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 811-6529
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Columbia Funds Trust VI
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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: 06/30/2004
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Date of reporting period: 06/30/2004
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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 SMALL CAP
VALUE FUND
Annual Report
June 30, 2004
[photo of man with puppy]
[LOGO]:
COLUMBIA FUNDS
A MEMBER OF COLUMBIA MANGEMENT GROUP
Table of Contents
Fund Profile 1
Performance Information 2
Economic Update 3
Portfolio Manager's Report 4
Investment Portfolio 6
Statement of Assets and Liabilities 14
Statement of Operations 15
Statement of Changes in Net Assets 16
Notes to Financial Statements 18
Financial Highlights 24
Report of Independent
Registered Public Accounting Firm 28
Unaudited Information 29
Trustees 30
Officers 32
Important Information
About This Report 33
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
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Columbia Small Cap Value 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
intends to deliver additional research and management capabilities, as well as
new products to you. There are no immediate changes planned for fund names or
customer service contacts.
As you might know, on March 15, 2004, FleetBoston Financial announced an
agreement in principle between Columbia Management Advisors, Inc. and Columbia
Funds Distributor, Inc. (collectively "Columbia Management") with the staff of
the Securities and Exchange Commission ("SEC") and the New York Attorney General
("NYAG") 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.) Under the agreements Columbia Management agreed, among other things, to
pay $70 million in disgorgement; $70 million in civil penalties and to reduce
mutual fund fees by $80 million over a five-year period. Please rest assured
that the settlement and all associated legal fees will be paid by Columbia
Management; not by the affected funds or their shareholders. The agreement
requires the final approval of the SEC and the NYAG.
We want you to know that all of the members of your fund's Board of Trustees are
independent of the fund's advisor and its affiliates. In addition, the board has
been energetic over the past year in strengthening its capacity to oversee the
Columbia funds. Recently, the Board of Trustees:
o APPOINTED AN INTERIM 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 DEDICATED
TO MONITORING 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 SENIOR EXECUTIVES OF THE ADVISOR FOR INVESTMENT
PERSONNEL AND BY A DESIGNATED COMMITTEE FOR THE BOARD).
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 during the period and the performance of your Columbia fund. These
discussions are 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.
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.
FUND PROFILE
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Columbia Small Cap Value 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 06/30/04 (%)
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MPS Group 1.0
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Consolidated Graphics 0.9
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Corn Products International 0.9
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Imagistics International 0.8
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MFC Bancorp 0.8
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PS Business Parks 0.8
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Kellwood 0.8
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Carpenter Technology 0.8
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Cash America International 0.8
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Harsco 0.8
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Top 5 sectors as of 06/30/04 (%)
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Financials 25.1
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Industrials 20.6
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Consumer discretionary 15.6
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Information technology 11.8
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Materials 8.7
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Sector breakdowns 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
06/30/2004.
[SIDE BAR DATA]:
Summary
o For the 12-month period ended June 30, 2004, the fund's class A shares
returned 38.58% without sales charge in an environment that was generally
favorable for stocks.
o Strong stock selection, especially within the health care and industrial
sectors, helped the fund beat both its benchmark, the Russell 2000 Value
Index, and its peer group, the Morningstar Small Value Category.
o A below-average stake in financials also helped the fund's relative
performance.
[2 arrows pointing up]:
Class A shares 38.58%
Russell 2000 Value Index 35.17%
OBJECTIVE
Seeks long-term growth by
investing primarily in smaller
capitalization equity securities
TOTAL NET ASSETS
$609.8 million
Morningstar style box
Style/Value // Size/Small
1
PERFORMANCE INFORMATION
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Columbia Small Cap Value Fund
Performance of a $10,000 investment
07/01/94 - 06/30/04 ($)
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sales charge without with
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Class A 39,171 36,918
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Class B 36,338 36,338
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Class C 35,766 35,766
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Class Z 40,104 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.
Value of a $10,000 investment 07/01/94 - 06/30/04
[MOUNTAIN CHART DATA]:
Class A shares Class A shares Russell 2000 S&P SmallCap S&P SmallCap 600/
without sales charge with sales charge Value Index 600 Index Barra Value Index
07/1994 $10,000 $ 9,425 $10,000 $10,000 $10,000
10,240 9,651 10,185 10,124 10,159
10,924 10,296 10,586 10,813 10,689
10,912 10,285 10,474 10,757 10,530
10,989 10,358 10,282 10,650 10,263
10,792 10,171 9,868 10,243 9,895
11,026 10,392 10,165 10,492 10,101
11,038 10,403 10,115 10,344 10,076
11,499 10,838 10,490 10,770 10,421
11,871 11,188 10,541 10,989 10,615
12,075 11,381 10,854 11,235 11,063
12,387 11,674 11,086 11,410 11,308
13,353 12,585 11,465 12,036 11,845
14,895 14,038 11,884 12,957 12,405
15,051 14,186 12,237 13,238 12,755
15,381 14,497 12,419 13,576 13,018
14,756 13,908 11,924 12,905 12,369
15,297 14,417 12,397 13,416 12,870
15,165 14,293 12,781 13,638 13,201
14,975 14,114 12,866 13,668 13,330
15,721 14,817 13,068 14,115 13,688
16,246 15,312 13,342 14,417 13,961
17,106 16,122 13,706 15,244 14,647
17,725 16,706 14,053 15,785 15,111
16,732 15,770 13,887 15,167 14,789
15,588 14,692 13,148 14,123 13,995
16,277 15,341 13,719 14,997 14,814
17,110 16,126 14,094 15,656 15,220
16,826 15,859 14,257 15,548 15,465
17,831 16,805 15,024 16,355 16,400
17,947 16,915 15,512 16,546 16,646
18,130 17,087 15,751 16,821 17,177
17,751 16,730 15,901 16,472 17,282
16,940 15,966 15,475 15,627 16,703
17,189 16,200 15,702 15,818 16,920
18,797 17,717 16,952 17,675 18,533
20,000 18,850 17,810 18,456 19,506
21,190 19,972 18,558 19,617 20,791
21,479 20,244 18,853 20,112 21,195
22,905 21,588 20,107 21,441 22,655
22,158 20,884 19,560 20,515 21,964
22,165 20,890 19,775 20,365 22,074
22,231 20,953 20,445 20,776 22,710
22,085 20,815 20,075 20,371 22,237
23,900 22,526 21,290 22,227 24,098
25,277 23,823 22,154 23,076 25,294
25,610 24,138 22,263 23,212 25,458
23,969 22,590 21,475 21,984 24,348
23,789 22,421 21,354 22,048 24,336
21,576 20,336 19,682 20,361 22,085
17,196 16,208 16,600 16,432 18,101
17,578 16,567 17,538 17,437 19,062
18,926 17,838 18,059 18,246 19,895
20,393 19,221 18,548 19,274 20,744
20,858 19,659 19,131 20,505 21,560
20,364 19,193 18,696 20,247 21,312
18,285 17,233 17,420 18,423 19,577
17,957 16,925 17,277 18,660 19,501
19,320 18,209 18,854 19,894 21,199
19,987 18,838 19,433 20,377 22,047
21,106 19,893 20,136 21,537 23,383
21,015 19,807 19,659 21,347 23,018
19,715 18,581 18,940 20,408 22,052
19,604 18,477 18,561 20,494 21,648
19,736 18,601 18,190 20,442 21,146
20,339 19,170 18,284 21,297 21,620
21,716 20,468 18,845 23,047 22,212
20,563 19,381 18,352 22,333 21,075
21,515 20,278 19,473 25,323 22,027
22,120 20,848 19,565 24,386 22,840
22,253 20,973 19,680 23,969 23,000
21,690 20,443 19,379 23,260 22,625
22,635 21,334 19,945 24,634 23,274
22,810 21,498 20,609 24,031 23,733
24,666 23,248 21,530 26,160 25,119
24,854 23,425 21,407 25,449 25,069
24,874 23,443 21,330 25,609 25,191
23,003 21,681 20,895 22,943 23,526
25,835 24,349 23,139 25,770 26,846
25,763 24,281 23,778 26,875 28,972
24,966 23,531 23,745 25,236 27,749
24,432 23,027 23,365 24,077 26,595
26,040 24,543 24,447 25,912 28,199
26,938 25,389 25,075 26,407 28,918
27,135 25,575 26,083 27,373 30,025
27,127 25,567 25,499 26,916 29,743
26,636 25,104 25,409 26,303 29,264
23,495 22,144 22,604 22,747 25,074
24,045 22,663 23,194 23,959 26,220
25,716 24,238 24,862 25,713 28,317
27,612 26,024 26,383 27,453 30,362
27,788 26,190 26,734 27,692 30,929
28,258 26,633 26,897 27,216 30,796
30,312 28,569 28,909 29,366 33,473
30,928 29,149 29,927 30,197 34,842
29,873 28,155 28,936 28,947 33,521
28,881 27,221 28,297 27,450 32,023
25,358 23,900 24,092 23,574 26,816
25,819 24,335 23,986 23,798 26,781
24,058 22,675 22,273 22,342 24,810
24,540 23,128 22,607 23,057 25,309
26,439 24,919 24,411 24,258 26,675
25,691 24,213 23,369 23,438 25,968
24,935 23,502 22,710 22,632 24,896
23,656 22,296 21,947 21,908 23,975
23,701 22,338 22,182 22,081 23,900
25,528 24,061 24,289 23,874 26,063
27,645 26,055 26,769 25,798 28,492
28,256 26,631 27,221 26,469 29,339
29,750 28,040 28,580 27,845 30,773
31,110 29,321 29,666 29,201 32,253
30,796 29,025 29,325 28,343 31,196
33,309 31,394 31,715 30,800 33,975
34,631 32,640 32,932 31,964 35,378
35,819 33,759 34,125 32,530 36,369
37,108 34,975 35,305 33,467 37,238
37,721 35,552 35,990 34,109 38,121
38,471 36,259 36,487 34,553 38,788
36,883 34,762 34,601 33,406 37,360
37,115 34,981 35,019 33,917 37,827
06/2004 39,171 36,918 36,796 35,790 39,915
On October 13, 2003, the fund's primary benchmark was changed to the Russell
2000 Value Index from the S&P SmallCap 600 Index and the S&P SmallCap 600/Barra
Value Index. The graph and table do not reflect the deduction of taxes a
shareholder would pay on fund distributions or the redemption of fund shares.
The Russell 2000 Value Index measures the performance of those Russell 2000
companies with lower price-to-book ratios and lower forecasted growth values.
The Standard & Poor's (S&P) SmallCap 600/Barra Value Index is an unmanaged index
that tracks the performance of value stocks contained in the S&P SmallCap 600
Index, as determined by their low price to book ratios. The Standard & Poor's
(S&P) SmallCap 600 Index is an unmanaged index that tracks the performance of
600 domestic companies traded on the New York Stock Exchange, the American Stock
Exchange and NASDAQ. The S&P SmallCap 600 is heavily weighted with the stocks of
companies with small market capitalizations. Unlike mutual funds, 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 06/30/04 (%)
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Share class A B C Z
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Inception 07/25/86 11/09/92 01/15/96 07/31/95
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Sales charge without with without with without with without
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1-year 38.58 30.62 37.58 32.58 37.56 36.56 38.94
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5-year 13.15 11.82 12.29 12.03 12.29 12.29 13.45
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10-year 14.63 13.95 13.77 13.77 13.59 13.59 14.90
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The "with sales charge" returns include the maximum initial sales charge of
5.75% for class A shares, maximum CDSC of 5.00% for class B shares and 1.00% for
class C shares for the first year only.
All results shown assume reinvestment of distributions. Class Z shares are sold
at net asset value with no Rule 12b-1 fees. Performance for different share
classes will vary based on differences in sales charges and fees associated with
each class.
Performance results reflect any voluntary waivers or reimbursement of fund
expenses by the advisor or its affiliates. Absent these waivers or reimbursement
arrangements, performance results would have been lower.
Class C and class Z are newer classes of shares. Class C share performance
information includes returns of the fund's class B shares for periods prior to
the inception of class C shares. Class B shares would have substantially similar
annual returns because class B and class C shares generally have similar expense
structures. Class Z share performance information includes returns of the fund's
class A shares (the oldest existing fund class) for periods prior to the
inception of the newer class shares. These returns have not been adjusted to
reflect any difference in expenses (such as Rule 12b-1 fees) between any of the
predecessor shares and the newer classes of shares. Had the expense differential
been reflected, the returns for the periods prior to the inception of the newer
class shares would have been different. Class A shares were initially offered on
July 25, 1986, class B shares were initially offered on November 9, 1992, class
C shares were initially offered on January 15, 1996 and class Z shares were
initially offered on July 31, 1995.
2
ECONOMIC UPDATE
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Columbia Small Cap Value Fund
The US economy staged a solid recovery during the 12-month period that began
July 1, 2003 and ended June 30, 2004. The growth rate for the US gross domestic
product (GDP) averaged more than 4.5% during the period--on par with the highest
annualized pace it has experienced in two decades.
Although consumer confidence wavered when the number of new jobs was well below
expectations in January and February 2004, it moved generally higher throughout
the period. Consumers continued to account for most of the economy's gains.
Consumer spending rose as a sizeable package of tax cuts (implemented in 2003)
gave disposable income a boost. As a result, retail sales and the housing market
showed steady gains. Low interest rates fueled mortgage refinancing activity,
which tapered off in the final quarter of the 12-month period. Relatively low
mortgage rates provided an additional boost to the housing market.
After months of disappointing reports on the number and quality of new jobs
added to the labor market, doubts surfaced early in 2004 about the economy's
ability to sustain its forward momentum. However, these concerns dissipated when
more than a million new jobs were added between March and June. With the last
remaining weak spot in the recovery--the employment picture--on the mend, the
economy appeared to be on solid ground.
The business sector also bounced back during the period. Industrial production
turned higher in September 2003, and factories utilized more of their capacity
as the period wore on. Business spending on technology rose. In 2004, spending
on capital equipment also picked up.
US STOCKS OUTPERFORMED BONDS
The US stock market snapped a three-year losing streak in 2003. However, stocks
gave back some of their gains in 2004. Concerns about geopolitical factors,
higher interest rates and the impact of the forthcoming presidential election
sidelined investors as the period wore on. The S&P 500 Index returned 19.11%
during this reporting period. Late in the period, the market's leadership passed
from small-cap stocks, which were strong performers early in the period, to
large-cap stocks. Value stocks edged out growth stocks. But as the stock market
lost ground near the end of the period, growth stocks generally held up better
than value stocks.
BONDS REFLECTED THE ECONOMIC NEWS
The US bond market began the period with respectable gains, as yields drifted
generally lower for the first seven months of the period. However, yields rose
sharply and bonds gave back nearly all of their early gains as the economy
strengthened and the employment picture brightened. Investors began to
anticipate a shift in the Federal Reserve Board's policy on the key short-term
interest rates it controls. On the last day of the period, the Fed raised the
federal funds rate from 1.00% to 1.25%. In this environment, the Lehman Brothers
Aggregate Bond Index, a broad measure of investment grade bond market
performance, returned 0.32%.
The strong economy was more good news than bad for the high yield bond sector,
which historically has been less vulnerable to the threat of higher interest
rates than other fixed income sectors. High yield bonds led the fixed income
markets. However, most of the sector's gains came in the first half of the
period.
[SIDE BAR DATA]:
Summary
For the 12-month period ended June 30, 2004
o As the economy strengthened and corporations reported higher profits, stock
prices rose for all segments of the stock market, as measured by the S&P
500 Index and the broader Russell 3000 Index. But many sectors retreated in
the final months of the period as interest rates moved higher.
[2 arrows pointing up]:
S&P 500 Index 19.11%
Russell 3000 Index 20.46%
o The investment grade bond market eked out a positive return as interest
rates soared in April and May before settling back somewhat in June. The
Lehman Brothers Aggregate Bond Index returned 0.32%. High yield bonds,
which can be less sensitive to changing interest rates, fared better. The
Merrill Lynch US High Yield, Cash Pay Index returned 9.97%.
[2 arrows pointing up]:
Lehman Index 0.32%
Merrill Lynch Index 9.97%
The S&P 500 Index is an unmanaged index that tracks the performance of 500
widely held, large capitalization US stocks.
The Russell 3000 Index is an unmanaged index that tracks the performance of the
3,000 largest US companies based on total market capitalization.
The Lehman Brothers Aggregate Bond Index is a market value-weighted index that
tracks fixed-rate, publicly placed, dollar-denominated, and non-convertible
investment grade debt issues.
The Merrill Lynch US High Yield, Cash Pay Index is an unmanaged index that
tracks the performance of non-investment-grade corporate bonds.
3
PORTFOLIO MANAGER'S REPORT
- --------------------------------------------------------------------------------
Columbia Small Cap Value Fund
For the 12-month period ended June 30, 2004, Columbia Small Cap Value Fund class
A shares returned 38.58% without sales charge. The fund outpaced its benchmark,
the Russell 2000 Value Index, which returned 35.17%. The fund also did better
than its peer group, the Morningstar Small Value Category, which averaged a
33.95% return over the same period.1 Strong stock picking in the health care,
industrial and financial sectors, as well as a below-average stake in
financials, helped the fund come out ahead.
STRATEGY STAYS THE SAME, EVEN AS MARKET CONDITIONS CHANGE
We continued to focus on identifying companies which we believe have strong
competitive and financial positions, good earnings growth prospects and
reasonable stock valuations. This strategy worked especially well in the second
half of 2003 as optimism about the economy and Iraq conflict propelled stocks
sharply higher. The market's momentum slowed in the first half of 2004 amid
growing geopolitical and economic uncertainty. Even in this more challenging
environment, small-cap stocks continued to outperform large-cap securities.
HEALTH CARE AND INDUSTRIALS PRODUCED STRONGEST RETURNS
The fund's modest investment in the health care sector produced outsized gains.
Standouts included nursing homes and other non-hospital and specialty facilities
companies, an oncology practice that was bought out at a premium during the
period, and a funeral home chain. The fund also owned a contact lens
manufacturer that was a strong performer. Our decision to avoid biotechnology
and more expensive pharmaceutical stocks that did not meet our quality and
valuation criteria were also beneficial to performance. These industries were
weak performers within the health care sector.
Industrial stocks rallied nicely as the economy improved. The fund owned shares
of machinery and equipment, transportation, business services, construction and
security services companies, which produced strong gains. Financial stocks also
bolstered the fund's return. As concerns about rising interest rates dampened
enthusiasm for the financial sector, the fund was rewarded for its positioning
within the group. We benefited from a below-average stake relative to our
benchmark index, as well as strong stock selection among banks, insurance and
specialty finance companies. Avoiding interest rate sensitive thrifts and real
estate investment trusts, which were among the worst performers in the group,
also contributed to the fund's solid return.
1 (C)2004, Morningstar, Inc. All rights reserved. The information contained
herein is the proprietary information of Morningstar, Inc., may not be
copied or redistributed for any purpose and may only be used for
noncommercial, personal purposes. The information contained herein is not
represented or warranted to be accurate, correct, complete or timely.
Morningstar, Inc. shall not be responsible for investment decisions,
damages or other losses resulting from the use of this information. Past
performance is no guarantee of future performance. Morningstar, Inc. has
not granted consent for it to be considered or deemed an "expert" under the
Securities Act of 1933.
[SIDE BAR DATA]:
Net asset value per share
as of 06/30/04 ($)
- -----------------------------------
Class A 42.17
- -----------------------------------
Class B 37.60
- -----------------------------------
Class C 39.05
- -----------------------------------
Class Z 43.41
- -----------------------------------
Distributions declared per share
as of 07/01/03 - 06/30/04 ($)
- -----------------------------------
Class A 1.18
- -----------------------------------
Class B 1.04
- -----------------------------------
Class C 1.04
- -----------------------------------
Class Z 1.23
- -----------------------------------
4
- --------------------------------------------------------------------------------
Columbia Small Cap Value Fund
INVESTORS' BIAS TOWARD EXPENSIVE, MOMENTUM-DRIVEN STOCKS
HINDERED RETURNS
The fund lost some ground as our decision to focus on reasonably-priced stocks
in the consumer discretionary sector ran counter to the market's preference for
more expensively-priced stocks with the best earnings and revenue growth.
Returns on our investments in restaurants, specialty retailers, and
manufacturers of apparel, shoes, toys and leisure products were slightly below
average for the consumer discretionary sector as a whole. In the technology
sector, we owned a mix of software and hardware names, but again avoided
momentum-driven stocks with expensive valuations. While the fund's tech returns
were slightly lower than the sector average, they were still quite strong.
MORE VOLATILITY EXPECTED IN SECOND HALF OF `04
Caught in a tug of war between positive earnings growth and worries about rising
interest rates, inflation, the progress of the economic recovery and global
tensions, we think the market is likely to remain choppy for the remainder of
the year. Regardless of market conditions, our focus will remain on reasonably
valued small-cap stocks of companies with strong balance sheets and good
management. We plan to maintain a bias toward economically sensitive companies
as long as these sectors do not become expensive relative to other
opportunities.
[PHOTO OF Stephen Barbaro]
Stephen Barbaro has managed the Columbia Small Cap Value Fund since June 2002
and has been with the advisor and its predecessors since 1976.
/s/ Stephen Barbaro
Investments in small-cap companies may be subject to greater volatility and
price fluctuations because they may be thinly traded and less liquid than
investments in larger companies.
[Sidebar]:
Caught in a tug of war between positive earnings growth and worries about
economic factors and global tensions, we think the market is likely to remain
choppy.
5
INVESTMENT PORTFOLIO
- --------------------------------------------------------------------------------
June 30, 2004 Columbia Small Cap Value Fund
Common Stocks - 99.4%
CONSUMER DISCRETIONARY - 15.6%
Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
Auto Components - 1.1% BorgWarner, Inc. 72,900 3,190,833
Modine Manufacturing Co. 55,743 1,775,415
Standard Motor Products, Inc. 127,500 1,878,075
Auto Components Total 6,844,323
-----------------------------------------------------------------------------
Distributors - 0.1% Brightpoint, Inc. (a) 39,200 539,000
Distributors Total 539,000
-----------------------------------------------------------------------------
Hotels, Restaurants & Leisure - 4.0% Bally Total Fitness Holding Corp. (a) 234,900 1,174,500
Bob Evans Farms, Inc. 70,050 1,917,969
Buca, Inc. (a) 297,950 1,588,074
Dave & Buster's, Inc. (a) 149,000 2,799,710
Landry's Restaurants, Inc. 122,800 3,670,492
Lone Star Steakhouse & Saloon 164,207 4,464,788
Marcus Corp. 153,600 2,649,600
Prime Hospitality Corp. (a) 202,100 2,146,302
Scientific Games Corp., Class A (a) 222,400 4,256,736
Hotels, Restaurants & Leisure Total 24,668,171
-----------------------------------------------------------------------------
Household Durables - 1.4% American Greetings Corp. (a) 90,600 2,100,108
CSS Industries, Inc. 76,700 2,687,568
Kimball International, Inc., Class B 165,134 2,435,726
Russ Berrie & Co., Inc. 52,300 1,016,189
Household Durables Total 8,239,591
-----------------------------------------------------------------------------
Leisure Equipment & Products - 1.0% Action Performance Companies, Inc. 185,100 2,789,457
Jakks Pacific, Inc. (a) 157,588 3,276,255
Travis Boats & Motors, Inc. (a) 174,975 131,231
Leisure Equipment & Products Total 6,196,943
-----------------------------------------------------------------------------
Media - 2.8% 4Kids Entertainment, Inc. (a) 145,500 3,480,360
Alliance Atlantis Communications, Inc. (a) 196,630 3,618,189
Catalina Marketing Corp. (a) 109,500 2,002,755
Journal Communications, Inc., Class A 97,800 1,841,574
Liberty Corp. 70,300 3,300,585
Media General, Inc. 41,300 2,652,286
Media Total 16,895,749
-----------------------------------------------------------------------------
Multiline Retail - 0.5% BJ's Wholesale Club, Inc. (a) 66,400 1,660,000
ShopKo Stores, Inc. (a) 110,200 1,558,228
Multiline Retail Total 3,218,228
-----------------------------------------------------------------------------
Specialty Retail - 2.5% Building Material Holding Corp. 73,643 1,394,062
Compucom Systems, Inc. (a) 357,900 1,624,866
GameStop Corp., Class A (a) 143,600 2,185,592
Goody's Family Clothing, Inc. 212,481 2,203,428
Monro Muffler, Inc. (a) 161,106 3,908,432
Movie Gallery, Inc. 52,178 1,020,080
Rent-Way, Inc. (a) 176,200 1,585,800
TBC Corp. (a) 44,521 1,059,600
Specialty Retail Total 14,981,860
-----------------------------------------------------------------------------
See notes to investment portfolio.
6
- --------------------------------------------------------------------------------
June 30, 2004
Columbia Small Cap Value Fund
Common Stocks - (continued)
CONSUMER DISCRETIONARY - (continued)
Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
Textiles, Apparel & Luxury Goods - 2.2% Culp, Inc. (a) 20,400 158,712
Delta Apparel, Inc. 49,500 1,205,325
Hampshire Group Ltd. (a) 85,100 2,467,049
Kellwood Co. 109,550 4,770,902
Russell Corp. 120,700 2,167,772
Stride Rite Corp. 151,300 1,668,839
Tandy Brands Accessories, Inc. 81,953 1,106,365
Textiles, Apparel & Luxury Goods Total 13,544,964
-----------
CONSUMER DISCRETIONARY TOTAL 95,128,829
CONSUMER STAPLES - 2.2%
- ------------------------------------------ -----------------------------------------------------------------------------
Food & Staples Retailing - 0.2% Winn-Dixie Stores, Inc. 168,600 1,213,920
Food & Staples Retailing Total 1,213,920
-----------------------------------------------------------------------------
Food Products - 2.0% Central Garden & Pet Co. (a) 67,790 2,424,848
Corn Products International, Inc. 121,200 5,641,860
John B. Sanfilippo & Son, Inc. (a) 36,800 983,296
M&F Worldwide Corp. (a) 127,200 1,742,640
Omega Protein Corp. (a) 171,100 1,659,670
Food Products Total 12,452,314
-----------
CONSUMER STAPLES TOTAL 13,666,234
ENERGY - 5.6%
- ------------------------------------------ -----------------------------------------------------------------------------
Energy Equipment & Services - 1.6% Lufkin Industries, Inc. 97,839 3,128,891
Universal Compression Holdings, Inc. (a) 85,700 2,629,276
Willbros Group, Inc. (a) 262,500 3,955,875
Energy Equipment & Services Total 9,714,042
-----------------------------------------------------------------------------
Oil & Gas - 4.0% Atlas America, Inc. (a) 30,800 616,308
Carrizo Oil & Gas, Inc. (a) 270,800 2,764,868
Cimarex Energy Co. (a) 46,600 1,408,718
Energy Partners Ltd. (a) 145,000 2,218,500
Harvest Natural Resources, Inc. (a) 214,200 3,193,722
Magnum Hunter Resources, Inc. (a) 240,600 2,497,428
Range Resources Corp. 151,000 2,204,600
Stone Energy Corp. (a) 85,100 3,887,368
Western Gas Resources, Inc. 124,700 4,050,256
Whiting Petroleum Corp. (a) 65,500 1,647,325
Oil & Gas Total 24,489,093
-----------
ENERGY TOTAL 34,203,135
FINANCIALS - 25.1%
- ------------------------------------------ -----------------------------------------------------------------------------
Capital Markets - 0.2% LaBranche & Co., Inc. (a) 139,500 1,174,590
Capital Markets Total 1,174,590
-----------------------------------------------------------------------------
Commercial Banks - 11.2% BancFirst Corp. 15,250 911,188
BancorpSouth, Inc. 113,700 2,561,661
BancTrust Financial Group, Inc. 77,900 1,364,808
Bank of Granite Corp. 109,193 2,283,226
Bryn Mawr Bank Corp. 134,210 3,053,277
See notes to investment portfolio.
7
- --------------------------------------------------------------------------------
June 30, 2004
Columbia Small Cap Value Fund
Common Stocks - (continued)
FINANCIALS - (continued)
Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
Commercial Banks - (continued) Capitol Bancorp Ltd. 116,279 3,024,417
Chemical Financial Corp. 108,580 4,005,516
Chittenden Corp. 123,900 4,355,085
Columbia Banking Systems, Inc. 73,200 1,625,040
Community Trust Bancorp, Inc. 66,777 2,036,698
Corus Bankshares, Inc. 101,500 4,172,665
First Citizens BancShares, Inc. 17,300 2,110,600
First Financial Bankshares, Inc. 55,400 2,322,922
Greater Bay Bancorp 88,000 2,543,200
Hancock Holding Co. 50,988 1,481,711
ITLA Capital Corp. (a) 3,000 121,710
MainSource Financial Group, Inc. 29,639 601,672
MASSBANK Corp. 36,900 1,277,109
Merchants Bancshares, Inc. 88,032 2,310,840
Mid-State Bancshares 156,360 3,676,024
Northrim BanCorp, Inc. 80,500 1,628,515
Omega Financial Corp. 18,737 645,115
Riggs National Corp. 173,496 3,664,236
S.Y. Bancorp, Inc. 16,700 390,947
Sterling Bancshares, Inc. 249,900 3,546,081
TriCo Bancshares 222,230 4,200,147
UMB Financial Corp. 64,600 3,334,652
Whitney Holding Corp. 64,100 2,863,347
Wintrust Financial Corp. 47,700 2,409,327
Commerical Banks Total 68,521,736
-----------------------------------------------------------------------------
Consumer Finance - 0.8% Cash America International, Inc. 203,300 4,675,900
Consumer Finance Total 4,675,900
-----------------------------------------------------------------------------
Diversified Financial Services - 1.3% Metris Companies, Inc. (a) 334,100 2,903,329
MFC Bancorp Ltd. (a) 269,070 5,002,011
Diversified Financial Services Total 7,905,340
-----------------------------------------------------------------------------
Insurance - 5.1% AmerUs Group Co. 44,000 1,821,600
CNA Surety Corp. (a) 173,200 1,896,540
Commerce Group, Inc. 55,300 2,730,161
Delphi Financial Group, Inc., Class A 98,202 4,369,989
Harleysville Group, Inc. 134,100 2,527,785
Horace Mann Educators Corp. 131,600 2,300,368
Kansas City Life Insurance Co. 13,000 547,170
Navigators Group, Inc. (a) 54,400 1,571,616
Phoenix Companies, Inc. 278,900 3,416,525
ProCentury Corp. (a) 185,500 1,804,915
Quanta Capital Holdings Ltd. (a) 217,200 2,332,728
RLI Corp. 81,100 2,960,150
UICI (a) 38,800 923,828
United National Group Ltd., Class A (a) 51,400 776,654
Universal American Financial Corp. (a) 113,994 1,251,654
Insurance Total 31,231,683
-----------------------------------------------------------------------------
See notes to investment portfolio.
8
- --------------------------------------------------------------------------------
June 30, 2004
Columbia Small Cap Value Fund
Common Stocks - (continued)
FINANCIALS - (continued)
Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
Real Estate - 6.5% Alexandria Real Estate Equities, Inc. 58,600 3,327,308
American Financial Realty Trust, REIT 134,500 1,922,005
Boykin Lodging Co., REIT (a) 222,900 1,705,185
Brandywine Realty Trust 87,200 2,370,968
EastGroup Properties, Inc., REIT 101,300 3,410,771
Equity One, Inc., REIT 130,800 2,364,864
First Potomac Realty Trust, REIT 118,200 2,265,894
Getty Realty Corp. 87,200 2,193,952
Gladstone Commercial Corp. 105,000 1,732,500
Mid-America Apartment Communities, Inc., REIT 102,400 3,879,936
Nationwide Health Properties, Inc., REIT 173,700 3,282,930
PS Business Parks, Inc., REIT 123,200 4,957,568
Tanger Factory Outlet Centers, Inc., REIT 60,600 2,369,460
Universal Health Realty Income Trust, REIT 58,100 1,667,470
Urstadt Biddle Properties, REIT 127,900 1,894,199
Real Estate Total 39,345,010
-----------
FINANCIALS TOTAL 152,854,259
HEALTH CARE - 5.4%
- ------------------------------------------ -----------------------------------------------------------------------------
Health Care Equipment & Supplies - 1.1% Analogic Corp. 59,500 2,524,585
Ocular Sciences, Inc. (a) 82,000 3,116,000
Sola International, Inc. (a) 79,800 1,374,954
Health Care Equipment & Supplies Total 7,015,539
-----------------------------------------------------------------------------
Health Care Providers & Services - 4.3% Capital Senior Living Corp. (a) 59,500 286,195
Chronimed, Inc. (a) 176,000 1,434,400
Cross Country Healthcare, Inc. (a) 126,400 2,294,160
Genesis HealthCare Corp. (a) 68,950 2,002,308
Hooper Holmes, Inc. 242,300 1,390,802
Kindred Healthcare, Inc. (a) 147,400 3,883,990
Orthodontic Centers Of America, Inc. (a) 259,400 2,124,486
PAREXEL International Corp. (a) 162,300 3,213,540
Pediatrix Medical Group, Inc. (a) 63,600 4,442,460
Province Healthcare Co. (a) 88,300 1,514,345
Stewart Enterprises, Inc. (a) 414,296 3,372,369
Health Care Providers & Services Total 25,959,055
-----------
HEALTH CARE TOTAL 32,974,594
INDUSTRIALS - 20.6%
- ------------------------------------------ -----------------------------------------------------------------------------
Aerospace & Defense - 2.8% AAR Corp. (a) 184,902 2,098,638
Armor Holdings, Inc. (a) 34,500 1,173,000
Esterline Technologies Corp. (a) 127,500 3,765,075
Herley Industries, Inc. (a) 92,800 1,813,312
Kaman Corp., Class A 156,000 2,182,440
Ladish Co., Inc. (a) 196,538 1,670,573
Precision Castparts Corp. 75,800 4,145,502
Aerospace & Defense Total 16,848,540
-----------------------------------------------------------------------------
Air Freight & Logistics - 0.9% HUB Group, Inc., Class A (a) 93,971 3,204,411
Ryder System, Inc. 60,100 2,408,207
Air Freight & Logisitics Total 5,612,618
-----------------------------------------------------------------------------
See notes to investment portfolio.
9
- --------------------------------------------------------------------------------
June 30, 2004
Columbia Small Cap Value Fund
Common Stocks - (continued)
INDUSTRIALS - (continued)
Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
Airlines - 0.7% Atlantic Coast Airlines Holdings, Inc. (a) 115,206 661,282
MAIR Holdings, Inc. (a) 104,924 856,180
Skywest, Inc. 137,800 2,399,098
Airlines Total 3,916,560
-----------------------------------------------------------------------------
Building Products - 2.1% Hughes Supply, Inc. 68,681 4,047,371
Jacuzzi Brands, Inc. (a) 152,240 1,227,054
NCI Building Systems, Inc. (a) 100,400 3,268,020
Watsco, Inc. 152,600 4,283,482
Building Products Total 12,825,927
-----------------------------------------------------------------------------
Commercial Services & Supplies - 5.9% ABM Industries, Inc. 127,200 2,476,584
ActivCard Corp. (a) 213,400 1,549,284
Angelica Corp. 72,200 1,812,942
Casella Waste Systems, Inc. (a) 291,190 3,829,148
Century Business Services, Inc. (a) 174,605 761,278
Consolidated Graphics, Inc. (a) 129,600 5,708,880
Danka Business Systems PLC, ADR (a) 191,080 863,682
Electro Rent Corp. (a) 56,881 595,544
First Consulting Group, Inc. (a) 130,103 718,169
Healthcare Services Group, Inc. 165,800 2,536,740
Imagistics International, Inc. (a) 143,300 5,072,820
Lightbridge, Inc. (a) 208,400 1,167,040
NCO Group, Inc. (a) 87,900 2,346,051
Sourcecorp, Inc. (a) 87,800 2,416,256
TeleTech Holdings, Inc. (a) 215,600 1,890,812
United Rentals, Inc. (a) 119,100 2,130,699
Commerical Services & Supplies Total 35,875,929
-----------------------------------------------------------------------------
Construction & Engineering - 1.2% Comfort Systems USA, Inc. (a) 294,400 1,881,216
EMCOR Group, Inc. (a) 42,200 1,855,956
MasTec, Inc. (a) 52,900 287,247
Quanta Services, Inc. (a) 87,700 545,494
Washington Group International, Inc. (a) 82,600 2,964,514
Construction & Engineering Total 7,534,427
-----------------------------------------------------------------------------
Electrical Equipment - 1.5% C&D Technologies, Inc. 127,000 2,264,410
Genlyte Group, Inc. (a) 48,818 3,069,676
Powell Industries, Inc. (a) 17,400 297,192
Woodward Governor Co. 48,100 3,468,491
Electrical Equipment Total 9,099,769
-----------------------------------------------------------------------------
Machinery - 4.2% Alamo Group, Inc. 61,800 982,620
Briggs & Stratton Corp. 45,000 3,975,750
EnPro Industries, Inc. (a) 139,600 3,208,008
Harsco Corp. 98,600 4,634,200
Kadant, Inc. (a) 128,600 2,974,518
Robbins & Myers, Inc. 119,035 2,672,336
Stewart & Stevenson Services, Inc. 181,600 3,254,272
Tecumseh Products Co. 59,412 2,447,180
UNOVA, Inc. (a) 72,100 1,460,025
Machinery Total 25,608,909
-----------------------------------------------------------------------------
See notes to investment portfolio.
10
- --------------------------------------------------------------------------------
June 30, 2004
Columbia Small Cap Value Fund
Common Stocks - (continued)
INDUSTRIALS - (continued)
Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
Road & Rail - 1.3% Covenant Transport, Inc. (a) 99,400 1,698,746
Dollar Thrifty Automotive Group, Inc. (a) 86,800 2,381,792
U.S. Xpress Enterprises, Inc., Class A (a) 59,583 937,241
Werner Enterprises, Inc. 146,800 3,097,480
Road & Rail Total 8,115,259
-----------
INDUSTRIALS TOTAL 125,437,938
INFORMATION TECHNOLOGY - 11.8%
- ------------------------------------------ -----------------------------------------------------------------------------
Communications Equipment - 1.4% Anaren, Inc. (a) 176,500 2,884,010
Black Box Corp. 53,400 2,523,684
Cable Design Technologies Corp. (a) 168,700 1,788,220
Tollgrade Communications, Inc. (a) 140,510 1,492,216
Communications Equipment Total 8,688,130
-----------------------------------------------------------------------------
Computers & Peripherals - 1.7% Advanced Digital Information Corp. (a) 39,500 383,150
Electronics for Imaging, Inc. (a) 90,700 2,563,182
Hutchinson Technology, Inc. (a) 77,100 1,895,889
Hypercom Corp. (a) 252,600 2,134,470
Imation Corp. 24,800 1,056,728
Innovex, Inc. (a) 167,300 764,561
Intergraph Corp. (a) 51,600 1,334,376
Computers & Peripherals Total 10,132,356
-----------------------------------------------------------------------------
Electronic Equipment & Instruments - 2.8% Anixter International, Inc. 54,200 1,844,426
Benchmark Electronics, Inc. (a) 71,150 2,070,465
Checkpoint Systems, Inc. (a) 133,900 2,400,827
Identix, Inc. (a) 262,600 1,961,622
MTS Systems Corp. 97,582 2,288,298
NU Horizons Electronics Corp. (a) 222,907 2,006,163
OSI Systems, Inc. (a) 88,000 1,753,840
Planar Systems, Inc. (a) 104,100 1,393,899
Vishay Intertechnology, Inc. (a) 84,100 1,562,578
Electronic Equipment & Instruments Total 17,282,118
-----------------------------------------------------------------------------
Internet Software & Services - 0.5% Keynote Systems, Inc. (a) 170,200 2,340,250
Modem Media, Inc. (a) 158,900 835,814
Internet Software & Services Total 3,176,064
-----------------------------------------------------------------------------
IT Services - 2.4% Acxiom Corp. 129,741 3,221,469
Agilysys, Inc. 108,079 1,490,409
Computer Horizons Corp. (a) 245,961 981,384
Inforte Corp. (a) 168,800 1,704,711
MAXIMUS, Inc. (a) 44,000 1,560,240
MPS Group, Inc. (a) 484,350 5,870,322
IT Services Total 14,828,535
-----------------------------------------------------------------------------
Semiconductors & Semiconductor Equipment - 0.6% Exar Corp. (a) 135,700 1,989,362
Pericom Semiconductor Corp. (a) 135,145 1,447,403
Semiconductors & Semiconductor Equipment Total 3,436,765
-----------------------------------------------------------------------------
See notes to investment portfolio.
11
- --------------------------------------------------------------------------------
June 30, 2004
Columbia Small Cap Value Fund
Common Stocks - (continued)
INFORMATION TECHNOLOGY - (continued)
Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
Software - 2.4% Captaris, Inc. (a) 343,500 2,219,010
Internet Security Systems, Inc. (a) 126,200 1,935,908
Lawson Software, Inc. (a) 168,400 1,192,272
MSC.Software Corp. (a) 218,000 1,951,100
PLATO Learning, Inc. (a) 293,791 2,911,469
SeaChange International, Inc. (a) 143,000 2,413,840
Sybase, Inc. (a) 103,800 1,868,400
Software Total 14,491,999
-----------
INFORMATION TECHNOLOGY TOTAL 72,035,967
MATERIALS - 8.7%
- ------------------------------------------ -----------------------------------------------------------------------------
Chemicals - 3.0% Cytec Industries, Inc. 65,900 2,995,155
H.B. Fuller Co. 76,700 2,178,280
Lubrizol Corp. 95,400 3,493,548
Minerals Technologies, Inc. 49,300 2,859,400
Schulman (A.), Inc. 100,644 2,162,840
Sensient Technologies Corp. 99,200 2,130,816
Stepan Co. 83,300 2,178,295
Chemicals Total 17,998,334
-----------------------------------------------------------------------------
Construction Materials - 1.0% AMCOL International Corp. 89,900 1,703,605
Eagle Materials, Inc. 63,800 4,531,076
Construction Materials Total 6,234,681
-----------------------------------------------------------------------------
Containers & Packaging - 1.1% AptarGroup, Inc. 57,800 2,525,282
Greif, Inc., Class A 97,300 4,110,925
Containers & Packaging Total 6,636,207
-----------------------------------------------------------------------------
Metals & Mining - 2.8% Carpenter Technology Corp. 137,900 4,695,495
Metal Management, Inc. (a) 166,000 3,288,460
Peabody Energy Corp. 57,300 3,208,227
RTI International Metals, Inc. (a) 174,500 2,783,275
Steel Technologies, Inc. 140,400 3,100,032
Metals & Mining Totals 17,075,489
-----------------------------------------------------------------------------
Paper & Forest Products - 0.8% Glatfelter 123,400 1,737,472
Mercer International, Inc. (a) 239,300 2,340,354
Schweitzer-Mauduit International, Inc. 37,000 1,133,310
Paper & Forest Products Total 5,211,136
-----------
MATERIALS TOTAL 53,155,847
TELECOMMUNICATION SERVICES - 0.7%
- ------------------------------------------ -----------------------------------------------------------------------------
Diversified Telecommunication Services - 0.4% North Pittsburgh Systems, Inc. 102,813 2,061,401
Diversified Telecommunication Services Total 2,061,401
-----------------------------------------------------------------------------
Wireless Telecommunication Services - 0.3% Price Communications Corp. (a) 132,580 1,956,881
Wireless Telecommunication Services Total 1,956,881
-----------
TELECOMMUNICATION SERVICES TOTAL 4,018,282
See notes to investment portfolio.
12
- --------------------------------------------------------------------------------
June 30, 2004
Columbia Small Cap Value Fund
Common Stocks - (continued)
UTILITIES - 3.7%
Shares Value ($)
- -------------------------------------------------------------------------------------------------------------------------------
Electric Utilities - 3.0% Central Vermont Public Service Corp. 145,400 2,979,246
CH Energy Group, Inc. 97,600 4,532,544
El Paso Electric Co. (a) 165,100 2,549,144
Maine & Maritimes Corp. 31,600 1,011,200
MGE Energy, Inc. 57,386 1,872,505
Otter Tail Corp. 83,500 2,242,810
Puget Energy, Inc. 141,700 3,104,647
Electric Utilities Total 18,292,096
-----------------------------------------------------------------------------
Gas Utilities - 0.7% Cascade Natural Gas Corp. 62,800 1,385,996
Northwest Natural Gas Co. 46,800 1,427,400
WGL Holdings, Inc. 50,100 1,438,872
Gas Utilities Total 4,252,268
-----------
UTILITIES TOTAL 22,544,364
-----------
TOTAL COMMON STOCKS (Cost of $461,988,596) 606,019,449
Short-Term Obligation - 0.3% Par ($)
- ------------------------------------------ -----------------------------------------------------------------------------
Repurchase agreement with State Street Bank & Trust
Co., dated 06/30/04, due 07/01/04 at 1.170%,
collateralized by a U.S. Treasury Bond maturing
11/15/22, market value $1,961,575 (repurchase
proceeds $1,919,062) (Cost of $1,919,000) 1,919,000 1,919,000
Total Investments - 99.7%
(Cost of $463,907,596)(b) 607,938,449
Other Assets & Liabilities, Net - 0.3% 1,908,732
Net Assets - 100.0% 609,847,181
NOTES TO INVESTMENT PORTFOLIO:
(a)Non-income producing security.
(b)Cost for federal income tax purposes is $465,993,819.
ACRONYM NAME
ADR American Depositary Receipt
REIT Real Estate Investment Trust
See notes to financial statements.
13
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
June 30, 2004
Columbia Small Cap Value Fund
($)
- ------------------------------------------ -----------------------------------------------------------------------------
Assets Investments, at cost 463,907,596
-----------
Investments, at value 607,938,449
Cash 94
Receivable for:
Investments sold 7,877,158
Fund shares sold 3,417,370
Interest 62
Dividends 533,934
Expense reimbursement due from Investment Advisor 74,106
Deferred Trustees' compensation plan 23,690
-----------
Total Assets 619,864,863
-----------------------------------------------------------------------------
Liabilities Payable for:
Investments purchased 7,821,191
Fund shares repurchased 979,207
Investment advisory fee 396,961
Transfer agent fee 373,739
Pricing and bookkeeping fees 31,137
Trustees' fees 658
Custody fee 4,891
Distribution and service fees 258,867
Deferred Trustees' fees 23,690
Other liabilities 127,341
-----------
Total Liabilities 10,017,682
Net Assets 609,847,181
-----------------------------------------------------------------------------
Composition of Net Assets Paid-in capital 429,662,532
Accumulated net investment loss (26,781)
Accumulated net realized gain 36,180,577
Net unrealized appreciation on investments 144,030,853
Net Assets 609,847,181
-----------------------------------------------------------------------------
Class A Net assets 292,364,580
Shares outstanding 6,933,226
Net asset value per share 42.17(a)
Maximum offering price per share ($42.17/0.9425) 44.74(b)
-----------------------------------------------------------------------------
Class B Net assets 213,158,603
Shares outstanding 5,669,071
Net asset value and offering price per share 37.60(a)
-----------------------------------------------------------------------------
Class C Net assets 38,797,616
Shares outstanding 993,438
Net asset value and offering price per share 39.05(a)
-----------------------------------------------------------------------------
Class Z Net assets 65,526,382
Shares outstanding 1,509,546
Net asset value, offering and redemption price per share 43.41
(a)Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b)On sales of $50,000 or more the offering price is reduced.
See notes to financial statements.
14
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended June 30, 2004
Columbia Small Cap Value Fund
($)
- ------------------------------------------ -----------------------------------------------------------------------------
Investment Income Dividends 8,536,207
Interest 48,028
----------
Total Investment Income (net of foreign taxes withheld of $9,016) 8,584,235
----------------------------------------------------------------------------
Expenses Investment advisory fee 4,155,248
Distribution fee:
Class B 1,569,351
Class C 239,723
Service fee:
Class A 595,682
Class B 523,117
Class C 79,908
Transfer agent fee 1,487,741
Pricing and bookkeeping fees 156,577
Trustees' fees 17,498
Custody fee 47,290
Non-recurring costs (See Note 7) 24,997
Other expenses 346,230
----------
Total Expenses 9,243,362
Fees and expenses waived or reimbursed by Investment Advisor (73,797)
Non-recurring costs assumed by Investment Advisor (See Note 7) (24,997)
Custody earnings credit (1,061)
----------
Net Expenses 9,143,507
----------
Net Investment Loss (559,272)
----------------------------------------------------------------------------
Net Realized and Unrealized Net realized gain (loss) on:
Gain (Loss) on Investments Investments 67,072,716
and Foreign Currency Foreign currency transactions (3,130)
----------
Net realized gain 67,069,586
Net change in unrealized
appreciation/depreciation on:
Investments 93,910,207
Foreign currency translations 15
----------
Net change in unrealized appreciation/depreciation 93,910,222
----------
Net Gain 160,979,808
-----------
Net Increase in Net Assets from Operations 160,420,536
See notes to financial statements.
15
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Columbia Small Cap Value Fund
Year Ended June 30,
-------------------------
Increase (Decrease) in Net Assets: 2004($) 2003($)
- ------------------------------------------ -----------------------------------------------------------------------------
Operations Net investment loss (559,272) (1,339,540)
Net realized gain (loss) on investments
and foreign currency transactions 67,069,586 (11,163,115)
Net change in unrealized appreciation on investments
and foreign currency translations 93,910,222 3,793,153
-------------------------
Net Increase (Decrease) from Operations 160,420,536 (8,709,502)
-----------------------------------------------------------------------------
Distributions Declared to Shareholders From net realized gains:
Class A (7,140,239) (17,262,144)
Class B (6,385,740) (28,475,602)
Class C (920,797) (3,407,918)
Class I (77) --
Class Z (1,339,466) (31,120)
Return of capital:
Class A -- (441,172)
Class B -- (727,756)
Class C -- (87,097)
Class Z -- (795)
-------------------------
Total Distributions Declared to Shareholders (15,786,319) (50,433,604)
-----------------------------------------------------------------------------
Share Transactions Class A:
Subscriptions 101,767,098 92,368,303
Proceeds received in connection with merger -- 25,103,297
Distributions reinvested 6,411,053 14,993,575
Redemptions (63,618,296) (77,460,669)
-------------------------
Net Increase 44,559,855 55,004,506
Class B:
Subscriptions 22,762,819 22,179,249
Proceeds received in connection with merger -- 112,583
Distributions reinvested 5,644,770 25,322,455
Redemptions (62,684,239) (50,728,910)
-------------------------
Net Decrease (34,276,650) (3,114,623)
Class C:
Subscriptions 11,127,187 7,973,792
Proceeds received in connection with merger -- 15,456
Distributions reinvested 752,490 2,749,843
Redemptions (6,986,805) (7,852,369)
-------------------------
Net Increase 4,892,872 2,886,722
Class I:
Subscriptions 1,050 1,000
Proceeds received in connection with merger -- 1,408,563
Distributions reinvested 77 --
Redemptions (2,664) (1,358,005)
-------------------------
Net Increase (Decrease) (1,537) 51,558
Class Z:
Subscriptions 56,563,959 27,400,365
Proceeds received in connection with merger -- 720
Distributions reinvested 693,082 31,915
Redemptions (14,611,150) (16,882,639)
-------------------------
Net Increase 42,645,891 10,550,361
Net Increase from Share Transactions 57,820,431 65,378,524
-------------------------
Total Increase in Net Assets 202,454,648 6,235,418
-----------------------------------------------------------------------------
See notes to financial statements.
16
Year Ended June 30,
-------------------------
2004($) 2003($)
- ------------------------------------------ -----------------------------------------------------------------------------
Net Assets Beginning of period 407,392,533 401,157,115
End of period (including accumulated
net investment loss and undistributed
net investment income of $(26,781)
and $210,896, respectively) $609,847,181 $407,392,533
-----------------------------------------------------------------------------
Changes in Shares Class A:
Subscriptions 2,683,022 3,154,270
Issued in connection with merger -- 902,337
Issued for distributions reinvested 171,190 550,829
Redemptions (1,699,383) (2,626,500)
-------------------------
Net Increase 1,154,829 1,980,936
Class B:
Subscriptions 661,962 826,123
Issued in connection with merger -- 4,484
Issued for distributions reinvested 168,350 1,030,619
Redemptions (1,841,257) (1,894,962)
-------------------------
Net Decrease (1,010,945) (33,736)
Class C:
Subscriptions 308,746 279,298
Issued in connection with merger -- 594
Issued for distributions reinvested 21,611 107,881
Redemptions (198,317) (277,391)
-------------------------
Net Increase 132,040 110,382
Class I:
Subscriptions 26 36
Issued in connection with merger -- 49,371
Issued for distributions reinvested 2 --
Redemptions (64) (49,371)
-------------------------
Net Increase (Decrease) (36) 36
Class Z:
Subscriptions 1,477,519 998,716
Issued in connection with merger -- 25
Issued for distributions reinvested 18,002 1,145
Redemptions (375,458) (617,673)
-------------------------
Net Increase 1,120,063 382,213
See notes to financial statements.
17
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
June 30, 2004
Columbia Small Cap Value Fund
Note 1. Organization
Columbia Small Cap Value Fund (the "Fund"), a series of Columbia Funds Trust VI
(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 smaller capitalization
equity securities.
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. Effective January 30, 2004, the Class I
shares of the Fund were liquidated.
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 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 Small Cap
Value Fund to Columbia Small Cap Value Fund. Also on that date, the Trust
changed its name from Liberty Funds Trust VI to Columbia Funds Trust VI.
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 on the principal exchange on
which they trade, except for securities traded on the NASDAQ, which are valued
at the NASDAQ official close price. 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.
Investments for which market quotations are not readily available, or quotations
which management believes are not appropriate, are valued at fair value as
determined in good faith under consistently applied procedures established by
and under the general supervision of the Board of Trustees.
Security Transactions
Security transactions are accounted for on the trade date. Cost is determined
and gains (losses) are based upon the specific identification method for both
financial statement and federal income tax purposes.
Repurchase Agreements
The Fund may engage in repurchase agreement transactions with institutions that
the Fund's investment advisor has determined are creditworthy. The Fund, through
its custodian, receives delivery of underlying securities collateralizing a
repurchase agreement. Collateral is at least equal, at all times, to the value
of the repurchase obligation including interest. A repurchase agreement
transaction involves certain risks in the event of default or insolvency of the
counterparty. These risks include possible delays or restrictions upon the
Fund's ability to dispose of the underlying securities and a possible decline in
the
18
- --------------------------------------------------------------------------------
June 30, 2004
Columbia Small Cap Value Fund
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. Awards from class action litigation are
recorded as a reduction of cost if the Fund still owns the applicable securities
on the payment date. If the Fund no longer owns the applicable securities the
proceeds are recorded as realized gains.
The Fund estimates components of distributions from Real Estate Investment
Trusts ("REITs"). Distributions received in excess of income are recorded as a
reduction of the cost of the related investments.
Effective January 1, 2004, the Fund adopted the policy to reduce cost of
investments for financial statement purposes by the distributions received in
excess of income from REITs. The cumulative effect of this accounting change did
not impact total net assets of the Fund, but resulted in reclassifications as
follows:
Increase in Accumulated
Decrease in Cost Net Investment Loss
- ---------------------------------------------------------
$499,138 $499,138
The effect of this change for the year ended June 30, 2004 is as follows:
Increase in Decrease in Increase in
Unrealized Net Investment Net
Appreciation Income Realized Gain
- ----------------------------------------------------------------
$138,511 $206,100 $67,589
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, the Fund intends to
distribute in each calendar year substantially all of its net investment income,
capital gains and certain other amounts, if any, such that the Fund should 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 timing and character of income and capital gain distributions are determined
in accordance with income tax regulations, which may differ from GAAP.
Reclassifications are made to the Fund's capital accounts for permanent tax
differences to reflect income and gains available for distribution (or available
capital loss carryforwards) under income tax regulations.
For the year ended June 30, 2004, permanent differences resulting primarily from
differing treatments for foreign currency transactions, capital loss
carryforwards, REIT adjustments and net
19
- --------------------------------------------------------------------------------
June 30, 2004
Columbia Small Cap Value Fund
For the year ended June 30, 2004, permanent differences resulting primarily from
differing treatments for foreign currency transactions, capital loss
carryforwards, REIT adjustments and net operating losses were identified and
reclassified among the components of the Fund's net assets as follows:
Accumulated Accumulated
Net Investment Net Realized Paid-In
Loss Gain Capital
- --------------------------------------------------------------
$820,733 $(1,239,766) $419,033
Net investment income and net realized gains (losses), as disclosed on the
Statement of Operations, and net assets were not affected by this
reclassification.
The tax character of distributions paid during the years ended June 30, 2004 and
June 30, 2003 was as follows:
June 30, 2004 June 30, 2003
- ----------------------------------------------------------
Distributions paid from:
- ----------------------------------------------------------
Ordinary Income * $ 9,100,819 $--
- ----------------------------------------------------------
Long-Term Capital Gains 6,685,500 49,176,784
- ----------------------------------------------------------
Tax Return of Capital -- 1,256,820
- ----------------------------------------------------------
$15,786,319 $50,433,604
- ----------------------------------------------------------
* For tax purposes short-term capital gains distributions, if any, are
considered ordinary income distributions.
As of July 31, 2004, the components of distributable earnings on a tax basis
were as follows:
Undistributed Undistributed Net Unrealized
Ordinary Long-term Appreciation
Income Capital Gains (Depreciation)*
- -------------------------------------------------------------
$22,954,895 $25,179,472 $141,944,630
* The differences between book-basis and tax-basis net unrealized
appreciation/depreciation are primarily due to deferral of losses from wash
sales and REIT adjustments.
Unrealized appreciation and depreciation at June 30, 2004, based on cost of
investments for federal income tax purposes was:
Unrealized appreciation $153,059,214
- -----------------------------------------------------------
Unrealized depreciation (11,114,584)
- -----------------------------------------------------------
Net unrealized appreciation $141,944,630
- -----------------------------------------------------------
The following capital loss carryforwards may be available to reduce taxable
income arising from future net realized gains on investments, if any, to the
extent permitted by the Internal Revenue Code:
Year of Capital Loss
Expiration Carryforward
- -----------------------------------------------------
2005 $ 1,233,446
- -----------------------------------------------------
2006 1,233,446
- -----------------------------------------------------
2007 1,233,446
- -----------------------------------------------------
2009 2,466,892
- -----------------------------------------------------
2012 3,700,337
- -----------------------------------------------------
$9,867,567
- -----------------------------------------------------
Any capital loss carryforwards acquired as part of a merger that are permanently
lost due to provisions under the Internal Revenue Code are included as being
expired. Expired capital loss carryforwards are recorded as a reduction of
paid-in capital.
Note 4. Fees and Compensation Paid to Affiliates
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, including the Fund's investment advisor, transfer agent and
distributor, was acquired by Bank of America Corporation ("BOA"). The
acquisition did not change the way the Fund is managed, the investment personnel
assigned to manage the Fund or the fees paid by the Fund.
Investment Advisory Fee
Columbia provides administrative and other services to the Fund in addition to
investment advisory services. Columbia receives a monthly investment advisory
fee based on the Fund's average daily net assets as follows:
Average Daily Net Assets Annual Fee Rate
- -----------------------------------------------------
First $500 million 0.80%
- -----------------------------------------------------
Next $500 million 0.75%
- -----------------------------------------------------
Over $1 billion 0.70%
- -----------------------------------------------------
20
- --------------------------------------------------------------------------------
June 30, 2004
Columbia Small Cap Value Fund
Prior to November 1, 2003, Columbia was entitled to receive a monthly investment
advisory fee based on the Fund's average daily net assets at the following
annual rates:
Average Daily Net Assets Annual Fee Rate
- -----------------------------------------------------
First $1 billion 0.80%
- -----------------------------------------------------
Over $1 billion 0.75%
- -----------------------------------------------------
For the year ended June 30, 2004, the Fund's effective investment advisory fee
rate was 0.80%.
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"). As a result, Columbia pays the total fees received
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 based on the number of securities held by
the Fund. For the year ended June 30, 2004, the Fund's effective pricing and
bookkeeping fee rate was 0.030%.
Transfer Agent Fee
Columbia Funds Services, Inc. (the "Transfer Agent"), an affiliate of Columbia,
provides shareholder services to the Fund. For such services, the Transfer Agent
receives an annual fee by class 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 at the annual rate of 0.06% of the average daily net assets
attributable to Class A, Class B, Class C and Class Z shares of the Fund, and
0.025% of the average daily net assets attributable to Class I shares of the
Fund. The Transfer Agent also received flat-rate charges based on the number of
shareholder accounts and transactions. In addition, the Transfer Agent was
entitled to receive reimbursement for certain out-of-pocket expenses.
For the year ended June 30, 2004, the Fund's effective transfer agent fee rate,
inclusive of out-of-pocket expenses, was 0.28%.
Effective October 13, 2003, Liberty Funds Services, Inc. was renamed Columbia
Funds Services, Inc.
Underwriting Discounts, Service and Distribution Fees
Columbia Funds Distributor, Inc. (the "Distributor"), an affiliate of Columbia,
is the principal underwriter of the Fund. For the year ended June 30, 2004, the
Distributor has retained net underwriting discounts of $78,566 on sales of the
Fund's Class A shares and received CDSC of $9,492, $262,846 and $3,681 on Class
A, Class B and Class C share redemptions, respectively.
The Fund has adopted a 12b-1 plan (the "Plan") which requires the payment of a
monthly service fee to the Distributor at the annual rate of 0.25% of the
average daily net assets of the Fund attributable to Class A, Class B and Class
C shares. The Plan also requires the payment of a monthly distribution fee to
the Distributor at the annual rate of 0.75% of the average daily net assets
attributable to Class B and Class C shares only.
The 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.
Effective October 13, 2003, Liberty Funds Distributor, Inc. was renamed Columbia
Funds Distributor, Inc.
Fee Waivers
Columbia has voluntarily agreed to reimburse the Fund for certain expenses so
that total expenses (exclusive of distribution and service fees, brokerage
commissions, interest, taxes and extraordinary expenses, if any) will not exceed
1.25% annually of the Fund's average daily net assets. Columbia, at its
discretion, may revise or discontinue this arrangement any time.
Prior to November 1, 2003, Columbia voluntarily reimbursed the Fund for certain
expenses so that total expenses (exclusive of distribution, service and transfer
agent fees, brokerage commissions, interest,
21
- --------------------------------------------------------------------------------
June 30, 2004
Columbia Small Cap Value Fund
taxes and extraordinary expenses, if any) would not exceed 1.00% annually of the
Fund's average daily net assets. Columbia also voluntarily reimbursed the Fund
so that Class A, Class B, Class C and Class Z transfer agent fees (exclusive of
out-of-pocket expenses) did not exceed 0.25% annually of each class'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.
Other
Columbia provides certain services to the Fund related to Sarbanes-Oxley
compliance. For the year ended June 30, 2004, the Fund paid $2,026 to Columbia
for such services. This amount is included in "Other expenses" on the Statement
of Operations.
Note 5. Purchases and Sales of Securities
For the year ended June 30, 2004, the cost of purchases and proceeds from sales
of securities, excluding short-term obligations, were $284,249,047 and
$238,564,945, respectively.
Note 6. Line of Credit
The Fund and other affiliated funds participate in a $350,000,000 credit
facility, which is used for temporary or emergency purposes to facilitate
portfolio liquidity. Interest is charged to the Fund based on its borrowings. In
addition, the Fund has agreed to pay commitment fees on its pro-rata portion of
the unutilized line of credit. The commitment fee is included in "Other
expenses" on the Statement of Operations. For the year ended June 30, 2004, the
Fund did not borrow under this arrangement.
Note 7. Disclosure of Significant Risks
and Contingencies
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, as well as
other industry wide issues. 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 advisor 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 advisor 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
22
- --------------------------------------------------------------------------------
June 30, 2004
Columbia Small Cap Value Fund
continue to serve as your fund's investment advisor 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, among other things, 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.
In connection with the events described in detail above, various parties have
filed suit against certain funds, their Boards and/or FleetBoston (and
affiliated entities). These suits and certain regulatory investigations are
ongoing. Accordingly, an estimate of the financial impact of this litigation on
any fund, if any, cannot currently be made.
For the year ended June 30, 2004, Columbia has assumed $24,997 of legal,
consulting services and Trustees' fees incurred by the Fund in connection with
these matters.
8. Business Combinations and Mergers
Fund Mergers
As of the end of business on November 1, 2002, the Liberty Contrarian Small-Cap
Fund merged into the Fund as follows:
Shares Net Assets Unrealized
Issued Received Depreciation1
- --------------------------------------------------------
956,811 $26,640,619 $(11,030,471)
Net Assets of
Liberty Contrarian
Net Assets Small-Cap Fund Net Assets
of the Fund Immediately of the Fund
Prior to Prior to Immediately After
Combination Combination Combination
- ----------------------------------------------------------
$333,518,938 $26,640,619 $360,159,557
1 Unrealized depreciation is included in the Net Assets Received
amount above.
23
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Columbia Small Cap Value Fund
Selected data for a share outstanding throughout each period is as follows:
Year Ended June 30,
Class A Shares 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $31.39 $37.54 $37.49 $32.56 $30.36
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (loss) (a) 0.08 0.02 (0.20) (0.06) (0.10)
Net realized and unrealized gain (loss)
on investments and foreign currency 11.88 (1.54) 2.42 6.38 2.30
-------- -------- -------- -------- --------
Total from Investment Operations 11.96 (1.52) 2.22 6.32 2.20
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions Declared to Shareholders:
From net realized gains (1.18) (4.51) (2.17) (1.39) --
Return of capital -- (0.12) -- -- --
-------- -------- -------- -------- --------
Total Distributions Declared
to Shareholders (1.18) (4.63) (2.17) (1.39) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $42.17 $31.39 $37.54 $37.49 $32.56
Total return (b) 38.58%(c) (2.16)%(c) 6.43% 19.86% 7.25%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets/Supplemental Data:
Operating expenses (d) 1.42% 1.54% 1.57% 1.58% 1.49%
Interest expense -- --%(e) -- -- --
Net investment income (loss) (d) 0.22% 0.07% (0.55)% (0.18)% (0.33)%
Waiver/reimbursement 0.01% 0.12% -- -- --
Portfolio turnover rate 46% 118% 77% 29% 77%
Net assets, end of period (000's) $292,365 $181,377 $142,551 $137,042 $138,969
(a)Per share data was calculated using average shares outstanding during the
period.
(b)Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(c)Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(d)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(e)Rounds to less than 0.01%.
24
- --------------------------------------------------------------------------------
Columbia Small Cap Value Fund
Selected data for a share outstanding throughout each period is as follows:
Year Ended June 30,
Class B Shares 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $28.18 $34.50 $34.88 $30.64 $28.78
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment loss (a) (0.18) (0.19) (0.44) (0.31) (0.31)
Net realized and unrealized gain (loss)
on investments and foreign currency 10.64 (1.50) 2.23 5.94 2.17
-------- -------- -------- -------- --------
Total from Investment Operations 10.46 (1.69) 1.79 5.63 1.86
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions Declared to Shareholders:
From net realized gains (1.04) (4.51) (2.17) (1.39) --
Return of capital -- (0.12) -- -- --
-------- -------- -------- -------- --------
Total Distributions Declared
to Shareholders (1.04) (4.63) (2.17) (1.39) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $37.60 $28.18 $34.50 $34.88 $30.64
Total return (b) 37.58%(c) (2.93)%(c) 5.65% 18.83% 6.46%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets/Supplemental Data:
Operating expenses (d) 2.17% 2.30% 2.32% 2.33% 2.24%
Interest expense -- --%(e) -- -- --
Net investment loss (d) (0.53)% (0.71)% (1.30)% (0.93)% (1.08)%
Waiver/reimbursement 0.01% 0.09% -- -- --
Portfolio turnover rate 46% 118% 77% 29% 77%
Net assets, end of period (000's) $213,159 $188,270 $231,602 $240,252 $238,607
(a)Per share data was calculated using average shares outstanding during the
period.
(b)Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(c)Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(d)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(e)Rounds to less than 0.01%.
25
- --------------------------------------------------------------------------------
Columbia Small Cap Value Fund
Selected data for a share outstanding throughout each period is as follows:
Year Ended June 30,
Class C Shares 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $29.24 $35.59 $35.91 $31.50 $29.59
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment loss (a) (0.19) (0.19) (0.45) (0.31) (0.32)
Net realized and unrealized gain (loss)
on investments and foreign currency 11.04 (1.53) 2.30 6.11 2.23
-------- -------- -------- -------- --------
Total from Investment Operations 10.85 (1.72) 1.85 5.80 1.91
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions Declared to Shareholders:
From net realized gains (1.04) (4.51) (2.17) (1.39) --
Return of capital -- (0.12) -- -- --
-------- -------- -------- -------- --------
Total Distributions Declared
to Shareholders (1.04) (4.63) (2.17) (1.39) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $39.05 $29.24 $35.59 $35.91 $31.50
Total return (b) 37.56%(c) (2.92)%(c) 5.66% 18.85% 6.45%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets/Supplemental Data:
Operating expenses (d) 2.17% 2.30% 2.32% 2.33% 2.24%
Interest expense -- --%(e) -- -- --
Net investment loss (d) (0.53)% (0.71)% (1.30)% (0.93)% (1.08)%
Waiver/reimbursement 0.01% 0.10% -- -- --
Portfolio turnover rate 46% 118% 77% 29% 77%
Net assets, end of period (000's) $38,798 $25,186 $26,726 $27,886 $27,400
(a)Per share data was calculated using average shares outstanding during the
period.
(b)Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(c)Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(d)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(e)Rounds to less than 0.01%.
26
- --------------------------------------------------------------------------------
Columbia Small Cap Value Fund
Selected data for a share outstanding throughout each period is as follows:
Year Ended June 30,
Class Z Shares 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $32.24 $38.28 $38.09 $33.01 $30.70
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (loss) (a) 0.21 0.24 (0.12) 0.02 (0.02)
Net realized and unrealized gain (loss)
on investments and foreign currency 12.19 (1.65) 2.48 6.45 2.33
-------- -------- -------- -------- --------
Total from Investment Operations 12.40 (1.41) 2.36 6.47 2.31
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions Declared to Shareholders:
From net realized gains (1.23) (4.51) (2.17) (1.39) --
Return of capital -- (0.12) -- -- --
-------- -------- -------- -------- --------
Total Distributions Declared
to Shareholders (1.23) (4.63) (2.17) (1.39) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $43.41 $32.24 $38.28 $38.09 $33.01
Total return (b) 38.94%(c) (1.79)%(c) 6.71% 20.05% 7.52%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets/Supplemental Data:
Operating expenses (d) 1.17% 1.25% 1.32% 1.33% 1.24%
Interest expense -- --%(e) -- -- --
Net investment income (loss) (d) 0.52% 0.82% (0.30)% 0.07% (0.08)%
Waiver/reimbursement 0.01% 0.38% -- -- --
Portfolio turnover rate 46% 118% 77% 29% 77%
Net assets, end of period (000's) $65,526 $12,558 $278 $21 $11,431
(a)Per share data was calculated using average shares outstanding during the
period.
(b)Total return at net asset value assuming all distributions reinvested.
(c)Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(d)The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(e)Rounds to less than 0.01%.
27
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
Columbia Small Cap Value Fund
To the Trustees of Columbia Funds Trust VI
and the Shareholders of Columbia Small Cap
Value Fund
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Columbia Small Cap Value Fund (the
"Fund") (formerly Liberty Small-Cap Value Fund) (a series of Columbia Funds
Trust VI, formerly Liberty Funds Trust VI) at June 30, 2004, and the results of
its operations, the changes in its net assets and its financial highlights for
the periods indicated, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States), which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at June 30, 2004 by correspondence with the custodian and brokers,
provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 17, 2004
28
UNAUDITED INFORMATION
- --------------------------------------------------------------------------------
Columbia Small Cap Value Fund
For the fiscal year ended June 30, 2004, the Fund designates long-term capital
gains of $31,864,972.
22.79% of the ordinary income distributed by the Fund, for the fiscal year ended
June 30, 2004, qualifies for the corporate dividends received deduction.
For non-corporate shareholders, 22.73% of income distributed by the Fund for the
fiscal year ended June 30, 2004 represent qualified dividend income subject to
the 15% income tax rate category.
29
TRUSTEES
- --------------------------------------------------------------------------------
Columbia Small Cap Value Fund
Effective October 8, 2003, Patrick J. Simpson and Richard L. Woolworth were
appointed to the Board of Trustees of the Fund. Messrs. Simpson and Woolworth
had been directors of 15 Columbia Funds and 20 funds in the CMG Fund Trust. Also
effective October 8, 2003, the incumbent trustees of the Fund were elected as
directors of the 15 Columbia Funds and as trustees of the 20 funds in the CMG
Fund Trust. The new combined Board of Trustees/Directors of the Fund now
oversees 118 funds in the Columbia Funds Complex (including the former Liberty
Funds, former Stein Roe Funds, Columbia Funds and CMG Funds). Several of these
trustees/directors also serve on the Boards of other funds in the Columbia Funds
Complex.
The Trustees/Directors serve terms of indefinite duration. The names, addresses
and ages of the Trustees/Directors and officers of the Funds in the Columbia
Funds complex, the year each was first elected or appointed to office, their
principal business occupations during at least the last five years, the number
of portfolios overseen by each Trustee/Director and other directorships they
hold are shown below. Each officer listed below serves as an officer of each
Fund in the Columbia Funds Complex.
Name, address and age, Position with funds, Principal occupation(s) during past five years, Number of portfolios in Columbia Funds
Year first elected or appointed to office(1) complex overseen by trustee/director, Other directorships held
DISINTERESTED TRUSTEES
DOUGLAS A. HACKER (age 48) Executive Vice President-Strategy of United Airlines (airline) since December 2002
P.O. Box 66100 (formerly President of UAL Loyalty Services (airline) from September 2001 to December
Chicago, IL 60666 2002; Executive Vice President and Chief Financial Officer of United Airlines from
Trustee (since 1996) July 1999 to September 2001). Oversees 118, Orbitz (online travel company)
--------------------------------------------------------------------------------------
JANET LANGFORD KELLY (age 46) Private Investor since March 2004 (formerly Chief Administrative Officer and Senior
9534 W. Gull Lake Drive Vice President, Kmart Holding Corporation (consumer goods) from September 2003 to
Richland, MI 49083-8530 March 2004; Executive Vice President- Corporate Development and Administration,
Trustee (since 1996) General Counsel and Secretary, Kellogg Company (food manufacturer), from September
1999 to August 2003; Senior Vice President, Secretary and General Counsel, Sara Lee
Corporation (branded, packaged, consumer-products manufacturer) from January 1995 to
September 1999). Oversees 118, None
--------------------------------------------------------------------------------------
RICHARD W. LOWRY (age 68) Private Investor since August 1987 (formerly Chairman and Chief Executive Officer,
10701 Charleston Drive U.S. Plywood Corporation (building products manufacturer)). Oversees 1203, None
Vero Beach, FL 32963
Trustee (since 1995)
--------------------------------------------------------------------------------------
CHARLES R. NELSON (age 62) Professor of Economics, University of Washington, since January 1976; Ford and Louisa
Department of Economics Van Voorhis Professor of Political Economy, University of Washington, since September
University of Washington 1993; (formerly Director, Institute for Economic Research, University of Washington
Seattle, WA 98195 from September 2001 to June 2003) Adjunct Professor of Statistics, University of
Trustee (since 1981) Washington, since September 1980; Associate Editor, Journal of Money Credit and
Banking, since September 1993; consultant on econometric and statistical matters.
Oversees 118, None
--------------------------------------------------------------------------------------
JOHN J. NEUHAUSER (age 61) Academic Vice President and Dean of Faculties since August 1999, Boston College
84 College Road (formerly Dean, Boston College School of Management from September 1977 to September
Chestnut Hill, MA 02467-3838 1999). Oversees 1213,4, Saucony, Inc. (athletic footwear and apparel)
Trustee (since 1985)
30
- --------------------------------------------------------------------------------
Columbia Small Cap Value Fund
Name, address and age, Position with funds, Principal occupation(s) during past five years, Number of portfolios in Columbia Funds
Year first elected or appointed to office(1) complex overseen by trustee/director, Other directorships held
DISINTERESTED TRUSTEES
PATRICK J. SIMPSON (age 59) Partner, Perkins Coie L.L.P. (law firm). Oversees 118, None
1120 N.W.Couch Street
Tenth Floor
Portland, OR 97209-4128
Trustee (since 2000)
--------------------------------------------------------------------------------------
THOMAS E. STITZEL (age 68) Business Consultant since 1999 (formerly Professor of Finance from 1975 to 1999,
2208 Tawny Woods Place College of Business, Boise State University); Chartered Financial Analyst.
Boise, ID 83706 Oversees 118, None
Trustee (since 1998)
--------------------------------------------------------------------------------------
THOMAS C. THEOBALD (age 67) Managing Director, William Blair Capital Partners (private equity investing) since
227 West Monroe Street, September 1994. Oversees 118, Anixter International (network support equipment
Suite 3500 distributor), Jones Lang LaSalle (real estate management services) and Ventas, Inc
Chicago, IL 60606 (real estate investment trust)
Trustee and Chairman of the Board5
(since 1996)
--------------------------------------------------------------------------------------
ANNE-LEE VERVILLE (age 59) Retired since 1997 (formerly General Manager, Global Education Industry, IBM
359 Stickney Hill Road Corporation (computer and technology) from 1994 to 1997). Oversees 1194, Chairman of
Hopkinton, NH 03229 the Board of Directors, Enesco Group, Inc. (designer, importer and distributor of
Trustee (since 1998) giftware and collectibles)
--------------------------------------------------------------------------------------
RICHARD L. WOOLWORTH (age 63) Retired since December 2003 (formerly Chairman and Chief Executive Officer, The
100 S.W. Market Street #1500 Regence Group (regional health insurer); Chairman and Chief Executive Officer,
Portland, OR 97207 BlueCross BlueShield of Oregon; Certified Public Accountant. Oversees 118, Northwest
Trustee (since 1991) Natural Gas Co. (natural gas service provider)
--------------------------------------------------------------------------------------
INTERESTED TRUSTEES
WILLIAM E. MAYER2 (age 64) Managing Partner, Park Avenue Equity Partners (private equity) since February 1999
399 Park Avenue (formerly Founding Partner, Development Capital LLC from November 1996 to February
Suite 3204 1999). Oversees 1203, Lee Enterprises (print media), WR Hambrecht + Co. (financial
New York, NY 10022 service provider), First Health (healthcare), Reader's Digest (publishing) and
Trustee (since 1994) OPENFIELD Solutions (retail industry technology provider)
--------------------------------------------------------------------------------------
(1) In December 2000, the boards of each of the former Liberty Funds and former
Stein Roe Funds were combined into one board of trustees responsible for
the oversight of both fund groups (collectively, the "Liberty Board"). In
October 2003, the trustees on the Liberty Board were elected to the boards
of the Columbia Funds (the "Columbia Board") and of the CMG Fund Trust (the
"CMG Funds Board"); simultaneous with that election, Patrick J. Simpson and
Richard L. Woolworth, who had been directors on the Columbia Board and
trustees on the CMG Funds Board, were appointed to serve as trustees of the
Liberty Board. The date shown is the earliest date on which a
trustee/director was elected or appointed to the board of a Fund in the
Columbia Funds complex.
(2) Mr. Mayer is an "interested person" (as defined in the Investment Company
Act of 1940 (1940 Act)) by reason of his affiliation with WR Hambrecht +
Co.
(3) Messrs. Lowry, Neuhauser and Mayer each also serve as a director/trustee of
the All-Star Funds, currently consisting of 2 funds, which are advised by
an affiliate of the Advisor.
(4) Mr. Neuhauser and Ms. Verville also serve as disinterested directors of
Columbia Management Multi-Strategy Hedge Fund, LLC, which is advised by the
Advisor.
(5) Mr. Theobald was appointed as Chairman of the Board effective December 10,
2003.
31
OFFICERS
- --------------------------------------------------------------------------------
Columbia Small Cap Value Fund
Name, address and age, Position with Columbia
Funds, Year first elected or appointed to office Principal occupation(s) during past five years
VICKI L. BENJAMIN (Age 43) Chief Accounting Officer of the Columbia Funds and Liberty All-Star Funds since
One Financial Center June 2001; Assistant Treasurer of Columbia Acorn and Wanger Funds since June
Boston, MA 02111 2004 (formerly Controller of the Columbia Funds and of the Liberty All-Star
Chief Accounting Officer (since 2001) Funds from May 2002 to May 2004); Controller and Chief Accounting Officer of
the Galaxy Funds since September 2002 (formerly Vice President, Corporate
Audit, State Street Bank and Trust Company from May 1998 to April 2001).
-------------------------------------------------------------------------------
MICHAEL CLARKE (Age 34) Controller of the Columbia Funds and of the Liberty All-Star Funds since 2004;
One Financial Center Assistant Treasurer of Columbia Acorn and Wanger Funds since June 2004
Boston, MA 02111 (formerly Assistant Treasurer of the Columbia Funds and of the Liberty All-Star
Controller (since 2004) Funds from June 2002 to May 2004; Vice President, Product Strategy &
Development of Liberty Funds Group from February 2001 to June 2002; Assistant
Treasurer of the Liberty Funds and of the Liberty All-Star Funds from August
1999 to February 2001; Audit Manager at Deloitte & Touche LLP from May 1997 to
August 1999).
-------------------------------------------------------------------------------
J. KEVIN CONNAUGHTON (Age 40) President of the Columbia Funds since February 27, 2004; Treasurer of the
One Financial Center Columbia Funds and of the Liberty All-Star Funds since December 2000; Vice
Boston, MA 02111 President of the Advisor since April 2003 (formerly Chief Accounting Officer
Treasurer (since 2000) and President (since 2004) and Controller of the Liberty Funds and Liberty All-Star Funds from February
1998 to October 2000); Treasurer of the Galaxy Funds since September 2002;
Treasurer, Columbia Management Multi-Strategy Hedge Fund, LLC since December
2002 (formerly Vice President of Colonial from February 1998 to October 2000).
-------------------------------------------------------------------------------
DAVID A. ROZENSON (Age 50) Secretary of the Columbia Funds and of the Liberty All-Star Funds since
One Financial Center December 2003; Senior Counsel, Bank of America Corporation (formerly
Boston, MA 02111 FleetBoston Financial Corporation) since January 1996; Associate Counsel,
Secretary (since 2003) Columbia Management Group since November 2002.
32
IMPORTANT INFORMATION ABOUT THIS REPORT
- --------------------------------------------------------------------------------
Columbia Small Cap Value 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 02110
Independent Registered
Public Accounting Firm
PricewaterhouseCoopers LLP
125 High Street
Boston MA 02110
The funds mail 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 Small Cap Value 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 funds and with the most recent copy of
the Columbia Funds Performance Update.
A description of the policies and procedures that fund's use to determine how to
vote proxies relating to their portfolio securities and a copy of the fund's
voting record are available (i) at www.columbiamanagement.com; (ii) on the
Securities and Exchange Commission's website at www.sec.gov and (iii) without
charge, upon request, by calling 800-368-0346.
33
[eDELIVERY LOGO]
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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 Small Cap Value Fund ANNUAL REPORT, JUNE 30, 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 www.columbiafunds.com
769-02/218S-0604 (08/04) 04/1728
ITEM 2. CODE OF ETHICS.
(a) The registrant has, as of the end of the period covered by this
report, adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party.
(b) During the period covered by this report, there were not any
amendments to a provision of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, there were not any waivers
or implicit waivers to a provision of the code of ethics adopted in
2(a) above.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Trustees has determined that Douglas A. Hacker, Thomas
E. Stitzel, Anne-Lee Verville and Richard L. Woolworth, each of whom are members
of the registrant's Board of Trustees and Audit Committee, each qualify as an
audit committee financial expert. Mr. Hacker, Mr. Stitzel, Ms. Verville and Mr.
Woolworth are each independent trustees, as defined in paragraph (a)(2) of this
item's instructions and collectively constitute the entire Audit Committee.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Fee information below is disclosed in aggregate for the series of the registrant
whose reports to stockholders are included in this annual filing.
(a) Aggregate Audit Fees billed by the principal accountant for professional
services rendered during the fiscal years ended June 30, 2004 and June 30, 2003
are approximately as follows:
2004 2003
$22,800 $24,500
Audit Fees include amounts related to the audit of the registrant's annual
financial statements or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years.
(b) Aggregate Audit-Related Fees billed by the principal accountant for
professional services rendered during the fiscal years ended June 30, 2004 and
June 30, 2003 are approximately as follows:
2004 2003
$4,000 $11,500
Audit-Related Fees include amounts for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported in Audit Fees
above. In both fiscal years 2004 and 2003, Audit-Related Fees include certain
agreed-upon procedures performed for semi-annual shareholder reports. Fiscal
year 2003 also includes fees for agreed-upon procedures conducted during the
conversion of the fund's accounting system, agreed-upon procedures relating to
fund mergers and testing of other merger related information.
The "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X became effective on May 6, 2003. For the registrant, the
percentage of Audit-Related services that were approved under the "de minimis"
exception during the fiscal years ended June 30, 2004 and June 30, 2003 was
zero.
The pre-approval requirements for services to the investment adviser (not
including any sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser) and any entity
controlling, controlled by, or under common control with the adviser that
provides ongoing services to the registrant under paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X became effective on May 6, 2003. During the fiscal years
ended June 30, 2004 and June 30, 2003, there were no Audit-Related Fees that
were approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
The percentage of Audit-Related fees required to be approved under paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X that were approved under the "de
minimis" exception during the fiscal years ended June 30, 2004 and June 30, 2003
was zero.
(c) Aggregate Tax Fees billed by the principal accountant for professional
services rendered during the fiscal years ended June 30, 2004 and June 30, 2003
are approximately as follows:
2004 2003
$4,900 $4,650
Tax Fees include amounts for professional services by the principal accountant
for tax compliance, tax advice and tax planning. Tax Fees in both fiscal years
2004 and 2003 primarily consist of the review of annual tax returns, the review
of calculations of required shareholder distributions and certain tax compliance
testing.
The "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X became effective on May 6, 2003. For the registrant, the
percentage of Tax Fees that were approved under the "de minimis" exception
during the fiscal years ended June 30, 2004 and June 30, 2003 was zero.
The pre-approval requirements for services to the investment adviser (not
including any sub-adviser whose role is primarily portfolio management and is
subcontracted with or overseen by another investment adviser) and any entity
controlling, controlled by, or under common control with the adviser that
provides ongoing services to the registrant under paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X became effective on May 6, 2003. During the fiscal years
ended June 30, 2004 and June 30, 2003, there were no Tax Fees that were approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
The percentage of Tax fees required to be approved under paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X that were approved under the "de minimis" exception
during the fiscal years ended June 30, 2004 and June 30, 2003 was zero.
(d) Aggregate All Other Fees billed by the principal accountant for professional
services rendered during the fiscal years ended June 30, 2004 and June 30, 2003
are as follows:
2004 2003
$0 $0
All Other Fees include amounts for products and services provided by the
principal accountant, other than the services reported in (a)-(c) above.
The "de minimis" exception under paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X became effective on May 6, 2003. For the registrant, the
percentage of All Other Fees that were approved under the "de minimis" exception
during the fiscal years ended June 30, 2004 and June 30, 2003 was zero.
The pre-approval requirements for services to the investment adviser (not
including any sub-adviser whose role is primarily portfolio management and is
subcontracted with or
overseen by another investment adviser) and any entity controlling, controlled
by, or under common control with the adviser that provides ongoing services to
the registrant under paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X became
effective on May 6, 2003. During the fiscal year ended June 30, 2004, All Other
Fees that were approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X were approximately $95,000. During the fiscal year ended June 30,
2003, All Other Fees that would have been subject to pre-approval had paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X been applicable at the time the
services were provided, were approximately $95,000. For both fiscal years, All
Other Fees relate to internal controls reviews of the registrant's transfer
agent.
The percentage of All Other Fees required to be approved under paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X that were approved under the "de
minimis" exception during the fiscal years ended June 30, 2004 and June 30, 2003
was zero.
(e)(1) AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
I. GENERAL OVERVIEW
The Audit Committee of the registrant has adopted a formal policy (the "Policy")
which sets forth the procedures and the conditions pursuant to which the Audit
Committee will pre-approve (i) all audit and non-audit (including audit related,
tax and all other) services provided by the registrant's independent auditor to
the registrant and individual funds (collectively "Fund Services"), and (ii) all
non-audit services provided by the registrant's independent auditor to the
funds' adviser or a control affiliate of the adviser, that relate directly to
the funds' operations and financial reporting (collectively "Fund-related
Adviser Services"). A "control affiliate" is an entity controlling, controlled
by, or under common control with the adviser that provides ongoing services to
the funds, and the term "adviser" is deemed to exclude any unaffiliated
sub-adviser whose role is primarily portfolio management and is sub-contracted
or overseen by another investment adviser. The adviser and control affiliates
are collectively referred to as "Adviser Entities."
The Audit Committee uses a combination of specific (on a case-by-case basis as
potential services are contemplated) and general (pre-determined list of
permitted services) pre-approvals. Unless a type of service has received general
pre-approval, it will require specific pre-approval by the Audit Committee if it
is to be provided by the independent auditor.
The Policy does not delegate the Audit Committee's responsibilities to
pre-approve services performed by the independent auditor to management.
II. GENERAL PROCEDURES
On an annual basis, the Fund Treasurer and/or Director of Trustee Administration
shall submit to the Audit Committee a schedule of the types of Fund Services and
Fund-related Adviser Services that are subject to general pre-approval.
These schedules will provide a description of each type of service that is
subject to general pre-approval and, where possible, will provide estimated fees
for each instance of providing each service. This general pre-approval and
related fees (where provided) will generally cover a one-year period (for
example, from July 1 through June 30 of the following year). The Audit Committee
will review and approve the types of services and review the projected fees for
the next one-year period and may add to, or subtract from, the list of general
pre-approved services from time to time, based on subsequent determinations.
This approval acknowledges that the Audit Committee is in agreement with the
specific types of services that the independent auditor will be permitted to
perform. The fee amounts will be updated to the extent necessary at other
regularly scheduled meetings of the Audit Committee.
In addition to the fees for each individual service, the Audit Committee has the
authority to implement a fee cap on the aggregate amount of non-audit services
provided to an individual fund.
If, subsequent to general pre-approval, a fund, its investment adviser or a
control affiliate determines that it would like to engage the independent
auditor to perform a service that requires pre-approval and that is not included
in the general pre-approval list, the specific pre-approval procedure shall be
as follows:
o A brief written request shall be prepared by management detailing the
proposed engagement with explanation as to why the work is proposed to
be performed by the independent auditor;
o The request should be addressed to the Audit Committee with copies to
the Fund Treasurer and/or Director of Trustee Administration;
o The Fund Treasurer and/or Director of Trustee Administration will
arrange for a discussion of the service to be included on the agenda
for the next regularly scheduled Audit Committee meeting, when the
Committee will discuss the proposed engagement and approve or deny the
request.
o If the timing of the project is critical and the project needs to
commence before the next regularly scheduled meeting, the Chairperson
of the Audit Committee may approve or deny the request on behalf of
the Audit Committee, or, in the Chairperson's discretion, determine to
call a special meeting of the Audit Committee for the purpose of
considering the proposal. Should the Chairperson of the Audit
Committee be unavailable, any other member of the Audit Committee may
serve as an alternate for the purpose of approving or denying the
request. Discussion with the Chairperson (or alternate, if necessary)
will be arranged by the Fund Treasurer and/or Director of Trustee
Administration. The independent auditor will not commence any such
project unless and until specific approval has been given.
III. CERTAIN OTHER SERVICES PROVIDED TO ADVISER ENTITIES
The Audit Committee recognizes that there are cases where services proposed to
be provided by the independent auditor to the adviser or control affiliates are
not Fund-related Adviser Services within the meaning of the Policy, but
nonetheless may be relevant to the Audit Committee's ongoing evaluation of the
auditor's independence and objectivity with respect to its audit services to the
funds. As a result, in all cases where an Adviser Entity engages the independent
auditor to provide audit or non-audit services that are not Fund Services or
Fund-related Adviser Services, were not subject to pre-approval by the Audit
Committee, and the projected fees for any such engagement (or the aggregate of
all such engagements during the period covered by the Policy) exceeds a
pre-determined threshold established by the Audit Committee; the independent
auditor, Fund Treasurer and/or Director of Trustee Administration will notify
the Audit Committee not later than its next meeting. Such notification shall
include a general description of the services provided, the entity that is to be
the recipient of such services, the timing of the engagement, the entity's
reasons for selecting the independent auditor, and the projected fees. Such
information will allow the Audit Committee to consider whether non-audit
services provided to the adviser and Adviser Entities, which were not subject to
Audit Committee pre-approval, are compatible with maintaining the auditor's
independence with respect to the Funds.
IV. REPORTING TO THE AUDIT COMMITTEE
The Fund Treasurer or Director of Trustee Administration shall report to the
Audit Committee at each of its regular meetings regarding all Fund Services or
Fund-related Adviser Services initiated since the last such report was rendered,
including:
o A general description of the services, and
o Actual billed and projected fees, and
o The means by which such Fund Services or Fund-related Adviser Services
were pre-approved by the Audit Committee.
In addition, the independent auditor shall report to the Audit Committee
annually, and no more than 90 days prior to the filing of audit reports with the
SEC, all non-audit services provided to entities in the funds' "investment
company complex," as defined by SEC rules, that did not require pre-approval
under the Policy.
V. AMENDMENTS; ANNUAL APPROVAL BY AUDIT COMMITTEE
The Policy may be amended from time to time by the Audit Committee. Prompt
notice of any amendments will be provided to the independent auditor, Fund
Treasurer and Director of Trustee Administration. The Policy shall be reviewed
and approved at least annually by the Audit Committee.
*****
(e)(2) This information has been included in items (b)-(d) above.
(f) Not applicable.
(g) All non-audit fees billed by the registrant's accountant for services
rendered to the registrant for the fiscal years ended June 30, 2004 and June 30,
2003 are disclosed in (b)-(d) above.
All non-audit fees billed by the registrant's accountant for services rendered
to the registrant's investment adviser (not including any sub-adviser whose role
is primarily portfolio management and is subcontracted with or overseen by
another investment adviser) and any entity controlling, controlled by, or under
common control with the adviser that provides ongoing services to the registrant
for the fiscal years ended June 30, 2004 and June 30, 2003 are also disclosed in
(b)-(d) above. Such fees were approximately $95,000 and $95,000, respectively.
(h) The registrant's Audit Committee of the Board of Directors has considered
whether the provision of non-audit services that were rendered to the
registrant's adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X, is compatible with maintaining the principal accountant's
independence. The Audit Committee determined that the provision of such services
is compatible with maintaining the principal accountant's independence.
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 recommended 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
attached hereto as Exhibit 99.CODE ETH.
(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 VI
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By (Signature and Title) /s/ J. Kevin Connaughton
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J. Kevin Connaughton, President and Treasurer
Date September 2, 2004
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title) /s/ J. Kevin Connaughton
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J. Kevin Connaughton, President and Treasurer
Date September 2, 2004
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