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 811-3009
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Columbia Funds Trust II
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(Exact name of registrant as specified in charter)
One Financial Center, Boston, Massachusetts 02111
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(Address of principal executive offices) (Zip code)
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
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
COLUMBIA
NEWPORT GREATER
CHINA FUND
Semiannual Report
February 29, 2004
[photo of man and dog on beach]
[LOGO]:
COLUMBIAFUNDS
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 ...............10
Statement of Operations ...........................11
Statements of Changes in Net Assets ...............12
Notes to Financial Statements .....................14
Financial Highlights ............................. 19
Important Information
About This Report ....................................23
Columbia Funds .......................................24
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 Newport Greater China 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 27.58% without sales charge.
o The fund's return was behind that of the MSCI China Index, but close to that
of its secondary benchmark, the Hang Seng Stock Index. The fund also trailed
the average return of its peer group, the Lipper China Region Funds Category.
o The fund's strong return was driven by investments in companies with the
potential to benefit from a growing consumer society in Greater China.
Certain investments in Hong Kong and Taiwan held back relative performance.
arrow up
Class A shares: +27.58%
arrow up
MSCI China Index: +43.07%
Objective
Seeks long-term growth
of capital by investing primarily
in equity securities of companies
located in the Greater
China Region
Total net assets
$84.6 million
Morningstar style box: Style Growth/Quality Large
FUND PROFILE
Columbia Newport Greater China 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 10 holdings as of 02/29/04 (%)
China Mobile 6.1
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Beijing Datang
Power Generation 4.4
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Huaneng Power International 4.3
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PetroChina 4.0
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Taiwan Semiconductor
Manufacturing 3.9
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Sun Hung Kai Properties 3.9
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Chinatrust Financial Holdings 3.7
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Henderson Land Development 3.6
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Hong Kong & China Gas 3.5
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Zhejiang Expressway 3.5
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Top 5 sectors as of 02/29/04 (%)
Financials 21.3
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Industrials 21.3
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Telecommunication services 13.6
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Utilities 12.3
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Information technology 12.1
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Sector breakdown 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 $10,000 investment
05/16/97 - 02/29/04 ($)
sales charge: without with
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Class A 17,584 16,572
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Class B 16,811 16,811
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Class C 17,046 17,046
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Class Z 18,373 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 Newport Greater China Fund
VALUE OF A $10,000 INVESTMENT 05/16/97 - 02/29/04
[mountain chart data]:
Class A Class A MSCI
without with China
sales charge sales charge Index
05/1997 $10,000.00 $ 9,425.00 $10,000.00
13,418.00 12,646.50 9,887.00
14,415.00 13,586.10 10,108.50
15,104.00 14,235.50 11,492.30
13,416.90 12,645.40 12,170.40
13,701.30 12,913.50 10,146.40
10,148.60 9,565.02 8,498.65
9,630.99 9,077.20 6,960.40
9,887.17 9,318.66 6,754.37
7,778.24 7,330.99 5,036.06
10,474.20 9,871.91 6,822.85
10,346.40 9,751.47 6,646.82
9,352.10 8,814.36 5,962.20
7,943.68 7,486.91 5,179.96
6,852.21 6,458.21 4,372.40
5,963.48 5,620.58 3,581.43
4,773.77 4,499.28 2,611.22
6,287.05 5,925.55 3,739.53
7,770.17 7,323.38 4,111.99
8,049.12 7,586.29 4,242.75
7,892.16 7,438.36 3,892.73
7,096.63 6,688.57 3,169.07
6,968.18 6,567.51 3,034.70
7,755.58 7,309.64 3,447.12
8,999.58 8,482.10 4,312.69
8,817.79 8,310.77 4,323.04
10,867.00 10,242.20 6,347.95
10,335.60 9,741.34 5,555.09
10,578.50 9,970.27 5,510.65
9,986.13 9,411.93 5,290.22
10,365.60 9,769.58 4,863.30
12,095.60 11,400.10 4,770.41
13,241.10 12,479.70 4,411.68
13,302.00 12,537.10 4,219.33
14,424.70 13,595.30 3,444.66
15,760.40 14,854.20 3,523.54
14,061.40 13,252.90 3,856.16
13,552.40 12,773.10 3,925.19
15,009.30 14,146.30 4,449.59
15,503.10 14,611.70 4,365.50
15,162.00 14,290.20 4,187.82
14,114.30 13,302.80 3,678.58
13,287.20 12,523.20 3,507.16
12,573.70 11,850.70 3,040.01
13,120.70 12,366.20 3,064.93
14,107.30 13,296.20 3,509.35
13,651.70 12,866.70 3,189.30
12,444.90 11,729.30 2,671.99
13,408.10 12,637.10 2,943.20
13,362.50 12,594.20 3,023.55
13,073.90 12,322.10 3,123.33
12,435.90 11,720.80 2,700.43
11,312.90 10,662.40 2,116.06
10,174.80 9,589.78 2,044.11
10,592.00 9,982.96 2,096.24
11,472.20 10,812.50 2,300.62
11,737.20 11,062.30 2,308.21
11,713.70 11,040.20 2,091.70
11,629.40 10,960.70 2,108.64
12,342.30 11,632.60 2,226.09
12,879.20 12,138.60 2,324.93
12,863.70 12,124.00 2,360.50
12,236.00 11,532.40 2,281.19
11,500.60 10,839.30 2,181.50
10,948.50 10,319.00 2,138.96
10,220.50 9,632.80 1,968.70
10,251.10 9,661.69 1,979.92
10,848.80 10,225.00 2,061.89
10,271.60 9,681.00 1,983.95
10,487.30 9,884.30 2,078.79
10,356.20 9,760.75 2,027.02
9,901.59 9,332.25 1,948.98
9,993.68 9,419.04 1,951.52
11,072.00 10,435.40 2,200.92
11,519.30 10,857.00 2,342.00
12,644.70 11,917.70 2,574.09
13,777.70 12,985.50 2,745.27
14,124.90 13,312.70 2,766.68
15,226.60 14,351.10 3,187.22
14,934.30 14,075.60 3,219.41
15,905.00 14,990.50 3,721.64
16,579.40 15,626.10 3,697.82
02/2004 17,584.00 16,572.00 3,927.82
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) China Index is designed to broadly and
fairly represent the full diversity of business activities in China. This index
aims to capture 85% of the free float adjusted market capitalization in each
industry group. Country indices are based on MSCI market indices, assuming
dividends are reinvested. 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 the
index. Index performance is from April 30, 1997.
Shares of the Columbia Newport Greater China Fund were offered during a
subscription period that began June 20, 1997 and ended July 25, 1997. The
subscription proceeds were invested into the fund on July 25, 1997. The fund's
performance returns are calculated from its inception date of May 16, 1997.
Average annual total return as of 02/29/04 (%)
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Share class A B C Z
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Inception 05/16/97 05/16/97 05/16/97 05/16/97
=========================================================================================
Sales charge without with without with without with without
=========================================================================================
6-month
(cumulative) 27.58 20.25 27.13 22.13 27.08 26.08 27.82
=========================================================================================
1-year 69.73 59.97 68.38 63.38 68.43 67.43 74.73
=========================================================================================
5-year 20.33 18.92 19.44 19.24 19.38 19.38 21.22
=========================================================================================
Life 8.67 7.72 7.95 7.95 8.17 8.17 9.37
=========================================================================================
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) 27.58 20.25 27.13 22.13 27.08 26.08 35.45
=========================================================================================
1-year 69.73 59.97 68.38 63.38 68.43 67.43 59.51
=========================================================================================
5-year 20.33 18.92 19.44 19.24 19.38 19.38 15.89
=========================================================================================
Life 8.67 7.72 7.95 7.95 8.17 8.17 7.96
=========================================================================================
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 The stock markets of Greater China benefited from the region's solid economic
growth. The MSCI China Index returned 43.07%. The Hang Seng Stock Index,
which measures the performance of the Hong Kong stock market, rose 28.84%.
arrow up
MSCI China Index: +43.07%
arrow up
Hang Seng Index: +28.84%
o GDP growth in China exceeded 9% during the period. The People's Bank of China
took steps to avoid an overheated economy. However, continued solid economic
growth is on track for 2004.
o GDP growth for Hong Kong and Taiwan was less robust than growth in mainland
China, but higher growth is expected in 2004.
The MSCI China Index is an unmanaged broad-based index that tracks the
performance of Chinese companies available to the non-domestic investors.
The Hang Seng Stock Index is an unmanaged index that tracks the stock exchange
of Hong Kong.
ECONOMIC UPDATE
Columbia Newport Greater China Fund
During the period that began September 1, 2003 and ended February 29, 2004, the
economies of the region known as Greater China (People's Republic of China, Hong
Kong and Taiwan), participated in a recovery that prevailed around the world.
China's economy benefited from a substantial increase in consumer and business
spending as well as government spending on infrastructure building. Exporting
countries, such as Hong Kong and Taiwan, also benefited from a worldwide
increase in demand for manufactured products.
STOCK MARKETS LIFTED BY FAVORABLE ECONOMIC NEWS
Stock market performance reflected the region's solid economic growth.
Throughout Greater China, stocks tied to domestic consumption, business
expansion and construction spending were market leaders. As a result, the
consumer discretionary, technology, industrials, materials and financials
sectors made the strongest gains. For the six-month reporting period, the MSCI
China Index returned 43.07%.
CHINA LOGS EXTRAORDINARY GROWTH
China's GDP growth exceeded 9% for the second half of 2003 as strong domestic
demand and export growth continued to fuel extraordinary growth for the third
largest economy in the world. In 2003, merchandise exports reportedly rose by
30%. Imports soared by 40%, driven by demand for raw materials and capital goods
needed to maintain a thriving manufacturing sector and a boom in infrastructure
development. However, policymakers began to worry that "overinvestment" in
public works and land development projects could lead to an overheated economy.
Late last year, the People's Bank of China (PBOC) tightened the money supply,
which curbed lending and slowed credit growth. As a result, the
industrialization of China is expected to continue at a somewhat slower,
steadier pace. Yet, estimates for 2004 growth remain very strong from 7.2% to
8.5%.
SOLID GROWTH IN HONG KONG AND TAIWAN PICKS UP
Hong Kong and Taiwan reported GDP growth 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 to recover. 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 all contributed to a strengthening
economy. Because Taiwan is a major exporter of computer-related goods, it also
benefited from the global recovery in the technology sector, especially from
increased business spending in the United States and euro zone countries--the 12
European countries that share the euro as a common currency--and the ongoing
modernization of mainland China.
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 increased the number of manufacturing jobs
outsourced to China.
3
Net asset value per share
as of 02/29/04 ($)
Class A 22.68
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Class B 22.26
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Class C 22.57
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Class Z 23.47
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Distributions declared per share
09/01/03 - 02/29/04 ($)
Class A 0.11
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Class B --
=====================================
Class C --
=====================================
Class Z 0.16
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Holdings discussed in this report
as of 02/29/04 (%)
Huaneng Power International 4.3
=====================================
China Unicom 3.1
=====================================
China Telecom 2.8
=====================================
Chinatrust Financial Holding 3.7
=====================================
Cathay Financial Holding 2.7
=====================================
Acer 1.4
=====================================
China Mobile 6.1
=====================================
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 Newport Greater China Fund
For the six-month period ended February 29, 2004, class A shares of Columbia
Newport Greater China Fund returned 27.58% without sales charge. The fund
trailed the MSCI China Index, which returned 43.07%. The fund's return was much
closer to the 28.84% return of the Hang Seng Stock Index. This unmanaged index
tracks the performance of Hong Kong stocks, which are not included in the MSCI
China Index. We added this secondary benchmark because Hong Kong is part of the
fund's investment universe. The fund's return was not as strong as the 30.84%
average of its peer group, the Lipper China Region Funds Category.1 The fund's
double-digit return was helped by investments in companies that stand to benefit
from growing consumerism. Certain of the fund's investments in Hong Kong and
Taiwan held back relative performance.
CHINESE HOLDINGS REPOSITIONED
Because China's economy has been extraordinary for several years, the government
became concerned that the huge amount of investment going into development
projects was putting a strain on resources and was threatening the country's
prospects for steady long-term growth. To cool what was becoming an overheated
economy, the People's Bank of China instituted policies that tightened the
availability of credit. These steps could have a negative impact on stocks.
While we believe China's economic growth should be robust by global standards,
we expect it to slow in response to this move. Therefore, we made some
adjustments to our China position. We trimmed some holdings that had become
overvalued and expanded investment in areas that had done poorly for several
months.
We added to some long-term investments in the telecommunications sector, an area
that has benefited from China's growing consumer society. We increased our
commitment to China Unicom, a wireless company, and created a position in China
Telecom, a fixed-line telephone company. Both companies have had strong
subscriber growth and rising earnings. Both stocks made positive contributions
to the fund's performance.
BUILDING UP TAIWAN
Although Taiwan fell behind other Asian markets in 2003, we believe that it has
the potential for stronger performance in 2004. Taiwan's economy is improving.
The economy could benefit from slightly higher inflation, rising consumer income
and consumer spending. Stock valuations are attractive, and earnings projections
are robust. Because we expect a pickup in business
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.
4
Columbia Newport Greater China Fund
and consumer loan demand, we favored financial stocks in Taiwan. We added to our
position in Chinatrust Financial Holding, which controls Taiwan's largest
private sector bank. We also established a position in Cathay Financial Holding,
the country's largest insurance company. Both companies helped performance.
We also emphasized information technology stocks. We believe that sector should
benefit from an improved global economy and an upturn in Taiwan's exports. We
established a position in Acer, a computer manufacturer and the second largest
provider of laptops to Europe. The company also has plans to enter the US
market. Acer made a positive contribution to the return.
Although we made relatively few changes in Hong Kong, we added to our position
in China Mobile, a wireless company with significant business in China. Like
other telecommunications companies in the portfolio, China Mobile's business
should be enhanced by greater consumer demand in China. The stock was a positive
performer during the period.
CAPITALIZING ON A BETTER ECONOMY
We expect relatively strong economic growth in the greater China region and have
positioned the portfolio to take advantage of the improving business and
consumer trends that are likely to develop in a more robust economic
environment.
[photo of Eric Sandlund]
Eric Sandlund has managed Columbia Newport Greater China Fund since March 2004
and has been with the advisor and its predecessors since June 2002.
/s/ Eric Sandlund
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.
callout
Although Taiwan fell behind other Asian markets in 2003, we believe that it has
the potential for stronger performance in 2004.
5
Financial Statements
February 29, 2004
Columbia Newport Greater China 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 Newport Greater China Fund
COMMON STOCKS - 95.0%
CONSUMER DISCRETIONARY - 6.5%
Shares Value ($)
- --------------------------------------------------------------------------------------------------------------------------------
Distributors - 3.7% China Resources Enterprise Ltd. 652,000 917,166
Li & Fung Ltd. 1,132,000 2,210,426
Distributors Total 3,127,592
------------------------------------------------------------------------------
Household Durables - 0.6% Shanghai Forte Land Co., Ltd. (a) 1,522,000 518,139
Household Durables Total 518,139
------------------------------------------------------------------------------
Media - 1.3% Television Broadcasts Ltd. 230,000 1,122,787
Media Total 1,122,787
------------------------------------------------------------------------------
Specialty Retail - 0.9% Esprit Holdings Ltd. 202,000 796,665
Specialty Retail Total 796,665
--------------
CONSUMER DISCRETIONARY TOTAL 5,565,183
CONSUMER STAPLES - 0.5%
- --------------------------------------------------------------------------------------------------------------------------------
Food & Staples Retailing - 0.5% Convenience Retail Asia Ltd. 1,176,000 404,126
Food & Staples Retailing Total 404,126
--------------
CONSUMER STAPLES TOTAL 404,126
ENERGY - 5.4%
- --------------------------------------------------------------------------------------------------------------------------------
Oil & Gas - 5.4% CNOOC Ltd. 554,500 1,121,936
PetroChina Co. 6,378,000 3,420,795
Oil & Gas Total 4,542,731
--------------
ENERGY TOTAL 4,542,731
FINANCIALS - 21.3%
- --------------------------------------------------------------------------------------------------------------------------------
Commercial Banks - 7.8% Chinatrust Financial Holding Co., Ltd. 2,613,480 3,128,316
Dah Sing Financial Group 112,800 873,076
Guoco Group Ltd. 89,000 674,572
Hang Seng Bank Ltd. 112,000 1,589,887
JCG Holdings Ltd. 424,000 367,668
Commercial Banks Total 6,633,519
------------------------------------------------------------------------------
Diversified Financial Services - 2.0% Aeon Credit Service Co., Ltd. 524,000 400,529
Swire Pacific Ltd. 185,000 1,307,135
Diversified Financial Services Total 1,707,664
------------------------------------------------------------------------------
Insurance - 2.7% Cathay Financial Holding Co., Ltd. 1,143,000 2,251,624
Insurance Total 2,251,624
------------------------------------------------------------------------------
Real Estate - 8.8% Cheung Kong Holdings Ltd. 114,000 1,087,395
Henderson Land Development Co., Ltd. 602,000 3,054,778
Sun Hung Kai Properties Ltd. 332,000 3,262,763
Real Estate Total 7,404,936
--------------
FINANCIALS TOTAL 17,997,743
HEALTH CARE - 0.5%
- --------------------------------------------------------------------------------------------------------------------------------
Health Care Equipment & Supplies - 0.5% Pihsiang Machinery Manufacturing Co., Ltd. 124,950 428,400
Health Care Equipment & Supplies Total 428,400
--------------
HEALTH CARE TOTAL 428,400
See notes to investment portfolio.
7
February 29, 2004 (unaudited)
Columbia Newport Greater China Fund
COMMON STOCKS - (CONTINUED)
INDUSTRIALS - 21.3%
Shares Value ($)
- --------------------------------------------------------------------------------------------------------------------------------
Electrical Equipment - 1.6% Johnson Electric Holdings Ltd. 837,500 1,005,964
Phoenixtec Power Co., Ltd. 245,220 308,277
Electrical Equipment Total 1,314,241
------------------------------------------------------------------------------
Industrial Conglomerates - 10.6% China Merchants Holdings International Co., Ltd. 1,982,000 2,877,187
Golden Meditech Co., Ltd. 476,000 183,448
Harbin Brewery Group Ltd. 3,782,000 1,712,642
Hutchison Whampoa Ltd. 333,200 2,803,705
People's Food Holdings Ltd. 953,000 779,906
Xinao Gas Holdings Ltd. (a) 1,040,000 571,157
Industrial Conglomerates Total 8,928,045
------------------------------------------------------------------------------
Marine - 1.9% Cosco Pacific Ltd. 1,066,000 1,629,634
Marine Total 1,629,634
Transportation Infrastructure - 7.2% Anhui Expressway Co., Ltd., Class H 1,442,000 560,372
Hainan Meilan Airport Co., Ltd., Class H 1,398,000 1,472,675
Jiangsu Expressway Co., Ltd., Class H 2,198,000 1,143,586
Zhejiang Expressway Co., Ltd., Class H 3,628,000 2,936,256
Transportation Infrastructure Total 6,112,889
--------------
INDUSTRIALS TOTAL 17,984,809
INFORMATION TECHNOLOGY - 12.1%
- --------------------------------------------------------------------------------------------------------------------------------
Computers & Peripherals - 5.6% Acer, Inc. 764,000 1,206,316
Ambit Microsystems Corp. 465,100 1,356,833
Asustek Computer, Inc. 370,125 974,013
Lite-On Technology Corp. 985,120 1,214,734
Computers & Peripherals Total 4,751,896
------------------------------------------------------------------------------
Electronic Equipment & Instruments - 1.7% Hon Hai Precision Industry Co., Ltd. 41,868 186,360
Synnex Tech International Corp. 727,000 1,268,150
Electronic Equipment & Instruments Total 1,454,510
------------------------------------------------------------------------------
Semiconductors & Semiconductor Equipment - 4.8% Realtek Semiconductor Corp. 382,800 713,793
Taiwan Semiconductor Manufacturing Co., Ltd.,
Class H (a) 1,734,296 3,312,114
Semiconductors & Semiconductor Equipment Total 4,025,907
--------------
INFORMATION TECHNOLOGY TOTAL 10,232,313
MATERIALS - 1.5%
- --------------------------------------------------------------------------------------------------------------------------------
Metals & Mining - 1.5% Yanzhou Coal Mining Co., Ltd., Class H 1,126,000 1,294,635
Metals & Mining Total 1,294,635
--------------
MATERIALS TOTAL 1,294,635
TELECOMMUNICATION SERVICES - 13.6%
- --------------------------------------------------------------------------------------------------------------------------------
Diversified Telecommunication Services - 2.8% China Telecom Corp., Ltd., Class H (a) 6,016,000 2,357,185
Diversified Telecommunication Services Total 2,357,185
------------------------------------------------------------------------------
Wireless Telecommunication Services - 10.8% China Mobile Ltd. 1,476,500 5,197,207
China Unicom Ltd. (a) 2,056,000 2,641,248
Taiwan Cellular Corp. 1,330,000 1,288,000
Wireless Telecommunication Services Total 9,126,455
--------------
TELECOMMUNICATION SERVICES TOTAL 11,483,640
See notes to investment portfolio.
8
February 29, 2004 (unaudited)
Columbia Newport Greater China Fund
COMMON STOCKS - (CONTINUED)
UTILITIES - 12.3%
Shares Value ($)
- --------------------------------------------------------------------------------------------------------------------------------
Electric Utilities - 8.8% Beijing Datang Power Generation Co., Ltd. Class H 4,402,000 3,732,330
Huaneng Power International, Inc., Class H 1,948,000 3,666,170
Electric Utilities Total 7,398,500
------------------------------------------------------------------------------
Gas Utilities - 3.5% Hong Kong & China Gas Co., Ltd. 1,718,304 2,968,987
Gas Utilities Total 2,968,987
--------------
UTILITIES TOTAL 10,367,487
--------------
TOTAL COMMON STOCKS (COST OF $56,880,340) 80,301,067
SHORT-TERM OBLIGATION - 4.3% Par ($)
- --------------------------------------------------------------------------------------------------------------------------------
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 11/15/05, market value of
$3,759,009 (repurchase proceeds $3,680,285)
(cost of $3,680,000) 3,680,000 3,680,000
Total Investments - 99.3%
(cost of $60,560,340) (b) 83,981,067
Other Assets & Liabilities, Net - 0.7% 574,354
Net Assets - 100.0% 84,555,421
NOTES TO INVESTMENT PORTFOLIO:
(a) Non-income producing.
(b) Cost for both financial statement and federal income tax purposes is the
same.
See notes to financial statements.
9
STATEMENT OF ASSETS AND LIABILITIES
February 29, 2004 (unaudited)
Columbia Newport Greater China Fund
($)
- --------------------------------------------------------------------------------------------------------------------------------
Assets: Investments, at cost 60,560,340
Investments, at value 83,981,067
Cash 367
Foreign currency (cost of $54,816) 54,651
Receivable for:
Fund shares sold 886,539
Interest 285
Deferred Trustees' compensation plan 4,657
--------------
Total Assets 84,927,566
------------------------------------------------------------------------------
Liabilities: Expense reimbursement due to Investment Advisor 6,433
Payable for:
Fund shares repurchased 196,064
Investment advisory fee 59,463
Administration fee 15
Transfer agent fee 27,425
Pricing and bookkeeping fees 3,079
Trustees' fees 324
Registration fee 19,808
Distribution and service fees 27,267
Deferred Trustees' fees 4,657
Other liabilities 27,610
--------------
Total Liabilities 372,145
NET ASSETS 84,555,421
------------------------------------------------------------------------------
Composition of Net Assets: Paid-in capital 97,481,444
Overdistributed net investment income (323,770)
Accumulated net realized loss (36,022,815)
Net unrealized appreciation/depreciation on:
Investments 23,420,727
Foreign currency translations (165)
--------------
NET ASSETS 84,555,421
------------------------------------------------------------------------------
Class A: Net assets 54,527,764
Shares outstanding 2,404,217
Net asset value per share 22.68(a)
Maximum offering price per share ($22.68/0.9425) 24.06(b)
------------------------------------------------------------------------------
Class B: Net assets 12,013,599
Shares outstanding 539,729
Net asset value and offering price per share 22.26(a)
------------------------------------------------------------------------------
Class C: Net assets 11,041,689
Shares outstanding 489,123
Net asset value and offering price per share 22.57(a)
------------------------------------------------------------------------------
Class Z: Net assets 6,972,369
Shares outstanding 297,096
Net asset value, offering and redemption price per share 23.47(c)
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
(c) Redemption price per share is equal to net asset value less any applicable
redemption fee.
See notes to financial statements.
10
STATEMENT OF OPERATIONS
For the Six Months Ended February 29, 2004 (unaudited)
Columbia Newport Greater China Fund
($)
- -------------------------------------------------------------------------------------------------------------------------------
Investment Income: Dividends 422,941
Interest 13,264
--------------
Total Investment Income (net of foreign taxes
withheld of $2,793) 436,205
------------------------------------------------------------------------------
Expenses: Investment advisory fee 332,382
Administration fee 24,036
Distribution fee:
Class B 28,572
Class C 24,878
Service fee:
Class A 59,509
Class B 9,456
Class C 8,250
Transfer agent fee 93,086
Pricing and bookkeeping fees 14,644
Trustees' fee 3,820
Custody fee 25,335
Registration fee 45,527
Other expenses 32,593
--------------
Total Expenses 702,088
Custody earnings credit (119)
--------------
Net Expenses 701,969
--------------
Net Investment Loss (265,764)
------------------------------------------------------------------------------
Net Realized and Unrealized Net realized gain on:
Gain (Loss) on Investments Investments 2,325,098
and Foreign Currency: Foreign currency transactions 10,833
--------------
Net realized gain 2,335,931
Net change in unrealized appreciation/depreciation on:
Investments 14,154,239
Foreign currency translations (3,747)
--------------
Net change in unrealized appreciation/depreciation 14,150,492
Net Gain 16,486,423
--------------
Net Increase in Net Assets from Operations 16,220,659
See notes to financial statements.
11
STATEMENT OF CHANGES IN NET ASSETS
Columbia Newport Greater China Fund
(unaudited)
Six Months Year
Ended Ended
February 29, August 31,
Increase (Decrease) in Net Assets: 2004 ($) 2003 ($)
- --------------------------------------------------------------------------------------------------------------------------------
Operations: Net investment income (loss) (265,764) 342,542
Net realized gain on investments and foreign
currency transactions 2,335,931 1,801,272
Net change in unrealized appreciation/depreciation
on investments and foreign currency translations 14,150,492 8,355,746
------------- ------------
Net Increase from Operations 16,220,659 10,499,560
------------------------------------------------------------------------------
Distributions Declared to Shareholders: From net investment income:
Class A (271,209) (211,935)
Class Z (33,006) (4,185)
Total Distributions Declared to Shareholders (304,215) (216,120)
------------------------------------------------------------------------------
Share Transactions: Class A:
Subscriptions 8,897,696 42,825,644
Distributions reinvested 202,579 167,826
Redemptions (8,634,574) (41,932,214)
Redemption fees 949 --
------------- ------------
Net Increase 466,650 1,061,256
Class B:
Subscriptions 6,049,633 2,556,672
Redemptions (1,021,466) (2,218,990)
Redemption fees 171 --
------------- ------------
Net Increase 5,028,338 337,682
Class C:
Subscriptions 7,732,815 4,366,827
Redemptions (1,656,032) (3,463,081)
Redemption fees 155 --
------------- ------------
Net Increase 6,076,938 903,746
Class Z:
Subscriptions 4,509,671 5,991,931
Distributions reinvested 19,454 2,201
Redemptions (579,389) (4,470,220)
Redemption fees 101 5,884
------------- ------------
Net Increase 3,949,837 1,529,796
Net Increase from Share Transactions 15,521,763 3,832,480
Total Increase in Net Assets 31,438,207 14,115,920
See notes to financial statements.
12
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Columbia Newport Greater China Fund
(unaudited)
Six Months Year
Ended Ended
February 29, August 31,
2004 ($) 2003 ($)
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets: Beginning of period 53,117,214 39,001,294
End of period (including (overdistributed)
undistributed net investment income of
$(323,770) and $246,209, respectively) 84,555,421 53,117,214
------------------------------------------------------------------------------
Changes in Shares: Class A:
Subscriptions 441,602 3,071,717
Issued for distributions reinvested 10,373 11,869
Redemptions (434,595) (3,019,611)
------------- ------------
Net Increase 17,380 63,975
Class B:
Subscriptions 298,609 181,670
Redemptions (51,241) (163,897)
------------- ------------
Net Increase 247,368 17,773
Class C:
Subscriptions 386,786 311,576
Redemptions (84,320) (252,340)
------------- ------------
Net Increase 302,466 59,236
Class Z:
Subscriptions 216,260 415,808
Issued for distributions reinvested 963 155
Redemptions (27,974) (317,706)
------------- ------------
Net Increase 189,249 98,257
See notes to financial statements.
13
NOTES TO FINANCIAL STATEMENTS
February 29, 2004 (unaudited)
Columbia Newport Greater China Fund
NOTE 1. ORGANIZATION
Columbia Newport Greater China Fund (the "Fund"), a series of Columbia Funds
Trust II (the "Trust"), is a non-diversified portfolio. The Trust is a
Massachusetts business trust registered under the Investment Company Act of
1940, as amended, as an open-end management investment company.
INVESTMENT GOAL
The Fund seeks long-term growth of capital by investing primarily in equity
securities of companies located in the Greater China Region.
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
Greater China Fund to Columbia Newport Greater China Fund. Also on that date,
the Trust changed its name from Liberty Funds Trust II to Columbia Funds Trust
II.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America ("GAAP") requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies consistently followed
by the Fund in the preparation of its financial statements.
SECURITY VALUATION
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.
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 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.
14
February 29, 2004 (unaudited)
Columbia Newport Greater China 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
The tax character of distributions paid during the year ended August 31, 2003
was as follows:
Year Ended
August 31, 2003
===============
Ordinary income $216,120
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 $26,556,316
Unrealized depreciation (3,135,589)
===========================================================
Net unrealized appreciation $23,420,727
15
February 29, 2004 (unaudited)
Columbia Newport Greater China 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
===================================================
2007 $32,607,119
2008 703,958
2010 5,047,669
$38,358,746
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 0.95%
Next $500 million 0.90%
Over $1.5 billion 0.85%
Prior to November 1, 2003, Columbia was entitled to receive a monthly investment
advisory fee at the annual rate of 1.15% 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 1.00%.
ADMINISTRATION FEES
Columbia provides administrative and other services to the Fund. Effective
November 1, 2003, the Board of Trustees approved an administration fee reduction
for the Fund. As a result of the fee reduction, Columbia no longer receives fees
from the Fund for its administration services.
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 0.07%.
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
0.044%.
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 0.19%.
Underwriting Discounts, Service and Distribution Fees
Columbia Funds Distributor, Inc. (the "Distributor"), an 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
16
February 29, 2004 (unaudited)
Columbia Newport Greater China Fund
Liberty Funds Distributor, Inc. For the six months ended February 29, 2004, the
Distributor has retained net underwriting discounts of $46,224 on sales of the
Fund's Class A shares and received CDSC fees of $23, $4,781 and $2,805 on Class
A, Class B and Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan (the "Plan"), which requires the payment of a
monthly service fee to the Distributor at the annual rate of 0.25% of the
average daily net assets 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 1.90% 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 $21,714,805 and
$7,833,043, 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 $1,376.
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 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
17
February 29, 2004 (unaudited)
Columbia Newport Greater China Fund
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 Greater China Region,
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.
As a non-diversified fund, the Fund may invest a greater percentage of its total
assets in the securities of fewer issuers than a diversified fund. The Fund may,
therefore, have a greater risk of loss from a few issuers than a similar fund
that invests more broadly.
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.
18
FINANCIAL HIGHLIGHTS
Columbia Newport Greater China Fund
Selected data for a share outstanding throughout each period is as follows:
(unaudited)
Six Months
Ended
February 29, Year Ended August 31,
Class A Shares 2004 2003 (a) 2002 (a) 2001 (a) 2000 (a) 1999
=================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $ 17.88 $ 14.29 $ 14.91 $ 19.98 $ 13.94 $ 6.34
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (b) (0.06) 0.14 0.10 0.12 0.05 0.10
Net realized and unrealized gain (loss)
on investments and foreign currency 4.97 3.53 (0.57) (5.19) 5.99 7.58
------------ ------------ ------------ ------------ ------------ -----------
Total from Investment Operations 4.91 3.67 (0.47) (5.07) 6.04 7.68
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.11) (0.08) (0.15) -- -- (0.08)
- ---------------------------------------------------------------------------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added to paid-in-capital --(b)(c) -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 22.68 $ 17.88 $ 14.29 $ 14.91 $ 19.98 $ 13.94
Total return (d) 27.58%(e) 25.84%(f) (3.22)%(f) (25.38)%(f) 43.33%(f) 121.59%(f)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Operating expenses (g) 1.98%(h) 2.15% 2.15% 2.15% 2.15% 2.15%
Interest expense -- --(i) --(i) -- -- --
Expenses (g) 1.98%(h) 2.15% 2.15% 2.15% 2.15% 2.15%
Net investment income (loss) (g) (0.58)%(h) 0.97% 0.65% 0.68% 0.26% 0.92%
Waiver/reimbursement -- 0.37% 0.29% 0.21% 0.10% 0.30%
Portfolio turnover rate 12%(e) 33% 16% 14% 28% 20%
Net assets, end of period (000's) $ 54,528 $ 42,685 $ 33,201 $ 37,652 $ 64,722 $ 54,623
- ---------------------------------------------------------------------------------------------------------------------------------
(a) For the years ended August 31, 2003, 2002, 2001 and 2000, the Fund was
audited by Ernst & Young LLP. The previous year was audited by other
auditors.
(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) Not annualized.
(f) Had the Investment Advisor/Administrator not waived or reimbursed a portion
of expenses, total return would have been reduced.
(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%.
19
Columbia Newport Greater China Fund
Selected data for a share outstanding throughout each period is as follows:
(unaudited)
Six Months
Ended
February 29, Year Ended August 31,
Class B Shares 2004 2003 (a) 2002 (a) 2001 (a) 2000 (a) 1999
=================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $ 17.51 $ 14.02 $ 14.63 $ 19.75 $ 13.88 $ 6.34
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (b) (0.15) 0.04 (0.02) (0.01) (0.09) 0.02
Net realized and unrealized gain (loss)
on investments and foreign currency 4.90 3.45 (0.55) (5.11) 5.96 7.52
------------ ------------ ------------ ------------ ------------ -----------
Total from Investment Operations 4.75 3.49 (0.57) (5.12) 5.87 7.54
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income -- -- (0.04) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added to paid-in-capital --(b)(c) -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 22.26 $ 17.51 $ 14.02 $ 14.63 $ 19.75 $ 13.88
Total return (d) 27.13%(e) 24.89%(f) (3.93)%(f) (25.92)%(f) 42.29%(f) 118.93%(f)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Operating expenses (g) 2.73%(h) 2.90% 2.90% 2.90% 2.90% 2.90%
Interest expense -- --(i) --(i) -- -- --
Expenses (g) 2.73%(h) 2.90% 2.90% 2.90% 2.90% 2.90%
Net investment income (loss) (g) (1.54)%(h) 0.30% (0.10)% (0.07)% (0.49)% 0.17%
Waiver/reimbursement -- 0.37% 0.29% 0.21% 0.10% 0.30%
Portfolio turnover rate 12%(e) 33% 16% 14% 28% 20%
Net assets, end of period (000's) $ 12,014 $ 5,121 $ 3,850 $ 4,151 $ 6,335 $ 3,423
- ---------------------------------------------------------------------------------------------------------------------------------
(a) For the years ended August 31, 2003, 2002, 2001 and 2000, the Fund was
audited by Ernst & Young LLP. The previous year was audited by other
auditors.
(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) Not annualized.
(f) Had the Investment Advisor/Administrator not waived or reimbursed a portion
of expenses, total return would have been reduced.
(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%.
20
Columbia Newport Greater China Fund
Selected data for a share outstanding throughout each period is as follows:
(unaudited)
Six Months
Ended
February 29, Year Ended August 31,
Class C Shares 2004 2003 (a) 2002 (a) 2001 (a) 2000 (a) 1999
=================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $ 17.76 $ 14.22 $ 14.84 $ 20.03 $ 14.10 $ 6.32
- ---------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (b) (0.16) 0.05 (0.02) (0.01) (0.09) 0.02
Net realized and unrealized gain (loss)
on investments and foreign currency 4.97 3.49 (0.56) (5.18) 6.02 7.76
------------ ------------ ------------ ------------ ------------ -----------
Total from Investment Operations 4.81 3.54 (0.58) (5.19) 5.93 7.78
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income -- -- (0.04) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added to paid-in-capital --(b)(c) -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 22.57 $ 17.76 $ 14.22 $ 14.84 $ 20.03 $ 14.10
Total return (d) 27.08%(e) 24.89%(f) (3.94)%(f) (25.91)%(f) 42.06%(f) 123.10%(f)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Operating expenses (g) 2.73%(h) 2.90% 2.90% 2.90% 2.90% 2.90%
Interest expense -- --(i) --(i) -- -- --
Expenses (g) 2.73%(h) 2.90% 2.90% 2.90% 2.90% 2.90%
Net investment income (loss) (g) (1.64)%(h) 0.35% (0.10)% (0.07)% (0.49)% 0.17%
Waiver/reimbursement -- 0.37% 0.29% 0.21% 0.10% 0.30%
Portfolio turnover rate 12%(e) 33% 16% 14% 28% 20%
Net assets, end of period (000's) $ 11,042 $ 3,316 $ 1,812 $ 1,352 $ 1,296 $ 774
- ---------------------------------------------------------------------------------------------------------------------------------
(a) For the years ended August 31, 2003, 2002, 2001 and 2000, the Fund was
audited by Ernst & Young LLP. The previous year was audited by other
auditors.
(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) Not annualized.
(f) Had the Investment Advisor/Administrator not waived or reimbursed a portion
of expenses, total return would have been reduced.
(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%.
21
Columbia Newport Greater China Fund
Selected data for a share outstanding throughout each period is as follows:
(unaudited)
Six Months
Ended
February 29, Year Ended August 31,
Class Z Shares 2004 2003 (a) 2002 (a) 2001 (a) 2000 (a) 1999
=================================================================================================================================
NET ASSET VALUE, BEGINNING OF PERIOD $ 18.51 $ 14.41 $ 15.05 $ 20.11 $ 14.01 $ 6.38
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (loss) (b) (0.07) 0.11 0.14 0.16 0.09 0.13
Net realized and unrealized gain (loss)
on investments and foreign currency 5.19 4.10 (0.59) (5.22) 6.01 7.61
------------ ------------ ------------ ------------ ------------ -----------
Total from Investment Operations 5.12 4.21 (0.45) (5.06) 6.10 7.74
- ---------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment income (0.16) (0.12) (0.19) -- -- (0.11)
- ---------------------------------------------------------------------------------------------------------------------------------
REDEMPTION FEES:
Redemption fees added to paid-in-capital --(b)(c) 0.01 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 23.47 $ 18.51 $ 14.41 $ 15.05 $ 20.11 $ 14.01
Total return (d) 27.82%(e) 29.51%(f) (3.10)%(f) (25.16)%(f) 43.54%(f) 121.80%(f)
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Operating expenses (g) 1.73%(h) 1.90% 1.90% 1.90% 1.90% 1.90%
Interest expense -- --(i) --(i) -- -- --
Expenses (g) 1.73%(h) 1.90% 1.90% 1.90% 1.90% 1.90%
Net investment income (loss) (g) (0.71)%(h) 0.70% 0.90% 0.93% 0.51% 1.17%
Waiver/reimbursement -- 0.37% 0.29% 0.21% 0.10% 0.30%
Portfolio turnover rate 12%(e) 33% 16% 14% 28% 20%
Net assets, end of period (000's) $ 6,972 $ 1,996 $ 138 $ 145 $ 164 $ 112
- ---------------------------------------------------------------------------------------------------------------------------------
(a) For the years ended August 31, 2003, 2002, 2001 and 2000, the Fund was
audited by Ernst & Young LLP. The previous year was audited by other
auditors.
(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) Not annualized.
(f) Had the Investment Advisor/Administrator not waived or reimbursed a portion
of expenses, total return would have been reduced.
(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
IMPORTANT INFORMATION ABOUT THIS REPORT
Columbia Newport Greater China 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 Greater China
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.
23
Columbia Funds
Columbia Newport Greater China 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
24
Columbia Newport Greater China Fund
------------------------------------
Single State Tax Exempt Columbia California Tax-Exempt
Columbia Connecticut Intermediate
Municipal Bond
Columbia Connecticut Tax-Exempt
Columbia Florida Intermediate
Municipal Bond
Columbia Massachusetts Intermediate
Municipal Bond
Columbia Massachusetts Tax-Exempt
Columbia New Jersey Intermediate
Municipal Bond
Columbia New York Intermediate
Municipal Bond
Columbia New York Tax-Exempt
Columbia Oregon Municipal Bond
Columbia Pennsylvania Intermediate
Municipal Bond
Columbia Rhode Island Intermediate
Municipal Bond
------------------------------------
Money Market Columbia Money Market
Columbia Municipal Money Market
------------------------------------
International/Global Columbia Acorn International
Columbia Acorn International Select
Columbia Europe
Columbia Global Equity
Columbia International Stock
Columbia Newport Asia Pacific
Columbia Newport Greater China
Columbia Newport Tiger
------------------------------------
Index Funds Columbia Large Company Index
Columbia Small Company Index
Columbia U.S. Treasury Index
Please consider the investment objectives, risks, charges and expenses of a
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.
For complete product information on any Columbia fund, visit our website at
www.columbiafunds.com. Columbia Management Group and Columbia Management refer
collectively to the various investment advisory subsidiaries of Columbia
Management Group, including Columbia Management Advisors, Inc., the registered
investment advisor, and Columbia Funds Distributor, Inc.
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 Newport Greater China 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
736-03/323R-0204 (04/04) 04/0798
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 II
------------------------------------------------------------------
By (Signature and Title) /s/ J. Kevin Connaughton
------------------------------------------------------
J. Kevin Connaughton, President and Treasurer
Date May 6, 2004
--------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ J. Kevin Connaughton
------------------------------------------------------
J. Kevin Connaughton, President and Treasurer
Date May 6, 2004
--------------------------------------------------------------------------