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 811-6347
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Columbia Funds Trust VII
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(Exact name of registrant as specified in charter)
One Financial Center, Boston, Massachusetts 02111
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(Address of principal executive offices) (Zip code)
Vincent Pietropaolo, Esq.
Columbia Management Group, Inc.
One Financial Center
Boston, MA 02111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 1-617-772-3698
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Date of fiscal year end: August 31, 2004
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Date of reporting period: February 29, 2004
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
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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
EUROPE FUND
Semiannual Report
February 29, 2004
[photo of man and woman and flowers]
[LOGO]:
COLUMBIA FUNDS
A MEMBER OF COLUMBIA MANAGEMENT GROUP
Table of Contents
Fund Profile ......................................... 1
Performance Information .............................. 2
Economic Update ...................................... 3
Portfolio Managers' Report ........................... 4
Financial Statements ................................. 6
Investment Portfolio .............................. 7
Statement of Assets and Liabilities .............. 12
Statement of Operations .......................... 13
Statements of Changes in Net Assets .............. 14
Notes to Financial Statements .................... 16
Financial Highlights ............................. 21
Important Information
About This Report ................................... 25
Economic and market conditions change frequently. There is no assurance that the
trends described in this report will continue or commence.
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
TO OUR FELLOW SHAREHOLDERS
Columbia Europe Fund
DEAR SHAREHOLDER:
We are pleased to let you know that FleetBoston Financial Corporation and Bank
of America Corporation have merged, effective April 1, 2004. As a result of the
merger, Columbia Management Group became part of the Bank of America family of
companies. Looking ahead, we believe this merger will be a real benefit to our
shareholders. Preserving and leveraging our strengths, the combined organization
will deliver additional research, management, and product capabilities to you.
There are no immediate changes planned for fund names, product lines, or
customer service contacts. As always, we will provide you with updates at
www.columbiafunds.com or through other communications, such as newsletters and
shareholder reports.
As you might know, on March 15, 2004, FleetBoston Financial announced
an agreement in principle with the staff of the Securities and Exchange
Commission ("SEC") and the New York Attorney General to settle charges involving
market timing in Columbia Management mutual funds. (Bank of America came to a
similar settlement in principle at the same time.) The agreement will require
the final approval of the SEC. This action reflects our full cooperation with
the investigation and our strong wish to put this regrettable situation behind
us. Columbia Management has taken and will continue to take steps to strengthen
policies, procedures and oversight to curb frequent trading of Columbia fund
shares.
We also want you to know that your fund's Board of Trustees has been energetic
over the past year in strengthening its capacity to oversee the Columbia funds.
Recently, the Board of Trustees:
o ELECTED AN INDEPENDENT TRUSTEE TO CHAIR THE TWELVE-PERSON BOARD. IN
ADDITION, EACH COMMITTEE OF THE BOARD IS COMPRISED OF TRUSTEES WHO ARE
COMPLETELY INDEPENDENT OF THE ADVISOR AND ITS AFFILIATES.
o APPOINTED A CHIEF COMPLIANCE OFFICER OF THE COLUMBIA FUNDS, WHO REPORTS
DIRECTLY TO EACH FUND'S AUDIT COMMITTEE. TRUSTEES WERE ALSO ASSIGNED TO
FOUR SEPARATE INVESTMENT OVERSIGHT COMMITTEES, EACH BETTER ABLE TO MONITOR
PERFORMANCE OF INDIVIDUAL FUNDS.
o VOTED TO DOUBLE THE REQUIRED INVESTMENT BY EACH TRUSTEE IN THE COLUMBIA
FUNDS -- TO FURTHER ALIGN THE INTERESTS OF THE TRUSTEES WITH THOSE OF OUR
FUND SHAREHOLDERS. AT THE SAME TIME, NEW POLICIES WERE INSTITUTED REQUIRING
ALL INVESTMENT PERSONNEL AND TRUSTEES TO HOLD THEIR COLUMBIA FUND SHARES
FOR A MINIMUM OF ONE YEAR (UNLESS EXTRAORDINARY CIRCUMSTANCES WARRANT AN
EXCEPTION TO BE GRANTED BY A BOARD DESIGNATED COMMITTEE).
Both your fund's trustees and Columbia Management are committed to serving the
interests of our shareholders, and we will continue to work hard to help you
achieve your financial goals.
In the pages that follow, you'll find valuable information about the economic
environment and the performance of 15 Columbia funds. The "Economic Update"
provides an overview of the investing environment during the past six months.
The individual fund reports feature commentary from fund managers, followed by
financial statements for each fund.
We hope that you will take time to read the reports of the funds you own and
discuss them with your financial advisor if you have any questions. If you have
any questions about your account, please feel free to call Columbia's
shareholder services department at 800-345-6611.
As always, thank you for choosing Columbia funds. It is a privilege to play a
role in your financial future.
Sincerely,
/s/ Thomas C. Theobald /s/ J. Kevin Connaughton
Thomas C. Theobald J. Kevin Connaughton
Chairman, Board of Trustees President, Columbia Funds
J. Kevin Connaughton was named president of Columbia Funds on February 27, 2004.
Summary
o For the six-month period that ended February 29, 2004, the fund's class A
shares returned 27.17% without sales charge.
o The fund's return was slightly less than both its benchmark, the MSCI Europe
Index, and the average return of its peer group, the Lipper European Region
Funds Category.
o For the period, investment banks and insurance companies were the biggest
gainers in the financial sector. However, the fund maintained an underweight
position in these two industry groups and that hindered relative performance.
The fund benefited from the managers' decision to emphasize Germany and
Spain.
arrow up
Class A shares: +27.17%
arrow up
MSCI Europe Index: +27.89%
Objective
Seeks long-term growth by investing primarily in equity
securities of European issuers.
Total net assets
$5.0 million
Morningstar style box: Growth/Large
FUND PROFILE
Columbia Europe Fund
The information below gives you a snapshot of your fund at the end of the
reporting period. Your fund is actively managed and the composition of its
portfolio will change over time.
Top 5 countries as of 02/29/04 (%)
United Kingdom 29.3
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France 12.3
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Germany 12.0
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Switzerland 8.0
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Netherlands 6.9
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Top 5 sectors as of 02/29/04 (%)
Financials 23.8
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Consumer discretionary 14.6
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Industrials 12.8
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Health care 9.2
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Telecommunication services 9.1
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Top 10 holdings as of 02/29/04 (%)
BP PLC 3.3
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Vodafone Group 3.0
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Siemens 2.5
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Royal Bank of Scotland Group 2.4
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Telefonica SA 2.3
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Allianz 2.3
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Eni 2.0
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Banco Santander
Central Hispano 2.0
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Erste Bank Der
Oesterreichischen
Sparkassen 2.0
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Credit Suisse Group 1.9
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Country breakdowns are calculated as a percentage of total investments.
Sectors and portfolio holdings are calculated as a percentage of net assets.
(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 BoxTM 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
02/29/2004.
1
Performance of a $10,000 investment
11/08/99 - 02/29/04 ($)
sales charge: without with
=====================================
Class A 9,624 9,070
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Class B 9,305 9,119
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Class C 9,228 9,228
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Class Z 9,826 n/a
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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.
PERFORMANCE INFORMATION
Columbia Europe Fund
VALUE OF A $10,000 INVESTMENT 11/08/99 - 02/29/04
[mountain chart data]:
Class A Class A MSCI
without with Europe
sales charge sales charge Index
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11/1999 $10,000.00 $ 9,425.00 $10,000.00
10,676.00 10,062.00 10,191.00
12,491.00 11,773.00 11,236.00
11,699.00 11,026.00 10,436.00
13,581.00 12,800.00 10,979.00
12,896.00 12,154.00 11,244.00
12,162.00 11,462.00 10,748.00
11,853.00 11,171.00 10,660.00
11,737.00 11,062.00 10,889.00
11,842.00 11,161.00 10,715.00
11,833.00 11,152.00 10,588.00
11,457.00 10,798.00 10,093.00
11,119.00 10,479.00 10,016.00
10,597.00 9,988.00 9,629.00
11,340.00 10,688.00 10,292.00
10,916.00 10,288.00 10,297.00
10,086.00 9,506.00 9,393.00
9,102.00 8,578.00 8,692.00
9,536.00 8,988.00 9,310.00
9,169.00 8,642.00 8,856.00
9,063.00 8,541.00 8,521.00
8,995.00 8,477.00 8,543.00
9,082.00 8,560.00 8,320.00
8,300.00 7,823.00 7,490.00
8,281.00 7,805.00 7,728.00
8,445.00 7,959.00 8,038.00
8,638.00 8,141.00 8,244.00
8,213.00 7,741.00 8,461.00
8,242.00 7,768.00 7,812.00
8,502.00 8,013.00 8,235.00
8,416.00 7,932.00 8,173.00
8,213.00 7,741.00 8,147.00
8,087.00 7,622.00 7,865.00
7,209.00 6,794.00 6,989.00
7,161.00 6,749.00 6,988.00
6,398.00 6,030.00 6,068.00
6,755.00 6,367.00 6,655.00
7,025.00 6,621.00 6,982.00
6,726.00 6,339.00 6,728.00
6,437.00 6,067.00 6,410.00
6,369.00 6,003.00 6,201.00
6,408.00 6,039.00 6,109.00
6,987.00 6,585.00 6,933.00
7,422.00 6,995.00 7,383.00
7,374.00 6,950.00 7,454.00
7,518.00 7,086.00 7,605.00
7,566.00 7,131.00 7,590.00
7,643.00 7,204.00 7,745.00
8,309.00 7,831.00 8,263.00
8,627.00 8,131.00 8,615.00
9,178.00 8,650.00 9,322.00
9,293.00 8,759.00 9,431.00
02/2004 9,624.00 9,070.00 9,708.00
The graph and table do not reflect a deduction of the taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. The Morgan
Stanley Capital International (MSCI) Europe Index is a broad-based, unmanaged
index that tracks the performance of European stocks. Unlike the fund, indices
are not investments, do not incur fees or expenses and are not professionally
managed. It is not possible to invest directly in an index. Securities in the
fund may not match those in an index. Index performance is from November 8,
1999.
Average annual total return as of 02/29/04 (%)
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Share class A B C Z
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Inception 11/08/99 11/08/99 11/08/99 11/08/99
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Sales charge without with without with without with without
==========================================================================================
6-month
(cumulative) 27.17 19.86 26.68 21.68 26.62 25.62 27.25
==========================================================================================
1-year 51.06 42.37 50.16 45.16 49.84 48.84 53.08
==========================================================================================
Life -0.82 -2.17 -1.59 -2.05 -1.78 -1.78 -0.34
==========================================================================================
Average annual total return as of 12/31/03 (%)
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Share class A B C Z
==========================================================================================
Sales charge without with without with without with without
==========================================================================================
6-month
(cumulative) 24.48 17.32 24.12 19.12 23.88 22.88 24.49
==========================================================================================
1-year 36.44 28.6 35.44 30.44 35.06 34.06 39.51
==========================================================================================
Life -1.97 -3.36 -2.73 -3.2 -2.93 -2.93 -1.48
==========================================================================================
All results shown assume reinvestment of distributions. The "with sales charge"
returns include the maximum 5.75% sales charge for class A shares, the
appropriate class B contingent deferred sales charge for the holding period
after purchase as follows: 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.
2
Summary
For the six-month period that
ended February 29, 2004
o European stock markets benefited from a rebound in economic activity. The
MSCI Europe Index returned 27.89%. Emerging market performance within Europe
was even stronger. The MSCI EM Europe Index returned 33.13% over the same
period.
arrow up
MSCI Europe Index: +27.89
arrow up
MSCI EM Europe Index: +33.13
o GDP growth in Europe was slower than in the United States, Japan and other
developed markets. High unemployment, lackluster consumer spending and a
strong euro were impediments to stronger growth.
The MSCI Europe Index is a broad-based, unmanaged index that tracks the
performance of common stocks in the developed markets of Europe.
The MSCI EM (Emerging Markets) Europe Index is a free float-adjusted market
capitalization index that is designed to measure equity market performance in
the emerging market countries of Europe.
ECONOMIC UPDATE
Columbia Europe Fund
Signs of a global economic recovery marked the period that began September 1,
2003 and ended February 29, 2004. Although Europe participated in the rebound,
its developed economies trailed the rest of the world. For the second half of
2003, world GDP growth averaged around 5%. By comparison GDP growth in developed
Europe was on the order of 1.5%. Forecasts for 2004 call for another year of low
single-digit growth, with slightly stronger growth in Spain, the United Kingdom
and European emerging markets.
SEVERAL FACTORS RESTRAIN GROWTH
The euro zone, so called because it encompasses the 12 nations that share the
euro as a common currency, is still struggling with relatively high unemployment
and lackluster consumer spending. A strong euro has also made European goods
less competitive around the world. In Germany, Europe's largest economy,
economic expectations are mixed. Last year, Germany introduced some important
labor reform measures and approved individual tax cuts, which went into effect
at the beginning of 2004. Domestic demand has shown signs of rebounding, driven
mainly by corporate spending. However, industrial production has been weaker
than expected so far this year.
Italian growth has been the most sluggish in the region. A GDP growth of less
than 1% is expected in 2004. High-profile corporate scandals have put a damper
on Italian consumer confidence. Italian exporters appear to be suffering more
than others from a stronger euro and the increased competition it has wrought.
With disappointing GDP expectations throughout Europe, hopes have been rekindled
that the European Central Bank (ECB) will cut interest rates. As yet there is no
tangible evidence that the ECB is leaning in that direction, although it is
unlikely to raise rates until the economic recovery is on steadier ground.
By contrast, the prospects for economic growth appear to be brighter in United
Kingdom, which falls outside the euro zone. February reports revealed a stronger
job market. Salaries have also risen. Hopes are that employment and salary
gains, combined with a resilient housing market, will bolster consumer spending
and keep the United Kingdom on track to realize forecast GDP growth of 3.6% for
the year.
EUROPE'S STOCK MARKETS REBOUND AFTER THREE DOWN YEARS
After three years of disappointing returns, European stock markets delivered
attractive double-digit gains for the period--despite mediocre economic results.
The MSCI Europe Index returned 27.89%. Emerging European markets did even better
than developed markets and have continued to thrive in 2004, led by Russia, the
Czech Republic and Hungary. Most of the developed European equity markets got
off to a solid start in 2004. However Germany, which was one of the strongest
performing markets in 2003, has been pretty much flat. As of the end of this
reporting period, the 2004 year-to-date return for the MSCI Germany Index is
0.25%.
Yet, low interest rates provide hope that the equity markets can continue to log
gains, even if they are below those earned in 2003. Cyclical stocks led the
markets in the first half of the period, but since January investors in European
markets have focused on defensive companies, such as food and beverage,
supermarkets, utilities and health care. With this rotation, and the general
volatility of the environment, stock picking is likely to take on more
importance and individual country allocations are likely to count for less.
3
sidebar:
Net asset value per share
as of 02/29/04 ($)
Class A 9.97
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Class B 9.64
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Class C 9.56
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Class Z 10.18
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Holdings discussed in this report
as of 02/29/04 (%)
Allianz 2.3
=====================================
Siemens 2.5
=====================================
Telefonica SA 2.3
=====================================
Banco Santander
Central Hispano 2.0
=====================================
Public Power 0.8
=====================================
Alpha Bank 0.7
=====================================
Hansabank 0.4
=====================================
Your fund is actively managed and the composition of its portfolio will change
over time. Information provided is calculated as a percentage of net assets.
PORTFOLIO MANAGERS' REPORT
Columbia Europe Fund
For the six-month period ended February 29, 2004, Columbia Europe Fund class A
shares returned 27.17% without sales charge. The fund modestly trailed its
benchmark, the MSCI Europe Index, which returned 27.89% for the period. The
fund's return was also behind the 28.28% average return of its peer group, the
Lipper European Region Funds Category.1 The fund benefited from our decision to
allocate a larger portion of assets to Germany and Spain than the countries
represented in the benchmark. However, an underweight position in investment
banks and insurance companies, which were the strongest parts of the financial
sector, hampered relative returns.
COUNTRY WEIGHTINGS AIDED THE FUND'S RETURN
Our overweight in Germany and Spain was positive for performance. The German
stock market benefited from a better global economy, tax cuts and domestic labor
and health care reforms, which have the potential to make the country more
competitive in the global economy. Stock valuations were attractive, and we
invested in several companies that were helped by corporate restructuring and
cost-cutting. We added to Allianz, an insurance company, and Siemens, an
industrial company that provides equipment and services to the public power and
telecommunications sectors. Both made positive contributions to total return.
Spain's strong economic growth and its close ties with Latin America, where
economic growth improved, were helpful to its stock market performance. The
majority of large Spanish companies, such as Telefonica and Banco Santander
Central Hispano, have significant operations in Latin America. The performance
of both companies was positive for the fund.
The fund's position in the United Kingdom also contributed to fund performance.
In the United Kingdom, stock prices suffered from rising interest rates and
relatively high valuations. However, as prospects have improved for stronger
earnings, UK stocks have become more attractive. We may add to our UK position
later this year.
BUILDING UP GREECE AND OPPORTUNITIES IN EASTERN EUROPE
We added a commitment to Greece, a market that did better than the MSCI Europe
Index. We invested in Public Power, a utility company, which is experiencing
robust growth in a favorable economic environment. Greek banks have seen a 40%
to 50% rise in mortgage origination. As a result, our investment in Alpha Bank
aided the fund's return.
We also believe there are growing investment opportunities in Eastern Europe, as
countries enter the EU and continue to rebuild their economies. Infrastructure
development and the emergence of a consumer society are common themes. Banks are
the early beneficiaries of these trends, and our holding in Hansabank in Estonia
was positive for performance.
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
callout:
We believe there are growing investment opportunities in Eastern Europe, as
countries enter the EU and continue to rebuild their economies.
Columbia Europe Fund
A MOVE AWAY FROM TECHNOLOGY
Because worker productivity in the US is high, we believe corporations will be
less likely to increase spending for software and hardware. Therefore, we
lowered exposure to technology and added investments in the utilities,
transportation and telecommunications sectors. We believe these areas should be
positively influenced by low historical capital expenditure. We were overweight
in the consumer discretionary sector, where we shifted our focus away from
retailers to media companies. We believe that surprisingly good earnings reports
may be forthcoming from media companies.
STOCK SELECTION WILL BE THE KEY TO PERFORMANCE
The portfolio's investments reflect our fairly optimistic view for recovery in
the global economy. As we look ahead, we believe there are few clear differences
among sector or country valuations; therefore, bottom-up stock selection will be
critical to performance in the months ahead. Our emphasis is likely to be on
companies with good cash flows and with the potential to be helped by an upturn
in corporate capital spending. We expect that many of the opportunities that
meet these criteria will be in the industrials, media and telecommunications
equipment areas.
[photo of Deborah F. Snee]
Deborah F. Snee has co-managed the fund since November 1999.
/s/ Deborah F. Snee
[photo of Penny Burgess]
Penny Burgess has co-managed the fund since February 2003 and has been with the
advisor and its predecessors since 1993.
/s/ Penny Burgess
International investing offers significant long-term growth potential, but also
involves certain risks. These risks include currency exchange rate fluctuations,
economic change, instability of emerging countries and political developments. A
portfolio of stocks from a single region poses additional risks due to limited
diversification.
A concentration of investments in a specific sector, such as the financial
sector, may cause the fund to experience increased volatility.
5
FINANCIAL STATEMENTS
February 29, 2004
Columbia Europe Fund
A guide to understanding your fund's financial statements
-----------------------------------------------------------------------------------
Investment Portfolio The investment portfolio details all of the fund's holdings and their market value
as of the last day of the reporting period. Portfolio holdings are organized by
type of asset, industry, country or geographic region (if applicable) to
demonstrate areas of concentration and diversification.
-----------------------------------------------------------------------------------
Statement of Assets and Liabilities This statement details the fund's assets, liabilities, net assets and share price
for each share class. Net assets are calculated by subtracting all the fund's
liabilities (including any unpaid expenses) from the total of the fund's investment
and non-investment assets. The share price for each class is calculated by dividing
net assets for that class by the number of shares outstanding in that class as of
the last day of the reporting period.
-----------------------------------------------------------------------------------
Statement of Operations This statement details income earned by the fund and the expenses 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 recognized over the period. The total of these results represents the fund's
net increase or decrease in net assets from operations.
-----------------------------------------------------------------------------------
Statement of Changes in Net Assets This statement demonstrates how the fund's net assets were affected by its
operating results, distributions to shareholders and shareholder transactions
(e.g., subscriptions, redemptions and dividend reinvestments). The Statement of
Changes in Net Assets also reconciles changes in the number of shares outstanding.
-----------------------------------------------------------------------------------
Financial Highlights The financial highlights demonstrate how the fund's net asset value per share was
affected by the fund's operating results. The financial highlights table also
discloses certain key fund ratios (e.g., fund expenses and net investment income as
a percentage of average net assets).
-----------------------------------------------------------------------------------
Notes to Financial Statements These notes disclose the organizational background of the fund, its significant
accounting policies (including those surrounding security valuation, income
recognition and distributions to shareholders), federal tax information, fees and
compensation paid to affiliates and significant risks and contingencies.
6
INVESTMENT PORTFOLIO
February 29, 2004 (unaudited)
Columbia Europe Fund
COMMON STOCKS - 97.2%
CONSUMER DISCRETIONARY - 14.0%
Shares Value ($)
- --------------------------------------------------------------------------------------------------------------------------------
Auto Components - 0.5% Continental AG 600 24,687
Auto Components Total 24,687
------------------------------------------------------------------------------
Automobiles - 0.8% Renault SA 547 38,330
Automobiles Total 38,330
------------------------------------------------------------------------------
Hotels, Restaurants & Leisure - 3.9% Accor SA 1,325 58,386
Compass Group PLC (a) 6,630 45,342
Hyatt Regency Hotels & Tourism SA 1,980 22,090
InterContinental Hotels Group PLC 7,050 68,408
Hotels, Restaurants & Leisure Total 194,226
------------------------------------------------------------------------------
Media - 5.6% JC Decaux SA (a) 2,700 54,316
Pearson PLC 6,460 74,737
Reuters Group PLC 5,451 39,771
Societe Television Francaise 1 655 22,642
United Business Media PLC 5,041 52,065
WPP Group PLC 3,322 37,317
Media Total 280,848
------------------------------------------------------------------------------
Multiline Retail - 0.5% Next Group PLC 980 25,437
Multiline Retail Total 25,437
------------------------------------------------------------------------------
Specialty Retail - 1.5% Burberry Group PLC 5,700 37,519
LVMH Moet Hennessy Louis Vuitton SA 498 38,221
Specialty Retail Total 75,740
------------------------------------------------------------------------------
Textiles, Apparel & Luxury Goods - 1.2% Puma AG Rudolf Dassler Sport 300 61,744
Textiles, Apparel & Luxury Goods Total 61,744
---------------
CONSUMER DISCRETIONARY TOTAL 701,012
CONSUMER STAPLES - 7.4%
- --------------------------------------------------------------------------------------------------------------------------------
Beverages - 2.6% Diageo PLC 3,800 52,826
Pernod Ricard SA 625 77,022
Beverages Total 129,848
------------------------------------------------------------------------------
Food & Staples Retailing - 1.0% Casino Guichard-Perrachon SA 500 49,793
Food & Staples Retailing Total 49,793
------------------------------------------------------------------------------
Food Products - 1.4% Nestle SA 260 68,933
Food Products Total 68,933
------------------------------------------------------------------------------
Household Products - 1.9% Reckitt Benckiser PLC 3,600 94,449
Household Products Total 94,449
------------------------------------------------------------------------------
Tobacco - 0.5% Imperial Tobacco Group PLC 1,195 25,844
Tobacco Total 25,844
---------------
CONSUMER STAPLES TOTAL 368,867
See notes to investment portfolio.
7
February 29, 2004 (unaudited)
Columbia Europe Fund
COMMON STOCKS - (CONTINUED)
ENERGY - 6.7%
Shares Value ($)
- --------------------------------------------------------------------------------------------------------------------------------
Oil & Gas - 6.7% BP PLC 20,300 163,925
Eni S.p.A. 5,100 100,369
Total SA 400 73,379
Oil & Gas Total 337,673
---------------
ENERGY TOTAL 337,673
FINANCIALS - 23.8%
- --------------------------------------------------------------------------------------------------------------------------------
Commercial Banks - 18.2% Alpha Bank 1,180 35,843
Anglo Irish Bank Corp., PLC 5,100 86,876
Banca Intesa S.p.A. 8,279 30,892
Barclays PLC 7,583 68,450
Banco Popular Espanol SA 385 23,470
Banco Santander Central Hispano SA 8,500 98,863
Banco Popolara di Verona e Novara Scrl 3,296 57,174
Credit Agricole SA 2,409 62,231
Credit Suisse Group (a) 2,609 95,395
Erste Bank Der Oesterreichischen Sparkassen AG 700 98,189
Hansabank Ltd. 758 22,372
Royal Bank of Scotland Group PLC 3,711 117,997
Societe Generale 572 51,003
Standard Chartered PLC 3,723 64,469
Commercial Banks Total 913,224
------------------------------------------------------------------------------
Diversified Financial Services - 1.7% ING Groep N.V. 3,438 84,436
Diversified Financial Services Total 84,436
------------------------------------------------------------------------------
Insurance - 3.9% Allianz AG, Registered Shares 931 116,486
Irish Life & Permanent PLC 4,900 80,106
Insurance Total 196,592
---------------
FINANCIALS TOTAL 1,194,252
HEALTH CARE - 9.2%
- --------------------------------------------------------------------------------------------------------------------------------
Health Care Equipment & Supplies - 4.7% Nobel Biocare Holding AG 578 73,648
Plonak Holding AG 3,160 84,530
Smith & Nephew PLC 5,600 53,633
SSL International PLC 3,700 21,748
Health Care Equipment & Supplies Total 233,559
------------------------------------------------------------------------------
Pharmaceuticals - 4.5% GlaxoSmithKline PLC, ADR 1,775 75,650
Novartis AG, Registered Shares 1,576 69,785
Stada Arzneimittel AG 500 29,127
Teva Pharmaceutical Industries Ltd., ADR 800 52,000
Pharmaceuticals Total 226,562
---------------
HEALTH CARE TOTAL 460,121
INDUSTRIALS - 12.8%
- --------------------------------------------------------------------------------------------------------------------------------
Building Products - 1.2% Wienerberger AG 1,959 62,096
Building Products Total 62,096
------------------------------------------------------------------------------
Commercial Services & Supplies - 2.9% Capita Group PLC 14,415 73,567
Randstad Holding N.V. 2,400 70,474
Commercial Services & Supplies Total 144,041
--------------
See notes to investment portfolio.
8
February 29, 2004 (unaudited)
Columbia Europe Fund
COMMON STOCKS - (CONTINUED)
INDUSTRIALS - (CONTINUED)
Shares Value ($)
- --------------------------------------------------------------------------------------------------------------------------------
Electrical Equipment - 4.4.% Koninklijke (Royal) Philips Electronics N.V. 3,100 94,588
Siemens AG 1,600 123,897
Electrical Equipment Total 218,485
------------------------------------------------------------------------------
Industrial Conglomerates - 1.4% Smith Group PLC 3,000 37,283
YUKOS, ADR 600 30,420
Industrial Conglomerates Total 67,703
------------------------------------------------------------------------------
Machinery - 2.4% Atlas Copco AB, Class B 1,500 49,237
Linde AG 600 31,665
Singulus Technologies AG (a) 1,800 40,097
Machinery Total 120,999
------------------------------------------------------------------------------
Transportation Infrastructure - 0.5% BAA PLC 2,659 26,049
Transportation Infrastructure Total 26,049
---------------
INDUSTRIALS TOTAL 639,373
INFORMATION TECHNOLOGY - 7.7%
- --------------------------------------------------------------------------------------------------------------------------------
Communications Equipment - 1.8% Telefonaktiebolaget LM Ericsson, Class B (a) 30,200 88,524
Communications Equipment Total 88,524
------------------------------------------------------------------------------
Electronic Equipment & Instruments - 0.4% Epcos AG 920 22,032
Electronic Equipment & Instruments Total 22,032
------------------------------------------------------------------------------
Internet Software & Services - 0.5% T-Online International AG (a) 1,875 25,669
Internet Software & Services Total 25,669
------------------------------------------------------------------------------
IT Services - 1.3% Indra Sistemas SA 4,620 63,363
IT Services Total 63,363
------------------------------------------------------------------------------
Semiconductors &
Semiconductor Equipment - 2.7% ARM Holdings PLC 18,870 42,606
ASML Holding N.V. (a) 2,506 46,441
STMicroelectronics N.V. 1,864 48,501
Semiconductors & Semiconductor Equipment Total 137,548
------------------------------------------------------------------------------
Software - 1.0% Dassault Systemes SA 1,099 48,140
Software Total 48,140
---------------
INFORMATION TECHNOLOGY TOTAL 385,276
MATERIALS - 3.7%
- --------------------------------------------------------------------------------------------------------------------------------
Chemicals - 1.4% BASF AG 700 37,389
MG Technologies AG 1,600 24,300
Syngenta AG (a) 100 6,968
Chemicals Total 68,657
------------------------------------------------------------------------------
Metals & Mining - 0.5% BHP Billiton PLC 2,824 26,032
Metal & Mining Total 26,032
------------------------------------------------------------------------------
Paper & Forest Products - 1.8% Stora Enso Oyj, Class R 4,600 61,367
UPM-Kymmene Oyj 1,600 31,648
Paper & Forest Products Total 93,015
---------------
MATERIALS TOTAL 187,704
See notes to investment portfolio.
9
February 29, 2004 (unaudited)
Columbia Europe Fund
COMMON STOCKS - (CONTINUED)
TELECOMMUNICATION SERVICES - 9.1%
Shares Value ($)
- --------------------------------------------------------------------------------------------------------------------------------
Diversified Telecommunication Services -5.5% France Telecom SA (a) 1,560 43,161
Portugal Telecom, SGPS, SA, Registered Shares 5,739 65,031
Telecom Italia S.p.A. 16,143 50,968
Telefonica SA 7,189 117,258
Diversified Telecommunication Services Total 276,418
------------------------------------------------------------------------------
Wireless Telecommunication Services - 3.6% Telefonica Moviles SA (a) 2,189 25,132
Vodafone Group PLC 60,779 152,258
Wireless Telecommunication Services Total 177,390
---------------
TELECOMMUNICATION SERVICES TOTAL 453,808
UTILITIES - 2.8%
- --------------------------------------------------------------------------------------------------------------------------------
Electric Utilities - 1.4% E ON AG 500 33,944
Public Power Corp. 1,440 38,708
Electric Utilities Total 72,652
------------------------------------------------------------------------------
Gas Utilities - 1.4% National Grid Transco PLC 8,700 69,969
Gas Utilities Total 69,969
UTILITIES TOTAL 142,621
---------------
TOTAL COMMON STOCKS (COST OF $3,808,486) 4,870,707
PREFERRED STOCK - 0.6%
CONSUMER DISCRETIONARY - 0.6%
- --------------------------------------------------------------------------------------------------------------------------------
Media - 0.6% ProSiebenSat.1 Media AG
(Cost of $19,852) 1,400 29,701
---------------
Media Total 29,701
Short-Term Obligation - 2.3% Par ($)
- --------------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with State Street
Bank & Trust Co., dated 02/27/04, due 03/01/04
at 0.930%, collateralized by a U.S. Treasury
Bond maturing 07/31/04, market value of
$120,825 (repurchase proceeds $117,009)
(cost of $117,000) 117,000 117,000
Total Investments - 100.1%
(cost of $3,945,338) (b) 5,017,408
Other Assets & Liabilities, Net - (0.1%) (6,387)
Net Assets - 100.0% 5,011,021
NOTES TO INVESTMENT PORTFOLIO:
(a) Non-income producing.
(b) Cost for both financial statement and federal income tax purposes is the
same.
See notes to financial statements.
10
February 29, 2004 (unaudited)
Columbia Europe Fund
ACRONYM NAME
- -----------------------------------------------------
ADR American Depositary Receipt
SUMMARY OF SECURITIES % OF TOTAL
BY COUNTRY (UNAUDITED) VALUE ($) INVESTMENTS
-------------------- --------- -----------
United Kingdom $1,471,700 29.3%
France 616,623 12.3
Germany 600,739 12.0
Switzerland 399,259 8.0
Netherlands 344,441 6.9
Spain 328,086 6.5
Italy 239,404 4.8
United States 192,651 3.8
Ireland 166,982 3.3
Austria 160,285 3.2
Sweden 137,760 2.7
Greece 96,641 1.9
Finland 93,015 1.9
Portugal 65,031 1.3
Israel 52,000 1.0
Russia 30,419 0.6
Estonia 22,372 0.5
--------- -----
$5,017,408 100.0%
========= =====
Certain securities are listed by country of underlying exposure but may trade
predominantly on other exchanges.
See notes to financial statements.
11
STATEMENT OF ASSETS AND LIABILITIES
February 29, 2004 (unaudited)
Columbia Europe Fund
($)
- --------------------------------------------------------------------------------------------------------------------------------
Assets: Investments, at cost 3,945,338
Investments, at value 5,017,408
Cash 804
Foreign currency (cost of $4,038) 4,024
Receivable for:
Fund shares sold 2,320
Interest 9
Dividends 16,838
Expense reimbursement due from Investment Advisor 11,869
Deferred Trustees' compensation plan 2,168
---------------
Total Assets 5,055,440
------------------------------------------------------------------------------
Liabilities: Payable for:
Investment advisory fee 2,808
Administration fee 878
Transfer agent fee 3,438
Pricing and bookkeeping fees 729
Trustees' fees 17
Audit fee 18,963
Custody fee 1,265
Distribution and service fees 1,748
Deferred Trustees' fees 2,168
Other liabilities 12,405
---------------
Total Liabilities 44,419
Net Assets 5,011,021
------------------------------------------------------------------------------
Composition of Net Assets: Paid-in capital 7,676,209
Accumulated net investment loss (23,963)
Accumulated net realized loss (3,715,288)
Net unrealized appreciation on:
Investments 1,072,070
Foreign currency translations 1,993
---------------
Net Assets 5,011,021
------------------------------------------------------------------------------
Class A: Net assets 2,553,739
Shares outstanding 256,158
Net asset value per share 9.97(a)
Maximum offering price per share($9.97/0.9425) 10.58(b)
------------------------------------------------------------------------------
Class B: Net assets 1,753,271
Shares outstanding 181,803
Net asset value and offering price per share 9.64(a)
------------------------------------------------------------------------------
Class C: Net assets 187,634
Shares outstanding 19,632
Net asset value and offering price per share 9.56(a)
------------------------------------------------------------------------------
Class Z: Net assets 516,377
Shares outstanding 50,712
Net asset value, offering and redemption price per share 10.18(c)
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
(c) Redemption price per share is equal to net asset value less any applicable
redemption fee.
See notes to financial statements.
12
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 2004 (unaudited)
Columbia Europe Fund
($)
- --------------------------------------------------------------------------------------------------------------------------------
Investment Income: Dividends 26,465
Interest 281
--------
Total Investment Income (net of foreign taxes
withheld of $3,656) 26,746
------------------------------------------------------------------------------
Expenses: Investment advisory fee 14,907
Administration fee 4,570
Distribution fee:
Class A 1,146
Class B 5,641
Class C 703
Service fee:
Class A 2,858
Class B 1,880
Class C 233
Transfer agent fee 7,763
Pricing and bookkeeping fees 6,524
Trustees' fee 3,357
Custody fee 12,214
Audit fee 15,389
Registration fee 24,185
Other expenses 11,654
----------
Total Expenses 113,024
Fees and expenses waived or reimbursed by Investment Advisor (69,258)
Fees waived by Distributor - Class A (1,146)
Custody earnings credit (114)
----------
Net Expenses 42,506
----------
Net Investment Loss (15,760)
------------------------------------------------------------------------------
Net Realized and Unrealized Net realized gain (loss) on:
Gain (Loss) on Investments Investments 282,220
and Foreign Currency: Foreign currency transactions (8,073)
----------
Net realized gain 274,147
Net change in unrealized appreciation/depreciation on:
Investments 726,330
Foreign currency translations 411
----------
Net change in unrealized appreciation/depreciation 726,741
----------
Net Gain 1,000,888
----------
Net Increase in Net Assets from Operations 985,128
See notes to financial statements.
13
STATEMENT OF CHANGES IN NET ASSETS
Columbia Europe Fund
(unaudited)
Six Months Year
Ended Ended
February 29, August 31,
Increase (Decrease) in Net Assets: 2004 ($) 2003 ($)
- --------------------------------------------------------------------------------------------------------------------------------
Operations: Net investment income (loss) (15,760) 2,007
Net realized gain (loss) on investments and foreign
currency transactions 274,147 (196,327)
Net change in unrealized appreciation/depreciation
on investments and foreign currency translations 726,741 413,839
-------------------------
Net Increase from Operations 985,128 219,519
------------------------------------------------------------------------------
Share Transactions: Class A:
Subscriptions 78,590 6,630,977
Redemptions (61,693) (9,468,293)
Redemption fees 515 --
-------------------------
Net Increase (Decrease) 17,412 (2,837,316)
Class B:
Subscriptions 444,340 1,231,412
Redemptions (274,929) (1,451,614)
Redemption fees 344 --
-------------------------
Net Increase (Decrease) 169,755 (220,202)
Class C:
Subscriptions 469,180 8,762,220
Redemptions (586,769) (8,766,448)
Redemption fees 39 --
-------------------------
Net Decrease (117,550) (4,228)
Class Z:
Subscriptions 428,945 7,001,434
Redemptions (63,453) (6,946,104)
Redemption fees 103 --
-------------------------
Net Increase 365,595 55,330
Net Increase (Decrease) from Share Transactions 435,212 (3,006,416)
Total Increase (Decrease) in Net Assets 1,420,340 (2,786,897)
See notes to financial statements.
14
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Columbia Europe Fund
(unaudited)
Six Months Year
Ended Ended
February 29, August 31,
2004 ($) 2003 ($)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets: Beginning of period 3,590,681 6,377,578
End of period (including accumulated net investment
loss of $(23,963) and $(8,203), respectively) 5,011,021 3,590,681
------------------------------------------------------------------------------
Changes in Shares: Class A:
Subscriptions 8,464 963,349
Redemptions (6,784) (1,353,961)
-------------------------
Net Increase (Decrease) 1,680 (390,612)
Class B:
Subscriptions 51,418 182,247
Redemptions (32,180) (211,698)
-------------------------
Net Increase (Decrease) 19,238 (29,451)
Class C:
Subscriptions 56,844 1,299,443
Redemptions (71,459) (1,291,182)
-------------------------
Net Increase (Decrease) (14,615) 8,261
Class Z:
Subscriptions 44,780 1,021,706
Redemptions (6,505) (1,010,307)
-------------------------
Net Increase 38,275 11,399
See notes to financial statements.
15
NOTES TO FINANCIAL STATEMENTS
February 29, 2004 (unaudited)
Columbia Europe Fund
NOTE 1. ORGANIZATION
Columbia Europe Fund (the "Fund"), a series of Columbia Funds Trust VII (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 long-term growth by investing primarily in equity securities of
European issuers.
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 5.75% based on
the amount of initial investment. Class A shares purchased without an initial
sales charge are subject to a 1.00% contingent deferred sales charge ("CDSC") on
shares sold within eighteen months on an original purchase of $1 million to $25
million. Class B shares are subject to a maximum CDSC of 5.00% based upon the
holding period after purchase. Class B shares will convert to Class A shares in
a certain number of years after purchase, depending on the program under which
shares were purchased. Class C shares are subject to a 1.00% CDSC on shares sold
within one year after purchase. Class Z shares are offered continuously at net
asset value. There are certain restrictions on the purchase of Class Z shares,
as described in the Fund's prospectus.
Effective October 13, 2003, the Fund changed its name from Liberty Newport
Europe Fund to Columbia Europe Fund. Also on that date, the Trust changed its
name from Liberty Funds Trust VII to Columbia Funds Trust VII.
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
Equity securities are valued at the last sale price at the close of the
principal exchange on which they trade. Unlisted securities or listed securities
for which there were no sales during the day are valued at the closing bid price
on such exchanges or over-the-counter markets.
Short-term debt obligations maturing within 60 days are valued at amortized
cost, which approximates market value.
Foreign securities are generally valued at the closing price on the foreign
exchange or market on which they trade. If any foreign share prices are not
readily available as a result of limited share activity, the securities are
valued at the last sale price of the local shares in the principal market in
which such securities are normally traded.
Generally, trading in foreign securities is substantially completed each day at
various times prior to the close of the New York Stock Exchange ("NYSE"). The
values of such securities used in computing the net asset value of the Fund's
shares are determined as of such times. Foreign currency exchange rates are
generally determined at 2:00 p.m. Eastern (U.S.) time. Occasionally, events
affecting the values of such foreign securities and such exchange rates may
occur between the times at which they are determined and the close of the
customary trading session of the NYSE, which would not be reflected in the
computation of the Fund's net asset value. If events materially affecting the
values of such foreign securities occur and it is determined that market
quotations are not readily available, then these foreign securities will be
valued at their fair value using procedures approved by the Board of Trustees.
Investments for which market quotations are not readily available are valued at
fair value under procedures approved by the Board of Trustees.
16
February 29, 2004 (unaudited)
Columbia Europe Fund
SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date. Cost is determined
and gains (losses) are based upon the specific identification method for both
financial statement and federal income tax purposes.
REPURCHASE AGREEMENTS
The Fund may engage in repurchase agreement transactions with institutions that
the Fund's investment advisor has determined are creditworthy. The Fund, through
its custodian, receives delivery of underlying securities collateralizing a
repurchase agreement. Collateral is at least equal, at all times, to the value
of the repurchase obligation including interest. A repurchase agreement
transaction involves certain risks in the event of default or insolvency of the
counterparty. These risks include possible delays or restrictions upon the
Fund's ability to dispose of the underlying securities and a possible decline in
the value of the underlying securities during the period while the Fund seeks to
assert its rights.
INCOME RECOGNITION
Interest income is recorded on the accrual basis. Corporate actions and dividend
income are recorded on the ex-date, except for certain foreign securities which
are recorded as soon after ex-date as the Fund becomes aware of such, net of
non-reclaimable tax withholdings.
FOREIGN CURRENCY TRANSACTIONS
The values of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates. Net realized and
unrealized gains (losses) on foreign currency transactions include gains
(losses) arising from the fluctuation in exchange rates between trade and
settlement dates on securities transactions, gains (losses) arising from the
disposition of foreign currency and currency gains (losses) between the accrual
and payment dates on dividends, interest income and foreign withholding taxes.
For financial statement purposes, the Fund does not distinguish that portion of
gains (losses) on investments which is due to changes in foreign exchange rates
from that which is due to changes in market prices of the investments. Such
fluctuations are included with the net realized and unrealized gains (losses) on
investments.
DETERMINATION OF CLASS NET ASSET VALUES
All income, expenses (other than class-specific expenses, as shown on the
Statement of Operations) and realized and unrealized gains (losses) are
allocated to each class of the Fund on a daily basis, based on the relative net
assets of each class, for purposes of determining the net asset value of each
class.
FEDERAL INCOME TAX STATUS
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 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
Distributions to shareholders are recorded on ex-date. Net realized capital
gains, if any, are distributed at least annually.
NOTE 3. FEDERAL TAX INFORMATION
As of August 31, 2003, the components of distributable earnings on a tax basis
were as follows:
Unrealized
Appreciation*
=============
$346,616
* The difference between book-basis and tax-basis unrealized appreciation is
attributable primarily to the tax deferral of losses on wash sales.
Unrealized appreciation and depreciation at February 29, 2004, 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 $1,111,486
Unrealized depreciation (39,416)
==========================================================
Net unrealized appreciation $1,072,070
17
February 29, 2004 (unaudited)
Columbia Europe Fund
The following capital loss carryforwards, determined as of August 31, 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
==================================================
2009 $ 82,647
2010 2,239,196
2011 1,487,332
$3,809,175
Under current tax rules, certain currency and capital losses realized after
October 31 may be deferred and treated as occurring on the first day of the
following fiscal year. As determined on August 31, 2003, post-October currency
losses of $6,150 and capital losses of $179,554 attributed to security
transactions were deferred to September 1, 2003.
NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES
INVESTMENT ADVISORY FEE
Columbia Management Advisors, Inc. ("Columbia") is the investment advisor to the
Fund. Prior to April 1, 2004, Columbia was an indirect, wholly owned subsidiary
of FleetBoston Financial Corporation ("FleetBoston"). Effective April 1, 2004,
FleetBoston was acquired by Bank of America Corporation ("BOA"), see Note 9.
Columbia receives a monthly investment advisory fee based on the Fund's average
daily net assets at the following annual rates:
Average Daily Net Assets Fee Rate
=================================================
First $1 billion 0.70%
Next $500 million 0.65%
Over $1.5 billion 0.60%
Prior to November 1, 2003, Columbia was entitled to receive a monthly investment
advisory fee at the annual rate of 0.70% of the Fund's average daily net assets.
For the six months ended February 29, 2004, the Fund's annualized effective
investment advisory fee rate was 0.70%.
ADMINISTRATION FEES
Columbia provides accounting and other services to the Fund for a monthly
administration fee at the annual rate of 0.20% of the Fund's average daily net
assets.
Prior to November 1, 2003, Columbia was entitled to receive a monthly
administration fee at the annual rate of 0.25% of the Fund's average daily net
assets.
For the six months ended February 29, 2004, the Fund's annualized effective
administration fee rate was 0.21%.
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 February 29,
2004, the Fund's annualized effective pricing and bookkeeping fee rate was
0.305%.
TRANSFER AGENT FEES
Columbia Funds Services, Inc. (the "Transfer Agent"), formerly Liberty Funds
Services, Inc., an indirect, wholly owned subsidiary of BOA, provides
shareholder services to the Fund. For such services, the Transfer Agent receives
a fee, paid monthly, at the annual rate of $28.00 per open account. The Transfer
Agent also receives reimbursement for certain out-of-pocket expenses.
Prior to November 1, 2003, the Transfer Agent was entitled to receive a monthly
transfer agent fee, in addition to reimbursement for certain out-of-pocket
expenses, 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 February 29, 2004, the Fund's annualized
effective transfer agent fee rate, exclusive of out-of-pocket fees, was 0.30%.
18
February 29, 2004 (unaudited)
Columbia Europe Fund
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
Columbia Funds Distributor, Inc. (the "Distributor"), an indirect, wholly owned
subsidiary of BOA, 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 February 29, 2004, the Distributor
has retained net underwriting discounts of $256 on sales of the Fund's Class A
shares and received CDSC fees of $1,292 and $8 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 at the annual rate of 0.25% of the
average daily net assets attributable to Class A, Class B and Class C shares of
the Fund. The Plan also requires the payment of a monthly distribution fee to
the Distributor at the annual rates of 0.10%, 0.75% and 0.75% of the average
daily net assets attributable to Class A, Class B and Class C shares,
respectively. The Distributor has voluntarily agreed to waive the Class A share
distribution fee in its entirety.
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.
EXPENSE LIMITS AND FEE REIMBURSEMENTS
Columbia has voluntarily agreed to waive certain fees to the extent that total
expenses (exclusive of distribution and service fees, brokerage commissions,
interest, taxes and extraordinary expenses, if any) exceed 1.45% annually of the
Fund's average daily net assets. This arrangement may be revised or discontinued
by Columbia at any time. Prior to November 1, 2003, Columbia waived certain fees
to the extent that total expenses (exclusive of distribution and service fees,
brokerage commissions, interest, taxes and extraordinary expenses, if any)
exceeded 1.50% annually of the Fund's average daily net assets.
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. PORTFOLIO INFORMATION
For the six months ended February 29, 2004, the cost of purchases and proceeds
from sales of securities, excluding short-term obligations, were $2,053,589 and
$1,611,408, respectively.
NOTE 6. REDEMPTION FEES
Effective February 10, 2003, the Fund began imposing a 2.00% redemption fee to
shareholders of Class Z shares who redeem shares held for 60 days or less.
Redemption fees, which are retained by the Fund, are accounted for as an
addition to paid in capital and are allocated to each class proportionately for
purposes of determining the net asset value of each class. Prior to October 9,
2003, redemption fees were recorded as a component of paid-in capital on Class Z
shares. For the six months ended February 29, 2004, the redemption fees for the
Class Z shares of the Fund amounted to $1,001.
NOTE 7. 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 February 29,
2004, the Fund did not borrow under these arrangements.
NOTE 8. DISCLOSURE OF SIGNIFICANT RISKS
AND CONTINGENCIES
FOREIGN SECURITIES
There are certain additional risks involved when investing in foreign securities
that are not inherent with
19
February 29, 2004 (unaudited)
Columbia Europe Fund
investments in domestic securities. These risks may involve foreign currency
exchange rate fluctuations, adverse political and economic developments and the
possible prevention of currency exchange or other foreign governmental laws or
restrictions. In addition, the liquidity of foreign securities may be more
limited than that of domestic securities.
GEOGRAPHIC CONCENTRATION
Because the Fund's investments are concentrated
in securities of European issuers, events within the region will have a greater
effect on the Fund than if the Fund were more geographically diversified. In
addition, events in any one country within the region may impact the other
countries or the region as a whole. Markets in the region can experience
significant volatility due to social, regulatory and political uncertainties.
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 and law enforcement authorities 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 were
knowingly involved in late trading of mutual fund shares.
On February 24, 2004, the Securities and Exchange Commission ("SEC") filed a
civil complaint in the United States District Court for the District of
Massachusetts against Columbia and the Distributor, alleging that they had
violated certain provisions of the federal securities laws in connection with
trading activity in mutual fund shares. Also on February 24, 2004, the New York
Attorney General ("NYAG") filed a civil complaint in New York Supreme Court,
County of New York against Columbia and the Distributor alleging that Columbia
and the Distributor had violated certain New York anti-fraud statutes. If either
Columbia or the Distributor is unsuccessful in its defense of these proceedings,
it could be barred from serving as an investment adviser or distributor for any
investment company registered under the Investment Company Act of 1940, as
amended (a "registered investment company"). Such results could prevent
Columbia, the Distributor or any company that is an affiliated person of
Columbia and the Distributor from serving as an investment adviser or
distributor for any registered investment company, including your fund. Your
fund has been informed by Columbia and the Distributor that, if these results
occur, they will seek exemptive relief from the SEC to permit them to continue
to serve as your fund's investment adviser and distributor. There is no
assurance that such exemptive relief will be granted. On March 15, 2004,
Columbia and the Distributor entered into agreements in principle with the SEC
Division of Enforcement and NYAG in settlement of the charges. Under the
agreements, Columbia and the Distributor agreed, inter alia, to the following
conditions: payment of $70 million in disgorgement; payment of $70 million in
civil penalties; an order requiring Columbia and the Distributor to cease and
desist from violations of the antifraud provisions and other provisions of the
federal securities laws; governance changes designed to maintain the
independence of the mutual fund boards of trustees and ensure compliance with
securities laws and their fiduciary duties; and retention of an independent
consultant to review Columbia's and the Distributor's compliance policies and
procedures. The agreement requires the final approval of the SEC. In a separate
agreement with the NYAG, the Columbia Group has agreed to reduce mutual fund
fees by $80 million over a five-year period.
As a result of these matters or any adverse publicity or other developments
resulting from them, there may be increased redemptions or reduced sales of fund
shares, which could increase transaction costs or operating expenses, or have
other adverse consequences for the funds.
NOTE 9. SUBSEQUENT EVENT
On April 1, 2004, FleetBoston, including the Fund's investment advisor and
distributor, was acquired by BOA. The merger did not change the way the Fund is
managed, the investment personnel assigned to manage the Fund or the fees paid
by the Fund.
20
FINANCIAL HIGHLIGHTS
Columbia Europe Fund
Selected data for a share outstanding throughout each period is as follows:
(unaudited)
Six Months Period
Ended Ended
February 29, Year Ended August 31, August 31
Class A Shares 2004 2003 2002 2001 2000 (a)
==================================================================================================================================--
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.84 $ 7.42 $ 9.41 $ 12.26 $ 10.33
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (b) (0.02) 0.02 0.02 (0.01) (0.03)
Net realized and unrealized gain (loss)
on investments and foreign currency 2.15 0.40 (2.01) (2.84) 1.96
------------ ------------ ------------ ------------ ------------
Total from Investment Operations 2.13 0.42 (1.99) (2.85) 1.93
- ------------------------------------------------------------------------------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added to paid-in-capital --(b)(c) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.97 $ 7.84 $ 7.42 $ 9.41 $ 12.26
Total return (d)(e) 27.17%(f) 5.66% (21.15)% (23.25)% 18.68%(f)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (g) 1.71%(h) 1.75% 1.75% 1.75% 1.75%(h)
Net investment income (loss) (g) (0.48)%(h) 0.28% 0.18% (0.14)% (0.25)%(h)
Waiver/reimbursement 3.34%(h) 3.64% 1.93% 1.25% 1.45%(h)
Portfolio turnover rate 39%(f) 74% 71% 67% 24%(f)
Net assets, end of period (000's) $ 2,554 $ 1,995 $ 4,788 $ 5,823 $ 9,874
- ------------------------------------------------------------------------------------------------------------------------------------
(a) The Fund commenced investment operations on November 1, 1999. The activity
shown is from the effective date of registration (November 8, 1999) with the
Securities and Exchange Commission.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Rounds to less than $0.01 per share.
(d) Total return at net asset value assuming no initial sales charge or
contingent deferred sales charge.
(e) Had the Investment Advisor and/or Distributor not waived or reimbursed a
portion of expenses, total return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(h) Annualized.
21
Columbia Europe Fund
Selected data for a share outstanding throughout each period is as follows:
(unaudited)
Six Months Period
Ended Ended
February 29, Year Ended August 31, August 31
Class B Shares 2004 2003 2002 2001 2000 (a)
==================================================================================================================================--
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.61 $ 7.26 $ 9.27 $ 12.17 $ 10.33
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.05) (0.02) (0.05) (0.09) (0.10)
Net realized and unrealized gain (loss)
on investments and foreign currency 2.08 0.37 (1.96) (2.81) 1.94
------------ ------------ ------------ ------------ ------------
Total from Investment Operations 2.03 0.35 (2.01) (2.90) 1.84
- ------------------------------------------------------------------------------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added to paid-in-capital --(b)(c) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.64 $ 7.61 $ 7.26 $ 9.27 $ 12.17
Total return (d)(e) 26.68%(f) 4.82% (21.68)% (23.83)% 17.81%(f)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (g) 2.46%(h) 2.50% 2.50% 2.50% 2.50%(h)
Net investment loss (g) (1.20)%(h) (0.27)% (0.57)% (0.89)% (1.00)%(h)
Waiver/reimbursement 3.24%(h) 3.95% 1.83% 1.15% 1.45%(h)
Portfolio turnover rate 39%(f) 74% 71% 67% 24%(f)
Net assets, end of period (000's) $ 1,753 $ 1,238 $ 1,394 $ 2,062 $ 2,989
- ------------------------------------------------------------------------------------------------------------------------------------
(a) The Fund commenced investment operations on November 1, 1999. The activity
shown is from the effective date of registration (November 8, 1999) with the
Securities and Exchange Commission.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Rounds to less than $0.01 per share.
(d) Total return at net asset value assuming no contingent deferred sales
charge.
(e) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(h) Annualized.
22
Columbia Europe Fund
Selected data for a share outstanding throughout each period is as follows:
(unaudited)
Six Months Period
Ended Ended
February 29, Year Ended August 31, August 31
Class C Shares 2004 2003 2002 2001 2000 (a)
==================================================================================================================================--
NET ASSET VALUE, BEGINNING OF PERIOD $ 7.55 $ 7.26 $ 9.28 $ 12.19 $ 10.33
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (b) (0.05) (0.04) (0.05) (0.09) (0.10)
Net realized and unrealized gain (loss)
on investments and foreign currency 2.06 0.33 (1.97) (2.82) 1.96
------------ ------------ ------------ ------------ ------------
Total from Investment Operations 2.01 0.29 (2.02) (2.91) 1.86
- ------------------------------------------------------------------------------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added to paid-in-capital --(b)(c) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.56 $ 7.55 $ 7.26 $ 9.28 $ 12.19
Total return (d)(e) 26.62%(f) 3.99% (21.77)% (23.87)% 18.01%(f)
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Expenses (g) 2.46%(h) 2.50% 2.50% 2.50% 2.50%(h)
Net investment loss (g) (1.26)%(h) (0.65)% (0.57)% (0.89)% (1.00)%(h)
Waiver/reimbursement 3.24%(h) 3.51% 1.83% 1.15% 1.45%(h)
Portfolio turnover rate 39%(f) 74% 71% 67% 24%(f)
Net assets, end of period (000's) $ 188 $ 259 $ 189 $ 308 $ 488
- ------------------------------------------------------------------------------------------------------------------------------------
(a) The Fund commenced investment operations on November 1, 1999. The activity
shown is from the effective date of registration (November 8, 1999) with the
Securities and Exchange Commission.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Rounds to less than $0.01 per share.
(d) Total return at net asset value assuming no contingent deferred sales
charge.
(e) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(h) Annualized.
23
Columbia Europe Fund
Selected data for a share outstanding throughout each period is as follows:
(unaudited)
Six Months Period
Ended Ended
February 29, Year Ended August 31, August 31
Class Z Shares 2004 2003 2002 2001 2000 (a)
==================================================================================================================================--
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.00 $ 7.39 $ 9.09 $ 11.83 $ 10.33
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (b) --(c) (0.02) 0.04 0.01 --(c)
Net realized and unrealized gain (loss)
on investments and foreign currency 2.18 0.63 (1.74) (2.75) 1.50
------------ ------------ ------------ ------------ ------------
Total from Investment Operations 2.18 0.61 (1.70) (2.74) 1.50
- ------------------------------------------------------------------------------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added to paid-in-capital --(b)(c) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 10.18 $ 8.00 $ 7.39 $ 9.09 $ 11.83
Total return (d)(e) 27.25%(f) 8.25%(g) (18.70)% (23.16)% 14.52%(f)
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets/Supplemental Data:
Expenses (h) 1.46%(i) 1.50% 1.50% 1.50% 1.50%(i)
Net investment income (loss) (h) (0.03)%(i) (0.26)% 0.43% 0.11% --(i)(j)
Waiver/reimbursement 3.24%(i) 3.54% 1.83% 1.15% 1.45%(i)
Portfolio turnover rate 39%(f) 74% 71% 67% 24%(f)
Net assets, end of period (000's) $ 516 $ 99 $ 8 $ 26 $ 35
- ------------------------------------------------------------------------------------------------------------------------------------
(a) The Fund commenced investment operations on November 1, 1999. The activity
shown is from the effective date of registration (November 8, 1999) with the
Securities and Exchange Commission.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Rounds to less than $0.01 per share.
(d) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(e) Total return at net asset value assuming all distributions reinvested.
(f) Not annualized.
(g) For the year ended August 31, 2003, the total return for the Class Z shares
was impacted due to the accounting policy for redemption fees described in
Note 6.
(h) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(i) Annualized.
(j) Rounds to less than 0.01%.
24
IMPORTANT INFORMATION ABOUT THIS REPORT
Columbia Europe 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 Europe 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.
25
[ART]:
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 Europe Fund SEMIANNUAL REPORT, FEBRUARY 29, 2004
PRSRT STD
U.S. POSTAGE
PAID
HOLLISTON, MA
PERMIT NO. 20
[LOGO]:
COLUMBIA FUNDS
A MEMBER OF COLUMBIA MANAGEMENT GROUP
[C] 2004 COLUMBIA FUNDS DISTRIBUTOR, INC.
ONE FINANCIAL CENTER, BOSTON, MA 02111-2621
800.345.6611
738-03/322R-0204 (04/04) 04/0801
[GRAPHIC]
COLUMBIA NEWPORT TIGER FUND
SEMIANNUAL REPORT
FEBRUARY 29, 2004
[COLUMBIAFUNDS(R) LOGO]
A MEMBER OF COLUMBIA MANAGEMENT GROUP
<Page>
TABLE OF CONTENTS
<Table>
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 11
STATEMENT OF OPERATIONS 13
STATEMENT OF CHANGES IN NET ASSETS 14
NOTES TO FINANCIAL STATEMENTS 16
FINANCIAL HIGHLIGHTS 22
IMPORTANT INFORMATION
ABOUT THIS REPORT 27
COLUMBIA FUNDS 28
</Table>
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
TO OUR FELLOW SHAREHOLDERS
COLUMBIA NEWPORT TIGER FUND
DEAR SHAREHOLDER:
We are pleased to let you know that FleetBoston Financial Corporation and Bank
of America Corporation have merged, effective April 1, 2004. As as a result of
the merger, Columbia Management Group became part of the Bank of America family
of companies. Looking ahead, we believe this merger will be a real benefit to
our shareholders. Preserving and leveraging our strengths, the combined
organization will deliver additional research, management, and product
capabilities to you.
There are no immediate changes planned for fund names, product lines, or
customer service contacts. As always, we will provide you with updates at
www.columbiafunds.com or through other communications, such as newsletters and
shareholder reports.
As you might know, on March 15, 2004, FleetBoston Financial announced an
agreement in principle with the staff of the Securities and Exchange Commission
("SEC") and the New York Attorney General to settle charges involving market
timing in Columbia Management mutual funds. (Bank of America came to a similar
settlement in principle at the same time.) The agreement will require the final
approval of the SEC. This action reflects our full cooperation with the
investigation and our strong wish to put this regrettable situation behind us.
Columbia Management has taken and will continue to take steps to strengthen
policies, procedures and oversight to curb frequent trading of Columbia fund
shares.
We also want you to know that your fund's Board of Trustees has been energetic
over the past year in strengthening its capacity to oversee the Columbia funds.
Recently, the Board of Trustees:
- ELECTED AN INDEPENDENT TRUSTEE TO CHAIR THE TWELVE-PERSON BOARD. IN
ADDITION, EACH COMMITTEE OF THE BOARD IS COMPRISED OF TRUSTEES WHO ARE
COMPLETELY INDEPENDENT OF THE ADVISOR AND ITS AFFILIATES.
- APPOINTED A CHIEF COMPLIANCE OFFICER OF THE COLUMBIA FUNDS, WHO REPORTS
DIRECTLY TO EACH FUND'S AUDIT COMMITTEE. TRUSTEES WERE ALSO ASSIGNED TO
FOUR SEPARATE INVESTMENT OVERSIGHT COMMITTEES, EACH BETTER ABLE TO MONITOR
PERFORMANCE OF INDIVIDUAL FUNDS.
- VOTED TO DOUBLE THE REQUIRED INVESTMENT BY EACH TRUSTEE IN THE COLUMBIA
FUNDS -- TO FURTHER ALIGN THE INTERESTS OF THE TRUSTEES WITH THOSE OF OUR
FUND SHAREHOLDERS. AT THE SAME TIME, NEW POLICIES WERE INSTITUTED
REQUIRING ALL INVESTMENT PERSONNEL AND TRUSTEES TO HOLD THEIR COLUMBIA
FUND SHARES FOR A MINIMUM OF ONE YEAR (UNLESS EXTRAORDINARY CIRCUMSTANCES
WARRANT AN EXCEPTION TO BE GRANTED BY A BOARD DESIGNATED COMMITTEE).
Both your fund's trustees and Columbia Management are committed to serving the
interests of our shareholders, and we will continue to work hard to help you
achieve your financial goals.
In the pages that follow, you'll find valuable information about the economic
environment and the performance of your Columbia fund. The "Economic Update"
provides an overview of the investing environment during the past six months. In
the "Portfolio Managers' Report," your fund's management team discusses
investment performance and the impact of decisions made during the period. This
discussion is followed by financial statements for your fund. We hope that you
will take time to read this report and discuss it with your financial advisor if
you have any questions.
If you have any questions about your account, please feel free to call
Columbia's shareholder services department at 800-345-6611.
As always, thank you for choosing Columbia funds. It is a privilege to play a
role in your financial future.
Sincerely,
/s/ Thomas C. Theobald /s/ J. Kevin Connaughton
Thomas C. Theobald J. Kevin Connaughton
Chairman, Board of Trustees President, Columbia Funds
J. Kevin Connaughton was named president of Columbia Funds on February 27, 2004.
<Page>
FUND PROFILE
COLUMBIA NEWPORT TIGER FUND
The information below gives you a snapshot of your fund at the end of the
reporting period. Your fund is actively managed and the composition of its
portfolio will change over time.
TOP 5 COUNTRIES AS OF 02/29/04 (%)
<Table>
Hong Kong 19.8
Taiwan 16.1
South Korea 15.2
India 11.0
Thailand 9.6
</Table>
TOP 5 SECTORS AS OF 02/29/04 (%)
<Table>
Financials 35.8
Information technology 24.5
Consumer discretionary 12.2
Industrials 8.4
Telecommunication services 6.6
</Table>
TOP 10 HOLDINGS AS OF 02/29/04 (%)
<Table>
Samsung Electronics 8.5
Sun Hung Kai Properties 5.3
Taiwan Semiconductor Manufacturing 5.0
China Mobile 4.5
Housing Development Finance 3.5
Hutchison Whampoa 3.2
Infosys Technologies 3.0
Kookmin Bank 3.0
Bangkok Bank 2.7
Huaneng Power International 2.5
</Table>
Country breakdowns are calculated as a percentage of total investments.
Sectors and portfolio holdings are calculated as a percentage of net assets.
(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 02/29/2004.
[SIDENOTE]
SUMMARY
- - FOR THE SIX-MONTH PERIOD THAT ENDED FEBRUARY 29, 2004, THE FUND'S CLASS A
SHARES RETURNED 22.18% WITHOUT SALES CHARGE.
- - THE FUND'S RETURN WAS LOWER THAN THE RETURN OF ITS BENCHMARK, THE MSCI AC
ASIA FREE EX JAPAN INDEX, AND THE AVERAGE RETURN OF ITS PEER GROUP, THE
LIPPER PACIFIC EX JAPAN CATEGORY.
- - WHILE THE FUND GENERATED A STRONG ABSOLUTE RETURN, IT FELL SHORT OF ITS
BENCHMARK BECAUSE WE EMPHASIZED HIGH-QUALITY STOCKS, WHICH DID NOT FARE AS
WELL AS MORE SPECULATIVE STOCKS. COUNTRY ALLOCATION, PARTICULARLY OUR
UNDERWEIGHT POSITION IN KOREA, ALSO HELD BACK TOTAL RETURN.
[CHART]
<Table>
<Caption>
MSCI AC
ASIA FREE
CLASS A SHARES EX JAPAN INDEX
22.18% 25.59%
</Table>
OBJECTIVE
Seeks capital appreciation by investing primarily in equity securities of
companies located in Tiger countries of Asia
TOTAL NET ASSETS
$381.9 million
[CHART]
MORNINGSTAR STYLE BOX
1
<Page>
PERFORMANCE INFORMATION
COLUMBIA NEWPORT TIGER FUND
[CHART]
VALUE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04
<Table>
<Caption>
CLASS A SHARES CLASS A SHARES MSCI AC ASIA
WITHOUT SALES CHARGE WITH SALES CHARGE FREE EX JAPAN INDEX
$ 10,000 $ 9,425 $ 10,000
03/01/1994 - 03/31/1994 $ 8,988 $ 8,471 $ 8,926
04/01/1994 - 04/30/1994 $ 9,619 $ 9,066 $ 9,268
05/01/1994 - 05/31/1994 $ 10,072 $ 9,493 $ 9,616
06/01/1994 - 06/30/1994 $ 9,530 $ 8,982 $ 9,293
07/01/1994 - 07/31/1994 $ 10,028 $ 9,451 $ 9,776
08/01/1994 - 08/31/1994 $ 10,614 $ 10,004 $ 10,556
09/01/1994 - 09/30/1994 $ 10,552 $ 9,945 $ 10,351
10/01/1994 - 10/31/1994 $ 10,685 $ 10,070 $ 10,512
11/01/1994 - 11/30/1994 $ 9,832 $ 9,267 $ 9,584
12/01/1994 - 12/31/1994 $ 9,727 $ 9,167 $ 9,316
01/01/1995 - 01/31/1995 $ 8,763 $ 8,259 $ 8,358
02/01/1995 - 02/28/1995 $ 9,582 $ 9,031 $ 9,056
03/01/1995 - 03/31/1995 $ 9,789 $ 9,226 $ 9,051
04/01/1995 - 04/30/1995 $ 9,807 $ 9,243 $ 8,926
05/01/1995 - 05/31/1995 $ 10,960 $ 10,330 $ 9,930
06/01/1995 - 06/30/1995 $ 10,815 $ 10,193 $ 9,775
07/01/1995 - 07/31/1995 $ 11,077 $ 10,440 $ 9,959
08/01/1995 - 08/31/1995 $ 10,707 $ 10,091 $ 9,500
09/01/1995 - 09/30/1995 $ 10,905 $ 10,278 $ 9,613
10/01/1995 - 10/31/1995 $ 10,833 $ 10,210 $ 9,447
11/01/1995 - 11/30/1995 $ 10,860 $ 10,236 $ 9,233
12/01/1995 - 12/31/1995 $ 11,307 $ 10,656 $ 9,689
01/01/1996 - 01/31/1996 $ 12,395 $ 11,683 $ 10,442
02/01/1996 - 02/29/1996 $ 12,395 $ 11,683 $ 10,556
03/01/1996 - 03/31/1996 $ 12,305 $ 11,597 $ 10,633
04/01/1996 - 04/30/1996 $ 12,259 $ 11,555 $ 11,015
05/01/1996 - 05/31/1996 $ 12,196 $ 11,494 $ 10,892
06/01/1996 - 06/30/1996 $ 11,924 $ 11,238 $ 10,730
07/01/1996 - 07/31/1996 $ 11,252 $ 10,605 $ 9,938
08/01/1996 - 08/31/1996 $ 11,661 $ 10,990 $ 10,238
09/01/1996 - 09/30/1996 $ 12,006 $ 11,316 $ 10,414
10/01/1996 - 10/31/1996 $ 11,924 $ 11,239 $ 10,216
11/01/1996 - 11/30/1996 $ 12,550 $ 11,829 $ 10,698
12/01/1996 - 12/31/1996 $ 12,544 $ 11,823 $ 10,661
01/01/1997 - 01/31/1997 $ 12,463 $ 11,746 $ 10,882
02/01/1997 - 02/28/1997 $ 12,444 $ 11,728 $ 10,974
03/01/1997 - 03/31/1997 $ 11,677 $ 11,006 $ 10,354
04/01/1997 - 04/30/1997 $ 11,467 $ 10,808 $ 10,200
05/01/1997 - 05/31/1997 $ 12,489 $ 11,771 $ 10,661
06/01/1997 - 06/30/1997 $ 13,011 $ 12,263 $ 11,051
07/01/1997 - 07/31/1997 $ 13,213 $ 12,453 $ 11,144
08/01/1997 - 08/31/1997 $ 10,952 $ 10,322 $ 9,168
09/01/1997 - 09/30/1997 $ 11,372 $ 10,719 $ 9,127
10/01/1997 - 10/31/1997 $ 8,600 $ 8,105 $ 7,098
11/01/1997 - 11/30/1997 $ 8,371 $ 7,890 $ 6,611
12/01/1997 - 12/31/1997 $ 8,283 $ 7,807 $ 6,364
01/01/1998 - 01/31/1998 $ 6,942 $ 6,543 $ 5,814
02/01/1998 - 02/28/1998 $ 8,421 $ 7,937 $ 7,046
03/01/1998 - 03/31/1998 $ 8,338 $ 7,859 $ 6,943
04/01/1998 - 04/30/1998 $ 7,576 $ 7,141 $ 6,335
05/01/1998 - 05/31/1998 $ 6,428 $ 6,059 $ 5,368
06/01/1998 - 06/30/1998 $ 5,731 $ 5,401 $ 4,766
07/01/1998 - 07/31/1998 $ 5,326 $ 5,020 $ 4,645
08/01/1998 - 08/31/1998 $ 4,489 $ 4,231 $ 3,976
09/01/1998 - 09/30/1998 $ 5,289 $ 4,985 $ 4,370
10/01/1998 - 10/31/1998 $ 6,955 $ 6,555 $ 5,320
11/01/1998 - 11/30/1998 $ 7,286 $ 6,867 $ 5,750
12/01/1998 - 12/31/1998 $ 7,283 $ 6,864 $ 5,869
01/01/1999 - 01/31/1999 $ 6,833 $ 6,440 $ 5,776
02/01/1999 - 02/28/1999 $ 6,805 $ 6,414 $ 5,663
03/01/1999 - 03/31/1999 $ 7,451 $ 7,023 $ 6,342
04/01/1999 - 04/30/1999 $ 9,099 $ 8,575 $ 7,502
05/01/1999 - 05/31/1999 $ 8,555 $ 8,063 $ 7,340
06/01/1999 - 06/30/1999 $ 9,585 $ 9,034 $ 8,487
07/01/1999 - 07/31/1999 $ 9,576 $ 9,025 $ 8,300
08/01/1999 - 08/31/1999 $ 9,632 $ 9,078 $ 8,505
09/01/1999 - 09/30/1999 $ 9,230 $ 8,699 $ 7,910
10/01/1999 - 10/31/1999 $ 9,716 $ 9,157 $ 8,165
11/01/1999 - 11/30/1999 $ 11,055 $ 10,419 $ 8,941
12/01/1999 - 12/31/1999 $ 12,609 $ 11,884 $ 9,665
01/01/2000 - 01/31/2000 $ 11,973 $ 11,284 $ 9,618
02/01/2000 - 02/29/2000 $ 12,375 $ 11,663 $ 9,417
03/01/2000 - 03/31/2000 $ 12,918 $ 12,175 $ 9,638
04/01/2000 - 04/30/2000 $ 11,982 $ 11,293 $ 8,754
05/01/2000 - 05/31/2000 $ 11,167 $ 10,525 $ 7,993
06/01/2000 - 06/30/2000 $ 12,384 $ 11,672 $ 8,415
07/01/2000 - 07/31/2000 $ 12,394 $ 11,681 $ 8,055
08/01/2000 - 08/31/2000 $ 12,394 $ 11,681 $ 7,995
09/01/2000 - 09/30/2000 $ 11,495 $ 10,834 $ 7,079
10/01/2000 - 10/31/2000 $ 10,924 $ 10,296 $ 6,522
11/01/2000 - 11/30/2000 $ 10,363 $ 9,767 $ 6,269
12/01/2000 - 12/31/2000 $ 10,615 $ 10,005 $ 6,259
01/01/2001 - 01/31/2001 $ 11,373 $ 10,719 $ 7,065
02/01/2001 - 02/28/2001 $ 10,699 $ 10,084 $ 6,732
03/01/2001 - 03/31/2001 $ 9,379 $ 8,839 $ 5,970
04/01/2001 - 04/30/2001 $ 9,940 $ 9,369 $ 5,979
05/01/2001 - 05/31/2001 $ 9,707 $ 9,149 $ 5,970
06/01/2001 - 06/30/2001 $ 9,435 $ 8,893 $ 5,827
07/01/2001 - 07/31/2001 $ 9,182 $ 8,654 $ 5,606
08/01/2001 - 08/31/2001 $ 8,573 $ 8,080 $ 5,519
09/01/2001 - 09/30/2001 $ 7,263 $ 6,846 $ 4,651
10/01/2001 - 10/31/2001 $ 7,516 $ 7,084 $ 4,902
11/01/2001 - 11/30/2001 $ 8,415 $ 7,931 $ 5,557
12/01/2001 - 12/31/2001 $ 8,859 $ 8,349 $ 6,019
01/01/2002 - 01/31/2002 $ 8,982 $ 8,465 $ 6,260
02/01/2002 - 02/28/2002 $ 8,934 $ 8,420 $ 6,306
03/01/2002 - 03/31/2002 $ 9,453 $ 8,910 $ 6,728
04/01/2002 - 04/30/2002 $ 9,548 $ 8,999 $ 6,797
05/01/2002 - 05/31/2002 $ 9,302 $ 8,767 $ 6,644
06/01/2002 - 06/30/2002 $ 8,811 $ 8,304 $ 6,314
07/01/2002 - 07/31/2002 $ 8,329 $ 7,850 $ 6,074
08/01/2002 - 08/31/2002 $ 8,131 $ 7,663 $ 5,967
09/01/2002 - 09/30/2002 $ 7,404 $ 6,978 $ 5,310
10/01/2002 - 10/31/2002 $ 7,734 $ 7,290 $ 5,580
11/01/2002 - 11/30/2002 $ 8,187 $ 7,717 $ 5,876
12/01/2002 - 12/31/2002 $ 7,722 $ 7,278 $ 5,518
01/01/2003 - 01/31/2003 $ 7,675 $ 7,233 $ 5,563
02/01/2003 - 02/28/2003 $ 7,418 $ 6,992 $ 5,339
03/01/2003 - 03/31/2003 $ 7,115 $ 6,706 $ 5,089
04/01/2003 - 04/30/2003 $ 7,229 $ 6,813 $ 5,250
05/01/2003 - 05/31/2003 $ 7,779 $ 7,331 $ 5,703
06/01/2003 - 06/30/2003 $ 8,291 $ 7,815 $ 6,062
07/01/2003 - 07/31/2003 $ 8,965 $ 8,449 $ 6,578
08/01/2003 - 08/31/2003 $ 9,714 $ 9,155 $ 7,084
09/01/2003 - 09/30/2003 $ 9,923 $ 9,352 $ 7,137
10/01/2003 - 10/31/2003 $ 10,644 $ 10,032 $ 7,749
11/01/2003 - 11/30/2003 $ 10,492 $ 9,889 $ 7,654
12/01/2003 - 12/31/2003 $ 11,162 $ 10,521 $ 8,111
01/01/2004 - 01/31/2004 $ 11,611 $ 10,944 $ 8,605
02/01/2004 - 02/29/2004 $ 11,872 $ 11,189 $ 8,896
</Table>
The graph and table do not reflect a deduction of the taxes that a shareholder
would pay on fund distributions or the redemption of fund shares. The Morgan
Stanley Capital International (MSCI) All Country (AC) Asia Free ex Japan Index
is an unmanaged index that tracks the performance of equity securities in eleven
countries in Asia, excluding Japan and takes into account local market
restrictions on share ownership by foreigners. 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 02/29/04 (%)
<Table>
<Caption>
SHARE CLASS A B C T Z
- -------------------- --------------- --------------- --------------- --------------- -------
INCEPTION 4/1/95 4/1/95 4/1/95 5/31/89 5/31/89
- -------------------- --------------- --------------- --------------- --------------- -------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
- -------------------- --------------- --------------- --------------- --------------- -------
6-MONTH (CUMULATIVE) 22.18 15.15 21.71 16.71 21.68 20.68 22.37 15.33 22.33
1-YEAR 59.98 50.79 58.75 53.75 58.67 57.67 60.40 51.18 60.30
5-YEAR 11.77 10.45 10.95 10.69 10.94 10.94 12.05 10.73 12.04
10-YEAR 1.73 1.13 1.04 1.04 1.04 1.04 1.94 1.34 1.91
</Table>
AVERAGE ANNUAL TOTAL RETURN AS OF 12/31/03 (%)
<Table>
<Caption>
SHARE CLASS A B C T Z
- -------------------- --------------- --------------- --------------- --------------- -------
SALES CHARGE WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT WITH WITHOUT
- -------------------- --------------- --------------- --------------- --------------- -------
6-MONTH (CUMULATIVE) 34.63 26.89 34.14 29.14 34.10 33.10 34.81 27.06 34.77
1-YEAR 44.55 36.24 43.65 38.65 43.60 42.60 45.05 36.71 45.04
5-YEAR 8.92 7.63 8.11 7.81 8.10 8.10 9.18 7.89 9.18
10-YEAR 0.11 -0.49 -0.56 -0.56 -0.56 -0.56 0.31 -0.29 0.28
</Table>
All results shown assume reinvestment of distributions. The "with sales charge"
returns include the maximum 5.75% charge for class A and T shares, the
appropriate class B contingent deferred sales charge (CDSC) for the holding
period after purchase as follows: Through the first year--5%, second year--4%,
third year--3%, fourth year--3%, fifth year--2%, sixth year--1%, thereafter--0%,
and the class C CDSC 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.
The fund was originally introduced on 5/31/89 and became Colonial Newport Tiger
Fund on 4/1/95 when class A, B, and D (since designated C) shares were offered.
On 4/30/98, the fund was renamed Newport Tiger Fund. The fund was renamed
Liberty Newport Tiger Fund on July 14, 2000. Please see the fund's prospectus
for additional details. Class A, B and C share performance information includes
returns of the fund's class T shares for periods prior to the inception dates of
those classes. Class T share returns are not restated to reflect any expense
differential, e.g., Rule 12b-1 fees, between class T shares and class A, B, and
C shares. Had expense differentials been reflected, returns would have been
lower for the periods prior to the inception date of class A, B and C share.
[SIDENOTE]
PERFORMANCE OF A $10,000 INVESTMENT 03/01/94 - 02/29/04 ($)
<Table>
<Caption>
SALES CHARGE: WITHOUT WITH
- ---------------------------------------
Class A 11,872 11,189
Class B 11,092 11,092
Class C 11,094 11,094
Class T 12,118 11,421
Class Z 12,080 n/a
</Table>
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
<Page>
ECONOMIC UPDATE
COLUMBIA NEWPORT TIGER FUND
During the period that began September 1, 2003 and ended February 29, 2004, most
of the developing economies of Asia participated in the recovery that prevailed
around the world. Overall economic growth was helped by an increase in consumer
and business spending as well as government spending on the building of
infrastructure. Exporting countries, such as Hong Kong and Taiwan, also
benefited from a worldwide increase in demand for products manufactured in Asia.
STOCK MARKETS LIFTED BY FAVORABLE ECONOMIC NEWS
Stock market performance reflected the region's robust economic growth.
Throughout the region known as Greater China (People's Republic of China,
Hong Kong and Taiwan), stocks tied to domestic consumption, business expansion
and construction spending were market leaders. As a result, the strongest gains
were made in the following sectors: consumer discretionary, technology,
industrial, material, and financial. In the smaller markets of Thailand,
Malaysia and Indonesia, investors were also rewarded with solid returns.
However, some of the strongest performers in 2003 -- namely Thailand and India
- -- gave back some of their outsized returns early in 2004. For the six-month
reporting period, the MSCI AC Asia Free ex Japan Index returned 25.59%.
GROWTH RANGES FROM MODEST TO ROBUST IN GREATER CHINA
In Greater China, GDP growth during the period ranged from modest in Hong Kong
and Taiwan to robust in China. Hong Kong and Taiwan reported a GDP growth rate
for the second half of 2003 between 4% and 5%, with estimates for slightly
higher growth in 2004. In Hong Kong, unemployment declined and domestic retail
sales moved higher as the economy continued its recovery. In Taiwan, sustained
demand for consumer goods, a recovery in capital goods expenditures, a pickup in
construction activity and increased government spending in an election year
contributed to a strengthening economy. Taiwan also benefited from the global
recovery in the technology sector because it is a major exporter of
computer-related goods.
Both Hong Kong and Taiwan were beneficiaries of China's strong economy. Hong
Kong benefited because many Chinese companies are based in Hong Kong, and their
rapid growth contributed to Hong Kong's broad-based economic recovery.
Outsourcing is the link between Taiwan's recovery and China. Taiwanese companies
have enjoyed lower costs as they have increasingly outsourced manufacturing jobs
to China. The outsourcing boom was also a significant factor in India's growing
economy. India has been particularly successful in providing services to
technology companies looking to lower the costs associated with their computer
help desks and to bank and insurance companies looking to outsource back office
operations. GDP growth for India has been forecasted at between 6.5% and 8% for
2004.
While China's growth exceeded 9% in 2003, estimates for growth in 2004 are
somewhat lower -- partly because of the government's growing concern that "over
investment" and misuse of resources could threaten China's steady long-term
economic growth. The People's Bank of China (PBOC) took steps to temper the
rapid pace of development. It tightened lending policies for infrastructure and
land development projects, which resulted in slower credit growth. Forecasts
call for GDP growth between 7.2% and 8.5% for 2004.
[SIDENOTE]
SUMMARY
FOR THE SIX-MONTH PERIOD THAT ENDED FEBRUARY 29, 2004
- - EMERGING STOCK MARKETS OF ASIA BENEFITED FROM THE REGION'S ROBUST ECONOMIC
GROWTH. THE MSCI AC ASIA FREE EX JAPAN INDEX RETURNED 25.59%.
[CHART]
<Table>
<Caption>
MSCI AC ASIA FREE EX JAPAN INDEX
25.59%
</Table>
- - INCREASED CONSUMER AND BUSINESS SPENDING AS WELL AS GOVERNMENT SPENDING ON
THE BUILDING OF INFRASTRUCTURE CONTRIBUTED TO ECONOMIC GROWTH. EXPORTING
COUNTRIES, SUCH AS HONG KONG AND TAIWAN, ALSO GOT A LIFT FROM INCREASED
WORLDWIDE DEMAND.
- - OUTSOURCING BUOYED GROWTH IN INDIA.
The MSCI AC Asia Free ex Japan Index is an unmanaged index that tracks the
performance of equity securities in eleven countries in Asia, excluding Japan,
and takes into account local market restrictions on share ownership by
foreigners.
3
<Page>
PORTFOLIO MANAGER'S REPORT
COLUMBIA NEWPORT TIGER FUND
For the six-month period ended February 29, 2004, Columbia Newport Tiger Fund
class A shares returned 22.18% without sales charge. This was less than the
25.59% return of the MSCI AC Asia Free ex Japan Index and the 25.09% average
return of its peer group, the Lipper Pacific ex Japan Category.(1) The fund's
emphasis on high-quality companies -- those with strong balance sheets and
consistent earnings growth -- hampered performance as investors favored the
stocks of lower-quality companies. Certain investments in Korea also held back
results. For example, KT Corporation, the Korean telecommunications company,
suffered because of regulatory uncertainty and we eliminated our position. Also,
Korea's Kookmin Bank did poorly during the period because of concerns about
growing consumer debt. However, we maintained our investment because we continue
to believe in its long-term potential.
REDEPLOYING ASSETS FROM CHINA TO OTHER MARKETS
We sold some of our long-term holdings in China to invest in new opportunities.
Because China's economic growth has been extraordinary for several years, the
government has become concerned about the prospects for rising inflation and is
taking steps to make credit less available, which could have a negative impact
on stocks. While China's economic growth should be robust by global standards,
we expect it to slow in response to these moves. We trimmed Huaneng Power
International, China's largest electric utility, which had been a strong
performer, when its valuation rose beyond our target. However, we kept the stock
in the portfolio because we believe the company continues to reflect China's
attractive long-term growth potential.
In re-allocating assets, we favored countries with growing economies and strong
trends in domestic consumption and infrastructure development. For example,
India made up 11% of the portfolio, significantly higher than the country's
weight in the fund's benchmark. The Indian economy, which the government
believes will grow at an 8% rate in 2004, is benefiting from relatively low
interest rates and expansion in the manufacturing and service sectors. To
capitalize on the rise in consumer spending, we purchased Maruti Udyog, a
manufacturer of low cost automobiles for the domestic population. The company,
which is majority controlled by Suzuki Motors of Japan, contributed to the
fund's performance.
The fund also had an above-average investment in Thailand, which represented
9.6% of the portfolio. We added to Thai Union Frozen Public, which detracted
slightly from performance, but we believe it has the
(1) Lipper Inc., a widely respected data provider in the industry, calculates an
average total return for mutual funds with similar investment objectives as
those of the fund.
[SIDENOTE]
NET ASSET VALUE PER SHARE AS OF 02/29/04 ($)
<Table>
Class A 12.44
Class B 12.04
Class C 12.05
Class T 12.50
Class Z 12.46
</Table>
DISTRIBUTIONS DECLARED PER SHARE 09/01/03 - 02/29/04 ($)
<Table>
Class A 0.06
Class B 0.01
Class C 0.01
Class T 0.08
Class Z 0.08
</Table>
HOLDINGS DISCUSSED IN THIS REPORT AS OF 02/29/04 (%)
<Table>
Kookmin Bank 3.0
Huaneng Power International 2.5
Maruti Udyog 1.3
Thai Union Frozen Public 0.8
Chinatrust Financial Holdings 2.1
Cathay Financial Holding 1.2
</Table>
Your fund is actively managed and the composition of its portfolio will change
over time. Information provided is calculated as a percentage of net assets.
4
<Page>
potential to be a solid contributor to the fund over the long term. The company
is one of the largest canned fish producers in the world. It owns Chicken of the
Sea brand tuna and exports shrimp, from shrimp farms in Asia, to the United
States.
We also added to investments in Taiwan. The Taiwanese market lagged other Asian
markets in 2003; but we believe it could do well in 2004 if Taiwan's economy
improves. Stock valuations and the prospects for relatively strong corporate
earnings are attractive. Recent purchases included Chinatrust Financial Holding,
which controls Taiwan's largest private sector bank, and Cathay Financial
Holding, the biggest insurance company in Taiwan.
LOOKING AHEAD TO ECONOMIC EXPANSION ACROSS ASIA
We are positive in our outlook for the next several months. We expect economic
growth in Asia to improve; and while we think inflation will rise slightly, we
believe interest rates will remain relatively low. By making relatively large
commitments to the financial, information technology and consumer discretionary
sectors, we have positioned the portfolio to take advantage of the strong
consumer and business trends that should result from growing domestic economies.
We believe that Asia should also be the beneficiary of improved economic growth
outside its borders, because many of the products manufactured in Asia are
designed for export around the world.
[PHOTO OF ERIC SANDLUND]
Eric Sandlund has managed or co-managed the fund since August 2002 and has been
with the advisor and its predecessors since 2002.
/s/ Eric Sandlund
There are specific risks involved when investing in foreign stocks, such as
currency exchange rate fluctuations, economic change, instability of emerging
countries and political developments. In addition, concentration of investments
in a single region or country may result in greater volatility.
A concentration of investments in a specific sector, such as technology, may
cause a fund to experience increased volatility.
[SIDENOTE]
IN RE-ALLOCATING ASSETS, WE FAVORED COUNTRIES WITH GROWING ECONOMIES AND STRONG
TRENDS IN DOMESTIC CONSUMPTION AND INFRASTRUCTURE DEVELOPMENT.
5
<Page>
FINANCIAL STATEMENTS
FEBRUARY 29, 2004
COLUMBIA NEWPORT TIGER FUND
A GUIDE TO UNDERSTANDING YOUR FUND'S FINANCIAL STATEMENTS
INVESTMENT PORTFOLIO
The investment portfolio details all of the fund's holdings and their market
value as of the last day of the reporting period. Portfolio holdings are
organized by type of asset, industry, country or geographic region (if
applicable) to demonstrate areas of concentration and diversification.
STATEMENT OF ASSETS AND LIABILITIES
This statement details the fund's assets, liabilities, net assets and share
price for each share class. Net assets are calculated by subtracting all the
fund's liabilities (including any unpaid expenses) from the total of the fund's
investment and non-investment assets. The share price for each class is
calculated by dividing net assets for that class by the number of shares
outstanding in that class as of the last day of the reporting period.
STATEMENT OF OPERATIONS
This statement details income earned by the fund and the expenses 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 recognized over the period. The total of these
results represents the fund's net increase or decrease in net assets from
operations.
STATEMENT OF CHANGES IN NET ASSETS
This statement demonstrates how the fund's net assets were affected by its
operating results, distributions to shareholders and shareholder transactions
(e.g., subscriptions, redemptions and dividend reinvestments). The Statement of
Changes in Net Assets also reconciles changes in the number of shares
outstanding.
FINANCIAL HIGHLIGHTS
The financial highlights demonstrate how the fund's net asset value per share
was affected by the fund's operating results. The financial highlights table
also discloses certain key fund ratios (e.g., fund expenses and net investment
income as a percentage of average net assets).
NOTES TO FINANCIAL STATEMENTS
These notes disclose the organizational background of the fund, its significant
accounting policies (including those surrounding security valuation, income
recognition and distributions to shareholders), federal tax information, fees
and compensation paid to affiliates and significant risks and contingencies.
6
<Page>
INVESTMENT PORTFOLIO
FEBRUARY 29, 2004 (UNAUDITED)
COLUMBIA NEWPORT TIGER FUND
<Table>
<Caption>
SHARES VALUE ($)
- -------------------------------------------------- ------------------------------------------------------------------------------
COMMON STOCKS - 99.4%
CONSUMER DISCRETIONARY - 12.2%
AUTOMOBILES - 4.8% Bajaj Auto Ltd. 58,300 1,167,545
Hyundai Motors Co.,Ltd. 189,770 8,051,336
Maruti Udyog Ltd.(a) 445,677 4,929,323
PT Astra International 6,655,000 4,250,384
Automobiles Total 18,398,588
------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE - 2.1% Genting Berhad 1,606,900 8,034,500
Hotels,Restaurants & Leisure Total 8,034,500
------------------------------------------------------------------------------
MEDIA - 3.2% Singapore Press Holdings Ltd. 847,400 9,279,741
Television Broadcasts Ltd. 578,000 2,821,613
Media Total 12,101,354
------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS - 2.1% Li & Fung Ltd. 4,204,000 8,209,039
Textiles, Apparel & Luxury Goods Total 8,209,039
-------------
CONSUMER DISCRETIONARY TOTAL 46,743,481
CONSUMER STAPLES - 0.8%
- -------------------------------------------------- ------------------------------------------------------------------------------
FOOD PRODUCTS - 0.8% Thai Union Frozen Public Co., Ltd. 4,366,800 3,002,001
Food Products Total 3,002,001
-------------
CONSUMER STAPLES TOTAL 3,002,001
FINANCIALS - 35.8%
- -------------------------------------------------- ------------------------------------------------------------------------------
COMMERCIAL BANKS - 17.9% Bangkok Bank Public Co., Ltd., NVDR (a) 4,276,600 10,344,418
Bank Rakyat (a) 23,601,500 4,326,709
Chinatrust Financial Holding Co., Ltd. 6,817,780 8,160,831
DBS Group Holdings Ltd. 426,859 3,694,335
Hong Leong Bank Berhad 3,141,000 4,794,158
Hong Leong Credit Berhad 1,001,000 1,461,987
Kasikornbank Public Co., Ltd., NVDR (a) 6,215,000 8,070,401
Kookmin Bank 277,795 11,573,810
Koram Bank 171,060 2,170,002
Public Bank Berhad 7,263,512 6,613,619
United Overseas Bank Ltd. 831,000 6,898,499
Commercial Banks Total 68,108,769
------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES - 6.1% Housing Development Finance Co., Ltd. 997,454 13,438,197
Standard Chartered PLC 307,723 5,328,676
Swire Pacific Ltd., Series A 637,000 4,500,784
Diversified Financial Services Total 23,267,657
------------------------------------------------------------------------------
INSURANCE - 1.2% Cathay Financial Holding Co., Ltd.(a) 2,365,000 4,658,872
Insurance Total 4,658,872
------------------------------------------------------------------------------
REAL ESTATE - 10.6% City Developments Ltd. 1,998,500 7,883,397
Henderson Land Development Co., Ltd. 1,726,000 8,758,382
SM Prime Holdings, Inc. 33,658,000 3,646,781
Sun Hung Kai Properties Ltd. 2,053,000 20,176,062
Real Estate Total 40,464,622
-------------
FINANCIALS TOTAL 136,499,920
</Table>
See notes to investment portfolio.
7
<Page>
<Table>
<Caption>
SHARES VALUE ($)
- -------------------------------------------------- ------------------------------------------------------------------------------
COMMON STOCKS - (CONTINUED)
HEALTH CARE - 3.1%
HEALTH CARE EQUIPMENT & SUPPLIES - 0.4% Pihsiang Machinery Manufacturing Co., Ltd. 419,500 1,438,286
Health Care Equipment & Supplies Total 1,438,286
------------------------------------------------------------------------------
PHARMACEUTICALS - 2.7% Dr Reddy's Laboratories Ltd., ADR 254,500 6,477,025
Ranbaxy Laboratories Ltd. (a) 187,071 3,887,292
Pharmaceuticals Total 10,364,317
-------------
HEALTH CARE TOTAL 11,802,603
INDUSTRIALS - 8.4%
- -------------------------------------------------- ------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING - 1.8% Land & Houses Public Co., Ltd., NVDR 22,004,900 6,667,303
Construction & Engineering Total 6,667,303
------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.5% Phoenixtec Power Co., Ltd. (a) 1,364,470 1,715,333
Electrical Equipment Total 1,715,333
------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES - 4.6% China Merchants Holdings International Co., Ltd. 2,792,000 4,053,030
Hutchison Whampoa Ltd. 1,451,100 12,210,253
MFS Technology Ltd. 1,623,000 1,280,436
Industrial Conglomerates Total 17,543,719
------------------------------------------------------------------------------
MACHINERY - 0.3% Bharat Forge Ltd. 80,800 1,326,141
Machinery Total 1,326,141
------------------------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE - 1.2% Zhejiang Expressway Co., Ltd. 5,894,000 4,770,201
Transportation Infrastructure Total 4,770,201
-------------
INDUSTRIALS TOTAL 32,022,697
INFORMATION TECHNOLOGY - 24.5%
- -------------------------------------------------- ------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS - 3.5% Acer, Inc. 2,502,000 3,950,526
Asustek Computer, Inc. 2,009,750 5,288,816
Lite-On Technology Corp. 3,541,000 4,366,346
Computers & Peripherals Total 13,605,688
------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.6% Ambit Microsystems Corp. 1,373,200 4,006,027
Synnex Technology International Corp. 1,665,000 2,904,361
Venture Corp., Ltd. 250,000 3,164,557
Electronic Equipment & Instruments Total 10,074,945
------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES - 1.1% NCSoft Corp. (a) 65,210 4,232,978
Internet Software & Services Total 4,232,978
------------------------------------------------------------------------------
IT SERVICES - 3.0% Infosys Technologies Ltd. 101,033 11,319,401
IT Services Total 11,319,401
------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 14.3% Realtek Semiconductor Corp. 1,474,600 2,749,630
Samsung Electronics Co., Ltd. 70,390 32,552,015
Taiwan Semiconductor Manufacturing Co.,
Ltd. (a) 10,034,315 19,163,278
Semiconductors & Semiconductor Equipment Total 54,464,923
-------------
INFORMATION TECHNOLOGY TOTAL 93,697,935
</Table>
See notes to investment portfolio.
8
<Page>
<Table>
<Caption>
SHARES VALUE ($)
- -------------------------------------------------- ------------------------------------------------------------------------------
COMMON STOCKS - (CONTINUED)
MATERIALS - 2.4%
CONSTRUCTION MATERIALS - 2.4% Siam Cement Public Co., Ltd., NVDR 1,470,900 8,988,313
Construction Materials Total 8,988,313
-------------
MATERIALS TOTAL 8,988,313
TELECOMMUNICATION SERVICES - 6.6%
- -------------------------------------------------- ------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.1% PT Telekomunkasi 4,862,000 4,197,824
Diversified Telecommunication Services Total 4,197,824
------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES - 5.5% China Mobile Ltd. 4,914,500 17,298,798
Taiwan Cellular Corp. 3,952,000 3,827,200
Wireless Telecommunication Services Total 21,125,998
-------------
TELECOMMUNICATION SERVICES TOTAL 25,323,822
UTILITIES - 5.6%
- -------------------------------------------------- ------------------------------------------------------------------------------
ELECTRIC UTILITIES - 3.8% Beijing Datang Power Generation Co., Ltd. 6,200,000 5,256,802
Huaneng Power International, Inc. 4,972,000 9,357,391
Electric Utilities Total 14,614,193
------------------------------------------------------------------------------
GAS UTILITIES - 1.8% Hong Kong & China Gas Co., Ltd. 3,997,908 6,907,821
Gas Utilities Total 6,907,821
-------------
UTILITIES TOTAL 21,522,014
-------------
TOTAL COMMON STOCKS (COST OF $290,192,443) 379,602,786
<Caption>
PAR ($)
- -------------------------------------------------- ------------------------------------------------------------------------------
SHORT-TERM OBLIGATION - 1.8%
Repurchase agreement with State Street
Bank & Trust Co., dated 02/27/04,
due 03/01/04 at 0.930%, collateralized
by a U.S. Treasury Bond maturing 11/15/15,
market value of $7,084,102 (Repurchase
proceeds $6,940,538) (Cost $6,940,000) 6,940,000 6,940,000
TOTAL INVESTMENTS - 101.2%
(COST $297,132,443) (b) 386,542,786
OTHER ASSETS & LIABILITIES, NET - (1.2%) (4,625,536)
NET ASSETS - 100% 381,917,250
</Table>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing.
(b) Cost for both financial statements and federal income tax purposes is the
same.
<Table>
<Caption>
ACRONYM NAME
--------------------------------------------------------------------------
ADR American Depositary Receipt
NVDR Non-Voting Depositary Receipt
</Table>
See notes to financial statements.
9
<Page>
<Table>
<Caption>
SUMMARY OF SECURITIES % OF TOTAL
BY COUNTRY (UNAUDITED) VALUE ($) INVESTMENTS
---------------------------------------------------------------
Hong Kong 76,726,743 19.8%
Taiwan 62,229,506 16.1
South Korea 58,580,141 15.2
India 42,544,925 11.0
Thailand 37,072,436 9.6
Singapore 32,200,964 8.3
Malaysia 20,904,264 5.4
China 19,384,394 5.0
Indonesia 12,774,917 3.3
Bermuda 8,209,039 2.1
United States 6,940,000 1.8
United Kingdom 5,328,675 1.4
Philippines 3,646,782 1.0
------------- -----
$ 386,542,786 100.0%
============= =====
</Table>
Certain securities are listed by country of underlying exposure but
may trade predominantly on other exchanges.
See notes to financial statements.
10
<Page>
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2004 (UNAUDITED) COLUMBIA NEWPORT TIGER FUND
<Table>
<Caption>
($)
- ------------------------------------------ ----------------------------------------------------------------------------
ASSETS Investments, at cost 297,132,443
Investments, at value 386,542,786
Cash 477
Foreign currency (cost of $208,094) 207,145
Receivable for:
Fund shares sold 220,471
Interest 538
Dividends 604,746
Deferred Trustees' compensation plan 21,600
-------------
Total Assets 387,597,763
----------------------------------------------------------------------------
LIABILITIES Payable for:
Investments purchased 286,892
Fund shares repurchased 1,140,233
Investment advisory fee 260,365
Administration fee 82,142
Transfer agent fee 236,684
Pricing and bookkeeping fees 17,381
Trustees' fees 98
Custody fee 27,939
Distribution and service fees 133,727
Deferred Trustees' fees 21,600
Foreign capital gains tax payable 3,451,360
Expense reimbursement due to Investment Advisor 4,372
Other liabilities 17,720
-------------
Total Liabilities 5,680,513
NET ASSETS 381,917,250
----------------------------------------------------------------------------
COMPOSITION OF NET ASSETS Paid-in capital 482,366,819
Overdistributed net investment income (1,560,400)
Accumulated net realized loss (184,855,307)
Net unrealized appreciation on:
Investments 89,410,343
Foreign currency translations 7,155
Foreign capital gains tax (3,451,360)
NET ASSETS 381,917,250
----------------------------------------------------------------------------
CLASS A Net assets 171,871,536
Shares outstanding 13,813,798
Net asset value per share 12.44(a)
Maximum offering price per share ($12.44/0.9425) 13.20(b)
----------------------------------------------------------------------------
CLASS B Net assets 117,422,108
Shares outstanding 9,754,381
Net asset value and offering price per share 12.04(a)
----------------------------------------------------------------------------
CLASS C Net assets 29,685,081
Shares outstanding 2,462,867
Net asset value and offering price per share 12.05(a)
</Table>
See notes to financial statements.
11
<Page>
<Table>
<Caption>
($)
- ------------------------------------------ ----------------------------------------------------------------------------
CLASS T Net assets 31,353,971
Shares outstanding 2,509,140
Net asset value, offering and redemption price per share 12.50(a)
Maximum offering price per share ($12.50/0.9425) 13.26(b)
----------------------------------------------------------------------------
CLASS Z Net assets 31,584,554
Shares outstanding 2,534,104
Net asset value, offering and redemption price per share 12.46(c)
</Table>
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
(c) Redemption price per share is equal to net asset value less any applicable
redemption fee.
See notes to financial statements.
12
<Page>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 29, 2004 COLUMBIA NEWPORT TIGER FUND
(UNAUDITED)
<Table>
<Caption>
($)
- ------------------------------------------ ----------------------------------------------------------------------------
INVESTMENT INCOME Dividends 2,352,499
Interest 23,351
-------------
Total Investment Income (net of foreign taxes withheld of
$264,619) 2,375,850
----------------------------------------------------------------------------
EXPENSES Investment advisory fee 1,563,054
Administration fee 479,579
Distribution fee:
Class B 454,887
Class C 97,624
Service fee:
Class A 185,856
Class B 151,629
Class C 32,541
Transfer agent fee 612,322
Pricing and bookkeeping fees 61,318
Trustees' fees 10,889
Custody fee 216,817
Other expenses 163,223
-------------
Total Operating Expenses 4,029,739
Fees and expenses waived or reimbursed by Investment Advisor (130,393)
Custody earnings credit (44)
-------------
Net Operating Expenses 3,899,302
Interest expense 260
-------------
Net Expenses 3,899,562
-------------
Net Investment Loss (1,523,712)
----------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON Net realized gain (loss) on:
INVESTMENTS AND FOREIGN CURRENCY Investments 35,263,345
Foreign currency transactions (136,421)
-------------
Net realized gain 35,126,924
Net change in unrealized appreciation/depreciation on:
Investments 43,456,066
Foreign currency translations 5,918
Foreign capital gains tax (1,201,091)
-------------
Net change in unrealized appreciation/depreciation 42,260,893
-------------
Net Gain 77,387,817
-------------
Net Increase in Net Assets from Operations 75,864,105
</Table>
See notes to financial statements.
13
<Page>
STATEMENT OF CHANGES IN NET ASSETS
COLUMBIA NEWPORT TIGER FUND
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS
ENDED PERIOD ENDED YEAR ENDED
FEBRUARY 29, AUGUST 31, DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS: 2004 ($) 2003 ($) (a) 2002 ($)
- ------------------------------------------ -------------------------------------------------------------------------------------
OPERATIONS Net investment income (loss) (1,523,712) 2,072,212 1,589,130
Net realized gain (loss) on
investments, foreign currency
transactions and foreign capital
gains tax 35,126,924 176,561 12,769,984
Net change in unrealized
appreciation/depreciation on
investments, foreign currency
transactions and foreign
capital gains tax 42,260,893 71,941,084 (61,471,644)
------------------------------------------------
Net Increase (Decrease) from
Operations 75,864,105 74,189,857 (47,112,530)
-------------------------------------------------------------------------------------
DISTRIBUTIONS DECLARED TO SHAREHOLDERS From net investment income:
Class A (831,593) -- (522,787)
Class B (88,934) -- --
Class C (19,088) -- --
Class T (212,355) -- (179,551)
Class Z (507,109) -- (667,756)
------------------------------------------------
Total Distributions
Declared to Shareholders (1,659,079) -- (1,370,094)
-------------------------------------------------------------------------------------
SHARE TRANSACTIONS Class A:
Subscriptions 47,291,699 131,510,550 643,189,834
Distributions reinvested 736,922 -- 463,247
Redemptions (36,714,743) (135,540,145) (698,824,493)
Redemption fees 201 -- --
------------------------------------------------
Net Increase (Decrease) 11,314,079 (4,029,595) (55,171,412)
Class B:
Subscriptions 5,563,767 3,837,634 9,920,631
Distributions reinvested 73,423 -- --
Redemptions (31,089,399) (22,251,418) (42,924,609)
Redemption fees 152 -- --
------------------------------------------------
Net Decrease (25,452,057) (18,413,784) (33,003,978)
Class C:
Subscriptions 6,334,352 9,575,621 43,515,160
Distributions reinvested 14,267 -- --
Redemptions (4,355,805) (11,445,140) (48,691,339)
Redemption fees 36 -- --
------------------------------------------------
Net Increase (Decrease) 1,992,850 (1,869,519) (5,176,179)
Class T:
Subscriptions 132,019 58,308 234,399
Distributions reinvested 188,281 -- 157,730
Redemptions (2,209,369) (2,469,957) (4,265,132)
Redemption fees 39 -- --
Net Decrease (1,889,030) (2,411,649) (3,873,003)
Class Z:
Subscriptions 3,923,005 59,682,091 586,858,953
Distributions reinvested 470,181 -- 575,242
Redemptions (48,393,434) (83,864,261) (623,845,867)
Redemption fees 47 9,941 --
------------------------------------------------
Net Decrease (44,000,201) (24,172,229) (36,411,672)
Net Decrease from Share Transactions (58,034,359) (50,896,776) (133,636,244)
------------------------------------------------
Total Increase (Decrease) in
Net Assets 16,170,667 23,293,081 (182,118,868)
-------------------------------------------------------------------------------------
NET ASSETS Beginning of period 365,746,583 342,453,502 524,572,370
End of period (including
(overdistributed) undistributed
net investment income of
$(1,560,400) and $1,622,391,
respectively) $ 381,917,250 $ 365,746,583 $ 342,453,502
-------------------------------------------------------------------------------------
</Table>
See notes to financial statements.
14
<Page>
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS
ENDED PERIOD ENDED YEAR ENDED
FEBRUARY 29, AUGUST 31, DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS: 2004 ($) 2003 ($) (a) 2002 ($)
- ------------------------------------------ -------------------------------------------------------------------------------------
CHANGES IN SHARES Class A:
Subscriptions 4,159,722 15,939,086 71,066,481
Issued for distributions
reinvested 65,914 -- 54,370
Redemptions (3,295,609) (16,360,254) (76,814,494)
-----------------------------------------------
Net Increase (Decrease) 930,027 (421,168) (5,693,643)
Class B:
Subscriptions 499,299 478,874 1,116,852
Issued for distributions reinvested 6,780 -- --
Redemptions (2,758,606) (2,769,012) (4,810,443)
-----------------------------------------------
Net Decrease (2,252,527) (2,290,138) (3,693,591)
Class C:
Subscriptions 582,140 1,191,289 5,104,039
Issued for distributions reinvested 1,315 -- --
Redemptions (402,965) (1,420,516) (5,657,106)
-----------------------------------------------
Net Increase (Decrease) 180,490 (229,227) (553,067)
Class T:
Subscriptions 11,504 7,033 26,459
Issued for distributions reinvested 16,780 -- 18,448
Redemptions (191,180) (298,398) (460,186)
-----------------------------------------------
Net Decrease (162,896) (291,365) (415,279)
Class Z:
Subscriptions 333,170 7,168,711 65,769,295
Issued for distributions reinvested 42,018 -- 67,517
Redemptions (4,155,301) (10,345,294) (69,376,873)
-----------------------------------------------
Net Decrease (3,780,113) (3,176,583) (3,540,061)
</Table>
(a) The Fund has changed its fiscal year from December 31 to August 31.
See notes to financial statements.
15
<Page>
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2004 (UNAUDITED) COLUMBIA NEWPORT TIGER FUND
NOTE 1. ORGANIZATION
Columbia Newport Tiger Fund (the "Fund"), a series of Columbia Funds Trust VII
(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 capital appreciation by investing primarily in equity securities
of companies located in the Tiger countries of Asia. The countries or regions in
which the Fund invests include Hong Kong, Singapore, South Korea, Taiwan,
Malaysia, Thailand, India, Indonesia, China and the Philippines.
FUND SHARES
The Fund may issue an unlimited number of shares and offers five classes of
shares: Class A, Class B, Class C, Class T and Class Z. Each share class has its
own sales charge and expense structure.
Class A and Class T shares are subject to a maximum front-end sales charge of
5.75% based on the amount of initial investment. Class A and Class T shares
purchased without an initial sales charge in accounts aggregating $1 million to
$25 million at the time of purchase are subject to a 1.00% contingent deferred
sales charge ("CDSC") on shares sold within eighteen months of the time of
purchase. 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 the Fund's prospectus.
Effective October 13, 2003, the Fund changed its name from Liberty Newport Tiger
Fund to Columbia Newport Tiger Fund. Also on that date, the Trust changed its
name from Liberty Funds Trust VII to Columbia Funds Trust VII.
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
Equity securities are valued at the last sale price at the close of the
principal exchange on which they trade. Unlisted securities or listed securities
for which there were no sales during the day are valued at the closing bid price
on such exchanges or over-the-counter markets.
Foreign securities are generally valued at the closing price on the foreign
exchange or market on which they trade. If any foreign share prices are not
readily available as a result of limited share activity, the securities are
valued at the last sale price of the local shares in the principal market in
which such securities are normally traded. In certain countries, the Fund may
hold foreign designated shares. If the foreign share prices are not readily
available as a result of limited share activity, the securities are valued at
the last sale price of the local shares in the principal market in which such
securities are normally traded. Korean equity securities that have reached the
limit for aggregate foreign ownership and for which premiums to the local
exchange prices may be paid by foreign investors are valued by applying a broker
quoted premium to the local share price.
Short-term debt obligations maturing within 60 days are valued at amortized
cost, which approximates market value.
Generally, trading in foreign securities is substantially completed each day at
various times prior to the close of the New York Stock Exchange ("NYSE"). The
values of such securities used in computing the net asset value of the Fund's
shares are determined as of such times. Foreign currency exchange rates are
generally
16
<Page>
determined at 2:00 p.m. Eastern (U.S.) time. Occasionally, events affecting the
values of such foreign securities and such exchange rates may occur between the
times at which they are determined and the close of the customary trading
session of the NYSE, which would not be reflected in the computation of the
Fund's net asset value. If events materially affecting the values of such
foreign securities occur and it is determined that market quotations are not
readily available, then these foreign securities will be valued at their fair
value using procedures approved by the Board of Trustees.
Investments for which market quotations are not readily available are valued at
fair value under procedures approved by the Board of Trustees.
SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date. Cost is determined
and gains (losses) are based upon the specific identification method for both
financial statement and federal income tax purposes.
REPURCHASE AGREEMENTS
The Fund may engage in repurchase agreement transactions with institutions that
the Fund's investment advisor has determined are creditworthy. The Fund, through
its custodian, receives delivery of underlying securities collateralizing a
repurchase agreement. Collateral is at least equal, at all times, to the value
of the repurchase obligation including interest. A repurchase agreement
transaction involves certain risks in the event of default or insolvency of the
counterparty. These risks include possible delays or restrictions upon the
Fund's ability to dispose of the underlying securities and a possible decline in
the value of the underlying securities during the period while the Fund seeks to
assert its rights.
INCOME RECOGNITION
Interest income is recorded on the accrual basis. Corporate actions and dividend
income are recorded on the ex-date, except for certain foreign securities which
are recorded as soon after ex-date as the Fund becomes aware of such, net of
non-reclaimable tax withholdings.
FOREIGN CURRENCY TRANSACTIONS
The values of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates. Net realized and
unrealized gains (losses) on foreign currency transactions include gains
(losses) arising from the fluctuation in exchange rates between trade and
settlement dates on securities transactions, gains (losses) arising from the
disposition of foreign currency and currency gains (losses) between the accrual
and payment dates on dividends, interest income and foreign withholding taxes.
For financial statement purposes, the Fund does not distinguish that portion of
gains (losses) on investments which is due to changes in foreign exchange rates
from that which is due to changes in market prices of the investments. Such
fluctuations are included with the net realized and unrealized gains (losses) on
investments.
DETERMINATION OF CLASS NET ASSET VALUES
All income, expenses (other than class-specific expenses, as shown on the
Statement of Operations), and realized and unrealized gains (losses), are
allocated to each class of the Fund on a daily basis, based on the relative net
assets of each class, for purposes of determining the net asset value of each
class.
FEDERAL INCOME TAX STATUS
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 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.
FOREIGN CAPITAL GAINS TAXES
Realized gains in certain countries may be subject to foreign taxes at the fund
level, at rates ranging from approximately 10% to 30%. The Funds accrue for such
foreign taxes on net realized and unrealized gains (losses) at the appropriate
rate for each jurisdiction.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded on ex-date. Net realized capital
gains, if any, are distributed at least annually.
17
<Page>
NOTE 3. FEDERAL TAX INFORMATION
The tax character of distributions paid during the period ended August 31, 2003
was as follows:
<Table>
<Caption>
PERIOD ENDED
AUGUST 31,
2003
- -----------------------------------------------------------
Distributions paid from
Ordinary Income $ --
</Table>
Unrealized appreciation and depreciation at February 29, 2004, 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:
<Table>
Unrealized appreciation $ 108,532,996
Unrealized depreciation (19,122,653)
-------------
Net unrealized appreciation $ 89,410,343
</Table>
The following capital loss carryforwards, determined as of August 31, 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:
<Table>
<Caption>
YEAR OF CAPITAL LOSS
EXPIRATION CARRYFORWARD
- ----------------------------------------------------
2006 $ 197,792,987
2007 22,164,746
$ 219,957,733
</Table>
NOTE 4. FEES AND COMPENSATION PAID TO AFFILIATES
INVESTMENT ADVISORY FEE
Columbia Management Advisors, Inc. ("Columbia") is the investment advisor to the
Fund. Prior to April 1, 2004, Columbia was an indirect, wholly owned subsidiary
of FleetBoston Financial Corporation ("FleetBoston"). Effective April 1, 2004,
FleetBoston was acquired by Bank of America Corporation ("BOA"), see Note 9.
Columbia receives a monthly investment advisory fee based on the Fund's average
daily net assets at the following annual rates:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS FEE RATE
- --------------------------------------------------
First $100 million 1.00%
Next $1.4 billion 0.75%
Next $1.0 billion 0.70%
Over $2.5 billion 0.65%
</Table>
For the six months ended February 29, 2004, the Fund's annualized effective
investment advisory fee rate was 0.81%.
ADMINISTRATION FEES
Columbia provides accounting and other services to the Fund for a monthly
administration fee at the annual rate of 0.25% of the Fund's average daily net
assets.
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 February 29,
2004, the Fund's annualized effective pricing and bookkeeping fee rate was
0.032%.
TRANSFER AGENT FEES
Columbia Funds Services, Inc. (the "Transfer Agent"), formerly Liberty Funds
Services, Inc., an indirect, wholly owned subsidiary of BOA, provides
shareholder services to the Fund. For such services, the Transfer Agent receives
a fee, paid monthly, at the annual rate of $28.00 per open account. The Transfer
Agent also receives reimbursement for certain out-of-pocket expenses.
Prior to November 1, 2003, the Transfer Agent was entitled to receive a monthly
transfer agent fee, in addition to reimbursement for certain out-of-pocket
expenses, 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.
18
<Page>
For the six months ended February 29, 2004, the Fund's annualized effective
transfer agent fee rate, exclusive of out-of-pocket fees, was 0.26%.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES
Columbia Funds Distributor, Inc. (the "Distributor"), an indirect, wholly owned
subsidiary of BOA, 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 February 29, 2004, the Distributor
has retained net underwriting discounts of $28,337 and $922 on sales of the
Fund's Class A and Class T shares, respectively. The Distributor has also
received CDSC fees of $19,527, $47,000 and $1,928 on Class A, Class B and
Class C share redemptions, respectively for the period.
The Fund has adopted a 12b-1 plan (the "Plan") which requires the payment of a
monthly service fee to the Distributor at the annual rate of 0.25% of the
average daily net assets attributable to Class A, Class B and Class C shares of
the Fund. 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 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.
EXPENSE LIMITS AND FEE REIMBURSEMENTS
Columbia has voluntarily agreed to waive fees and reimburse certain expenses to
the extent that total expenses (exclusive of distribution and service fees,
brokerage commissions, interest, taxes and extraordinary expenses, if any)
exceed 1.55% annually of the Fund's average daily net assets. This arrangement
may be revised or discontinued by Columbia at any time.
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. PORTFOLIO INFORMATION
For the six months ended February 29, 2004, the cost of purchases and proceeds
from sales of securities, excluding short-term obligations, were $62,875,570 and
$123,869,533, respectively.
NOTE 6. REDEMPTION FEES
Effective February 10, 2003, the Fund began imposing a 2.00% redemption fee to
shareholders of Class Z shares who redeem shares held for 60 days or less.
Redemption fees, which are retained by the Fund, are accounted for as an
addition to paid in capital and are allocated to each class proportionately for
purposes of determining the net asset value of each class. Prior to October 9,
2003, redemption fees were recorded as a component of paid in capital on Class Z
shares. For the six months ended February 29, 2004, the redemption fees for the
Class Z shares of the Fund amounted to $475.
NOTE 7. 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 February 29,
2004, the average daily loan balance outstanding on days where borrowings
existed was $3,000,000 at a weighted average interest rate of 1.56%.
19
<Page>
NOTE 8. DISCLOSURE OF SIGNIFICANT RISKS AND CONTINGENCIES
FOREIGN SECURITIES
There are certain additional risks involved when investing in foreign securities
that are not inherent with investments in domestic securities. These risks may
involve foreign currency exchange rate fluctuations, adverse political and
economic developments and the possible prevention of currency exchange or other
foreign governmental laws or restrictions. In addition, the liquidity of foreign
securities may be more limited than that of domestic securities.
Investments in emerging market countries are subject to additional risk. The
risk of foreign investments is typically increased in less developed countries.
These countries are also more likely to experience high levels of inflation,
deflation or currency devaluation which could hurt their economies and
securities markets.
GEOGRAPHIC CONCENTRATION
Because the Fund's investments are concentrated in the Tiger countries of Asia,
events within the region will have a greater effect on the Fund than if the Fund
were more geographically diversified. In addition, events in any one country
within the region may impact the other countries or the region as a whole.
Markets in the region can experience significant volatility due to social,
regulatory and political uncertainties.
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 and law enforcement authorities 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 were
knowingly involved in late trading of mutual fund shares.
On February 24, 2004, the Securities and Exchange Commission ("SEC") filed a
civil complaint in the United States District Court for the District of
Massachusetts against Columbia and the Distributor, alleging that they had
violated certain provisions of the federal securities laws in connection with
trading activity in mutual fund shares. Also on February 24, 2004, the New York
Attorney General ("NYAG") filed a civil complaint in New York Supreme Court,
County of New York against Columbia and the Distributor alleging that Columbia
and the Distributor had violated certain New York anti-fraud statutes. If either
Columbia or the Distributor is unsuccessful in its defense of these proceedings,
it could be barred from serving as an investment adviser or distributor for any
investment company registered under the Investment Company Act of 1940, as
amended (a "registered investment company"). Such results could prevent
Columbia, the Distributor or any company that is an affiliated person of
Columbia and the Distributor from serving as an investment adviser or
distributor for any registered investment company, including your fund. Your
fund has been informed by Columbia and the Distributor that, if these results
occur, they will seek exemptive relief from the SEC to permit them to continue
to serve as your fund's investment adviser and distributor. There is no
assurance that such exemptive relief will be granted. On March 15, 2004,
Columbia and the Distributor entered into agreements in principle with the SEC
Division of Enforcement and NYAG in settlement of the charges. Under the
agreements, Columbia and the Distributor agreed, inter alia, to the following
conditions: payment of $70 million in disgorgement; payment of $70 million in
civil penalties; an order requiring Columbia and the Distributor to cease and
desist from violations of the antifraud provisions and other provisions of the
federal securities laws; governance changes designed to maintain the
independence of the mutual fund boards of trustees and ensure compliance with
securities laws and their fiduciary duties; and retention of an independent
consultant to review Columbia's and the Distributor's compliance policies and
procedures. The agreement requires the final approval of the SEC. In a separate
agreement with the NYAG, the Columbia Group has agreed to reduce mutual fund
fees by $80 million over a five-year period.
As a result of these matters or any adverse publicity or other developments
resulting from them, there may be increased redemptions or reduced sales of fund
shares,
20
<Page>
which could increase transaction costs or operating expenses, or have other
adverse consequences for the funds.
NOTE 9. SUBSEQUENT EVENT
On April 1, 2004, FleetBoston, including the Fund's investment advisor and
distributor, was acquired by BOA. The merger did not change the way the Fund is
managed, the investment personnel assigned to manage the Fund or the fees paid
by the Fund.
NOTE 10. COMPARABILITY OF FINANCIAL STATEMENTS
Effective February 11, 2003, the Board of Trustees approved a change in the
fiscal year end of the Fund from June 30 to August 31.
21
<Page>
FINANCIAL HIGHLIGHTS
COLUMBIA NEWPORT TIGER FUND
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS PERIOD
ENDED ENDED
FEBRUARY 29, AUGUST 31,
CLASS A SHARES 2004 2003 (a)
- ---------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.24 $ 8.14
- ---------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) (b) (0.03) 0.07
Net realized and
unrealized gain (loss)
on investments,
foreign currency and
foreign capital gains tax 2.29 2.03
------------ ----------
Total from Investment
Operations 2.26 2.10
- ---------------------------------------------------------------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net investment
income (0.06) --
- ---------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added
to paid in capital --(b)(c) --
- ---------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.44 $ 10.24
Total return (d) 22.18%(e)(f) 25.80%(e)(f)
- ---------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Operating expenses (g) 1.80%(h) 1.80%(h)
Interest expense --(h)(i) --(h)(i)
Expenses (g) 1.80%(h) 1.80%(h)
Net investment
income (loss) (g) (0.59)%(h) 1.21%(h)
Waiver/reimbursement 0.07%(h) 0.20%(h)
Portfolio turnover rate 17%(f) 18%(f)
Net assets, end of
period (000's) $ 171,872 $ 131,974
- ---------------------------------------------------------------
<Caption>
YEAR ENDED DECEMBER 31,
CLASS A SHARES 2002 2001 2000 1999 1998
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.38 $ 11.34 $ 13.47 $ 7.78 $ 9.02
- ------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) (b) 0.05 0.08 0.01 0.09 0.14
Net realized and
unrealized gain (loss)
on investments,
foreign currency and
foreign capital gains tax (1.25) (1.95) (2.14) 5.60 (1.23)
--------- --------- --------- --------- ---------
Total from Investment
Operations (1.20) (1.87) (2.13) 5.69 (1.09)
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net investment
income (0.04) (0.09) -- -- (0.15)
- ------------------------------------------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added
to paid in capital -- -- -- -- --
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 8.14 $ 9.38 $ 11.34 $ 13.47 $ 7.78
Total return (d) (12.83)%(e) (16.55)%(e) (15.81)% 73.14% (12.08)%
- ------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Operating expenses (g) 1.80% 1.80% 1.71% 1.77% 1.78%
Interest expense 0.01% --(i) -- -- --
Expenses (g) 1.81% 1.80% 1.71% 1.77% 1.78%
Net investment
income (loss) (g) 0.54% 0.75% 0.07% 0.97% 2.02%
Waiver/reimbursement 0.07% --(i) -- -- --
Portfolio turnover rate 25% 12% 25% 14% 15%
Net assets, end of
period (000's) $ 108,240 $ 178,145 $ 321,671 $ 403,082 $ 250,089
- ------------------------------------------------------------------------------------------------
</Table>
(a) The Fund has changed its fiscal year end from December 31 to August 31.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Rounds to less than $0.01 per share.
(d) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(e) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(h) Annualized.
(i) Rounds to less than 0.01%.
22
<Page>
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS PERIOD
ENDED ENDED
FEBRUARY 29, AUGUST 31,
CLASS B SHARES 2004 2003 (a)
- ---------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.90 $ 7.90
- ---------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) (b) (0.08) 0.03
Net realized and
unrealized gain (loss)
on investments,
foreign currency and
foreign capital gains tax 2.23 1.97
------------ ----------
Total from Investment
Operations 2.15 2.00
- ---------------------------------------------------------------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS: (0.01) --
- ---------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added
to paid in capital --(b)(c) --
- ---------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.04 $ 9.90
Total return (d) 21.71%(e)(f) 25.32%(e)(f)
- ---------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Operating expenses (g) 2.55%(h) 2.55%(h)
Interest expense --%(h)(i) --(h)(i)
Expenses (g) 2.55%(h) 2.55%(h)
Net investment income
(loss) (g) (1.32)%(h) 0.49%(h)
Waiver/reimbursement 0.07%(h) 0.20%(h)
Portfolio turnover rate 17%(f) 18%(f)
Net assets, end of
period (000's) $ 117,422 $ 118,849
- ---------------------------------------------------------------
<Caption>
YEAR ENDED DECEMBER 31,
CLASS B SHARES 2002 2001 2000 1999 1998
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.14 $ 11.05 $ 13.23 $ 7.70 $ 8.92
- ------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) (b) (0.02) -- (c) (0.08) 0.02 0.09
Net realized and
unrealized gain (loss)
on investments,
foreign currency and
foreign capital gains tax (1.22) (1.89) (2.10) 5.51 (1.23)
--------- --------- --------- --------- ---------
Total from Investment
Operations (1.24) (1.89) (2.18) 5.53 (1.14)
- ------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS: -- (0.02) -- -- (0.08)
- ------------------------------------------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added
to paid in capital -- -- -- -- --
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 7.90 $ 9.14 $ 11.05 $ 13.23 $ 7.70
Total return (d) (13.57)%(e) (17.12)%(e) (16.48)% 71.82% (12.77)%
- ------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Operating expenses (g) 2.55% 2.55% 2.46% 2.52% 2.53%
Interest expense 0.01% --(i) -- -- --
Expenses (g) 2.56% 2.55% 2.46% 2.52% 2.53%
Net investment income
(loss) (g) (0.21)% --(i) (0.68)% 0.22% 1.27%
Waiver/reimbursement 0.07% --(i) -- -- --
Portfolio turnover rate 25% 12% 25% 14% 15%
Net assets, end of
period (000's) $ 112,942 $ 164,354 $ 265,219 $ 407,179 $ 280,163
- ------------------------------------------------------------------------------------------------
</Table>
(a) The Fund has changed its fiscal year end from December 31 to August 31.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Rounds to less than $0.01 per share.
(d) Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(e) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(h) Annualized.
(i) Rounds to less than 0.01%.
23
<Page>
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS PERIOD
ENDED ENDED
FEBRUARY 29, AUGUST 31,
CLASS C SHARES 2004 2003 (a)
- ---------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.91 $ 7.91
- ---------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) (b) (0.07) 0.03
Net realized and
unrealized gain (loss)
on investments,
foreign currency and
foreign capital gains tax 2.22 1.97
------------ ----------
Total from Investment
Operations 2.15 2.00
- ---------------------------------------------------------------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net investment
income (0.01) --
- ---------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added
to paid in capital --(b)(c) --
- ---------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.05 $ 9.91
Total return (d) 21.68%(e)(f) 25.28%(e)(f)
- ---------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Operating expenses (g) 2.55%(h) 2.55%(h)
Interest expense --(h)(i) --(h)(i)
Expenses (g) 2.55%(h) 2.55%(h)
Net investment income
(loss) (g) (1.34)%(h) 0.49%(h)
Waiver/reimbursement 0.07%(h) 0.20%(h)
Portfolio turnover rate 17%(f) 18%(f)
Net assets, end of
period (000's) $ 29,685 $ 22,619
- ---------------------------------------------------------------
<Caption>
YEAR ENDED DECEMBER 31,
CLASS C SHARES 2002 2001 2000 1999 1998
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.15 $ 11.07 $ 13.25 $ 7.71 $ 8.94
- ------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) (b) (0.02) --(c) (0.08) 0.02 0.09
Net realized and
unrealized gain (loss)
on investments,
foreign currency and
foreign capital gains tax (1.22) (1.90) (2.10) 5.52 (1.24)
--------- --------- --------- --------- ---------
Total from Investment
Operations (1.24) (1.90) (2.18) 5.54 (1.15)
- ------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net investment
income -- (0.02) -- -- (0.08)
- ------------------------------------------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added
to paid in capital -- -- -- -- --
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 7.91 $ 9.15 $ 11.07 $ 13.25 $ 7.71
Total return (d) (13.55)%(e) (17.18)%(e) (16.45)% 71.85% (12.89)%
- ------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Operating expenses (g) 2.55% 2.55% 2.46% 2.52% 2.53%
Interest expense 0.01% --(i) -- -- --
Expenses (g) 2.56% 2.55% 2.46% 2.52% 2.53%
Net investment income
(loss) (g) (0.21)% --(i) (0.68)% 0.22% 1.27%
Waiver/reimbursement 0.07% --(i) -- -- --
Portfolio turnover rate 25% 12% 25% 14% 15%
Net assets, end of
period (000's) $ 19,866 $ 28,036 $ 42,897 $ 73,038 $ 48,316
- ------------------------------------------------------------------------------------------------
</Table>
(a) The Fund has changed its fiscal year end from December 31 to August 31.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Rounds to less than $0.01 per share.
(d) Total return at net asset value assuming all distributions reinvested and no
contingent deferred sales charge.
(e) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(h) Annualized.
(i) Rounds to less than 0.01%.
24
<Page>
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS PERIOD
ENDED ENDED
FEBRUARY 29, AUGUST 31,
CLASS T SHARES 2004 2003 (a)
- ---------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.29 $ 8.16
- ---------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) (b) (0.02) 0.08
Net realized and
unrealized gain (loss)
on investments,
foreign currency and
foreign capital gains tax 2.31 2.05
------------ ----------
Total from Investment
Operations 2.29 2.13
- ---------------------------------------------------------------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net investment
income (0.08) --
- ---------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added
to paid in capital --(b)(c) --
- ---------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.50 $ 10.29
Total return (d) 22.37%(e)(f) 26.10%(e)(f)
- ---------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Operating expenses (g) 1.55%(h) 1.55%(h)
Interest expense --(h)(i) --(h)(i)
Expenses (g) 1.55%(h) 1.55%(h)
Net investment income
(loss) (g) (0.33)%(h) 1.50%(h)
Waiver/reimbursement 0.07%(h) 0.20%(h)
Portfolio turnover rate 17%(f) 18%(f)
Net assets, end of
period (000's) $ 31,354 $ 27,501
- ---------------------------------------------------------------
<Caption>
YEAR ENDED DECEMBER 31,
CLASS T SHARES 2002 2001 2000 1999 1998
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.41 $ 11.38 $ 13.48 $ 7.77 $ 9.01
- ------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) (b) 0.08 0.10 0.04 0.12 0.16
Net realized and
unrealized gain (loss)
on investments,
foreign currency and
foreign capital gains tax (1.27) (1.96) (2.14) 5.59 (1.23)
--------- --------- --------- --------- ---------
Total from Investment
Operations (1.19) (1.86) (2.10) 5.71 (1.07)
- ------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net investment
income (0.06) (0.11) -- -- (0.17)
- ------------------------------------------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added
to paid in capital -- -- -- -- --
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 8.16 $ 9.41 $ 11.38 $ 13.48 $ 7.77
Total return (d) (12.68)%(e) (16.39)%(e) (15.58)% 73.49% (11.87)%
- ------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Operating expenses (g) 1.55% 1.55% 1.46% 1.52% 1.53%
Interest expense 0.01% --(i) -- -- --
Expenses (g) 1.56% 1.55% 1.46% 1.52% 1.53%
Net investment income
(loss) (g) 0.79% 1.00% 0.32% 1.22% 2.27%
Waiver/reimbursement 0.07% --(i) -- -- --
Portfolio turnover rate 25% 12% 25% 14% 15%
Net assets, end of
period (000's) $ 24,180 $ 31,782 $ 46,733 $ 69,503 $ 51,526
- ------------------------------------------------------------------------------------------------
</Table>
(a) The Fund has changed its fiscal year end from December 31 to August 31.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Rounds to less than $0.01 per share.
(d) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(e) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(h) Annualized.
(i) Rounds to less than 0.01%.
25
<Page>
<Table>
<Caption>
(UNAUDITED)
SIX MONTHS PERIOD
ENDED ENDED
FEBRUARY 29, AUGUST 31,
CLASS Z SHARES 2004 2003 (a)
- ---------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.26 $ 8.14
- ---------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) (b) (0.01) 0.07
Net realized and
unrealized gain (loss)
on investments,
foreign currency and
foreign capital gains tax 2.29 2.05
------------ ----------
Total from Investment
Operations 2.28 2.12
- ---------------------------------------------------------------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net investment
income (0.08) --
- ---------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added
to paid in capital --(b)(c) --(b)(c)
- ---------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.46 $ 10.26
Total return (d) 22.33%(e)(f) 26.04%(e)(f)
- ---------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Operating expenses (g) 1.55%(h) 1.55%(h)
Interest expense --(h)(i) --(h)(i)
Expenses (g) 1.55%(h) 1.55%(h)
Net investment income
(loss) (g) (0.22)%(h) 1.31%(h)
Waiver/reimbursement 0.07%(h) 0.20%(h)
Portfolio turnover rate 17%(f) 18%(f)
Net assets, end of
period (000's) $ 31,585 $ 64,803
- ---------------------------------------------------------------
<Caption>
YEAR ENDED DECEMBER 31,
CLASS Z SHARES 2002 2001 2000 1999 1998
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.38 $ 11.35 $ 13.46 $ 7.75 $ 9.01
- ------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) (b) 0.08 0.10 0.04 0.12 0.16
Net realized and
unrealized gain (loss)
on investments,
foreign currency and
foreign capital gains tax (1.26) (1.96) (2.15) 5.59 (1.25)
--------- --------- --------- --------- ---------
Total from Investment
Operations (1.18) (1.86) (2.11) 5.71 (1.09)
- ------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
DECLARED TO SHAREHOLDERS:
From net investment
income (0.06) (0.11) -- -- (0.17)
- ------------------------------------------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added
to paid in capital -- -- -- -- --
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 8.14 $ 9.38 $ 11.35 $ 13.46 $ 7.75
Total return (d) (12.61)%(e) (16.43)%(e) (15.68)% 73.68% (12.09)%
- ------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Operating expenses (g) 1.55% 1.55% 1.46% 1.52% 1.53%
Interest expense 0.01% --(i) -- -- --
Expenses (g) 1.56% 1.55% 1.46% 1.52% 1.53%
Net investment income
(loss) (g) 0.79% 1.00% 0.32% 1.22% 2.27%
Waiver/reimbursement 0.07% --(i) -- -- --
Portfolio turnover rate 25% 12% 25% 14% 15%
Net assets, end of
period (000's) $ 77,225 $ 122,255 $ 157,606 $ 214,498 $ 138,988
- ------------------------------------------------------------------------------------------------
</Table>
(a) The Fund has changed its fiscal year end from December 31 to August 31.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Rounds to less than $0.01 per share.
(d) Total return at net asset value assuming all distributions reinvested.
(e) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(f) Not annualized.
(g) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(h) Annualized.
(i) Rounds to less than 0.01%.
26
<Page>
IMPORTANT INFORMATION ABOUT THIS REPORT
COLUMBIA NEWPORT TIGER 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 Newport Tiger 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.
27
<Page>
COLUMBIA FUNDS
COLUMBIA NEWPORT TIGER 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
28
<Page>
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
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mutual fund carefully before investing. Contact us at 800-345-6611 for a
prospectus which contains this and other important information about the fund.
Read it carefully before you invest.
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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
Columbia Funds Distributor, Inc.
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eDelivery
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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 NEWPORT TIGER FUND PRSRT STD
SEMIANNUAL REPORT, FEBRUARY 29, 2004 U.S. POSTAGE
PAID
HOLLISTON, MA
PERMIT NO. 20
[COLUMBIA FUNDS(R) LOGO]
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
732-03/316R-0204 (04/04) 04/0731
ITEM 2. CODE OF ETHICS.
Not applicable at this time.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable at this time.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable at this time.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable at this time.
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.
The registrant has not filed Schedule 14A subsequent to the effective date of
that Schedule's Item 7(d)(2)(ii)(G). However, it is the registrant's policy to
consider candidates for the Board of Trustees/Directors who are recommend by
shareholders. A Fund shareholder who wishes to nominate a candidate to the Board
may send information regarding prospective candidates to the Fund's Governance
Committee, care of the Fund's Secretary. The information should include evidence
of the shareholder's Fund ownership, a full listing of the proposed candidate's
education, experience, current employment, date of birth, names and addresses of
at least three professional references, information as to whether the candidate
is not an "interested person" under the 1940 Act and "independent" under NYSE
Listing Standards in relation to the Fund, and such other information as may be
helpful to the independent trustees/directors in evaluating the candidate. All
satisfactorily completed information packages regarding a candidate will be
forwarded to an independent trustee/director for consideration.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer, based on his evaluation of the registrant's disclosure controls
and procedures as of a date within 90 days of the filing of this report,
has 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 VII
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By (Signature and Title) /s/ J. Kevin Connaughton
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J. Kevin Connaughton, President and Treasurer
Date May 6, 2004
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ J. Kevin Connaughton
------------------------------------------------------
J. Kevin Connaughton, President and Treasurer
Date May 6, 2004
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