Issued in connection with merger -- 6,725,748 Issued for distributions reinvested 69,364 177,053 Redemptions (674,660) (1,580,530) ----------- ----------- Net Increase 166,332 6,962,075 Class B: Subscriptions 256,745 696,631 Issued in connection with merger -- 5,181,423 Issued for distributions reinvested 37,226 121,313 Redemptions (716,223) (1,438,818) ----------- ----------- Net Increase (Decrease) (422,252) 4,560,549 Class C: Subscriptions 265,157 537,281 Issued in connection with merger -- 420,910 Issued for distributions reinvested 7,900 9,891 Redemptions (114,835) (158,063) ----------- ----------- Net Increase 158,222 810,019 Class Z: Subscriptions 8,955,250 7,296,394 Issued for distributions reinvested 306,739 915,399 Redemptions (3,188,886) (5,385,102) ----------- ----------- Net Increase 6,073,103 2,826,691 (a) On July 29, 2002, the existing Fund Class S shares were redesignated Class Z shares. Class B and Class C shares were initially offered on July 15, 2002. See notes to financial statements. 37 NOTES TO FINANCIAL STATEMENTS December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund NOTE 1. ORGANIZATION Columbia High Yield Municipal Fund (the "Fund"), a series of Columbia Funds Trust IX (the "Trust"), is a non-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 a high level of total return consisting of current income exempt from federal income tax and opportunities for capital appreciation. 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 subject to a maximum front-end sales charge of 4.75% based on the amount of initial investment. Class A shares purchased without an initial sales charge are subject to a 1.00% contingent deferred sales charge ("CDSC") on shares sold within eighteen months on an original purchase of $1 million to $25 million. Class B shares are subject to a maximum CDSC of 5.00% based upon the holding period after purchase. Class B shares will convert to Class A shares in a certain number of years after purchase, depending on the program under which shares were purchased. Class C shares are subject to a 1.00% CDSC on shares sold within one year after purchase. Class 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 High Yield Municipal Fund to Columbia High Yield Municipal Fund. Also on that date, the Trust changed its name from Liberty-Stein Roe Funds Municipal Trust to Columbia Funds Trust IX. 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 Debt securities generally are valued by a pricing service approved by the Trust's Board of Trustees, based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as broker quotes. Debt securities for which quotations are readily available are valued at an over-the-counter or exchange bid quotation. Certain securities, which tend to be more thinly traded and of lesser quality, are priced based on fundamental analysis of the financial condition of the issuer and the estimated value of any collateral. Valuations developed through pricing techniques may vary from the actual amounts realized upon sale of the securities, and the potential variation may be greater for those securities valued using fundamental analysis. Short-term obligations maturing within 60 days are valued at amortized cost, which approximates market 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. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale at the issuer's expense either upon demand by the Fund or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such 38 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund restricted securities may be determined to be liquid under criteria established by the Board of Trustees. The Fund will not incur any registration costs upon such resale. 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. FUTURES CONTRACTS The Fund may invest in municipal and U.S. Treasury futures contracts. The Fund will invest in these instruments to hedge against the effects of changes in the value of portfolio securities due to anticipated changes in interest rates and/or market conditions, for duration management, or when the transactions are economically appropriate to the reduction of risk inherent in the management of the Fund and not for trading purposes. The use of futures contracts involves certain risks, which include: (1) imperfect correlation between the price movement of the instruments and the underlying securities, (2) inability to close out positions due to differing trading hours, or the temporary absence of a liquid market, for either the instrument or the underlying securities, or (3) an inaccurate prediction by Columbia Management Advisors, Inc. of the future direction of interest rates. Any of these risks may involve amounts exceeding the variation margin recorded in the Fund's Statement of Assets and Liabilities at any given time. Upon entering into a futures contract, the Fund deposits cash or securities with the broker in an amount sufficient to meet the initial margin requirement. Subsequent payments are made or received by the Fund equal to the daily change in the contract value and are recorded as variation margin payable or receivable and offset in unrealized gains or losses. The Fund also identifies portfolio securities as segregated with the custodian in a separate account in an amount equal to the futures contract. The Fund recognizes a realized gain or loss when the contract is closed or expires. DELAYED DELIVERY SECURITIES The Fund may trade securities on other than normal settlement terms, including securities purchased or sold on a "when-issued" basis. This may increase the risk if the other party to the transaction fails to deliver and causes the Fund to subsequently invest at less advantageous prices. The Fund identifies cash or liquid portfolio securities as segregated with the custodian in an amount equal to the delayed delivery commitment. INCOME RECOGNITION Interest income is recorded on the accrual basis. Premium and discount are amortized and accreted, respectively, on all debt securities. 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 39 <PaGE> December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund 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 for the year ended June 30, 2003 was as follows: 2003 - ---------------------------------------------------------- Tax-Exempt Income $21,999,954 Ordinary Income 1,801 As of June 30, 2003, the components of distributable earnings on a tax basis were as follows: Undistributed Tax-Exempt Unrealized Income Appreciation - ---------------------------------------------------------- $520,746 $6,188,889 Unrealized appreciation and depreciation at December 31, 2003, based on cost of investments for federal income tax purposes and excluding any unrealized appreciation and depreciation from changes in the value of assets and liabilities resulting from changes in exchange rates was: Unrealized appreciation $ 23,228,167 Unrealized depreciation (13,625,458) - ---------------------------------------------------------- Net unrealized appreciation $ 9,602,709 The following capital loss carryforwards determined 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 $ 1,525,965 2006 5,933,974 2007 1,931,613 2008 2,738,332 2009 1,928,565 2010 1,780,434 2011 697,947 Total $16,536,830 Of the capital loss carryforwards attributable to Columbia High Yield Municipal Fund, $9,056,612 ($684,212 expired June 30, 2003, $1,525,965 expiring June 30, 2005, $1,931,613 expiring June 30, 2007, $2,738,332 expiring June 30, 2008, $1,081,414 expiring June 30, 2009 and $1,095,076 expiring June 30, 2010) was obtained in the merger with Liberty High Yield Municipal Fund, of which $8,372,400 remains (See note 8). Utilization of the Fund's capital loss carryforwards above could be subject to limitations imposed by the Internal Revenue Code. Expired capital loss carryforwards, if any are treated as a reduction in paid-in capital. 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 $100 million 0.450% Next $100 million 0.425% Over $200 million 0.400% For the six months ended December 31, 2003, the Fund's annualized effective investment advisory fee rate was 0.42%. 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 $100 million 0.150% Next $100 million 0.125% Over $200 million 0.100% For the six months ended December 31, 2003, the Fund's annualized effective administration fee rate was 0.12%. 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. 40 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund 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 effective pricing and bookkeeping fee rate was 0.033%. 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 $34.00 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 0.09%. 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 retained net underwriting discounts of $10,604 on sales of the Fund's Class A shares and received CDSC of $62,743 and $2,408 on 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. The service fee is equal to 0.20% annually of the average daily net assets attributable to Class A, 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 0.60% annually. 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. NOTE 5. PURCHASES AND SALES OF SECURITIES For the six months ended December 31, 2003, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $89,163,601 and $54,794,116, respectively. NOTE 6. LINE OF CREDIT The Fund and other affiliated funds participate in a $350,000,000 credit facility, which is used for temporary or emergency purposes to facilitate portfolio liquidity. Interest is charged to the Fund based on its borrowings. In addition, the Fund has agreed to pay commitment fees on its pro-rata portion of the unutilized line of credit. The commitment fee is included in "Other expenses" on the Statement of Operations. For the six months ended December 31, 2003, the Fund did not borrow under these arrangements. 41 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund NOTE 7. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES HIGH-YIELD SECURITIES Investing in high-yield securities may involve greater credit risk and considerations not typically associated with investing in U.S. Government bonds and other higher quality fixed income securities. These securities are non-investment grade securities, often referred to as "junk bonds." Economic downturns may disrupt the high yield market and impair the ability of issuers to repay principal and interest. Also, an increase in interest rates would likely have an adverse impact on the value of such obligations. Moreover, high-yield securities may be less liquid due to the extent that there is no established retail secondary market and because of a decline in the value of such securities. INDUSTRY FOCUS The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. LEGAL PROCEEDINGS Columbia, the Distributor and certain of their affiliates (collectively, "the Columbia Group") have received information requests and subpoenas from various regulatory 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 8. BUSINESS COMBINATIONS AND MERGERS FUND MERGERS As of the end of business on July 12, 2002, the Stein Roe High-Yield Municipals Fund acquired all the net assets of Liberty High Yield Municipal Fund pursuant to a plan of reorganization approved by Liberty High Yield Municipal Fund shareholders on June 28, 2002. All assets of Liberty High Yield Municipal Fund were transferred to Stein Roe High-Yield Municipals Fund in a tax-free exchange and shareholders of Liberty High Yield Municipal Fund received shares of Stein Roe High-Yield Municipals Fund in exchange for their shares as follows: Stein Roe Liberty High High-Yield Yield Municipal Municipals Fund Fund Net Unrealized Shares Issued Assets Received Depreciation1 - ---------------------------------------------------------- 12,328,081 $139,430,597 $(2,726,785) * Unrealized depreciation is included in the Net Assets Received amount shown above. 42 December 31, 2003 (Unaudited) Columbia High Yield Municipal Fund Net Assets Net Assets Net Assets of Liberty of Stein Roe of Stein Roe High Yield High-Yield High-Yield Municipal Fund Municipals Fund Municipals Fund Immediately Immediately Prior to Prior to After Combination Combination Combination - ---------------------------------------------------------- $218,007,534 $139,430,597 $357,438,131 CHANGE IN FUND STRUCTURE Prior to July 15, 2002, the Fund invested substantially all of its assets in the SR&F High-Yield Municipals Portfolio (the "Portfolio") as part of a master/feeder structure. The Portfolio allocated income, expenses, realized and unrealized gains (losses) to its investors 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 Portfolio was distributed to Stein Roe High-Yield Municipals Fund based on allocation methods in compliance with the Internal Revenue Service. 43 FINANCIAL HIGHLIGHTS Columbia High Yield Municipal Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: (UNAUDITED) SIX MONTHS PERIOD ENDED YEAR ENDED JUNE 30, ENDED DECEMBER 31, ---------------------- JUNE 30, CLASS A SHARES 2003 2003 2002 2001 (A) ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $ 11.25 $ 11.26 $ 11.13 $ 11.11 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (b) 0.28 0.60 0.61(c) 0.58 Net realized and unrealized gain on investments and futures contracts (0.01) 0.11 0.15(c) 0.01 -------- -------- -------- -------- Total from Investment Operations 0.27 0.71 0.76 0.59 - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.26) (0.72) (0.63) (0.57) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 11.26 $ 11.25 $ 11.26 $ 11.13 Total return (d) 2.48%(e) 6.58% 6.93% 5.42%(e) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f) 0.97%(g) 1.07% 1.13% 1.06%(g) Net investment income (f) 5.04%(g) 5.39% 5.41%(c) 5.65%(g) Portfolio turnover rate 14%(e) 17% 16%(h) 16%(h) Net assets, end of period (000's) $80,320 $78,335 $ 42 $ 1 - ------------------------------------------------------------------------------------------------------------------------------------ (a) Class A shares were initially offered on July 31, 2000. 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) Effective July 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and accreting discount on all debt securities. The effect of this change for the year ended June 30, 2002, was to increase the ratio of net investment income to average net assets from 5.37% to 5.41%. The impact to the net investment income and the net realized and unrealized gain was less than $0.01. Per share data and ratios for periods prior to June 30, 2002, have not been restated to reflect this change in presentation. (d) Total return at net asset value assuming all distributions reinvested and no initial sales charge or contingent deferred sales charge. (e) Not annualized. (f) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (g) Annualized. (h) Portfolio turnover disclosed is for the SR&F High-Yield Municipals Portfolio. 44 Columbia High Yield Municipal Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: (UNAUDITED) SIX MONTHS PERIOD ENDED ENDED DECEMBER 31, JUNE 30, CLASS B SHARES 2003 2003 (A) ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $ 11.25 $ 11.31 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (b) 0.24 0.51 Net realized and unrealized gain (loss) on investments and futures contracts (0.01) 0.05 -------- -------- Total from Investment Operations 0.23 0.56 - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.22) (0.62) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 11.26 $ 11.25 Total return (c)(d) 2.09% 5.14% - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (e)(f) 1.72% 1.81% Net investment income (e)(f) 4.29% 4.70% Portfolio turnover rate 14%(d) 17% Net assets, end of period (000's) $46,605 $51,292 - ------------------------------------------------------------------------------------------------------------------------------------ (a) Class B shares were initially offered on July 15, 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 and no contingent deferred sales charge. (d) Not annualized. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (f) Annualized. 45 Columbia High Yield Municipal Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: (UNAUDITED) SIX MONTHS PERIOD ENDED ENDED DECEMBER 31, JUNE 30, CLASS C SHARES 2003 2003 (A) ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $ 11.25 $ 11.31 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income (b) 0.25 0.51 Net realized and unrealized gain (loss) on investments and futures contracts (0.01) 0.07 -------- -------- Total from Investment Operations 0.24 0.58 - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.23) (0.64) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 11.26 $ 11.25 Total return (c)(d)(e) 2.17% 5.29% - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (f)(g) 1.56% 1.67% Net investment income (f)(g) 4.40% 4.75% Waiver/reimbursement (g) 0.15% 0.15% Portfolio turnover rate 14%(e) 17% Net assets, end of period (000's) $10,904 $ 9,110 - ------------------------------------------------------------------------------------------------------------------------------------ (a) Class C shares were initially offered on July 15, 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 and no contingent deferred sales charge. (d) Had the 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. 46 Columbia High Yield Municipal Fund SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS: (UNAUDITED) SIX MONTHS ENDED YEAR ENDED JUNE 30, DECEMBER 31, ---------------------------------------------------------------------- CLASS Z SHARES 2003 2003 (A) 2002 2001 2000 1999 ==================================================================================================================================== NET ASSET VALUE, BEGINNING OF PERIOD $ 11.25 $ 11.26 $ 11.12 $ 11.04 $ 11.71 $ 11.97 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS: Net investment income 0.29(b) 0.63(b) 0.64(b)(c) 0.65(b) 0.65 0.63 Net realized and unrealized gain (loss) on investments and futures contracts -- 0.11 0.15(c) 0.08 (0.68) (0.25) ------------ ------------ ------------ ------------ ------------ ------------ Total from Investment Operations 0.29 0.74 0.79 0.73 (0.03) 0.38 - ------------------------------------------------------------------------------------------------------------------------------------ LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS: From net investment income (0.28) (0.75) (0.65) (0.65) (0.64) (0.64) - ------------------------------------------------------------------------------------------------------------------------------------ NET ASSET VALUE, END OF PERIOD $ 11.26 $ 11.25 $ 11.26 $ 11.12 $ 11.04 $ 11.71 Total return (d) 2.59%(e) 6.82% 7.30% 6.78% (0.16)% 3.18%(f) - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA: Expenses (g) 0.77%(h) 0.86% 0.88% 0.81% 0.78% 0.77% Net investment income (g) 5.23%(h) 5.59% 5.66%(c) 5.86% 5.82% 5.26% Portfolio turnover rate 14%(e) 17% 16%(i) 16%(i) 14%(i) 19%(i) Net assets, end of period (000's) $313,524 $244,784 $213,271 $224,950 $253,787 $297,874 - ------------------------------------------------------------------------------------------------------------------------------------ (a) On July 15, 2002, the existing Fund Class S shares were redesignated Class Z shares. (b) Per share data was calculated using average shares outstanding during the period. (c) Effective July 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and accreting discount on all debt securities. The effect of this change for the year ended June 30, 2002, was to increase the ratio of net investment income to average net assets from 5.62% to 5.66%. The impact to the net investment income and the net realized and unrealized gain was less than $0.01. Per share data and ratios for periods prior to June 30, 2002, have not been restated to reflect this change in presentation. (d) Total return at net asset value assuming all distributions reinvested. (e) Not annualized. (f) 0.50% of the return is attributable to a one time revaluation of portfolio security reflecting the restructuring of this security. Absent this revaluation, total return would have been 2.68%. (g) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (h) Annualized. (i) Portfolio turnover disclosed is for the SR&F High Yield Municipals Portfolio. 47 IMPORTANT INFORMATION ABOUT THIS REPORT Columbia High Yield Municipal Fund TRANSFER AGENT The fund mails one shareholder report Columbia Funds Services, Inc. to each shareholder address. If you P.O. Box 8081 would like more than one report, Boston MA 02266-8081 please call shareholder services at 800.345.6611 800-345-6611 and additional reports will be sent to you. DISTRIBUTOR Columbia Funds Distributor, Inc. This report has been prepared for One Financial Center shareholders of Columbia High Yield Boston MA 02111 Municipal Fund. This report may also be used as sales literature when INVESTMENT ADVISOR preceded or accompanied by the current Columbia Management Advisors, Inc. prospectus which provides details of 100 Federal Street sales charges, investment objectives Boston MA 02111 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 Commissionwebsite at http://www.sec.gov. 48 COLUMBIA FUNDS Columbia High Yield Municipal 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 49 Columbia High Yield Municipal 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 ------------------------------------ MONEY MARKET Columbia Money Market Columbia Municipal Money Market 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 ------------------------------------ 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. 50 This page intentionally left blank. This page intentionally left blank. 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. Columbia High Yield Municipal Fund Semiannual Report, December 31, 2003 logo:columbia funds 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 PRSRT STD U.S. Postage PAID Holliston, MA Permit NO. 20 752-03/734Q-1203 (02/04) 04/0216 COLUMBIA MANAGED MUNICIPALS FUND Semiannual Report December 31, 2003 WE ARE COLUMBIA FUNDS! Inside - Management's discussion of the changes effective October 13, 2003. PRESIDENT'S MESSAGE Columbia Managed Municipals Fund [Joseph R. Palombo Photo] Table of Contents Fund Profile................................................ 1 Performance Information..................................... 2 Economic Update............................................. 3 Portfolio Manager's Report.................................. 4 Financial Statements........................................ 6 Investment Portfolio...................................... 7 Statement of Assets and Liabilities....................... 24 Statement of Operations................................... 25 Statement of Changes in Net Assets........................ 26 Notes to Financial Statements............................. 28 Financial Highlights...................................... 33 Important Information About This Report..................... 37 Columbia Funds.............................................. 38 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 - --------------------------- 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 Managed Municipals Fund was changed to Columbia Managed Municipals 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 Kim Campbell 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 FUND PROFILE Columbia Managed Municipals Fund Summary - - For the six-month period ended December 31, 2003, the fund's class A shares returned 0.64% without sales charge. - - The fund's return lagged that of its benchmark as well as the average return of its peer group, the Lipper General Municipal Debt Fund Category. - - We believe that the fund's longer-than-average duration hurt performance as all but the short-term interest rates rose slightly during the period. Objective Seeks high level of total return consisting of current income exempt from federal income tax and opportunities for capital appreciation Total Net Assets $467.1 million Class A Shares Lehman Brothers Municipal Bond Index 0.64% 1.45% [Arrow Graphics] [Fund Ratings Graphic] 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 breakdowns, sectors and percentages will be maintained in the future. Quality breakdown as of 12/31/03 (%) AAA 66.3 - --------------------------------------- AA 9.0 - --------------------------------------- A 8.8 - --------------------------------------- BBB 7.2 - --------------------------------------- BB 0.1 - --------------------------------------- B 0.6 - --------------------------------------- CCC 0.3 - --------------------------------------- CC 0.3 - --------------------------------------- Non-rated 6.7 - --------------------------------------- Cash equivalent 0.7 - --------------------------------------- Top 5 sectors as of 12/31/03 (%) Local general obligations 14.8 - --------------------------------------------- State general obligations 11.8 - --------------------------------------------- Joint power authority 10.3 - --------------------------------------------- Refunded/escrowed 10.1 - --------------------------------------------- Water & sewer 7.6 - --------------------------------------------- Maturity breakdown as of 12/31/03 (%) [Bar Chart] 0-1 years 0.0 1-3 years 0.4 3-5 years 4.3 5-7 years 9.0 7-10 years 12.9 10-15 years 40.3 15-20 years 18.0 20-25 years 6.5 25+ years 7.9 Cash equivalent 0.7 Quality and maturity breakdowns are calculated as a percentage of total investments, including short-term obligations. Sector breakdowns are calculated as a percentage of net assets. Ratings shown in the quality breakdown represent the highest rating assigned to a particular bond by one of the following nationally-recognized rating agencies: Standard & Poor's Corporation, Moody's Investors Service, Inc. or Fitch Investors Service, Inc. Maturity breakdown is based on each security's effective maturity, which reflects pre-refundings, mandatory puts and other conditions that affect a bond's maturity. (C) 2004 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. The Morningstar Style Box(TM) reveals a fund's investment strategy. For equity funds the vertical axis shows the market capitalization of the stocks owned and the horizontal axis shows investment style (value, blend or growth). For fixed-income funds the vertical axis shows the average credit quality of the bonds owned, and the horizontal axis shows interest rate sensitivity as measured by a bond's duration (short, intermediate or long). All of these numbers are drawn from the data most recently provided by the fund and entered into Morningstar's database as of month-end. Although the data are gathered from reliable sources, Morningstar cannot guarantee completeness and accuracy. As of 12/31/2003. 1 PERFORMANCE INFORMATION Columbia Managed Municipals Fund Performance of a $10,000 investment 01/01/94 - 12/31/03 sales charge: without with - --------------------------------- Class A 17,192 16,370 - --------------------------------- Class B 17,045 17,045 - --------------------------------- Class C 17,104 17,104 - --------------------------------- Class Z 17,235 n/a - --------------------------------- Performance data quoted represents past performance and current performance may be lower or higher. Past performance is no guarantee of future results. The investment return and principal value will fluctuate so that shares may be worth more or less than the original cost. Please visit www.columbiafunds.com for daily and most recent month-end performance updates. Value of a $10,000 investment 01/01/94 - 12/31/03 [Performance Graph] Class A without sales charge Class A with sales charge 10000.00 9525.00 12/01/1993 - 12/31/1993 10119.00 9638.00 01/01/1994 - 01/31/1994 9852.00 9384.00 02/01/1994 - 02/28/1994 9476.00 9025.00 03/01/1994 - 03/31/1994 9520.00 9068.00 04/01/1994 - 04/30/1994 9598.00 9142.00 05/01/1994 - 05/31/1994 9556.00 9102.00 06/01/1994 - 06/30/1994 9690.00 9229.00 07/01/1994 - 07/31/1994 9726.00 9264.00 08/01/1994 - 08/31/1994 9595.00 9139.00 09/01/1994 - 09/30/1994 9442.00 8993.00 10/01/1994 - 10/31/1994 9288.00 8847.00 11/01/1994 - 11/30/1994 9461.00 9011.00 12/01/1994 - 12/31/1994 9737.00 9274.00 01/01/1995 - 01/31/1995 9974.00 9501.00 02/01/1995 - 02/28/1995 10068.00 9590.00 03/01/1995 - 03/31/1995 10058.00 9580.00 04/01/1995 - 04/30/1995 10350.00 9858.00 05/01/1995 - 05/31/1995 10236.00 9750.00 06/01/1995 - 06/30/1995 10309.00 9819.00 07/01/1995 - 07/31/1995 10428.00 9933.00 08/01/1995 - 08/31/1995 10511.00 10011.00 09/01/1995 - 09/30/1995 10678.00 10170.00 10/01/1995 - 10/31/1995 10903.00 10385.00 11/01/1995 - 11/30/1995 11035.00 10511.00 12/01/1995 - 12/31/1995 11108.00 10580.00 01/01/1996 - 01/31/1996 10972.00 10451.00 02/01/1996 - 02/29/1996 10792.00 10280.00 03/01/1996 - 03/31/1996 10756.00 10245.00 04/01/1996 - 04/30/1996 10768.00 10257.00 05/01/1996 - 05/31/1996 10878.00 10362.00 06/01/1996 - 06/30/1996 10977.00 10456.00 07/01/1996 - 07/31/1996 10965.00 10444.00 08/01/1996 - 08/31/1996 11138.00 10609.00 09/01/1996 - 09/30/1996 11277.00 10741.00 10/01/1996 - 10/31/1996 11500.00 10954.00 11/01/1996 - 11/30/1996 11452.00 10908.00 12/01/1996 - 12/31/1996 11465.00 10921.00 01/01/1997 - 01/31/1997 11575.00 11026.00 02/01/1997 - 02/28/1997 11411.00 10869.00 03/01/1997 - 03/31/1997 11500.00 10954.00 04/01/1997 - 04/30/1997 11681.00 11126.00 05/01/1997 - 05/31/1997 11809.00 11248.00 06/01/1997 - 06/30/1997 12160.00 11582.00 07/01/1997 - 07/31/1997 12030.00 11458.00 08/01/1997 - 08/31/1997 12190.00 11611.00 09/01/1997 - 09/30/1997 12257.00 11674.00 10/01/1997 - 10/31/1997 12322.00 11736.00 11/01/1997 - 11/30/1997 12521.00 11926.00 12/01/1997 - 12/31/1997 12641.00 12041.00 01/01/1998 - 01/31/1998 12622.00 12023.00 02/01/1998 - 02/28/1998 12610.00 12011.00 03/01/1998 - 03/31/1998 12554.00 11958.00 04/01/1998 - 04/30/1998 12758.00 12152.00 05/01/1998 - 05/31/1998 12797.00 12189.00 06/01/1998 - 06/30/1998 12825.00 12216.00 07/01/1998 - 07/31/1998 13032.00 12413.00 08/01/1998 - 08/31/1998 13182.00 12556.00 09/01/1998 - 09/30/1998 13140.00 12516.00 10/01/1998 - 10/31/1998 13179.00 12553.00 11/01/1998 - 11/30/1998 13209.00 12582.00 12/01/1998 - 12/31/1998 13378.00 12743.00 01/01/1999 - 01/31/1999 13275.00 12645.00 02/01/1999 - 02/28/1999 13275.00 12645.00 03/01/1999 - 03/31/1999 13329.00 12695.00 04/01/1999 - 04/30/1999 13227.00 12599.00 05/01/1999 - 05/31/1999 13012.00 12394.00 06/01/1999 - 06/30/1999 13057.00 12437.00 07/01/1999 - 07/31/1999 12928.00 12314.00 08/01/1999 - 08/31/1999 12897.00 12284.00 09/01/1999 - 09/30/1999 12737.00 12132.00 10/01/1999 - 10/31/1999 12838.00 12228.00 11/01/1999 - 11/30/1999 12755.00 12150.00 12/01/1999 - 12/31/1999 12662.00 12061.00 01/01/2000 - 01/31/2000 12836.00 12226.00 02/01/2000 - 02/29/2000 13109.00 12487.00 03/01/2000 - 03/31/2000 13013.00 12395.00 04/01/2000 - 04/30/2000 12905.00 12292.00 05/01/2000 - 05/31/2000 13255.00 12626.00 06/01/2000 - 06/30/2000 13453.00 12814.00 07/01/2000 - 07/31/2000 13695.00 13044.00 08/01/2000 - 08/31/2000 13569.00 12924.00 09/01/2000 - 09/30/2000 13724.00 13072.00 10/01/2000 - 10/31/2000 13877.00 13218.00 11/01/2000 - 11/30/2000 14350.00 13669.00 12/01/2000 - 12/31/2000 14432.00 13747.00 01/01/2001 - 01/31/2001 14519.00 13829.00 02/01/2001 - 02/28/2001 14628.00 13933.00 03/01/2001 - 03/31/2001 14253.00 13576.00 04/01/2001 - 04/30/2001 14443.00 13757.00 05/01/2001 - 05/31/2001 14600.00 13907.00 06/01/2001 - 06/30/2001 14970.00 14259.00 07/01/2001 - 07/31/2001 15341.00 14612.00 08/01/2001 - 08/31/2001 15189.00 14468.00 09/01/2001 - 09/30/2001 15464.00 14729.00 10/01/2001 - 10/31/2001 15130.00 14411.00 11/01/2001 - 11/30/2001 14895.00 14188.00 12/01/2001 - 12/31/2001 15181.00 14460.00 01/01/2002 - 01/31/2002 15417.00 14684.00 02/01/2002 - 02/28/2002 14996.00 14284.00 03/01/2002 - 03/31/2002 15363.00 14634.00 04/01/2002 - 04/30/2002 15454.00 14720.00 05/01/2002 - 05/31/2002 15632.00 14889.00 06/01/2002 - 06/30/2002 15811.00 15060.00 07/01/2002 - 07/31/2002 15974.00 15215.00 08/01/2002 - 08/31/2002 16366.00 15588.00 09/01/2002 - 09/30/2002 15965.00 15206.00 10/01/2002 - 10/31/2002 15859.00 15106.00 11/01/2002 - 11/30/2002 16310.00 15535.00 12/01/2002 - 12/31/2002 16155.00 15387.00 01/01/2003 - 01/30/2003 16520.00 15735.00 02/01/2003 - 02/28/2003 16472.00 15690.00 03/01/2003 - 03/31/2003 16673.00 15881.00 04/01/2003 - 04/30/2003 17255.00 16435.00 05/01/2003 - 05/31/2003 17091.00 16279.00 06/01/2003 - 06/30/2003 16199.00 15429.00 07/01/2003 - 07/31/2003 16364.00 15587.00 08/01/2003 - 08/31/2003 16987.00 16181.00 09/01/2003 - 09/30/2003 16823.00 16024.00 10/01/2003 - 10/31/2003 17065.00 16254.00 11/01/2003 - 11/30/2003 17192.00 16370.00 Lehman Brothers Municipal Bond Index 10000.00 12/01/1993 - 12/31/1993 10114.00 01/01/1994 - 01/31/1994 9852.00 02/01/1994 - 02/28/1994 9451.00 03/01/1994 - 03/31/1994 9531.00 04/01/1994 - 04/30/1994 9614.00 05/01/1994 - 05/31/1994 9556.00 06/01/1994 - 06/30/1994 9731.00 07/01/1994 - 07/31/1994 9765.00 08/01/1994 - 08/31/1994 9621.00 09/01/1994 - 09/30/1994 9450.00 10/01/1994 - 10/31/1994 9279.00 11/01/1994 - 11/30/1994 9483.00 12/01/1994 - 12/31/1994 9754.00 01/01/1995 - 01/31/1995 10038.00 02/01/1995 - 02/28/1995 10153.00 03/01/1995 - 03/31/1995 10166.00 04/01/1995 - 04/30/1995 10490.00 05/01/1995 - 05/31/1995 10399.00 06/01/1995 - 06/30/1995 10497.00 07/01/1995 - 07/31/1995 10631.00 08/01/1995 - 08/31/1995 10698.00 09/01/1995 - 09/30/1995 10853.00 10/01/1995 - 10/31/1995 11033.00 11/01/1995 - 11/30/1995 11139.00 12/01/1995 - 12/31/1995 11224.00 01/01/1996 - 01/31/1996 11147.00 02/01/1996 - 02/29/1996 11005.00 03/01/1996 - 03/31/1996 10974.00 04/01/1996 - 04/30/1996 10969.00 05/01/1996 - 05/31/1996 11089.00 06/01/1996 - 06/30/1996 11189.00 07/01/1996 - 07/31/1996 11186.00 08/01/1996 - 08/31/1996 11343.00 09/01/1996 - 09/30/1996 11471.00 10/01/1996 - 10/31/1996 11681.00 11/01/1996 - 11/30/1996 11632.00 12/01/1996 - 12/31/1996 11654.00 01/01/1997 - 01/31/1997 11761.00 02/01/1997 - 02/28/1997 11605.00 03/01/1997 - 03/31/1997 11702.00 04/01/1997 - 04/30/1997 11879.00 05/01/1997 - 05/31/1997 12006.00 06/01/1997 - 06/30/1997 12339.00 07/01/1997 - 07/31/1997 12223.00 08/01/1997 - 08/31/1997 12368.00 09/01/1997 - 09/30/1997 12447.00 10/01/1997 - 10/31/1997 12521.00 11/01/1997 - 11/30/1997 12704.00 12/01/1997 - 12/31/1997 12835.00 01/01/1998 - 01/31/1998 12838.00 02/01/1998 - 02/28/1998 12850.00 03/01/1998 - 03/31/1998 12792.00 04/01/1998 - 04/30/1998 12994.00 05/01/1998 - 05/31/1998 13045.00 06/01/1998 - 06/30/1998 13078.00 07/01/1998 - 07/31/1998 13280.00 08/01/1998 - 08/31/1998 13446.00 09/01/1998 - 09/30/1998 13446.00 10/01/1998 - 10/31/1998 13493.00 11/01/1998 - 11/30/1998 13527.00 12/01/1998 - 12/31/1998 13688.00 01/01/1999 - 01/31/1999 13628.00 02/01/1999 - 02/28/1999 13647.00 03/01/1999 - 03/31/1999 13681.00 04/01/1999 - 04/30/1999 13602.00 05/01/1999 - 05/31/1999 13406.00 06/01/1999 - 06/30/1999 13454.00 07/01/1999 - 07/31/1999 13346.00 08/01/1999 - 08/31/1999 13352.00 09/01/1999 - 09/30/1999 13208.00 10/01/1999 - 10/31/1999 13348.00 11/01/1999 - 11/30/1999 13247.00 12/01/1999 - 12/31/1999 13189.00 01/01/2000 - 01/31/2000 13342.00 02/01/2000 - 02/29/2000 13633.00 03/01/2000 - 03/31/2000 13553.00 04/01/2000 - 04/30/2000 13482.00 05/01/2000 - 05/31/2000 13839.00 06/01/2000 - 06/30/2000 14032.00 07/01/2000 - 07/31/2000 14248.00 08/01/2000 - 08/31/2000 14174.00 09/01/2000 - 09/30/2000 14328.00 10/01/2000 - 10/31/2000 14437.00 11/01/2000 - 11/30/2000 14794.00 12/01/2000 - 12/31/2000 14940.00 01/01/2001 - 01/31/2001 14988.00 02/01/2001 - 02/28/2001 15123.00 03/01/2001 - 03/31/2001 14960.00 04/01/2001 - 04/30/2001 15121.00 05/01/2001 - 05/31/2001 15222.00 06/01/2001 - 06/30/2001 15448.00 07/01/2001 - 07/31/2001 15703.00 08/01/2001 - 08/31/2001 15649.00 09/01/2001 - 09/30/2001 15835.00 10/01/2001 - 10/31/2001 15702.00 11/01/2001 - 11/30/2001 15553.00 12/01/2001 - 12/31/2001 15822.00 01/01/2002 - 01/31/2002 16012.00 02/01/2002 - 02/28/2002 15698.00 03/01/2002 - 03/31/2002 16004.00 04/01/2002 - 04/30/2002 16102.00 05/01/2002 - 05/31/2002 16273.00 06/01/2002 - 06/30/2002 16483.00 07/01/2002 - 07/31/2002 16681.00 08/01/2002 - 08/31/2002 17046.00 09/01/2002 - 09/30/2002 16763.00 10/01/2002 - 10/31/2002 16692.00 11/01/2002 - 11/30/2002 17045.00 12/01/2002 - 12/31/2002 17002.00 01/01/2003 - 01/30/2003 17240.00 02/01/2003 - 02/28/2003 17250.00 03/01/2003 - 03/31/2003 17364.00 04/01/2003 - 04/30/2003 17771.00 05/01/2003 - 05/31/2003 17696.00 06/01/2003 - 06/30/2003 17077.00 07/01/2003 - 07/31/2003 17205.00 08/01/2003 - 08/31/2003 17710.00 09/01/2003 - 09/30/2003 17622.00 10/01/2003 - 10/31/2003 17805.00 11/01/2003 - 11/30/2003 17951.00 All results shown assume reinvestment of distributions. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Lehman Brothers Municipal Bond Index is a broad-based, unmanaged index that tracks the performance of high-yield bonds. Unlike the fund, indices are not investments, do not incur fees or expenses and are not professionally managed. It is not possible to invest directly in an index. Securities in the fund may not match those in an index. Average annual total return as of 12/31/03 (%) Share class A B - ---------------------------------------------------------------------------------------------------------------- Inception date 11/1/02 11/1/02 - ---------------------------------------------------------------------------------------------------------------- Sales charge without with without with - ---------------------------------------------------------------------------------------------------------------- 6-month (cumulative) 0.64 -4.14 0.27 -4.58 - ---------------------------------------------------------------------------------------------------------------- 1-year 5.47 0.46 4.69 -0.29 - ---------------------------------------------------------------------------------------------------------------- 5-year 5.42 4.40 5.24 4.92 - ---------------------------------------------------------------------------------------------------------------- 10-year 5.57 5.05 5.48 5.48 - ---------------------------------------------------------------------------------------------------------------- Share class C Z - -------------------- -------------------------------------------------------------------------- Inception date 11/1/02 2/23/77 - -------------------- -------------------------------------------------------------------------- Sales charge without with without - -------------------- -------------------------------------------------------------------------- 6-month (cumulative) 0.42 -0.55 0.73 - ---------------------------------------------------------------------------------------------------------------- 1-year 5.00 4.01 5.66 - ---------------------------------------------------------------------------------------------------------------- 5-year 5.31 5.31 5.47 - ---------------------------------------------------------------------------------------------------------------- 10-year 5.51 5.51 5.59 - ---------------------------------------------------------------------------------------------------------------- All results shown assume reinvestment of distributions. The "with sales charge" returns include the maximum 4.75% charge for class A shares, the appropriate class B contingent deferred sales charge for the holding period after purchase as follows: through first year-5%, second year-4%, third year-3%, fourth year-3%, fifth year-2%, sixth year-1%, thereafter-0%, and the class C contingent deferred sales charge of 1% for the first year only. Performance for different share classes will vary based on differences in sales charges and fees associated with each class. Performance results reflect any voluntary waivers or reimbursement of fund expenses by the advisor or its affiliates. Absent these waivers or reimbursement arrangements, performance results would have been lower. Class A, B and C share (newer class shares) performance information includes returns of the fund's class Z shares (the oldest existing fund class) for periods prior to the inception of the newer class shares. These class Z share returns are not restated to reflect any expense differential (e.g., rule 12b-1 fees) between class Z shares and the newer class shares. Had the expense differential been reflected, the returns for the periods prior to the inception of class A, B and C shares would have been lower. 2 ECONOMIC UPDATE Columbia Managed Municipals 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 picked up in the last months of the period. The US bond market experienced extraordinary volatility as interest rates fell early in the period, rose sharply as the economy improved and then came back down in the final months of the reporting period. 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 negative .53% return for the Lehman 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 on to 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. 3 PORTFOLIO MANAGER'S REPORT Columbia Managed Municipals Fund Net asset value per share as of 12/31/03 ($) Class A 9.10 - ---------------------------------------------------------------------- Class B 9.10 - ---------------------------------------------------------------------- Class C 9.10 - ---------------------------------------------------------------------- Class Z 9.10 - ---------------------------------------------------------------------- Distributions declared per share 07/01/03 - 12/31/03 ($) Class A 0.33 - ---------------------------------------------------------------------- Class B 0.30 - ---------------------------------------------------------------------- Class C 0.31 - ---------------------------------------------------------------------- Class Z 0.34 - ---------------------------------------------------------------------- A portion of the fund's income may be subject to the alternative minimum tax. The fund may at times purchase municipal securities at a discount. Some or all of this discount may be included in the fund's ordinary income, and is taxable when distributed. SEC yields as of 12/31/03 (%) Class A 3.26 - ---------------------------------------------------------------------- Class B 2.67 - ---------------------------------------------------------------------- Class C 2.97 - ---------------------------------------------------------------------- Class Z 3.63 - ---------------------------------------------------------------------- The 30-day SEC yields reflect the portfolio earning power net of expenses, expressed as an annualized percentage of public offering price per share. Taxable equivalent SEC yields as of 12/31/03 (%) Class A 5.02 - ---------------------------------------------------------------------- Class B 4.11 - ---------------------------------------------------------------------- Class C 4.57 - ---------------------------------------------------------------------- Class Z 5.58 - ---------------------------------------------------------------------- Taxable-equivalent SEC yields are based on the maximum effective 35% federal and state income tax rate. This tax rate does not reflect the phase out of exemptions or the reduction of otherwise allowable deductions that occur when adjusted gross income exceeds certain levels. For the six-month period ended December 31, 2003, Columbia Managed Municipals Fund class A shares returned 0.64% without sales charge. The fund underperformed its benchmark, the Lehman Brothers Municipal Bond Index, which returned 1.45% for the same period. The fund also underperformed the 1.33% average return of the Lipper General Municipal Debt Fund Category.(1) The fund's duration, which was longer than that of its peers, detracted from performance as municipal bond yields rose and their prices fell. The fund also was hampered by its holdings of ten-year bonds, because yields in this maturity range tended to rise more than longer maturities. Although the fund's concentration on zero-coupon and non-callable bonds helped performance as interest rates fell in the second quarter of 2003, this position hurt performance as yields on most municipal bonds ended the six-month period slightly higher. Economic gains pushed bond prices down The US economy picked up the pace of growth over the past six months. In the beginning of the period, consumer confidence and spending generally increased. Businesses continued to increase their capital spending. This economic upswing raised concerns about inflation early in the summer. As a result, yields on municipal and Treasury securities rose and their prices declined, because yields and prices move in opposite directions. Yet, this growth did not give rise to inflationary pressures and combined with the uncertainty of job creation, economic expectations cooled. As a result, municipal yields generally declined from the middle of the period, but closed the period slightly higher than where they began. High-yield bonds benefited the fund The fund's investments in high-yield bonds contributed positively to performance. Historically, high-yield bonds have been less sensitive to interest rate changes than higher quality bonds, and that pattern was repeated during the period. The fund's airline bonds also performed well as that industry's performance improved along with the economy and an increase in travel. We continued to own intermediate maturity (10-20 year) bonds, which provided the potential for good returns. In addition, we purchased higher-yielding municipal bonds, which have the potential to add income and diversity to the portfolio. (1) Lipper Inc., a widely respected data provider in the industry, calculates an average total return for mutual funds with similar investment objectives as the fund. 4 - -------------------------------------------------------------------------------- Columbia Managed Municipals Fund Duration is a measure, expressed in years, of interest-rate sensitivity. We use duration as a tactical tool to anticipate or respond to interest rate changes. Because bond prices move in the opposite direction of interest rates, we lower duration when we expect interest rates to rise. We raise duration when we expect interest rates to fall. These adjustments provide the potential to benefit performance. If we are wrong and interest rates rise after we lengthen duration or fall after we shorten duration, fund performance could be hurt. Monitoring interest rates for the period ahead If the economy continues to recover gradually and inflationary pressures are muted, we expect interest rates to stay relatively low. Since consumer spending did not decrease sharply during the economic slowdown, the strong demand that typically fuels a recovery period has not been available to sustain a strong economic expansion. As a result, we believe that economic growth could be uneven, restrained by limited pricing power, global competition, high productivity and a reluctance on the part of business to hire permanent employees. However, if the pace of growth is greater than expected, interest rates could move higher in anticipation of inflationary pressures. As usual, we will monitor and manage the fund's sensitivity to interest rate changes. We expect to focus on intermediate-maturity bonds with structures that we believe offer potential for good return. In addition, we will look to purchase higher-yielding bonds on a selective basis. [Kimberly A. Kimberly A. Campbell has managed the Columbia Campbell Photo] Managed Municipals Fund since December 2001. From 1995 to 2001, Kim was the chief trader for municipal investments of the advisor. She has 23 years of experience in the municipal investment industry. /s/ KIMBERLY A. CAMPBELL Tax-exempt investing offers current tax-free income, but it also involves certain risks. Investing in high yield bonds involves greater risk of loss due to credit deterioration than higher-quality bonds. The value of the fund will be affected by interest rate changes and the creditworthiness of issues held in the fund. The manager seeks to identify opportunities and attempts to react quickly to market changes. 5 FINANCIAL STATEMENTS Columbia Managed Municipals Fund December 31, 2003 (Unaudited) A guide to understanding the fund's financial statements - -------------------------------------------------------------------------------- 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). - -------------------------------------------------------------------------------- Statement of Assets and Liabilities This statement shows the fund's net assets and share 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. - -------------------------------------------------------------------------------- Statement of Operations This statement details both the type of income earned by 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. - -------------------------------------------------------------------------------- Statement of Changes in Net Assets This statement shows how the fund's net assets were 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. - -------------------------------------------------------------------------------- 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. The financial highlights also detail the fund's portfolio turnover rate, which is a measure of trading activity. A separate table is provided for each share class. - -------------------------------------------------------------------------------- Notes to Financial Statements These notes disclose information regarding certain fund background information, significant accounting policies of the fund, including security valuation and income accruals and related party transactions. 6 INVESTMENT PORTFOLIO Columbia Managed Municipals Fund December 31, 2003 (Unaudited) Municipal Bonds - 97.6% EDUCATION - 3.8% Par ($) Value ($) - ------------------------------------------ ------------------------------------------------------------------------------- Education - 3.1% CA State Educational Facilities Authority, Loyola Marymount University, Series 2001 A, (a), 10/01/20 1,000,000 442,300 MA State Health & Educational Facilities Authority, Mass Institute of Technology, Series 2002 K, 5.500%, 07/01/22 1,000,000 1,154,830 MI State, University of Mississippi Medical Center, Series 1998 B, 5.500%, 12/01/23 1,000,000 1,132,010 OH State, University of Akron, Series 1999, 5.750%, 01/01/12 1,000,000 1,141,770 OH State Higher Educational Facilities Reserve, Case Western Reserve University, Series 1994, 6.250%, 10/01/17 4,340,000 5,375,220 SC Berkeley County School District, Installment Lease, Securing Assets for Education, Series 2003, 5.000%, 12/01/28 1,000,000 995,580 VA State College Building Authority, Washington and Lee University, Series 2001, 5.375%, 01/01/21 2,000,000 2,278,260 WV State University, Series 2000 A, (a), 04/01/18 3,800,000 1,957,380 -------------- Education Total 14,477,350 ------------------------------------------------------------------------------- Student Loan - 0.7% ME State Educational Loan Marketing Corp., Series 1994 B-1, 6.500%, 11/01/09 3,000,000 3,345,780 -------------- Student Loan Total 3,345,780 -------------- EDUCATION TOTAL 17,823,130 HEALTHCARE - 8.3% - ------------------------------------------ ------------------------------------------------------------------------------- Congregate Care Retirement - 0.2% FL Capital Project Finance Authority, Glenridge on Palmer Ranch, Series 2002 A, 8.000%, 06/01/32 500,000 516,895 OH Hamilton County Health Care Facilities Revenue, Twin Towers, Series 1998 A, 5.125%, 10/01/18 500,000 470,105 -------------- Congregate Care Retirement Total 987,000 ------------------------------------------------------------------------------- See notes to investment portfolio. 7 - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals Fund Municipal Bonds - (continued) HEALTHCARE - (continued) Par ($) Value ($) - ------------------------------------------ ------------------------------------------------------------------------------- Health Services - 0.5% MA State Development Finance Agency, Boston Biomedical Research Institute, Series 1999, 5.650%, 02/01/19 310,000 300,805 WI State Health & Educational Facilities Authority, Marshfield Clinic, Series 1999, 6.250%, 02/15/29 1,600,000 1,826,624 -------------- Health Services Total 2,127,429 ------------------------------------------------------------------------------- Hospital - 6.8% Abag Finance Authority for Nonprofit Corps., San Diego Hospital Association, Series 2003 C, 5.375%, 03/01/20 1,320,000 1,322,455 FL Hillsborough County Industrial Development Authority, Tampa General Hospital Project, Series 2003 A: 5.000%, 10/01/18 825,000 824,084 5.250%, 10/01/24 800,000 788,008 FL West Orange Healthcare District, Series 2001 A, 5.650%, 02/01/22 1,050,000 1,062,841 ID State Health Facilities Authority Revenue, Intermountain Health Care Hospitals, Inc., Series 1992, 6.650%, 02/15/21 1,200,000 1,534,788 IL State Development Finance Authority, Adventist Health System, Series 1999, 5.500%, 11/15/20 1,650,000 1,680,475 IL State Health Facilities Authority, Swedish American Hospital, Series 2000, 6.875%, 11/15/30 1,000,000 1,090,470 LA State Public Facilities Authority, Touro Infirmary, Series 1999 A, 5.625%, 08/15/29 1,240,000 1,248,420 MA State Health & Educational Facilities Authority: Massachusetts General Hospital, Series 1992 F, 6.250%, 07/01/12 5,750,000 6,764,128 South Shore Hospital, Series 1999 F: 5.625%, 07/01/19 1,000,000 1,035,400 5.750%, 07/01/29 2,500,000 2,550,300 MD State Health & Educational Facilities Authority, University of Maryland Medical System, Series 2000, 6.750%, 07/01/30 500,000 566,235 MO State Health & Educational Facilities Authority, Lake Regional Health Systems, Series 2003, 5.600%, 02/15/25 625,000 624,956 NV Henderson, Catholic Healthcare West, Series 1999 A, 6.750%, 07/01/20 1,000,000 1,079,690 8 See notes to investment portfolio. - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals Fund Municipal Bonds - (continued) HEALTHCARE - (continued) Par ($) Value ($) - ------------------------------------------ ------------------------------------------------------------------------------- NY State Dormitory Authorization Revenue, Memorial Sloan-Kettering Cancer Center, Series 2003-1, (a) 07/01/25 600,000 211,458 OH Belmont County, Ohio Valley Medical Center, Inc., Series 1998, 5.700%, 01/01/13 500,000 445,780 OH Green Springs Health Care Facilities, St. Francis Health Care Center Project, Series 1994 A, 7.000%, 05/15/04 190,000 189,525 OH Highland County Joint Township Hospital District, Series 1999, 6.750%, 12/01/29 480,000 456,797 OH Miami County Hospital Facilities Revenue, Upper Valley Medical Center, Series 1996 C, 6.000%, 05/15/06 770,000 821,497 OH Montgomery County, Franciscan Sisters of the Poor, Series 1985 B-1, 8.100%, 07/01/18 410,000 451,467 OK Development Finance Authority, Duncan Regional Hospital, Series 2003 A, 5.125%, 12/01/23 (b) 1,000,000 987,060 TN Knox County Health and Educational Facilities Authority, East Tennessee Hospital, Series 2003 B, 5.750%, 07/01/33 750,000 762,622 VA Prince William County, Industrial Development Authority, Potomac Hospital Corp., Series 2003, 5.200%, 10/01/26 1,000,000 997,270 WI State Health & Educational Facilities Authority: Aurora Health Care, Series 2003, 6.400%, 04/15/33 1,075,000 1,131,900 Wheaton Franciscan Services, Series 2002, 5.750%, 08/15/30 900,000 936,198 WV State Hospital Finance Authority, Charlestown Area Medical Center, Series 2000 A, 6.750%, 09/01/30 1,610,000 1,996,158 -------------- Hospital Total 31,559,982 ------------------------------------------------------------------------------- See notes to investment portfolio. 9 - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals Fund Municipal Bonds - (continued) HEALTHCARE - (continued) Par ($) Value ($) - ------------------------------------------ ------------------------------------------------------------------------------- Intermediate Care Facilities - 0.6% IN State Health Facilities Financing Authority, Hoosier Care, Inc., Series 1999 A, 7.125%, 06/01/34 2,415,000 1,993,365 TN Shelby County, Health, Education & Housing Facilities Board, Germantown Village, Series 2003 A, 7.250%, 12/01/34 1,000,000 997,400 -------------- Intermediate Care Facilities Total 2,990,765 ------------------------------------------------------------------------------- Nursing Home - 0.2% HI State Department of Budget and Finance, Kahala Senior Living Community Project, Series 2003 A, 7.875%, 11/15/23 1,000,000 1,011,570 -------------- Nursing Home Total 1,011,570 -------------- HEALTHCARE TOTAL 38,676,746 HOUSING - 2.4% - ------------------------------------------ ------------------------------------------------------------------------------- Multi-Family - 1.8% FL Broward County Housing Finance Authority, Chaves Lake Apartment Project, Series 2000 A, 7.500%, 07/01/40 1,500,000 1,518,705 FL Clay County Housing Finance Authority, Madison Commons Apartments, Series 2000 A, 7.450%, 07/01/40 730,000 739,118 FL Orange County Housing Finance Authority, Palms at Brentwood Apartments, Series 1998 K, 6.500%, 12/01/34 1,935,000 1,752,433 IL State Development Finance Authority, Catholic Charities Housing Development Corp., Series 1993 C, 5.950%, 01/01/09 1,450,000 1,484,786 Municipal Mortgage & Equity LLC, 7.750%, 11/01/10 (c) 2,000,000 2,201,500 OH Lake County, North Madison Properties, Ltd. Project, Series 1993, 8.819%, 09/01/11 180,000 178,756 RI State Housing & Mortgage Finance Corp., Series 1988, 7.550%, 10/01/22 515,000 515,654 -------------- Multi-Family Total 8,390,952 ------------------------------------------------------------------------------- Single Family - 0.6% ID State Housing Agency, Series 1990 E, 7.875%, 07/01/24 465,000 465,000 NM State Mortgage Finance Authority, Series 2000 A-2, 7.100%, 09/01/30 1,125,000 1,255,894 10 See notes to investment portfolio. - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals Fund Municipal Bonds - (continued) HOUSING - (continued) Par ($) Value ($) - ------------------------------------------ ------------------------------------------------------------------------------- NV State Housing Division, Series 1991 A-2, 7.750%, 04/01/22 430,000 430,744 OH Housing Finance Agency: Series 1994 B-2, 6.700%, 03/01/25 90,000 92,632 Series 1997 A-1, 6.050%, 09/01/17 625,000 662,913 -------------- Single Family Total 2,907,183 -------------- HOUSING TOTAL 11,298,135 INDUSTRIAL - 4.2% - ------------------------------------------ ------------------------------------------------------------------------------- Food Products - 2.6% GA Cartersville Development Authority, Anheuser Busch Companies., Inc., Series 1989 A, 7.375%, 05/01/09 9,000,000 10,845,000 MI State Strategic Funding, Michigan Sugar Co., Carollton Project: Series 1998 B, 6.450%, 11/01/25 700,000 600,467 Series 1998 C, 6.550%, 11/01/25 800,000 694,576 -------------- Food Products Total 12,140,043 ------------------------------------------------------------------------------- Forest Products - 1.2% WA Port Longview Industrial Development Corp., Weyerhaeuser Corp., Series 1992, 6.875%, 10/01/08 4,750,000 5,406,593 -------------- Forest Products Total 5,406,593 ------------------------------------------------------------------------------- Manufacturing - 0.4% MO State Development Finance Board, Procter & Gamble Co., Series 1999, 5.200%, 03/15/29 1,000,000 1,055,030 NM Albuquerque Industrial Development Authority, Motorola, Inc., Series 1983 A, 10.000%, 06/01/13 1,000,000 1,004,520 -------------- Manufacturing Total 2,059,550 -------------- INDUSTRIAL TOTAL 19,606,186 OTHER - 10.6% - ------------------------------------------ ------------------------------------------------------------------------------- Other - 0.5% NJ Tobacco Settlement Financing Corp., Series 2003, 6.750%, 06/01/39 1,415,000 1,392,063 Virgin Islands Public Finance Authority, Hovensa Refinery, Series 2003, 6.125%, 07/01/22 875,000 893,156 -------------- Other Total 2,285,219 ------------------------------------------------------------------------------- See notes to investment portfolio. 11 - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals Fund Municipal Bonds - (continued) OTHER - (continued) Par ($) Value ($) - ------------------------------------------ ------------------------------------------------------------------------------- Refunded/Escrowed (d) - 10.1% CA Foothill/Eastern Transportation Corridor Agency, Series 1995 A, (a), 01/01/18 10,000,000 5,326,700 CA Southern California Public Power Authority, Southern Transmission Project, Series 1988 A, (a), 07/01/14 8,155,000 5,358,324 CA State, Series 2003, 5.250%, 02/01/23 2,000,000 2,083,520 FL State, Jacksonville Transportation Authority, Series 1985, 9.200%, 01/01/15 2,000,000 2,840,680 GA State Municipal Electric Authority, Series 1991, 6.600%, 01/01/18 3,600,000 4,532,148 GA Fulton County, Series 1992, 6.375%, 01/01/14 13,270,000 15,947,355 MI State, Certificate of Participation, Series 2000, (a), 06/01/21 1,000,000 430,650 NC Eastern Municipal Power Agency, Series 1991 A, 6.500%, 01/01/18 4,315,000 5,527,342 NJ Cape May County Municipal Utilities Authority, Series 2002 A, 5.750%, 01/01/16 1,000,000 1,180,160 SC Calhoun County, Solid Waste Disposal Facilities, Eastman Kodak Co., Series 1992, 6.750%, 05/01/17 3,000,000 3,785,310 TX State Municipal Power Agency, Series 1989, (a), 09/01/08 75,000 66,290 -------------- Refunded/Escrowed Total 47,078,479 -------------- OTHER TOTAL 49,363,698 OTHER REVENUE - 0.9% - ------------------------------------------ ------------------------------------------------------------------------------- Recreation - 0.7% CA Agua Caliente Band Cahuilla Indians, Series 2003, 6.000%, 07/01/18 350,000 353,406 FL Capital Trust Agency, Seminole Tribe Convention Center, Series 2002 A, 10.000%, 10/01/33 1,500,000 1,857,750 OH Hamilton County Sales Tax Revenue, Series 2000 B, (a), 12/01/20 2,000,000 906,920 -------------- Recreation Total 3,118,076 ------------------------------------------------------------------------------- 12 See notes to investment portfolio. - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals Fund Municipal Bonds - (continued) OTHER REVENUE - (continued) Shares Value - ------------------------------------------ ------------------------------------------------------------------------------- Retail - 0.2% NJ State Economic Development Authority, Glimcher Properties L.P. Project, Series 1998, 6.000%, 11/01/28 850,000 864,441 -------------- Retail Total 864,441 -------------- OTHER REVENUE TOTAL 3,982,517 RESOURCE RECOVERY - 0.9% - ------------------------------------------ ------------------------------------------------------------------------------- Disposal - 0.5% IL Development Finance Authority, Waste Management, Inc., Series 1997, 5.050%, 01/01/10 500,000 519,515 MI State Strategic Fund, United Waste Systems, Inc., Series 1995, 5.200%, 04/01/10 500,000 527,060 OH State Air Quality Development Authority, JMG Funding Ltd. Project, Series 1997, 5.625%, 01/01/23 1,000,000 1,076,090 -------------- Disposal Total 2,122,665 ------------------------------------------------------------------------------- Resource Recovery - 0.4% PA Carbon County Industrial Development Authority, Panther Creek Partners Project, Series 2000, 6.650%, 05/01/10 900,000 977,805 NV State Department of Business & Industry, Republic Services, Inc. Project, Series 2003, 5.625%, 12/01/26 500,000 507,635 WY Lincoln County, Environmental Improvement Revenue, Pacificorp Project, Series 1995, 4.125%, 11/01/25 500,000 490,605 -------------- Resource Recovery Total 1,976,045 -------------- RESOURCE RECOVERY TOTAL 4,098,710 TAX-BACKED - 35.1% - ------------------------------------------ ------------------------------------------------------------------------------- Local Appropriated - 2.1% CA San Bernardino County, Series 2002 A, 5.000%, 07/01/15 2,210,000 2,455,222 IL Chicago Board of Education, Series 1992 A, 6.000%, 01/01/16 5,000,000 5,972,100 IN Crown Point School Building Corp., Series 2000: (a), 01/15/18 1,550,000 804,078 (a), 01/15/19 1,665,000 811,071 -------------- Local Appropriated Total 10,042,471 ------------------------------------------------------------------------------- Local General Obligations -- 14.8% AK North Slope Borough: Series 1999 A, (a), 06/30/10 2,515,000 2,019,293 Series 2000 B, (a), 06/30/10 2,000,000 1,603,340 Series 2001 A, (a), 06/30/12 5,000,000 3,587,500 See notes to investment portfolio. 13 - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals Fund Municipal Bonds - (continued) TAX-BACKED - (continued) Par ($) Value ($) - ------------------------------------------ ------------------------------------------------------------------------------- CA Golden West School Financing Authority, Series 1999 A, (a), 08/01/15 1,500,000 902,955 CA Los Angeles Unified School District, Series 2002, 5.750%, 07/01/16 400,000 473,972 CA Union Elementary School District, Series 1999 A, (a), 09/01/17 2,300,000 1,228,775 CA West Contra Costa Unified School District, Series 2001 B, 6.000%, 08/01/24 465,000 557,256 CA Yuba City Unified School District, Series 2000, (a), 09/01/18 1,160,000 583,526 IL Champaign County, Series 1999, 8.250%, 01/01/20 1,015,000 1,453,866 IL Chicago Board of Education: Series 1996, 6.250%, 12/01/12 2,500,000 3,036,925 Series 1998 B-1: (a), 12/01/21 1,500,000 610,590 (a), 12/01/22 3,000,000 1,144,410 (a), 12/01/23 2,500,000 893,550 IL Chicago Emergency Telephone System, Series 1999, 5.500%, 01/01/23 2,250,000 2,550,847 IL Chicago Public Building Commission, Series 1999 B, 5.250%, 12/01/18 2,000,000 2,252,300 IL Coles & Cumberland County's Unified School District, Series 2000, (a), 12/01/13 3,120,000 2,091,929 IL Cook County School District No. 102, Series 2001, (a), 12/01/20 3,065,000 1,334,072 IL Will County Community Unit School District No. 365 Valley View, Series 1999 B, (a), 11/01/18 1,900,000 941,355 IL Will County Forest Preservation District, Series 1999, (a), 12/01/16 1,000,000 559,270 LA New Orleans, Series 1991, (a), 09/01/12 6,250,000 4,492,187 MO Springfield School District No. R-12, Series 1991 B, 9.500%, 03/01/07 600,000 735,558 OH Adams County Ohio Valley Local School District, Series 1995, 7.000%, 12/01/15 3,000,000 3,870,900 14 See notes to investment portfolio. - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals Fund Municipal Bonds - (continued) TAX-BACKED - (continued) Par ($) Value ($) - ------------------------------------------ ------------------------------------------------------------------------------- OH Beavercreek Local School District, Series 1996, 6.600%, 12/01/15 2,500,000 3,153,675 OH Crooksville Exempt Village School District, Series 1986, 7.375%, 12/01/07 25,000 29,291 OH Cuyahoga County, Series 1993 A, (a), 10/01/12 1,000,000 721,840 OH Dublin City School District, Series 1997, (a), 12/01/11 900,000 678,213 OH Eastern Local School District Brown & Highland Counties, Series 1995, 6.250%, 12/01/17 1,160,000 1,435,024 OH Gahanna-Jefferson City School District, Series 1993, (a), 12/01/11 795,000 600,956 OH Hilliard School District: Series 1995 A, (a), 12/01/12 2,505,000 1,784,963 Series 2000, 5.750%, 12/01/24 1,000,000 1,123,070 OH Kings Local School District, Series 1995, 7.500%, 12/01/16 2,110,000 2,854,345 OH Lakota Local School District, Series 2001, 5.500%, 12/01/18 1,460,000 1,697,031 OH Massillion City School District, Series 2002: (a), 12/01/09 900,000 750,537 (a), 12/01/11 1,000,000 753,570 OH Monroe Local School District, Series 2002, 5.750%, 12/01/19 1,195,000 1,422,241 OH North Fork Local School District, Series 2001, 5.750%, 12/01/17 510,000 608,751 OH Northwest Local School District, Series 1998, 6.000%, 12/01/13 1,030,000 1,243,478 OH Pickerington Local School District, Series 2001, (a), 12/01/16 1,340,000 767,632 OH Plain Local School District, Series 2000, (a), 12/01/27 1,315,000 391,646 OH Shaker Heights City School District, Series 1990 A, 7.100%, 12/15/10 620,000 732,896 OH Southwest Licking Local School District, Series 1999, 5.750%, 12/01/16 400,000 474,068 See notes to investment portfolio. 15 - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals Fund Municipal Bonds - (continued) TAX-BACKED - (continued) Par ($) Value ($) - ------------------------------------------ ------------------------------------------------------------------------------- OH Tri-County North Local School District, Series 1986, 8.125%, 12/01/06 75,000 87,014 OH West Chester Township, Series 2002, 5.750%, 12/01/20 1,000,000 1,189,010 PA Philadelphia School District, Series 2002 B, 5.625%, 08/01/16 500,000 565,890 PA Pittsburgh School District, Series 2002 A, 5.500%, 09/01/17 1,500,000 1,745,370 PR Puerto Rico Commonwealth, Series 1998, 6.000%, 07/01/16 2,000,000 2,434,600 TX Hurst Euless Bedford Independent School District, Series 1998, 4.500%, 08/15/25 2,250,000 2,183,265 TX Houston, Series 2000, 6.400%, 06/01/27 2,000,000 2,271,760 WA Clark County School District No. 037, Series 2001 C, (a), 12/01/20 1,150,000 501,630 -------------- Local General Obligations Total 69,126,142 ------------------------------------------------------------------------------- Special Non-Property Tax - 3.2% IL Metropolitan Pier & Exposition Authority, Series 1996 A: (a), 12/15/12 8,850,000 6,252,171 Pre-refunded, (a), 06/15/12 2,655,000 1,962,895 Unrefunded, (a), 06/15/12 2,345,000 1,678,434 MA State, Series 2002 A, 5.500%, 06/01/15 1,000,000 1,160,270 NY State Local Government Assistance Corp., Series 1993 E, 5.000%, 04/01/21 1,000,000 1,088,410 PR Commonwealth of Puerto Rico, Public Building Authority, Series 2002 C, 5.500%, 07/01/15 1,000,000 1,130,290 WA Central Puget Sound Regional Transportation Authority, Series 1998, 5.250%, 02/01/21 1,500,000 1,665,345 -------------- Special Non-Property Tax Total 14,937,815 ------------------------------------------------------------------------------- Special Property Tax - 1.0% CA Huntington Beach Community Facilities District, Grand Coast Resort, Series 2001, 6.450%, 09/01/31 500,000 517,740 CA Santa Margarita Water District, Series 1999, 6.250%, 09/01/29 750,000 770,738 FL Double Branch Community Development District, Series 2002 A, 6.700%, 05/01/34 400,000 417,104 16 See notes to investment portfolio. - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals Fund Municipal Bonds - (continued) TAX-BACKED - (continued) Par ($) Value ($) - ------------------------------------------ ------------------------------------------------------------------------------- FL Westchester Community Development District, District No. 1 Special Assessment, Series 2003, 6.000%, 05/01/23 560,000 558,673 IL State Sports Facilities Authority, Series 2001, (a), 06/15/18 1,000,000 510,190 OH River Valley School District, School Facilities Construction & Improvement, Series 2001, 5.250%, 11/01/23 500,000 555,110 TX Dallas County Flood Control District, Series 2002, 7.250%, 04/01/32 1,500,000 1,541,760 -------------- Special State Property Tax Total 4,871,315 ------------------------------------------------------------------------------- State Appropriated - 2.2% KY State Turnpike Authority, Series 1992, (a), 01/01/10 7,500,000 6,173,625 UT State Building Ownership Authority, Series 1998 C, 5.500%, 05/15/19 3,450,000 3,970,984 -------------- State Appropriated Total 10,144,609 ------------------------------------------------------------------------------- State General Obligations - 11.8% MA Massachusetts Bay Transportation Authority: Series 1992 B, 6.200%, 03/01/16 9,825,000 11,977,658 Series 1994 A: 7.000%, 03/01/14 3,150,000 4,026,425 7.000%, 03/01/19 2,500,000 3,261,075 Series 1998 A, 4.500%, 03/01/26 3,805,000 3,726,351 Series 2003 A, 5.250%, 07/01/19 1,200,000 1,354,212 MA State College Building Authority Project: Series 1994 A: 7.500%, 05/01/11 1,500,000 1,915,935 7.500%, 05/01/14 3,500,000 4,620,630 NJ State Transportation Trust Fund Authority, Series 1999 A: 5.750%, 06/15/18 5,000,000 5,833,300 5.750% 06/15/20 1,000,000 1,164,580 OH State, Series 1992, 6.100%, 08/01/12 380,000 457,980 OH State Turnpike Commission, Series 1998 A, 5.500%, 02/15/17 1,690,000 1,956,158 PA State, Series 1992-2, 6.250%, 07/01/12 7,200,000 8,736,408 See notes to investment portfolio. 17 - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals Fund Municipal Bonds - (continued) TAX-BACKED - (continued) Par ($) Value ($) - ------------------------------------------ ------------------------------------------------------------------------------- PR Commonwealth of Puerto Rico: Highway Transportation Authority, Series 2003 AA, 5.500%, 07/01/19 1,000,000 1,166,970 Series 2001 A, 5.500%, 07/01/16 4,230,000 4,949,481 -------------- State General Obligations Total 55,147,163 -------------- TAX-BACKED TOTAL 164,269,515 TRANSPORTATION - 7.4% - ------------------------------------------ ------------------------------------------------------------------------------- Air Transportation - 1.7% IL Chicago O'Hare International Airport, United Airlines, Inc., Series 2000 A, 6.750%, 11/01/11 (e) 1,600,000 438,032 IN Indianapolis Airport Authority, United Airlines Project, Series 1995 A, 6.500%, 11/15/31 (e) 3,000,000 1,002,690 KY Kenton County Airport Board, Delta Airlines, Inc., Series 1992 A, 7.500%, 02/01/20 1,000,000 998,070 MN Minneapolis & St. Paul Metropolitan Airports Commission, Northwest Airlines: Series 2001 A, 7.000%, 04/01/25 1,250,000 1,174,487 Series 2001 B, 6.500% 04/01/25 500,000 486,555 NC Charlotte/Douglas International Airport, U.S. Airways, Inc.: Series 1998, 5.600%, 07/01/27 1,000,000 653,500 Series 2000, 7.750%, 02/01/28 1,000,000 904,120 NJ State Economic Development Authority, Continental Airlines, Inc., Series 1999, 6.250%, 09/15/29 2,000,000 1,674,100 TN Memphis-Shelby County Airport Authority, Federal Express Corp., Series 2002, 5.050%, 09/01/12 500,000 537,990 -------------- Air Transportation Total 7,869,544 ------------------------------------------------------------------------------- Airports - 0.3% MA State Port Authority Revenue, Series 1999, 10.650%, 07/01/29 (f) 1,000,000 1,196,800 -------------- Airports Total 1,196,800 ------------------------------------------------------------------------------- Ports - 0.6% WA Port of Seattle, Series 1999, 5.500%, 09/01/17 2,445,000 2,819,721 -------------- Ports Total 2,819,721 ------------------------------------------------------------------------------- 18 See notes to investment portfolio. - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals Fund Municipal Bonds - (continued) TRANSPORTATION - (continued) Par ($) Value ($) - ------------------------------------------ ------------------------------------------------------------------------------- Railroad - 0.0% OH Cleveland-Cuyahoga County Port Authority, Oglebay Northern Co. Project, Series 1997-1, 6.000%, 03/01/07 180,000 195,808 -------------- Railroad Total 195,808 ------------------------------------------------------------------------------- Toll Facilities - 3.0% CO E-470 Public Highway Authority, Series 2000 B, (a), 09/01/18 4,600,000 2,314,306 MA State Turnpike Authority: Series 1993 A, 5.000%, 01/01/20 2,000,000 2,188,320 Series 1997 C, (a), 01/01/20 2,000,000 939,860 NY Triborough Bridge & Tunnel Authority: Series 1992 Y, 6.125%, 01/01/21 5,500,000 6,699,055 Series 2002 E, 5.500%, 11/15/20 550,000 639,419 VA Richmond Metropolitan Authority, Series 1998, 5.250%, 07/15/22 1,100,000 1,229,558 -------------- Toll Facilities Total 14,010,518 -------------- Transportation - 1.8% GA Metropolitan Atlanta Rapid Transit Authority, Series 1992 P, 6.250%, 07/01/20 4,000,000 4,947,280 NV State Department of Business & Industry, Las Vegas Monorail Project, Series 2000: 7.375%, 01/01/30 650,000 654,004 7.375%, 01/01/40 500,000 500,085 OH Toledo-Lucas County Port Authority, CSX Transportation, Inc., Series 1992, 6.450%, 12/15/21 2,000,000 2,204,100 -------------- Transportation Total 8,305,469 -------------- TRANSPORTATION TOTAL 34,397,860 UTILITY - 24.0% - ------------------------------------------ ------------------------------------------------------------------------------- Independent Power Producer - 0.5% FL Escambia County Environmental Improvement Revenue, Series 2003 A, 5.750%, 11/01/27 550,000 557,662 NY Suffolk County Industrial Development Agency, Nissequogue Cogen Partners, Series 1998, 5.500%, 01/01/23 1,000,000 938,050 PR Commonwealth of Puerto Rico Industrial, Educational, Medical & Environmental Cogeneration Facilities, AES Project, Series 2000, 6.625%, 06/01/26 650,000 676,475 -------------- Independent Power Producer Total 2,172,187 ------------------------------------------------------------------------------- See notes to investment portfolio. 19 - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals Fund Municipal Bonds - (continued) UTILITY - (continued) Par ($) Value ($) - ------------------------------------------ ------------------------------------------------------------------------------- Investor Owned - 1.3% IN Petersburg, Series 1995 C, 5.950%, 12/01/29 1,500,000 1,410,540 IN State Development Finance Authority, Series 1999, 5.950%, 08/01/30 1,000,000 934,950 OH State Air Quality Development Authority, Cleveland Electric Illuminating Co., Series 2002 A, 6.000%, 12/01/13 500,000 517,120 TX Brazos River Authority, Texas Utilities Electric Co. Project: Series 1999 B, 6.750%, 09/01/34 2,455,000 2,708,601 Series 2001 C, 5.750%, 05/01/36 500,000 524,020 -------------- Investor Owned Total 6,095,231 ------------------------------------------------------------------------------- Joint Power Authority - 10.3% GA State Municipal Electric Authority, Series 1991, 6.600%, 01/01/18 17,700,000 21,961,275 MN Southern Minnesota Municipal Power Agency, Series 2002 A, 5.250%, 01/01/17 2,000,000 2,271,100 NC Eastern Municipal Power Agency, Series 1991 A, 6.500%, 01/01/18 2,185,000 2,602,532 Series 1992, (a), 01/01/09 2,260,000 1,953,137 Series 1993, 6.000%, 01/01/18 7,000,000 8,372,910 OH State Municipal Electricity Generation Agency, Series 2001, (a), 02/15/29 3,000,000 832,170 WA State Public Power Supply System: Nuclear Project No. 2, Series 1992 A, 6.300%, 07/01/12 3,500,000 4,188,415 Nuclear Project No. 3, Series 1989 B, (a), 07/01/08 7,000,000 6,100,500 -------------- Joint Power Authority Total 48,282,039 -------------- Municipal Electric - 4.3% NC University of North Carolina at Chapel Hill, Series 1997, (a), 08/01/20 1,750,000 807,327 NY Long Island Power Authority, Series 2000, (a), 06/01/20 450,000 217,782 OH Cleveland Public Power System Revenue, Series 1994 A, (a), 11/15/13 2,000,000 1,367,660 PA Westmoreland County Municipal Authority, Series 2000 A, (a), 08/15/23 1,400,000 523,754 20 See notes to investment portfolio. - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals Fund Municipal Bonds - (continued) UTILITY - (continued) Par ($) Value ($) - ------------------------------------------ ------------------------------------------------------------------------------- PR Puerto Rico Electric Power Authority, Series 2002 KK, 5.500%, 07/01/16 2,000,000 2,340,180 SD Heartland Consumers Power District, Series 1992, 6.000%, 01/01/17 8,000,000 9,591,680 TX Austin Electric Utility Systems Revenue, Series 2002, 5.500%, 11/15/16 1,000,000 1,157,370 TX Austin Financial Service Department, Series 1998, 5.250%, 05/15/25 3,710,000 4,051,654 -------------- Municipal Electric Total 20,057,407 ------------------------------------------------------------------------------- Water & Sewer - 7.6% AZ Mesa Utility System Revenue, Series 2002, 5.250%, 07/01/15 1,600,000 1,824,144 DE State Economic Development Authority, General Waterworks Corp., Series 1992 B, 6.450%, 12/01/07 1,160,000 1,330,566 GA Atlanta Water & Wastewater Revenue: Series 1999 A, 5.500%, 11/01/22 3,225,000 3,689,271 Series 2001 A, 5.500%, 11/01/27 1,500,000 1,693,635 GA Fulton County, Series 1992, 6.375%, 01/01/14 430,000 520,343 OH Cleveland Waterworks Revenue, Series 1993, 5.500%, 01/01/21 3,000,000 3,431,010 OH Lakewood Water Systems Revenue, Series 1995, 5.850%, 07/01/20 2,405,000 2,877,775 OH State Water Development Authority: Series 1990-1, 6.000%, 12/01/16 1,000,000 1,180,230 Series 1991 B, 5.500%, 06/01/18 1,000,000 1,160,710 OH Warren Waterworks Revenue, Series 1997, 5.500%, 11/01/15 500,000 580,375 PA Allegheny County Sanitation Authority, Series 1991 A, (a), 06/01/07 2,370,000 2,188,624 PA Dauphin County Industrial Development Authority, Dauphin Water Supply Co., Series 1992 A, 6.900%, 06/01/24 3,400,000 4,239,562 See notes to investment portfolio. 21 - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals Fund Municipal Bonds - (continued) UTILITY - (continued) Par ($) Value ($) - ------------------------------------------ ------------------------------------------------------------------------------- TX Houston Water & Sewer System Revenue: Series 1998, (a), 12/01/23 3,500,000 1,254,155 Series 1991 C: (a) 12/01/08 4,000,000 3,491,760 (a), 12/01/09 4,000,000 3,327,960 (a), 12/01/10 3,750,000 2,967,375 -------------- Water & Sewer Total 35,757,495 -------------- UTILITY TOTAL 112,364,359 -------------- TOTAL MUNICIPAL BONDS (COST OF $405,988,692) 455,880,856 Municipal Preferred Stocks - 0.5% HOUSING - 0.5% Shares - ------------------------------------------ ------------------------------------------------------------------------------- Multi-Family - 0.5% Charter Municipal Mortgage Acceptance Co., 6.625%, 06/30/09, (c) 2,000,000 2,137,380 -------------- HOUSING TOTAL (COST OF $2,000,000) 2,137,380 Purchased Put Option - 0.0% Contracts - ------------------------------------------ ------------------------------------------------------------------------------- 10 Year U.S. Treasury Notes, Strike Price 108, Expires 02/21/04 680,000 212,500 -------------- TOTAL PURCHASED PUT OPTIONS (COST OF $1,055,615) 212,500 Short-Term Obligations - 0.7% Par($) - ------------------------------------------ ------------------------------------------------------------------------------- Variable Rate Demand Notes (g) - 0.7% AZ Phoenix Industrial Development Authority, Valley of the Sun YMCA Project, Series 2001, 1.370%, 01/01/31 200,000 200,000 CO Health & Hospital Authority, Series 2001 B, 1.370%, 12/01/31 200,000 200,000 IA Healthcare Revenue, Mercy Hospital Project, Series 2002, 1.320%, 08/01/32 400,000 400,000 ID Health Facilities Authority Revenue, St. Luke's Regional Medical Center Project, Series 1995, 1.320%, 05/01/22 500,000 500,000 IN Educational Facilities Authority, DePauw University Project, Series 2002, 1.320%, 07/01/32 200,000 200,000 MO State Health & Educational Facilities Authority: Rockhurst University, Series 2002, 1.320%, 11/01/32 200,000 200,000 Washington University, Series 1996 C, 1.320%, 09/01/30 300,000 300,000 22 See notes to financial statements. - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals Fund Short-Term Obligations - (continued) Par($) Value($) - ------------------------------------------ ------------------------------------------------------------------------------- NY New York City, Series 1993 A, 1.300%, 08/01/22 700,000 700,000 OK Development Finance Authority, Continuing Care Community, Series 2002 C, 1.370%, 02/01/12 200,000 200,000 WY Lincoln County Pollution Control Revenue, Exxon Corp. Project, Series 1984 A, 3.300%, 11/01/14 300,000 300,000 -------------- TOTAL SHORT-TERM OBLIGATIONS (COST OF $3,200,000) 3,200,000 Total Investments - 98.8% (cost of $412,244,307) (h) 461,430,736 Other Assets & Liabilities, Net - 1.2% 5,705,411 Net Assets - 100.0% 467,136,147 NOTES TO INVESTMENT PORTFOLIO: (a) Zero coupon bond. (b) Settlement of this security is on a delayed delivery basis. (c) These securities are 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 $4,338,880, which represents 0.9% of net assets. (d) The fund has been informed that each issuer has placed direct obligations of the U.S. Government in an irrevocable trust solely for the purpose of the payment of principal and income. (e) As of December 31, 2003, the Fund held securities of certain issuers that have filed for bankruptcy protection under Chapter 11 representing 0.3% of net assets. These issuers are in default of certain debt covenants. Income is not being accrued. (f) Denotes a restricted security, which is subject to restrictions on resale under federal securities laws. At December 31, 2003, this security amounted to $1,196,800 which represents 0.3% of net assets. Additional information on this restricted security is as follows: ACQUISITION ACQUISITION SECURITY DATE COST MA State Port Authority Revenue, Series 1999, 10.650% 07/01/29 11/17/99 1,001,580 (g) Variable rate demand notes (VRDN) are considered short-term obligations. Interest rates change periodically on specified dates. These securities are payable on demand and are secured either by letters of credits or other credit support agreements from banks. The rates listed are as of December 31, 2003. (h) Cost for federal income purposes is $411,952,878. See notes to financial statements. 23 STATEMENT OF ASSETS AND LIABILITIES Columbia Managed Municipals Fund December 31, 2003 (Unaudited) ($) ------------------------------------------------------------------------- Assets: Investments, at cost 412,244,307 Investments, at value 461,430,736 Cash 1,039,063 Receivable for: Fund shares sold 28,168 Interest 6,597,070 Deferred Trustees' compensation plan 26,213 Other assets 12,740 ------------ Total Assets 469,133,990 ------------------------------------------------------------------------- Liabilities: Payable for: Investments purchased on a delayed delivery basis 984,905 Fund shares repurchased 98,233 Distributions 568,460 Investment advisory fee 150,566 Administration fee 40,679 Transfer agent fee 78,268 Pricing and bookkeeping fees 30,620 Custody fee 361 Distribution and service fees 15,970 Deferred Trustees' fees 26,213 Other liabilities 3,568 ------------ Total Liabilities 1,997,843 Net Assets 467,136,147 ------------------------------------------------------------------------- Composition of Net Assets: Paid-in capital 420,936,005 Undistributed net investment income 1,304,337 Accumulated net realized loss (4,290,624) Net unrealized appreciation on investments 49,186,429 ------------ Net Assets 467,136,147 ------------------------------------------------------------------------- Class A: Net assets 51,540,324 Shares outstanding 5,665,035 Net asset value per share 9.10(a) Maximum offering price per share ($9.10/0.9525) 9.55(b) ------------------------------------------------------------------------- Class B: Net assets 7,846,941 Shares outstanding 862,464 Net asset value and offering price per share 9.10(a) ------------------------------------------------------------------------- Class C: Net assets 1,624,496 Shares outstanding 178,562 Net asset value and offering price per share 9.10(a) ------------------------------------------------------------------------- Class Z: Net assets 406,124,386 Shares outstanding 44,635,451 Net asset value, offering and redemption price per share 9.10 (a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge. (b) On sales of $50,000 or more the offering price is reduced. 24 See notes to financial statements. STATEMENT OF OPERATIONS Columbia Managed Municipals Fund For the Six Months Ended December 31, 2003 (Unaudited) ($) -------------------------------------------------------------------------- Investment Income: Interest 12,279,546 -------------------------------------------------------------------------- Expenses: Investment advisory fee 988,295 Administration fee 275,353 Distribution fee: Class B 31,470 Class C 5,354 Service fee: Class A 54,948 Class B 8,917 Class C 1,682 Transfer agent fee 309,087 Pricing and bookkeeping fees 90,821 Trustees' fees 8,690 Custody fee 10,194 Other expenses 82,635 ------------- Total Operating Expenses 1,867,446 Fees waived by Distributor -- Class C (2,384) Custody earnings credit (566) ------------- Net Expenses 1,864,496 ------------- Net Investment Income 10,415,050 -------------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) on Net realized gain (loss) on: Investments and Futures Contracts: Investments (1,434,222) Futures contracts 1,162,712 ------------- Net realized loss (271,510) ------------- Net change in unrealized appreciation/depreciation on: Investments (6,917,950) Futures contracts (414,198) ------------- Net change in unrealized appreciation/depreciation (7,332,148) ------------- Net Loss (7,603,658) ------------- Net Increase in Net Assets from Operations 2,811,392 See notes to financial statements. 25 STATEMENT OF CHANGES IN NET ASSETS Columbia Managed Municipals Fund (Unaudited) Six Months Ended Year Ended December 31, June 30, Increase (Decrease) in Net Assets: 2003 ($) 2003 ($) - ------------------------------------------ ---------------------------------------------------------------------------- Operations: Net investment income 10,415,050 22,129,688 Net realized gain (loss) on investments (271,510) 7,459,349 Net change in unrealized appreciation/depreciation on investments and futures contracts (7,332,148) 15,436,452 ---------------------------- Net Increase from Operations 2,811,392 45,025,489 ---------------------------------------------------------------------------- Distributions Declared to Shareholders: From net investment income: Class A (1,034,861) (1,528,000) Class B (135,942) (222,870) Class C (28,125) (37,406) Class Z (8,633,117) (19,508,563) From net realized gains: Class A (857,679) -- Class B (131,967) -- Class C (26,854) -- Class Z (6,747,258) -- ---------------------------- Total Distributions Declared to Shareholders (17,595,803) (21,296,839) ---------------------------------------------------------------------------- Share Transactions: Class A: Subscriptions 1,444,841 2,335,628 Proceeds received in connection with merger -- 56,105,119 Distributions reinvested 1,221,799 890,534 Redemptions (3,486,825) (7,592,477) ---------------------------- Net Increase (Decrease) (820,185) 51,738,804 Class B: Subscriptions 138,140 302,522 Proceeds received in connection with merger -- 10,260,711 Distributions reinvested 186,227 145,914 Redemptions (1,165,984) (2,149,839) ---------------------------- Net Increase (Decrease) (841,617) 8,559,308 Class C: Subscriptions 155,971 349,095 Proceeds received in connection with merger -- 1,808,445 Distributions reinvested 44,250 28,468 Redemptions (108,669) (668,615) ---------------------------- Net Increase 91,552 1,517,393 Class Z: Subscriptions 25,243,576 95,478,788 Distributions reinvested 11,081,020 13,852,730 Redemptions (49,755,320) (140,614,453) ---------------------------- Net Decrease (13,430,724) (31,282,935) ---------------------------- Net Increase (Decrease) from Share Transactions (15,000,974) 30,532,570 ---------------------------- Total Increase (Decrease) in Net Assets (29,785,385) 54,261,220 ---------------------------------------------------------------------------- 26 See notes to financial statements. STATEMENT OF CHANGES IN NET ASSETS Columbia Managed Municipals Fund (Unaudited) Six Months Ended Year Ended December 31, June 30, Increase (Decrease) in Net Assets: 2003 ($) 2003 ($) - ------------------------------------------ ---------------------------------------------------------------------------- Net Assets: Beginning of period 496,921,532 442,660,312 End of period (including undistributed net investment income of $1,304,337 and $721,332, respectively) 467,136,147 496,921,532 ---------------------------------------------------------------------------- Changes in Shares: Class A: Subscriptions 159,443 252,043 Issued in connection with merger -- 6,240,857 Issued for distributions reinvested 134,335 97,035 Redemptions (385,182) (833,496) ---------------------------- Net Increase (Decrease) (91,404) 5,756,439 Class B: Subscriptions 15,083 32,805 Issued in connection with merger -- 1,141,022 Issued for distributions reinvested 20,474 15,909 Redemptions (128,143) (234,686) ---------------------------- Net Increase (Decrease) (92,586) 955,050 Class C: Subscriptions 17,263 37,731 Issued in connection with merger -- 201,082 Issued for distributions reinvested 4,865 3,099 Redemptions (12,040) (73,438) ---------------------------- Net Increase 10,088 168,474 Class Z: Subscriptions 2,794,098 10,490,877 Issued for distributions reinvested 1,218,477 1,517,021 Redemptions (5,489,011) (15,369,022) ---------------------------- Net Decrease (1,476,436) (3,361,124) ---------------------------- (a) On July 29, 2002, the Stein Roe Managed Municipal Fund was redesignated Liberty Managed Municipal Fund, Class Z. See notes to financial statements. 27 NOTES TO FINANCIAL STATEMENTS Columbia Managed Municipals Fund December 31, 2003 (Unaudited) Note 1. Organization Columbia Managed Municipals Fund (the "Fund"), a series of Columbia Funds Trust IX (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 a high level of total return consistent with prudent risk, consisting of current income exempt from federal income tax and opportunities for capital appreciation. 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 subject to a maximum front-end sales charge of 4.75% based on the amount of initial investment. Class A shares purchased without an initial sales charge are subject to a 1.00% contingent deferred sales charge ("CDSC") on shares sold within eighteen months on an original purchase of $1 million to $25 million. Class B shares are subject to a maximum CDSC of 5.00% based upon the holding period after purchase. Class B shares will convert to Class A shares in a certain number of years after purchase, depending on the program under which shares were purchased. Class C shares are subject to a 1.00% CDSC on shares sold within one year after purchase. Class 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 Managed Municipals Fund to Columbia Managed Municipals Fund. Also on that date, the Trust changed its name from Liberty-Stein Roe Funds Municipal Trust to Columbia Funds Trust IX. 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 Debt securities generally are valued by a pricing service approved by the Trust's Board of Trustees, based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as broker quotes. Debt securities for which quotations are readily available are valued at an over-the-counter or exchange bid quotation. Certain securities, which tend to be more thinly traded and of lesser quality, are priced based on fundamental analysis of the financial condition of the issuer and the estimated value of any collateral. Valuations developed through pricing techniques may vary from the actual amounts realized upon sale of the securities, and the potential variation may be greater for those securities valued using fundamental analysis. Short-term obligations maturing within 60 days are valued at amortized cost, which approximates market 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. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded. Restricted securities are securities that may only be resold upon registration under federal securities laws or in transactions exempt from registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale at the issuer's expense either upon demand by the Fund or in connection with another registered offering of the securities. Many 28 - -------------------------------------------------------------------------------- December 31, 2003 (Unaudited) Columbia Managed Municipals Fund restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Board of Trustees. The Trust will not incur any registration costs upon such resale. 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. Futures Contracts The Fund may invest in municipal and U.S. Treasury futures contracts. The Fund will invest in these instruments to hedge against the effects of changes in the value of portfolio securities due to anticipated changes in interest rates and/or market conditions, for duration management, or when the transactions are economically appropriate to the reduction of risk inherent in the management of the Fund and not for trading purposes. The use of futures contracts involves certain risks, which include: (1) imperfect correlation between the price movement of the instruments and the underlying securities, (2) inability to close out positions due to differing trading hours, or the temporary absence of a liquid market, for either the instrument or the underlying securities, or (3) an inaccurate prediction by Columbia Management Advisors, Inc. of the future direction of interest rates. Any of these risks may involve amounts exceeding the variation margin recorded in the Fund's Statement of Assets and Liabilities at any given time. Upon entering into a futures contract, the Fund deposits cash or securities with the broker in an amount sufficient to meet the initial margin requirement. Subsequent payments are made or received by the Fund equal to the daily change in the contract value and are recorded as variation margin payable or receivable and offset in unrealized gains or losses. The Fund also identifies portfolio securities as segregated with the custodian in a separate account in an amount equal to the futures contract. The Fund recognizes a realized gain or loss when the contract is closed or expires. Options The Fund may write call and put options on futures it owns or in which it may invest. Writing put options tends to increase the fund's exposure to the underlying instrument. Writing call options tends to decrease the Fund's exposure to the underlying instrument. When the Fund writes a call or put option, an amount equal to the premium received is recorded as a liability and subsequently marked-to-market to reflect the current value of the option written. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised or closed are added to the proceeds or offset against the amounts paid on the underlying future transaction to determine the realized gain or loss. The Fund as a writer of an option has no control over whether the underlying future may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the future underlying the written option. There is the risk the Fund may not be able to enter into a closing transaction because of an illiquid market. The Fund may also purchase put and call options. Purchasing call options tends to increase the Fund's exposure to the underlying instrument. Purchasing put options tends to decrease the Fund's exposure to the underlying instrument. The Fund pays a premium, which is included in the Fund's Statement of Assets and Liabilities as an investment and subsequently marked-to-market to reflect the current value of the option. The risk associated with purchasing put and call options is limited to the premium paid. Premiums paid for purchasing options which expire are treated as realized losses. Premiums paid for purchasing options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying future transaction to determine the realized gain or loss. The Fund's custodian will set aside cash or liquid portfolio securities equal to the amount of the written options contract commitment in a separate account. Delayed Delivery Securities The Fund may trade securities on other than normal settlement terms, including securities purchased or sold on a "when-issued" basis. This may increase the risk if the other party to the transaction fails to deliver and causes the Fund to subsequently invest at less advantageous prices. The Fund identifies cash or liquid 29 - -------------------------------------------------------------------------------- December 31, 2003 (Unaudited) Columbia Managed Municipals Fund portfolio securities as segregated with the custodian in an amount equal to the delayed delivery commitment. Income Recognition Interest income is recorded on the accrual basis. Premium and discount are amortized and accreted, respectively, on all debt securities. 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 for the year ended June 30, 2003 was as follows: 2003 - ------------------------------------- Tax-Exempt Income $21,266,033 Ordinary Income 30,806 Long-Term Capital Gains -- - ------------------------------------- As of June 30, 2003, the components of distributable earnings on a tax basis were as follows: Undistributed Undistributed Tax-Exempt Long-term Unrealized Income Capital Gains Appreciations - ------------------------------------------------------- $ 626,345 $ 7,760,057 $56,845,878 - ------------------------------------------------------- The estimated capital loss carryforward obtained from the Liberty Ohio Tax-Exempt Fund was $1,612,102, of which all was utilized by the Liberty Managed Municipals Fund for the year ended June 30, 2003. Unrealized appreciation and depreciation at December 31, 2003, based on cost of investments for federal income tax purposes and excluding any unrealized appreciation and depreciation from changes in the value of assets and liabilities resulting from changes in exchange rates was: Unrealized appreciation $54,779,816 Unrealized depreciation (5,301,958) ----------- Net unrealized appreciation $49,477,858 - --------------------------------------------------- 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 $100 million 0.450% - --------------------------------------- Next $100 million 0.425% - --------------------------------------- Next $800 million 0.400% - --------------------------------------- Over $1 billion 0.375% - --------------------------------------- For the six months ended December 31, 2003, the Fund's annualized effective investment advisory fee rate was 0.42%. 30 - -------------------------------------------------------------------------------- December 31, 2003 (Unaudited) Columbia Managed Municipals 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 $100 million 0.150% - --------------------------------------- Next $100 million 0.125% - --------------------------------------- Next $800 million 0.100% - --------------------------------------- Over $1 billion 0.075% - --------------------------------------- For the six months ended December 31, 2003, the Fund's annualized effective administration fee rate was 0.12%. 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 effective pricing and bookkeeping fee rate was 0.038%. Transfer Agent Fee Columbia Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia, provides shareholder services for an annual fee of $34.00 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 0.08%. 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 retained net underwriting discounts of $2,036 on sales of the Fund's Class A shares and received CDSC of $11,313 and $551 on Class B and Class C share redemptions, respectively. The Fund has adopted a 12b-1 plan (the "Plan") for its Class A, Class B and Class C shares which requires the payment of a monthly service fee to the Distributor. The service fee is equal to 0.10% annually of the net assets attributable to shares of the Liberty Ohio Tax-Exempt Fund issued prior to December 1, 1994 and 0.25% annually of the net assets attributable to shares issued thereafter. This arrangement results in a service fee between the 0.10% and 0.25% annual rates. For the six months ended December 31, 2003, annualized effective service fee rates were 0.21%, 0.21% and 0.21% for Class A, Class B and Class C shares, respectively. 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 0.45% annually. Prior to August 5, 2003, the Distributor has voluntarily agreed to waive a portion of the Class C share distribution fee so that it would not exceed 0.05% annually. For the six months period ended December 31, 2003, the Fund's annualized effective distribution fee rate for Class C shares was 0.37%. 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. 31 - -------------------------------------------------------------------------------- December 31, 2003 (Unaudited) Columbia Managed Municipals Fund 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. Note 5. Purchases and Sales of Securities For the six months ended December 31, 2003, the cost of purchases and proceeds from sales of securities, excluding short-term obligations, were $19,752,604 and $39,328,542. Note 6. Line of Credit The Fund and other affiliated funds participate in a $350,000,000 credit facility, which is used for temporary or emergency purposes to facilitate portfolio liquidity. Interest is charged to the Fund based on its borrowings. In addition, the Fund has agreed to pay commitment fees on its pro-rata portion of the unutilized line of credit. The commitment fee is included in "Other expenses" on the Statement of Operations. For the six months ended December 31, 2003, the Fund did not borrow under these arrangements. Note 7. Disclosure of Significant Risks and Contingencies High-Yield Securities Investing in high-yield securities may involve greater credit risk and considerations not typically associated with investing in U.S. Government bonds and other higher quality fixed income securities. These securities are non-investment grade securities, often referred to as "junk bonds." Economic downturns may disrupt the high yield market and impair the ability of issuers to repay principal and interest. Also, an increase in interest rates would likely have an adverse impact on the value of such obligations. Moreover, high-yield securities may be less liquid due to the extent that there is no established retail secondary market and because of a decline in the value of such securities. Industry Focus The Fund may focus its investments in certain industries, subjecting it to greater risk than a fund that is more diversified. Legal Proceedings Columbia, the Distributor and certain of their affiliates (collectively, "the Columbia Group") have received information requests and subpoenas from various regulatory 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 informed the Columbia Funds that it 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 majority of the transactions in connection with these arrangements occurred in one international fund and two domestic funds. The majority of the trading under these arrangements was made by three entities. 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 the New York Attorney General and to the SEC and other 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. On February 24, 2004, the SEC filed a civil complaint in the United States District Court for the District of Massachusetts against Columbia and the Distributor, alleging that they have violated certain provisions of the federal securities laws. Also on February 24, 2004, the New York Attorney General filed a civil complaint in New York Supreme Court, County of New York against Columbia and the Distributor alleging that Columbia and the Distributor violated certain New York anti-fraud statutes. Both complaints are based on arrangements between 1998 and 2003 with nine 32 - -------------------------------------------------------------------------------- December 31, 2003 (Unaudited) Columbia Managed Municipals Fund investors for the trading of mutual fund shares. In their respective complaints, the New York Attorney General and the SEC are seeking disgorgement of profits, restitution, monetary penalties and permanent injunctions, including, in the case of the SEC, a permanent injunction from serving or acting as investment advisor or distributor of any registered fund. Columbia and the Distributor are engaged in discussions with the SEC staff in an effort to reach a satisfactory resolution of these matters. As a result of these matters or any adverse publicity or other developments resulting from them, there may be increased redemptions or reduced sales of Columbia Fund shares, which could increase transactions costs or operating expenses, or other consequences for the Columbia Funds. Note 8. Business Combinations and Mergers Fund Mergers As of the end of business on November 1, 2002, the Fund acquired all the net assets of Liberty Ohio Tax-Exempt Fund pursuant to a plan of reorganization. All assets of Liberty Ohio Tax-Exempt Fund were transferred to the Fund in a tax-free exchange and shareholders of Liberty Ohio Tax-Exempt Fund received shares of Liberty Managed Municipals Fund in exchange for their shares as follows: Liberty Liberty Ohio Managed Tax-Exempt Municipals Fund Fund Net Unrealized Shares Issued Assets Received Appreciation(1) - ------------------------------------------------------- 7,582,961 $68,174,275 $5,937,882 - ------------------------------------------------------- (1) Unrealized Appreciation is included in the Net Assets Received amount above. Net Assets of Net Assets of Net Assets of Liberty Liberty Managed Liberty Managed Ohio Tax-Exempt Municipals Fund Municipals Fund Fund Immediately Immediately Prior to Combination Prior to Combination After Combination - -------------------------------------------------------------------- $443,275,288 $68,174,275 $511,449,563 - -------------------------------------------------------------------- 33 FINANCIAL HIGHLIGHTS Columbia Managed Municipals Fund Selected data for a share outstanding throughout the period is as follows: (Unaudited) Six Months Ended Period Ended December 31, June 30, Class A Shares 2003 2003 (a) - ----------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 9.38 $ 9.01 - ----------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (b) 0.17 0.26 Net realized and unrealized gain (loss) on investments and futures contracts (0.12) 0.37 ------- ------- Total from Investment Operations 0.05 0.63 - ----------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.18) (0.26) From net realized gains (0.15) -- ------- ------- Total from Distributions Declared (0.33) (0.26) - ----------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 9.10 $ 9.38 Total return (c)(d) 0.64% 7.06% - ----------------------------------------------------------------------------------------------------- Ratios to Average Net Asset/Supplemental Data: Expenses (e)(f) 0.95% 0.97% Net investment income (e)(f) 4.20% 4.27% Portfolio turnover rate 4% 40% Net assets, end of period (000's) $51,540 $53,979 - ----------------------------------------------------------------------------------------------------- (a) Class A shares were initially offered on November 1, 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 and no initial sales charge or contingent deferred sales charge. (d) Not annualized. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (f) Annualized. 34 - -------------------------------------------------------------------------------- Columbia Managed Municipals Fund Selected data for a share outstanding throughout the period is as follows: (Unaudited) Six Months Ended Period Ended December 31, June 30, Class B Shares 2003 2003 (a) - ----------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 9.38 $ 9.01 - ----------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (b) 0.14 0.21 Net realized and unrealized gain (loss) on investments and futures contracts (0.12) 0.37 ------ ------ Total from Investment Operations 0.02 0.58 - ----------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.15) (0.21) From net realized gains (0.15) -- ------ ------ Total from Distributions Declared (0.30) (0.21) - ----------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 9.10 $ 9.38 Total return (c)(d) 0.27% 6.54% - ----------------------------------------------------------------------------------------------------- Ratios to Average Net Asset/Supplemental Data: Expenses (e)(f) 1.70% 1.72% Net investment income (e)(f) 3.46% 3.52% Portfolio turnover rate 4% 40% Net assets, end of period (000's) $7,847 $8,956 - ----------------------------------------------------------------------------------------------------- (a) Class B shares were initially offered on November 1, 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 and no contingent deferred sales charge. (d) Not annualized. (e) The benefits derived from custody credits and directed brokerage arrangements, if applicable, had an impact of less than 0.01%. (f) Annualized. 35 - -------------------------------------------------------------------------------- Columbia Managed Municipals Fund Selected data for a share outstanding throughout the period is as follows: (Unaudited) Six Months Ended Period Ended December 31, June 30, Class C Shares 2003 2003 (a) - ----------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 9.38 $ 9.01 - ----------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income (b) 0.16 0.25 Net realized and unrealized gain (loss) on investments and futures contracts (0.13) 0.35 ------ ------ Total from Investment Operations 0.03 0.60 - ----------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.16) (0.23) From net realized gains (0.15) -- ------ ------ Total from Distributions Declared (0.31) (0.23) - ----------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 9.10 $ 9.38 Total return (c)(d)(e) 0.42% 6.75% - ----------------------------------------------------------------------------------------------------- Ratios to Average Net Asset/Supplemental Data: Expenses (f)(g) 1.32% 1.02% Net investment income (f)(g) 3.82% 4.20% Waiver/reimbursement (g) 0.30% 0.70% Portfolio turnover rate 4% 40% Net assets, end of period (000's) $1,624 $1,579 - ----------------------------------------------------------------------------------------------------- (a) Class C shares were initially offered on November 1, 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 and no contingent deferred sales charge. (d) Not annualized. (e) Had the 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. 36 - -------------------------------------------------------------------------------- Columbia Managed Municipals Fund Selected data for a share outstanding throughout the period is as follows: (Unaudited) Six Months Ended December 31, Year Ended June 30, Class Z Shares 2003 2003 (a) 2002 2001 2000 1999 - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $ 9.38 $ 8.95 $ 8.99 $ 8.65 $ 9.07 $ 9.38 - ----------------------------------------------------------------------------------------------------------------------------- Income from Investment Operations: Net investment income 0.18(b) 0.42(b) 0.43(b)(c) 0.45(b) 0.47 0.47 Net realized and unrealized gain (loss) on investments and futures contracts (0.12) 0.41 0.18(c) 0.41 (0.32) (0.31) -------- -------- -------- -------- -------- -------- Total from Investment Operations 0.06 0.83 0.61 0.86 0.15 0.16 - ----------------------------------------------------------------------------------------------------------------------------- Less Distributions Declared to Shareholders: From net investment income (0.19) (0.40) (0.44) (0.45) (0.47) (0.47) From net realized gains (0.15) -- (0.21) (0.07) (0.10) -- -------- -------- -------- -------- -------- -------- Total from Distributions Declared (0.34) (0.40) (0.65) (0.52) (0.57) (0.47) - ----------------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $ 9.10 $ 9.38 $ 8.95 $ 8.99 $ 8.65 $ 9.07 Total return (d) 0.73%(e) 9.50% 7.06% 10.13% 1.86% 1.67% - ----------------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Asset/ Supplemental Data: Expenses (f) 0.74%(g) 0.76% 0.76% 0.74% 0.69% 0.72% Net investment income (f) 4.41%(g) 4.58% 4.82%(c) 5.07% 5.39% 5.02% Portfolio turnover rate 4% 40% 17% 17% 19% 17% Net assets, end of period (000's) $406,124 $432,407 $442,660 $454,366 $458,205 $538,322 - ----------------------------------------------------------------------------------------------------------------------------- (a) On July 29, 2002, the Fund's existing shares were redesignated Class Z shares. (b) Per share data was calculated using average shares outstanding during the period. (c) Effective July 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing and accreting premium and discount on all debt securities. The effect of this change for the year ended June 30, 2002, was to increase the ratio of investment income to average net assets from 4.81% to 4.82%. The impact to net investment income and net realized and unrealized gain was less than $0.01. Per share data and ratios for periods prior to June 30, 2002, have not been restated to reflect this change in presentation. (d) Total return at net asset value assuming all distributions reinvested. (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. 37 IMPORTANT INFORMATION ABOUT THIS REPORT Columbia Managed Municipals 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 Managed Municipals 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. 38 COLUMBIA FUNDS Columbia Managed Municipals Fund December 31, 2003 - ------------------------------------------ ------------------------------------------------------------ Large Growth Columbia Common Stock Columbia Equity Growth Columbia Growth Columbia Growth Stock Columbia Tax-Managed Growth Columbia Tax-Managed Growth II Columbia Young Investor ------------------------------------------------------------ Large Value Columbia Equity Value Columbia Growth & Income Columbia Large Cap Core Columbia Tax-Managed Value ------------------------------------------------------------ Midcap Growth Columbia Acorn Select Columbia Special Columbia Tax-Managed Aggressive Growth ------------------------------------------------------------ Midcap Value Columbia Select Value Columbia Strategic Equity Columbia Strategic Value ------------------------------------------------------------ Small Growth Columbia Acorn Fund 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 Securities 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 39 - -------------------------------------------------------------------------------- December 31, 2003 Columbia Managed Municipals 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 ------------------------------------------------------------ Money Market Columbia Money Market Columbia Municipal Money Market ------------------------------------------------------------ International/Global Columbia Acorn International Columbia Acorn International Select Columbia International Equity Columbia International Stock Columbia Newport Asia Pacific Columbia Newport Europe Columbia Newport Global Equity Columbia Newport Greater China Columbia Newport Tiger ------------------------------------------------------------ Index Funds Columbia Large Company Index Columbia Small Company Index Columbia US 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. 40 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. Columbia Managed Municipals Fund Semiannual Report, December 31, 2003 logo:columbia funds 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 PRSRT STD U.S. Postage PAID Holliston, MA Permit NO. 20 798-03/732Q-1203 (02/04) 04/0204 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 IX ------------------------------------------------------------------ By (Signature and Title) /s/ J. Kevin Connaughton ------------------------------------------------------ J. Kevin Connaughton, President and Treasurer Date March 4, 2004 -------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title) /s/ J. Kevin Connaughton ------------------------------------------------------ J. Kevin Connaughton, President and Treasurer Date March 4, 2004 --------------------------------------------------------------------------