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: 07/31/2004
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Date of reporting period: 07/31/2004
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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
Growth & Income
Fund
Annual Report
July 31, 2004
[photo of man and woman smiling]
[logo]:
COLUMBIA FUNDS
A MEMBER OF COLUMBIA MANAGEMENT GROUP
TO OUR FELLOW SHAREHOLDERS
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Columbia Growth & Income 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.
You should know that your fund's Board of Trustees has taken another important
step to strengthen its capacity to oversee your fund. Recently, the Board of
Trustees appointed Mary Joan Hoene as Chief Compliance Officer of Columbia
funds. In this role, Ms. Hoene will work with the Board of Trustees,
particularly focused on the overall compliance program of the funds and the
responsibility and performance of the funds' service providers. Ms. Hoene will
report directly to the Board of Trustees and will work closely with senior
leadership of Columbia Management, the investment arm of Bank of America, and
with Bank of America's principal compliance executives. Prior to her
appointment, Ms. Hoene was a partner in the law firm of Carter, Ledyard &
Milburn, LLP. Among the firm's clients were investment advisors and independent
directors of mutual funds. Ms. Hoene has also worked for the Securities and
Exchange Commission as associate director and deputy director for the Division
of Investment Management. She has also been an active advisor to several fund
boards in developing independent board practices. The Board is pleased that it
has appointed Ms. Hoene with her broad and extensive experience to this
important new position.
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.
Table of Contents
Fund Profile ............................1
Performance Information .................2
Understanding Your Expenses..............3
Economic Update..........................4
Portfolio Managers' Report ..............5
Financial Statements ....................7
Investment Portfolio..................8
Statement of Assets and Liabilities..12
Statement of Operations..............13
Statements of Changes in Net Assets..14
Notes to Financial Statements........16
Financial Highlights.................21
Report of Independent Registered
Public Accounting Firm...............25
Unaudited Information...................26
Trustees................................27
Officers................................29
Columbia Funds..........................30
Important Information
About This Report.......................32
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
FUND PROFILE
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Columbia Growth & Income Fund
The information below gives you a snapshot of your fund at the end of the
reporting period. Your fund is actively managed, and the composition of its
portfolio will change over time.
Top 5 sectors as of 07/31/04 (%)
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Financials 29.8
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Energy 13.8
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Industrials 11.1
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Consumer staples 9.6
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Consumer discretionary 7.3
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Top 10 holdings as of 07/31/04 (%)
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Citigroup 4.0
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Exxon Mobil 3.5
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JPMorgan Chase & Co. 2.8
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ConocoPhillips 2.7
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BP PLC 2.6
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US Bancorp 2.3
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Wells Fargo 2.2
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American International Group 2.2
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General Electric 2.1
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iShares Russell 1000
Value Index Fund 2.0
===================================
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 BoxTM reveals a fund's investment strategy. For equity
funds the vertical axis shows the market capitalization of the stocks owned and
the horizontal axis shows investment style (value, blend or growth). For
fixed-income funds the vertical axis shows the average credit quality of the
bonds owned, and the horizontal axis shows interest rate sensitivity as measured
by a bond's duration (short, intermediate or long). All of these numbers are
drawn from the data most recently provided by the fund and entered into
Morningstar's database as of month-end. Although the data are gathered from
reliable sources, Morningstar cannot guarantee completeness and accuracy. As of
07/31/2004.
[SIDEBAR INFORMATION]:
Summary
o For the 12-month period ended July 31, 2004, the fund's class A shares
returned 13.83% without sales charge. A strengthening economy and solid
profit growth helped the fund generate its double-digit return.
o The fund's performance shortfall can be attributed to the first half of the
period, when the managers were restructuring the portfolio. Relative
performance picked up considerably in the second half of the period as the
fund shifted to a more diversified portfolio with new parameters for
evaluating risk.
o The fund's emphasis on higher quality securities also helped relative
performance in the second half of the period. They held up better than
lower quality securities, which led the market rally during the first half
of the period.
Objective
Seeks long-term
growth and income
Total net assets
$1.908 billion
[Illustration of 2 arrows pointing up]:
Russell 1000
Class A shares Value Index
13.83% 17.68%
Morningstar style box
Style/Value // Size/Large
1
PERFORMANCE INFORMATION
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Columbia Growth & Income Fund
Performance of a $10,000 investment
08/01/94 - 07/31/04 ($)
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sales charge without with
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Class A 31,702 29,879
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Class B 29,396 29,396
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Class C 29,404 29,404
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Class Z 32,031 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.
[MOUNTAIN CHART DATA]:
Value of a $10,000 investment 08/01/94 - 07/31/04
Class A shares Class A shares Russell 1000 S&P 500
without sales charge with sales charge Value Index Index
08/1994 $10,000 $ 9,425 $10,000 $10,000
10,444 9,843 10,288 10,410
10,316 9,722 9,947 10,155
10,453 9,852 10,086 10,383
10,111 9,530 9,679 10,005
10,268 9,677 9,792 10,154
10,524 9,919 10,093 10,417
11,019 10,385 10,493 10,823
11,285 10,636 10,724 11,142
11,532 10,869 11,063 11,470
12,008 11,317 11,527 11,928
12,229 11,526 11,683 12,205
12,625 11,899 12,089 12,610
12,552 11,830 12,260 12,642
12,985 12,238 12,704 13,175
12,902 12,160 12,578 13,128
13,373 12,604 13,214 13,704
13,296 12,532 13,546 13,969
13,657 12,872 13,969 14,444
13,877 13,079 14,075 14,578
13,886 13,088 14,314 14,718
14,396 13,568 14,368 14,934
14,756 13,907 14,548 15,320
14,533 13,697 14,560 15,378
13,750 12,959 14,009 14,698
14,182 13,366 14,410 15,008
14,804 13,953 14,983 15,853
15,186 14,313 15,563 16,291
16,301 15,363 16,692 17,522
15,913 14,998 16,478 17,175
17,004 16,027 17,277 18,249
17,037 16,057 17,531 18,391
16,435 15,490 16,900 17,635
17,430 16,427 17,610 18,688
18,467 17,405 18,594 19,826
19,202 18,098 19,392 20,715
20,953 19,748 20,850 22,363
20,165 19,006 20,108 21,111
21,292 20,068 21,322 22,268
20,274 19,109 20,728 21,524
21,041 19,831 21,644 22,521
21,510 20,273 22,276 22,908
21,732 20,482 21,959 23,162
23,312 21,971 23,437 24,832
24,458 23,052 24,872 26,104
24,446 23,041 25,038 26,367
23,818 22,448 24,668 25,914
24,706 23,286 24,983 26,966
24,262 22,867 24,544 26,680
20,339 19,169 20,892 22,822
21,240 20,018 22,091 24,285
22,992 21,670 23,803 26,260
24,410 23,007 24,912 27,851
25,824 24,339 25,759 29,455
26,508 24,984 25,965 30,686
25,400 23,940 25,599 29,732
26,238 24,730 26,129 30,921
26,960 25,410 28,569 32,118
26,585 25,056 28,255 31,360
28,159 26,540 29,075 33,100
27,424 25,847 28,223 32,068
27,114 25,555 27,176 31,911
26,084 24,584 26,227 31,036
27,179 25,616 27,738 33,001
27,475 25,896 27,522 33,671
28,770 27,115 27,654 35,654
27,230 25,665 26,752 33,864
26,177 24,671 24,764 33,224
29,116 27,442 27,786 36,473
29,116 27,442 27,463 35,375
28,921 27,258 27,752 34,650
28,560 26,917 26,483 35,506
28,740 27,087 26,815 34,952
29,806 28,092 28,305 37,123
30,098 28,367 28,566 35,163
31,636 29,817 29,269 35,015
31,816 29,987 28,183 32,256
33,442 31,519 29,595 32,414
33,322 31,406 29,707 33,565
32,998 31,101 28,881 30,504
31,923 30,087 27,862 28,570
32,555 30,683 29,227 30,789
33,150 31,244 29,885 30,996
32,365 30,504 29,221 30,243
33,235 31,324 29,160 29,946
32,996 31,099 27,990 28,072
31,838 30,007 26,020 25,803
31,787 29,959 25,796 26,296
33,033 31,134 27,295 28,313
33,261 31,348 27,939 28,562
32,722 30,841 27,724 28,145
32,313 30,455 27,768 27,602
33,964 32,011 29,082 28,640
32,613 30,737 28,084 26,904
32,593 30,719 28,225 26,705
29,053 27,383 26,605 24,804
26,773 25,233 24,130 22,872
26,995 25,443 24,314 23,020
23,232 21,896 21,610 20,518
25,272 23,818 23,211 22,324
27,182 25,619 24,674 23,638
26,030 24,533 23,603 22,251
25,100 23,657 23,032 21,668
23,680 22,318 22,417 21,343
23,585 22,229 22,455 21,550
25,252 23,800 24,431 23,326
27,318 25,747 26,009 24,555
27,963 26,355 26,334 24,869
27,848 26,247 26,727 25,307
28,302 26,675 27,143 25,800
27,770 26,173 26,877 25,527
28,736 27,084 28,522 26,972
29,021 27,352 28,910 27,209
31,009 29,226 30,691 28,635
31,468 29,658 31,231 29,162
32,330 30,471 31,900 29,567
32,178 30,328 31,619 29,121
31,412 29,606 30,847 28,663
31,431 29,624 31,162 29,056
32,292 30,435 31,898 29,620
07/2004 31,702 29,879 31,445 28,630
The graph and table do not reflect the deduction of taxes a shareholder would
pay on fund distributions or the redemption of fund shares. As reported in the
semiannual report dated January 31, 2004, the Russell 1000 Value Index is the
fund's new benchmark. The previous benchmark was the S&P 500 Index. The Russell
1000 Value Index is an unmanaged index that measures the performance of those
Russell 1000 Index companies with lower price-to-book ratios and lower
forecasted growth values. The Standard & Poor's (S&P) 500 Index is an unmanaged
index that tracks the performance of 500 widely held, large capitalization US
stocks. 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 07/31/04 (%)
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Share class A B C Z
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Inception 07/01/92 07/01/92 07/01/94 02/07/01
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Sales charge without with without with without with without
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1-year 13.83 7.28 12.92 7.92 12.90 11.90 14.08
====================================================================================================================
5-year 2.94 1.73 2.17 1.89 2.16 2.16 3.15
====================================================================================================================
10-year 12.23 11.57 11.39 11.39 11.39 11.39 12.35
====================================================================================================================
Average annual total return as of 06/30/04 (%)
- --------------------------------------------------------------------------------------------------------------------
Share class A B C Z
====================================================================================================================
Sales charge without with without with without with without
====================================================================================================================
1-year 15.49 8.85 14.60 9.60 14.64 13.64 15.82
====================================================================================================================
5-year 2.78 1.57 2.00 1.72 2.01 2.01 2.99
====================================================================================================================
10-year 12.67 12.01 11.82 11.82 11.83 11.83 12.79
====================================================================================================================
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% 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 Z share (newer class shares) performance information includes returns of
the fund's class A shares (older class shares) as its expense structure more
closely resembles that of the newer class shares for periods prior to the
inception date of the newer class shares. Total returns are not restated to
reflect any expense differential (e.g., Rule 12b-1 fees) between the older class
shares and the newer class 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.
2
UNDERSTANDING YOUR EXPENSES
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Columbia Growth & Income Fund
As a fund shareholder, you incur two types of costs. There are transaction
costs, which generally include sales charges on purchases and may include
redemption or exchange fees. There are also ongoing costs, which generally
include investment advisory fees, and/or Rule 12b-1 fees, and other fund
expenses. The information on this page is intended to help you understand your
ongoing costs of investing in the fund and to compare these costs with the
ongoing costs of investing in other mutual funds.
ANALYZING YOUR FUND'S EXPENSES BY SHARE CLASS
To illustrate these ongoing costs, we have provided an example and calculated
the expenses paid by investors in each share class during the reporting period.
The information in the following table is based on an initial investment of
$1,000, which is invested at the beginning of the reporting period and held for
the entire period. Expense information is calculated two ways and each method
provides you with different information. The amount listed in the "actual"
column is calculated using the fund's actual operating expenses and total return
for the period. The amount listed in the "hypothetical" column for each share
class assumes that the return each year is 5% before expenses and includes the
fund's actual expense ratio. You should not use the hypothetical account values
and expenses to estimate either your actual account balance at the end of the
period or the expenses you paid during this reporting period.
ESTIMATING YOUR ACTUAL EXPENSES
To estimate the expenses that you paid over the period, first you will need your
account balance at the end of the period:
o For shareholders who receive their account statements from Columbia
Funds Services, Inc., your account balance is available online at
www.columbiafunds.com or by calling Shareholder Services at
800.345.6611
o For shareholders who receive their account statements from their
brokerage firm, contact your brokerage firm to obtain your account
balance
1. Divide your ending account balance by $1,000. For example, if an
account balance was $8,600 at the end of the period, the result would
be 8.6
2. In the section of the table below titled "Expenses paid during this
period," locate the amount for your share class. You will find this
number is in the column labeled "actual." Multiply this number by the
result from step 1. Your answer is an estimate of the expenses you
paid on your account during the period
February 1, 2004 - July 31, 2004
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Account value at the Account value at the Expenses paid Fund's annualized
========================================================================================================================
beginning of the period ($) end of the period ($) during period ($) expense ratio (%)
========================================================================================================================
Actual Hypothetical Actual Hypothetical Actual Hypothetical
========================================================================================================================
Class A 1,000.00 1,000.00 1,008.72 1,019.41 5.47 5.50 1.10
========================================================================================================================
Class B 1,000.00 1,000.00 1,004.65 1,015.68 9.20 9.25 1.85
========================================================================================================================
Class C 1,000.00 1,000.00 1,004.65 1,015.68 9.20 9.25 1.85
========================================================================================================================
Class Z 1,000.00 1,000.00 1,009.92 1,020.66 4.23 4.25 0.85
========================================================================================================================
Expenses paid during the period are equal to the fund's annualized expense
ratio, multiplied by the average account value over the period, then multiplied
by the number of days in the fund's most recent fiscal half-year and divided by
366.
Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
It is important to note that the expense amounts shown in the table are meant to
highlight only ongoing costs of investing in the fund and do not reflect any
transactional costs, such as sales charges, redemption or exchange fees.
Therefore, the hypothetical examples provided may not help you determine the
relative total costs of owning different funds. If these transactional costs
were included, your costs would have been higher.
COMPARE WITH OTHER FUNDS
Since all mutual fund companies are required to include the same hypothetical
calculations about expenses in shareholder reports, you can use this information
to compare the ongoing cost of investing in the fund with other funds. To do so,
compare the 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical
examples of other funds, it is important to note that hypothetical examples are
meant to highlight the continuing cost of investing in a fund and do not reflect
any transactional costs, such as sales charges or redemption or exchange fees.
3
ECONOMIC UPDATE
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Columbia Growth & Income Fund
The US economy staged a solid recovery during the 12-month period that began
August 1, 2003 and ended July 31, 2004. However, unsettling news about the job
market and a dip in consumer spending raised questions about the sustainability
of growth near the end of the period. US gross domestic product (GDP) grew at a
pace of more than 4.7% over the past year. But that pace slowed to 2.8% in the
second quarter of 2004. Corporate profit growth exceeded 20% during the period,
but it began to slow in 2004. As a result of these shifts, many economists
lowered their expectations for the economy for the second half of the year.
Consumer confidence seesawed, mostly in reaction to changing job data, which
dominated much of the economic news during the year. The Conference Board
reported that confidence readings declined on weak job figures early in the
year. Then they rose after the US labor markets added more than 1.2 million new
jobs between March and May. However, consumer confidence continued to move
higher despite disappointing job creation in June and July.
A good mood among consumers translated to higher spending on retail goods, autos
and housing, which continued to thrive on relatively low mortgage rates. Yet,
consumer spending declined markedly in July, the first such pullback in a year.
However, businesses stepped into the gap and helped fuel the economy during the
period. Industrial production rose and factories utilized more of their
capacity. Spending on both technology and capital equipment picked up.
US STOCKS OUTPERFORMED BONDS
Buoyed by strong gains at the beginning of the period, the S&P 500 Index
returned 13.17% during this 12-month reporting period. However, concerns about
new terror threats, higher interest rates and energy prices, sidelined investors
as the period wore on. Late in the period, leadership passed from small-cap
stocks, which were strong performers early in the period, to mid- and large-cap
stocks. Value stocks continued to lead growth stocks.
BONDS REFLECTED THE ECONOMIC NEWS
Despite interest-rate volatility, the US bond market delivered respectable gains
during the period. The yield on the benchmark 10-year US Treasury bond drifted
generally lower for the first eight months of the period. It rose sharply as the
economy strengthened, the employment picture brightened and investors began to
anticipate a shift in the Federal Reserve Board's policy on short-term interest
rates. The Fed delivered on these expectations and raised the federal funds
rate, a key short-term rate, from 1.00% to 1.25% when it met in June.1
A shaky stock market, higher energy prices and some surprisingly weak economic
data gave the bond market a boost in the last two months of the period. As a
result, the Lehman Brothers Aggregate Bond Index, a broad measure of investment
grade bond market performance, returned 4.84%. The high-yield sector continued
to lead the bond market. The Merrill Lynch High Yield, Cash Pay Index returned
13.08%. However, most of the sector's gains came in the first half of the
period.
1 The federal funds rate was increased to 1.50% early in August.
[SIDEBAR INFORMATION]:
Summary
For the 12-month period
ended July 31, 2004
o 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
and weaker economic data unsettled investors.
[Illustration of 2 arrows pointing up]:
S&P Index Russell Index
13.17% 13.31%
o Investment grade bonds chalked up respectable gains despite a period of
extreme interest rate volatility in April and May. The Lehman Brothers
Aggregate Bond Index returned 4.84%. High-yield bonds, which can be less
sensitive to changing interest rates, performed in line with the stock
market. The Merrill Lynch US High Yield, Cash Pay Index returned 13.08%.
[Illustration of 2 arrows pointing up]:
Lehman Index Merrill Lynch Index
4.84% 13.08%
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.
4
PORTFOLIO MANAGERS' REPORT
------------------------------------------------------
Columbia Growth & Income Fund
For the 12-month period ended July 31, 2004, Columbia Growth & Income Fund class
A shares returned 13.83% without sales charge. This was less than the return of
the fund's benchmark, the Russell 1000 Value Index, and the average return of
the Morningstar(R) Large Value Category, which were 17.68% and 15.34%
respectively.1
However, the fund's relative return does not capture an important aspect
of the fund's story for the reporting period: a significant turnaround in
performance that occurred because of a major restructuring that commenced early
in the reporting period. For the first six-month period, from August 1, 2003
through January 31, 2004, the fund trailed both its benchmark and peer group by
more than three percentage points. The fund returned 13.00% compared to a 16.86%
gain for the Russell 1000 Value Index and a 16.12% average gain for the
Morningstar Large Value Category. After restructuring, the fund closed that
performance gap and outperformed both its benchmark and peer group for the
second half of the period. From February 1, 2004 through July 31, 2004, the fund
returned 0.73% compared to a 0.70% gain for the Russell 1000 Value Index and a
negative 0.62% average return for the Morningstar Large Value Category.
We realize that six months is a relatively short period. And we cannot ensure
that the fund will maintain this performance in the future because past
performance is no guarantee of future results. However, we are pleased that the
changes implemented by our management team resulted in an improvement in
relative performance for this period.
The fund's new portfolio management team implemented a number
of changes as part of its restructuring effort. It broadened the fund's
diversification and brought fund allocations more in line with its benchmark,
significantly tightening the risk parameters of the fund. The managers also
raised the quality of securities in the portfolio, a move that was rewarded as
higher quality names pulled ahead of the more aggressive, lower quality
companies that had led the earlier market rally.
STRONG RETURNS FROM ENERGY, UTILITIES
We positioned the fund to benefit from a modestly improving economy, and this
generally worked in its favor. Among the fund's best performers were energy
stocks, which were a sizeable position in the portfolio, and utilities stocks,
which were a relatively small position. The steady rise in oil and natural gas
prices--to record levels by period end--boosted stock prices for Exxon Mobil,
ConocoPhillips and BP. TXU benefited from its new management team's aggressive
restructuring.
FINANCIAL STOCKS HIT BY RISING RATES
The fund's financial holdings started the period on a strong note but lost
value in the second half of the year when interest rates rose. Credit card
company MBNA declined as concerns about a slowdown in consumer spending began
to surface, and higher short-term interest rates created concerns about their
profit margins. Citigroup, Bank of New York and Morgan Stanley also were
adversely affected by the steady slowdown in capital markets activity, which
resulted from higher rates and lower investor confidence.
1 (C)2004 by 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.
[SIDEBAR INFORMATION]:
Net asset value per share
as of 07/31/04 ($)
- -----------------------------------
Class A 16.57
===================================
Class B 15.53
===================================
Class C 15.64
===================================
Class Z 16.59
===================================
Distributions declared per share
as of 08/01/03 - 07/31/04 ($)
- -----------------------------------
Class A 0.14
===================================
Class B 0.03
===================================
Class C 0.03
===================================
Class Z 0.18
===================================
Holdings discussed in this report
as of 07/31/04 (%)
- -----------------------------------
Exxon Mobil 3.5
===================================
ConocoPhillips 2.7
===================================
BP 2.6
===================================
TXU 1.9
===================================
MBNA 1.0
===================================
Citigroup 4.0
===================================
Bank of New York 1.4
===================================
Morgan Stanley 1.1
===================================
Nokia 0.8
===================================
Wendy's International 1.5
===================================
PepsiCo 1.8
===================================
Your fund is actively managed and the composition of the portfolio will change
over time. Information provide is calculated as a percentage of net assets.
5
- --------------------------------------------------------------------------------
Columbia Growth & Income Fund
POOR RETURNS FROM TECHNOLOGY, CONSUMER DISCRETIONARY
In technology, we lost ground with Finnish cell phone manufacturer Nokia. The
company's market share declined during the period, but we believe its plans to
introduce a wide range of new phones with varying price points has the potential
to help the stock recover in the coming year. Wendy's International and PepsiCo
reflected a slowdown in discretionary spending among consumers near the end of
the period. While both stocks' returns were positive for the period, each
finished the period relatively weak.
MIXED SIGNALS ON THE ECONOMY
We believe that the fund's restructuring efforts have the potential to continue
to reap benefits for the fund. As the economic cycle matures, we expect profit
growth to slow. In this environment, we continue to favor companies with strong
financial positions and the potential to do well under a variety of market
conditions.
[photo of Brian Cunningham]
Brian Cunningham has co-managed Columbia Growth & Income Fund since November
2003 and has been with the advisor and its predecessors since 1987.
/s/ Brian Cunningham
[photo of Gregory M. Miller]
Gregory M. Miller has co-managed the fund since April 2003 and has been with the
advisor and its predecessors since 1985.
/s/ Gregory M. Miller
[photo of Richard Dahlberg]
Richard Dahlberg, CFA, has co-managed the fund since October 2003 and has been
with the advisor since 2003.
/s/ Richard Dahlberg
An investment in the fund offers significant long-term growth potential,
but also involves certain risks. The fund may be affected by stock market
fluctuations that occur in response to economic and business developments.
Changes in interest rates, changes in financial strength of issuers of
lower-rated bonds and foreign, political and economic developments also may
affect the fund's performance.
Value stocks are securities of companies that may have experienced adverse
business or industry developments or may be subject to special risks that have
caused the stocks to be out of favor. If the advisor's assessment of a company's
prospects is wrong, the price of its stock may not approach the value the
advisor has placed on it.
[SIDEBAR INFORMATION]:
We continue to favor companies with strong financial positions and the potential
to do well under a variety of market conditions.
6
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
July 31, 2004
Columbia Growth & Income Fund
A GUIDE TO UNDERSTANDING YOUR FUND'S FINANCIAL STATEMENTS
------------------------------------------------------------------------------------
Investment Portfolio The investment portfolio details all of the fund's holdings and their market
value as of the last day of the reporting period. Portfolio holdings are
organized by type of asset, industry, country or geographic region (if
applicable) to demonstrate areas of concentration and diversification.
------------------------------------------------------------------------------------
Statement of Assets and Liabilities This statement details the fund's assets, liabilities, net assets and share price
for each share class as of the last day of the reporting period. Net assets are
calculated by subtracting all the fund's liabilities (including any unpaid
expenses) from the total of the fund's investment and non-investment assets.
The share price for each class is calculated by dividing net assets for that class
by the number of shares outstanding in that class as of the last day of the
reporting period.
------------------------------------------------------------------------------------
Statement of Operations This statement details income earned by the fund and the expenses accrued
by the fund during the reporting period. The Statement of Operations also
shows any net gain or loss the fund realized on the sales of its holdings during
the period, as well as any unrealized gains or losses recognized over the period.
The total of these results represents the fund's net increase or decrease in net
assets from operations.
------------------------------------------------------------------------------------
Statement of Changes in Net Assets This statement demonstrates how the fund's net assets were affected by its
operating results, distributions to shareholders and shareholder transactions
(e.g., subscriptions, redemptions and dividend reinvestments) during the
reporting period. The Statement of Changes in Net Assets also details changes
in the number of shares outstanding.
------------------------------------------------------------------------------------
Notes to Financial Statements These notes disclose the organizational background of the fund, its significant
accounting policies (including those surrounding security valuation, income
recognition and distributions to shareholders), federal tax information, fees
and compensation paid to affiliates and significant risks and contingencies.
------------------------------------------------------------------------------------
Financial Highlights The financial highlights demonstrate how the fund's net asset value per share
was affected by the fund's operating results. The financial highlights table also
discloses the classes' performance and certain key ratios (e.g., class expenses
and net investment income as a percentage of average net assets).
7
INVESTMENT PORTFOLIO
------------------------------------------------------------
July 31, 2004
Columbia Growth & Income Fund
Common Stocks - 97.6%
CONSUMER DISCRETIONARY - 7.3% Shares Value ($)
- ------------------------------------------ -----------------------------------------------------------------------------
Automobiles - 0.8% General Motors Corp. 343,719 14,828,038
Automobiles Total 14,828,038
-----------------------------------------------------------------------------
Hotels, Restaurants & Leisure - 1.8% Harrah's Entertainment, Inc. 101,874 4,736,122
Wendy's International, Inc. 803,823 28,752,749
Hotels, Restaurants & Leisure Total 33,488,871
-----------------------------------------------------------------------------
Media - 3.8% Clear Channel Communications, Inc. 374,328 13,363,510
Gannett Co., Inc. 118,041 9,813,929
McGraw-Hill Companies, Inc. 254,400 19,095,264
Time Warner, Inc. (a) 1,327,140 22,096,881
Viacom, Inc., Class A 231,527 7,883,494
Media Total 72,253,078
-----------------------------------------------------------------------------
Specialty Retail - 0.9% Office Depot, Inc. (a) 1,100,715 18,051,726
Specialty Retail Total 18,051,726
------------
CONSUMER DISCRETIONARY TOTAL 138,621,713
CONSUMER STAPLES - 9.6%
- ------------------------------------------ -----------------------------------------------------------------------------
Beverages - 1.8% PepsiCo, Inc. 672,423 33,621,150
Beverages Total 33,621,150
-----------------------------------------------------------------------------
Food & Staples Retailing - 1.0% Costco Wholesale Corp. 468,908 19,065,799
Food & Staples Retailing Total 19,065,799
-----------------------------------------------------------------------------
Food Products - 2.2% ConAgra Foods, Inc. 837,371 21,771,646
Kraft Foods, Inc., Class A 643,224 19,650,493
Food Products Total 41,422,139
-----------------------------------------------------------------------------
Household Products - 3.7% Clorox Co. 434,891 21,644,525
Kimberly-Clark Corp. 392,954 25,176,563
Procter & Gamble Co. 457,490 23,858,104
Household Products Total 70,679,192
-----------------------------------------------------------------------------
Tobacco - 0.9% Altria Group, Inc. 379,482 18,063,343
Tobacco Total 18,063,343
------------
CONSUMER STAPLES TOTAL 182,851,623
ENERGY - 13.8%
- ------------------------------------------ -----------------------------------------------------------------------------
Energy Equipment & Services - 1.9% Halliburton Co. 1,159,056 36,800,028
Energy Equipment & Services Total 36,800,028
-----------------------------------------------------------------------------
Oil & Gas - 11.9% BP PLC, ADR 878,903 49,534,973
ConocoPhillips 664,314 52,328,014
Exxon Mobil Corp. 1,427,507 66,093,574
Marathon Oil Corp. 982,438 37,008,439
Royal Dutch Petroleum Co., N.Y. Shares 417,598 21,005,179
Oil & Gas Total 225,970,179
------------
ENERGY TOTAL 262,770,207
See notes to investment portfolio.
8
- --------------------------------------------------------------------------------
July 31, 2004
Columbia Growth & Income Fund
Common Stocks - (continued)
FINANCIALS - 29.8% Shares Value ($)
- ------------------------------------------ -----------------------------------------------------------------------------
Capital Markets - 3.9% Bank of New York Co., Inc. 903,951 25,970,512
Goldman Sachs Group, Inc. 170,293 15,018,140
Morgan Stanley 433,789 21,398,811
State Street Corp. 279,158 11,950,754
Capital Markets Total 74,338,217
-----------------------------------------------------------------------------
Commercial Banks - 6.3% National City Corp. 410,607 14,987,156
U.S. Bancorp 1,527,294 43,222,420
Wachovia Corp. 434,124 19,236,034
Wells Fargo & Co. 741,956 42,595,694
Commercial Banks Total 120,041,304
-----------------------------------------------------------------------------
Consumer Finance - 1.0% MBNA Corp. 767,465 18,948,711
Consumer Finance Total 18,948,711
-----------------------------------------------------------------------------
Diversified Financial Services - 6.8% Citigroup, Inc. 1,719,244 75,801,468
JPMorgan Chase & Co. 1,455,043 54,316,755
Diversified Financial Services Total 130,118,223
-----------------------------------------------------------------------------
Insurance - 8.3% AFLAC, Inc. 280,194 11,106,890
Ambac Financial Group, Inc. 278,330 19,792,046
American International Group, Inc. 599,472 42,352,697
Lincoln National Corp. 379,160 16,569,292
Marsh & McLennan Companies, Inc. 218,798 9,710,255
St. Paul Travelers Companies, Inc. 527,882 19,568,586
Willis Group Holdings Ltd. 565,676 19,685,525
XL Capital Ltd., Class A 279,559 19,759,230
Insurance Total 158,544,521
-----------------------------------------------------------------------------
Real Estate - 1.7% Archstone-Smith Trust, REIT 336,937 9,916,056
Kimco Realty Corp., REIT 228,576 10,994,506
Vornado Realty Trust, REIT 185,512 10,776,392
Real Estate Total 31,686,954
-----------------------------------------------------------------------------
Thrifts & Mortgage Finance - 1.8% Countrywide Financial Corp. 179,636 12,951,756
Freddie Mac 341,849 21,984,309
Thrifts & Mortgage Finance Total 34,936,065
------------
FINANCIALS TOTAL 568,613,995
HEALTH CARE - 4.5%
- ------------------------------------------ -----------------------------------------------------------------------------
Health Care Providers & Services - 1.9% Aetna, Inc. 429,684 36,866,887
Health Care Providers & Services Total 36,866,887
-----------------------------------------------------------------------------
Pharmaceuticals - 2.6% Bristol-Myers Squibb Co. 349,046 7,993,153
Johnson & Johnson 185,035 10,226,884
Merck & Co., Inc. 221,420 10,041,397
Pfizer, Inc. 672,133 21,481,371
Pharmaceuticals Total 49,742,805
------------
HEALTH CARE TOTAL 86,609,692
See notes to investment portfolio.
9
- --------------------------------------------------------------------------------
July 31, 2004
Columbia Growth & Income Fund
Common Stocks - (continued)
INDUSTRIALS - 11.1% Shares Value ($)
- ------------------------------------------ -----------------------------------------------------------------------------
Aerospace & Defense - 4.1% General Dynamics Corp. 238,154 23,534,378
Honeywell International, Inc. 537,413 20,212,103
Raytheon Co. 283,062 9,496,730
United Technologies Corp. 268,531 25,107,649
Aerospace & Defense Total 78,350,860
-----------------------------------------------------------------------------
Commercial Services & Supplies - 1.4% Waste Management, Inc. 987,364 27,784,423
Commercial Services & Supplies Total 27,784,423
-----------------------------------------------------------------------------
Industrial Conglomerates - 3.7% General Electric Co. 1,206,488 40,115,726
Textron, Inc. 484,748 29,715,052
Industrial Conglomerates Total 69,830,778
-----------------------------------------------------------------------------
Machinery - 1.9% Deere & Co. 322,243 20,240,083
Ingersoll-Rand Co., Class A 221,043 15,183,444
Machinery Total 35,423,527
------------
INDUSTRIALS TOTAL 211,389,588
INFORMATION TECHNOLOGY - 6.7%
- ------------------------------------------ -----------------------------------------------------------------------------
Communications Equipment - 0.8% Nokia Oyj, ADR 1,351,680 15,706,522
Communications Equipment Total 15,706,522
-----------------------------------------------------------------------------
Computers & Peripherals - 2.1% International Business Machines Corp. 216,202 18,824,708
Lexmark International, Inc., Class A (a) 231,301 20,470,138
Computers & Peripherals Total 39,294,846
-----------------------------------------------------------------------------
IT Services - 1.2% Accenture Ltd., Class A (a) 914,238 22,517,682
IT Services Total 22,517,682
-----------------------------------------------------------------------------
Office Electronics - 1.1% Xerox Corp. (a) 1,579,303 21,889,140
Office Electronics Total 21,889,140
-----------------------------------------------------------------------------
Software - 1.5% Electronic Arts, Inc. (a) 383,791 19,239,443
Microsoft Corp. 319,541 9,094,137
Software Total 28,333,580
------------
INFORMATION TECHNOLOGY TOTAL 127,741,770
MATERIALS - 3.5%
- ------------------------------------------ -----------------------------------------------------------------------------
Chemicals - 1.5% Air Products & Chemicals, Inc. 571,875 29,594,531
Chemicals Total 29,594,531
-----------------------------------------------------------------------------
Paper & Forest Products - 2.0% MeadWestvaco Corp. 765,925 22,870,520
Weyerhaeuser Co. 247,640 15,353,680
Paper & Forest Products Total 38,224,200
------------
MATERIALS TOTAL 67,818,731
TELECOMMUNICATION SERVICES - 5.1%
- ------------------------------------------ -----------------------------------------------------------------------------
Diversified Telecommunication Services - 5.1% BellSouth Corp. 1,172,133 31,753,083
SBC Communications, Inc. 1,259,525 31,916,364
Verizon Communications, Inc. 875,890 33,756,801
Diversified Telecommunication Services Total 97,426,248
------------
TELECOMMUNICATION SERVICES TOTAL 97,426,248
See notes to investment portfolio.
10
- --------------------------------------------------------------------------------
July 31, 2004
Columbia Growth & Income Fund
Common Stocks - (continued)
UTILITIES - 6.2% Shares Value ($)
- ------------------------------------------ -----------------------------------------------------------------------------
Electric Utilities - 6.2% American Electric Power Co., Inc. 639,124 19,883,148
Consolidated Edison, Inc. 724,817 29,695,752
Entergy Corp. 276,552 15,901,740
Southern Co. 520,189 15,231,134
TXU Corp. 934,496 37,062,111
Electric Utilities Total 117,773,885
------------
UTILITIES TOTAL 117,773,885
------------
TOTAL COMMON STOCKS (cost of $1,594,831,251) 1,861,617,452
Investment Company - 2.0%
- ------------------------------------------ -----------------------------------------------------------------------------
iShares Russell 1000 Value Index Fund
(cost of $37,654,236) 644,122 38,196,435
Short-Term Obligation - 0.4% Par ($)
- ------------------------------------------ -----------------------------------------------------------------------------
Repurchase agreement with State Street
Bank & Trust Co., dated 07/30/04, due
08/02/04 at 1.240%, collateralized by a
U.S. Treasury Bond maturing 08/15/29,
market value of $7,700,351 (repurchase
proceeds $7,548,780)
(cost of $7,548,000) 7,548,000 7,548,000
Total Investments - 100.0%
(cost of $1,640,033,487) (b) 1,907,361,887
Other Assets & Liabilities, Net - 0.0% 931,046
Net Assets - 100.0% $1,908,292,933
Notes to Investment Portfolio:
(a) Non-income producing security.
(b) Cost for federal income tax purposes is $1,640,115,682.
Acronym Name
------------- ---------
ADR American Depositary Receipt
REIT Real Estate Investment Trust
See notes to financial statements.
11
STATEMENT OF ASSETS AND LIABILITIES
---------------------------------------------
July 31, 2004
Columbia Growth & Income Fund
($)
- ------------------------------------------ -----------------------------------------------------------------------------
Assets Investments, at cost 1,640,033,487
-------------
Investments, at value 1,907,361,887
Cash 24,869,384
Receivable for:
Fund shares sold 1,410,692
Interest 520
Dividends 4,983,908
Reimbursement due from Investment Advisor 42,577
Deferred Trustees' compensation plan 44,463
-------------
Total Assets 1,938,713,431
-----------------------------------------------------------------------------
Liabilities Payable for:
Investments purchased 24,868,832
Fund shares repurchased 2,818,629
Investment advisory fee 1,158,192
Transfer agent fee 528,969
Pricing and bookkeeping fees 48,667
Trustees' fees 1,520
Custody fee 7,070
Distribution and service fees 801,376
Deferred Trustees' fees 44,463
Other liabilities 142,780
-------------
Total Liabilities 30,420,498
Net Assets 1,908,292,933
-----------------------------------------------------------------------------
Composition of Net Assets Paid-in capital 1,935,350,937
Undistributed net investment income 11,362,036
Accumulated net realized loss (305,748,440)
Net unrealized appreciation on investments 267,328,400
Net Assets 1,908,292,933
-----------------------------------------------------------------------------
Class A Net assets 621,242,730
Shares outstanding 37,483,977
Net asset value per share 16.57(a)
Maximum offering price per share ($16.57/0.9425) 17.58(b)
-----------------------------------------------------------------------------
Class B Net assets 718,021,538
Shares outstanding 46,219,676
Net asset value and offering price per share 15.53(a)
-----------------------------------------------------------------------------
Class C Net assets 97,225,657
Shares outstanding 6,214,727
Net asset value and offering price per share 15.64(a)
Class Z Net assets 471,803,008
Shares outstanding 28,432,616
Net asset value, offering and redemption price per share 16.59
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
(b) On sales of $50,000 or more the offering price is reduced.
See notes to financial statements.
12
STATEMENT OF OPERATIONS
---------------------------------------------------------
For the Year Ended July 31, 2004
Columbia Growth & Income Fund
($)
- ------------------------------------------ -----------------------------------------------------------------------------
Investment Income Dividends 44,784,434
Interest 482,136
----------
Total Investment Income (net of foreign taxes
withheld of $363,336) 45,266,570
-----------------------------------------------------------------------------
Expenses Investment advisory fee 13,939,113
Distribution fee:
Class B 5,668,909
Class C 833,455
Service fee:
Class A 1,622,321
Class B 1,889,636
Class C 277,818
Transfer agent fee 3,740,585
Pricing and bookkeeping fees 461,519
Trustees' fees 46,186
Custody fee 69,318
Non-recurring costs (See Note 7) 89,386
Other expenses 557,732
----------
Total Expenses 29,195,978
Fees and expenses waived or reimbursed by Investment Advisor (224,681)
Non-recurring costs assumed by Investment Advisor (See Note 7) (89,386)
Custody earnings credit (3,478)
----------
Net Expenses 28,878,433
----------
Net Investment Income 16,388,137
-----------------------------------------------------------------------------
Net Realized and Unrealized Net realized gain on:
Gain (Loss) on Investments Investments 48,265,445
Net realized loss on the disposal of investments purchased
in violation of investment restrictions (See Note 6) --
----------
Net realized gain 48,265,445
Net change in unrealized appreciation/depreciation on investments 182,278,097
-----------
Net Gain 230,543,542
-----------
Net Increase in Net Assets from Operations 246,931,679
See notes to financial statements.
13
STATEMENTS OF CHANGES IN NET ASSETS
---------------------------------------------
Columbia Growth & Income Fund
Year Ended Period Ended Year Ended
July 31, July 31, June 30,
Increase (Decrease) in Net Assets: 2004 ($) 2003 (a) ($) 2003 ($)
- ------------------------------------------ -----------------------------------------------------------------------------
Operations Net investment income 16,388,137 2,635,729 8,993,969
Net realized gain (loss)
on investments 48,265,445 8,380,929 (361,181,251)
Net change in unrealized appreciation/
depreciation on investments 182,278,097 (18,186,270) 275,599,753
----------------------------------------
Net Increase (Decrease)
from Operations 246,931,679 (7,169,612) (76,587,529)
-----------------------------------------------------------------------------
Distributions Declared to Shareholders From net investment income:
Class A (5,897,569) -- (3,173,507)
Class B (1,496,752) -- --
Class C (222,462) -- --
Class Z (formerly Class S) (b) (4,825,957) -- --
Class Z (through 07/29/02) (b) -- -- (1,132,336)
From net realized gains:
Class A -- -- (13,113,326)
Class B -- -- (14,310,343)
Class C -- -- (2,195,247)
Class Z (through 07/29/02) (b) -- -- (3,001,953)
----------------------------------------
Total Distributions Declared
to Shareholders (12,442,740) -- (36,926,712)
-----------------------------------------------------------------------------
Share Transactions Class A:
Subscriptions 110,785,469 10,998,695 275,649,995
Distributions reinvested 5,352,979 -- 12,464,817
Redemptions (202,240,844) (15,465,282) (355,987,815)
----------------------------------------
Net Decrease (86,102,396) (4,466,587) (67,873,003)
Class B:
Subscriptions 63,411,224 7,719,841 130,400,340
Distributions reinvested 1,357,040 -- 13,082,827
Redemptions (183,048,069) (12,183,503) (222,419,817)
----------------------------------------
Net Decrease (118,279,805) (4,463,662) (78,936,650)
Class C:
Subscriptions 12,823,341 1,520,993 35,645,799
Distributions reinvested 202,402 -- 1,967,464
Redemptions (43,080,290) (2,834,558) (42,869,122)
----------------------------------------
Net Decrease (30,054,547) (1,313,565) (5,255,859)
Class Z (formerly Class S) (b):
Subscriptions 136,454,093 8,461,262 217,927,301
Proceeds received in combination
with original Class Z -- -- 4,557,863
Distributions reinvested 4,266,571 -- 3,886,208
Redemptions (104,262,595) (5,748,955) (62,646,371)
----------------------------------------
Net Increase 36,458,069 2,712,307 163,725,001
(a)The Fund changed its fiscal year end from June 30 to July 31.
(b)On July 29, 2002, the Fund's existing Class Z shares were combined into the
Fund's Class S shares, which were subsequently redesignated as Class Z shares.
See notes to financial statements.
14
- --------------------------------------------------------------------------------
Columbia Growth & Income Fund
Year Ended Period Ended Year Ended
July 31, July 31, June 30,
2004($) 2003(a)($) 2003($)
- ------------------------------------------ -----------------------------------------------------------------------------
Class Z (through 07/29/02) (b):
Subscriptions -- -- 387,731
Proceeds combined into former Class S -- -- (4,557,863)
Redemptions -- -- (170,835)
----------------------------------------
Net Decrease -- -- (4,340,967)
Net Increase (Decrease)
from Share Transactions (197,978,679) (7,531,507) 7,318,522
Total Increase (Decrease)
in Net Assets 36,510,260 (14,701,119) (106,195,719)
-----------------------------------------------------------------------------
Net Assets Beginning of period 1,871,782,673 1,886,483,792 1,992,679,511
End of period (including undistributed
net investment income of $11,362,036,
$7,425,317 and $4,789,588,
respectively) 1,908,292,933 1,871,782,673 1,886,483,792
-----------------------------------------------------------------------------
Changes in Shares Class A:
Subscriptions 6,980,307 740,289 19,938,430
Issued for distributions reinvested 342,763 -- 902,615
Redemptions (12,621,689) (1,045,471) (26,325,791)
-----------------------------------------
Net Decrease (5,298,619) (305,182) (5,484,746)
Class B:
Subscriptions 4,264,505 554,962 10,058,691
Issued for distributions reinvested 92,195 -- 1,005,610
Redemptions (12,190,707) (874,829) (17,345,105)
-----------------------------------------
Net Decrease (7,834,007) (319,867) (6,280,804)
Class C:
Subscriptions 861,203 108,591 2,739,448
Issued for distributions reinvested 13,657 -- 150,057
Redemptions (2,839,364) (202,000) (3,334,540)
-----------------------------------------
Net Decrease (1,964,504) (93,409) (445,035)
Class Z (formerly Class S) (b):
Subscriptions 8,517,555 571,033 17,134,572
Issued for combination with
original Class Z -- -- 336,309
Issued for distributions reinvested 273,149 -- 281,607
Redemptions (6,498,126) (387,341) (4,606,424)
-----------------------------------------
Net Increase 2,292,578 183,692 13,146,064
Class Z (through 07/29/02) (b):
Subscriptions -- -- 26,431
Shares combined into former Class S -- -- (336,309)
Redemptions -- -- (11,978)
-----------------------------------------
Net Decrease -- -- (321,856)
(a)The Fund changed its fiscal year end from June 30 to July 31.
(b)On July 29, 2002, the Fund's existing Class Z shares were combined into the
Fund's Class S shares, which were subsequently redesignated as Class Z shares.
See notes to financial statements.
15
NOTES TO FINANCIAL STATEMENTS
---------------------------------------------------
July 31, 2004
Columbia Growth & Income Fund
NOTE 1. ORGANIZATION
Columbia Growth & Income 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 and income.
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. Effective February 10, 2004, the
Board of Trustees approved the commencement of Class R shares of the Fund which
had not commenced operations as of July 31, 2004. Each share class has its own
sales charge and expense structure.
Class A shares are subject to a maximum front-end sales charge of 5.75% based on
the amount of initial investment. Class A shares purchased without an initial
sales charge are subject to a 1.00% contingent deferred sales charge ("CDSC") on
shares sold within eighteen months on an original purchase of $1 million to $25
million. Class B shares are subject to a maximum CDSC of 5.00% based upon the
holding period after purchase. Class B shares will convert to Class A shares in
a certain number of years after purchase, depending on the program under which
shares were purchased. Class C shares are subject to a 1.00% CDSC on shares sold
within one year after purchase. Class Z shares are offered continuously at net
asset value. There are certain restrictions on the purchase of Class Z shares,
as described in the Fund's prospectus.
Effective October 13, 2003, the Fund changed its name from Liberty Growth &
Income Fund to Columbia Growth & Income 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 and exchange traded funds 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
16
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July 31, 2004
Columbia Growth & Income Fund
restrictions upon the Fund's ability to dispose of the underlying securities and
a possible decline in the value of the underlying securities during the period
while the Fund seeks to assert its rights.
INCOME RECOGNITION
Interest income is recorded on the accrual basis. Corporate actions and dividend
income are recorded on ex-date. 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.
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 July 31, 2004, permanent differences resulting primarily from
differing treatments for REIT adjustments were identified and reclassified among
the components of the Fund's net assets as follows:
Undistributed Accumulated
Net Investment Net Realized Paid-In
Income Loss Capital
===========================================================
$(8,678) $8,679 $(1)
===========================================================
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 year ended July 31, 2004, the
period ended July 31, 2003 and the year ended June 30, 2003 was as follows:
July 31, 2004 July 31, 2003 June 30, 2003
===============================================================================
Distributions paid from:
Ordinary income* $12,442,740 $-- $ 5,091,397
- -------------------------------------------------------------------------------
Long-term capital gains -- -- 31,835,315
===============================================================================
* 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
Ordinary Long-Term Net Unrealized
Income Capital Gains Appreciation*
==============================================================
$11,412,198 $-- $267,246,205
==============================================================
* The differences between book-basis and tax-basis net unrealized appreciation
are primarily due to deferral of losses from wash sales.
Unrealized appreciation and depreciation at July 31, 2004, based on cost of
investments for federal income tax purposes was:
Unrealized appreciation $ 302,793,704
Unrealized depreciation (35,547,499)
============================================================
Net unrealized appreciation $ 267,246,205
============================================================
The following capital loss carryforwards may be available to reduce taxable
income arising from future
17
- --------------------------------------------------------------------------------
July 31, 2004
Columbia Growth & Income Fund
net realized gains on investments, if any, to the extent permitted by the
Internal Revenue Code:
Year of Capital Loss
Expiration Carryforward
=====================================================
2010 $193,404,812
- -----------------------------------------------------
2011 112,261,432
- -----------------------------------------------------
$305,666,244
=====================================================
Capital loss carryforwards of $48,144,585 were utilized during the year ended
July 31, 2004 for the Fund. 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 at the following annual rates:
Average Daily Net Assets Annual Fee Rate
=======================================================
First $1 billion 0.80%
- -------------------------------------------------------
Over $1 billion 0.60%
=======================================================
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 0.70%
=======================================================
In addition, for the period August 1, 2003 through October 31, 2003, Columbia
voluntarily waived a portion of its investment advisory fee so that it did not
exceed 0.60% annually on the Fund's average daily net assets over $1 billion.
For the year ended July 31, 2004, the Fund's effective investment advisory fee
rate was 0.70%.
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 July 31, 2004, the Fund's effective pricing and
bookkeeping fee rate was 0.024%.
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 a fee, paid monthly, at the annual rate of $28.00 per open account. The
Transfer Agent also receives reimbursement for certain out-of-pocket expenses.
Prior to November 1, 2003, the Transfer Agent was entitled to receive a monthly
transfer agent fee at the annual rate of 0.06% of the Fund's average daily net
assets plus flat-rate charges based on the number of shareholder accounts and
transactions. The Transfer Agent was also entitled to receive reimbursement for
certain out-of-pocket expenses.
For the year ended July 31, 2004, the Fund's effective transfer agent fee rate,
inclusive of out-of-pocket expenses, was 0.19%.
Effective October 13, 2003, Liberty Funds Services, Inc. was renamed Columbia
Funds Services, Inc.
18
- --------------------------------------------------------------------------------
July 31, 2004
Columbia Growth & Income Fund
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 July 31, 2004, the
Distributor has retained net underwriting discounts of $118,207 on sales of the
Fund's Class A shares and received CDSC fees of $8,128, $1,872,077 and $20,974
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.
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 July 31, 2004, the Fund paid $4,328 to Columbia
for such services. This amount is included in "Other expenses" on the Statement
of Operations.
PORTFOLIO INFORMATION
For the year ended July 31, 2004, the cost of purchases and proceeds from sales
of securities, excluding short-term obligations, were $984,525,013 and
$1,070,643,137, respectively.
NOTE 5. 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 July 31, 2004, the
Fund did not borrow under this arrangement.
NOTE 6. OTHER
During the year ended July 31, 2004, the Fund purchased iShares of the Russell
1000 Value Index Fund in excess of investment restrictions. A portion of this
position was subsequently sold off at a loss of $191,282 and the Fund is in the
process of being reimbursed by Columbia.
Also during the year ended July 31, 2004, due to a trading error, the Fund
purchased additional iShares. This position was subsequently sold off at a loss
of $10,337 and the Fund was reimbursed by Columbia.
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
19
- --------------------------------------------------------------------------------
July 31, 2004
Columbia Growth & Income Fund
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 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 and its affiliate Banc
of America Capital Management, LLC have agreed to collectively reduce mutual
fund fees by $160 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). More than 300 cases (including those filed against
entities unaffiliated with the funds, their Boards and/or FleetBoston and its
affiliated entities) have been consolidated in a multi-district proceeding and
transferred to the Federal District Court in Maryland. Recently, certain
Columbia funds and affiliated entities have been named as defendants in several
derivative actions under various sections of the Investment Company Act of 1940,
as amended, alleging, among other things, that the fees and expenses paid by
those funds are excessive. The funds and the other defendants to these actions,
including Columbia and various affiliates, certain other mutual funds advised by
Columbia and its affiliates, and various directors of such funds, have denied
these allegations and are contesting the plaintiffs' claims. These suits and
certain regulatory investigations are ongoing, however, based on currently
available information, Columbia believes that these lawsuits are without merit,
that the likelihood they will have a material adverse impact on any fund is
remote, and that the lawsuits are not likely to materially affect its ability to
provide investment management services to its clients, including the funds.
For the year ended July 31, 2004, Columbia has assumed $89,386 of legal,
consulting services and Trustees' fees incurred by the Fund in connection with
these matters.
20
FINANCIAL HIGHLIGHTS
-----------------------------------------------------------
Columbia Growth & Income Fund
Selected data for a share outstanding throughout each period is as follows:
Year Period
Ended Ended Year Ended June 30,
July 31, July 31, --------------------------------------------------------
Class A Shares 2004 2003 (a) 2003 2002 2001 2000
==================================================================================================================================
Net Asset Value, Beginning of Period $ 14.69 $ 14.75 $ 15.67 $ 18.98 $ 20.60 $ 21.84
- ----------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (b) 0.18 0.02 0.11 0.11 0.12 0.01
Net realized and unrealized
gain (loss) on investments 1.84 (0.08) (0.72) (1.89) 2.59 0.25
------------ ------------ ------------ ------------ ------------ ------------
Total from Investment Operations 2.02 (0.06) (0.61) (1.78) 2.71 0.26
- ----------------------------------------------------------------------------------------------------------------------------------
Less Distributions Declared to Shareholders:
From net investment income (0.14) -- (0.06) (0.10) -- --
From net realized gains -- -- (0.25) (1.43) (4.33) (1.50)
------------ ------------ ------------ ------------ ------------ ------------
Total Distributions
Declared to Shareholders (0.14) -- (0.31) (1.53) (4.33) (1.50)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 16.57 $ 14.69 $ 14.75 $ 15.67 $ 18.98 $ 20.60
Total return (c)(d) 13.83% (0.41)%(e) (3.75)% (10.24)% 13.34% 1.43%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets/Supplemental Data:
Expenses (f) 1.21% 1.36%(g) 1.40% 1.31% 1.32% 1.35%
Net investment income (f) 1.11% 1.93%(g) 0.83% 0.60% 0.62% 0.06%
Waiver/reimbursement 0.01% 0.05%(g) 0.04% 0.05% 0.03% 0.10%
Portfolio turnover rate 52% 6%(e) 63% 47% 104% 81%
Net assets, end of period (000's) $621,243 $628,680 $635,415 $761,122 $503,647 $309,129
- ----------------------------------------------------------------------------------------------------------------------------------
(a) The Fund changed its fiscal year end from June 30 to July 31.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and no
initial sales charge or contingent deferred sales charge.
(d) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
21
- --------------------------------------------------------------------------------
Columbia Growth & Income Fund
Selected data for a share outstanding throughout each period is as follows:
Year Period
Ended Ended Year Ended June 30,
July 31, July 31, --------------------------------------------------------
Class B Shares 2004 2003 (a) 2003 2002 2001 2000
==================================================================================================================================
Net Asset Value, Beginning of Period $ 13.78 $ 13.84 $ 14.77 $ 18.01 $ 19.88 $ 21.29
- ----------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (loss) (b) 0.05 0.01 0.01 (0.03) (0.03) (0.14)
Net realized and unrealized
gain (loss) on investments 1.73 (0.07) (0.69) (1.77) 2.49 0.23
------------ ------------ ------------ ------------ ------------ ------------
Total from Investment Operations 1.78 (0.06) (0.68) (1.80) 2.46 0.09
- ----------------------------------------------------------------------------------------------------------------------------------
Less Distributions Declared to Shareholders:
From net investment income (0.03) -- -- (0.01) -- --
From net realized gains -- -- (0.25) (1.43) (4.33) (1.50)
------------ ------------ ------------ ------------ ------------ ------------
Total Distributions
Declared to Shareholders (0.03) -- (0.25) (1.44) (4.33) (1.50)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 15.53 $ 13.78 $ 13.84 $ 14.77 $ 18.01 $ 19.88
Total return (c)(d) 12.92% (0.43)%(e) (4.50)% (10.89)% 12.46% 0.64%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets/Supplemental Data:
Expenses (f) 1.96% 2.11%(g) 2.15% 2.06% 2.07% 2.10%
Net investment income (loss) (f) 0.36% 1.18%(g) 0.07% (0.15)% (0.13)% (0.69)%
Waiver/reimbursement 0.01% 0.05%(g) 0.04% 0.05% 0.03% 0.10%
Portfolio turnover rate 52% 6%(e) 63% 47% 104% 81%
Net assets, end of period (000's) $718,022 $745,122 $752,605 $895,904 $883,754 $822,017
- ----------------------------------------------------------------------------------------------------------------------------------
(a) The Fund changed its fiscal year end from June 30 to July 31.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(d) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
22
- --------------------------------------------------------------------------------
Columbia Growth & Income Fund
Selected data for a share outstanding throughout each period is as follows:
Year Period
Ended Ended Year Ended June 30,
July 31, July 31, --------------------------------------------------------
Class C Shares 2004 2003 (a) 2003 2002 2001 2000
==================================================================================================================================
Net Asset Value, Beginning of Period $ 13.88 $ 13.94 $ 14.87 $ 18.12 $ 19.99 $ 21.39
- ----------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (loss) (b) 0.05 0.01 0.01 (0.03) (0.02) (0.14)
Net realized and unrealized
gain (loss) on investments 1.74 (0.07) (0.69) (1.78) 2.48 0.24
------------ ------------ ------------ ------------ ------------ ------------
Total from Investment Operations 1.79 (0.06) (0.68) (1.81) 2.46 0.10
- ----------------------------------------------------------------------------------------------------------------------------------
Less Distributions Declared to Shareholders:
From net investment income (0.03) -- -- (0.01) -- --
From net realized gains -- -- (0.25) (1.43) (4.33) (1.50)
------------ ------------ ------------ ------------ ------------ ------------
Total Distributions
Declared to Shareholders (0.03) -- (0.25) (1.44) (4.33) (1.50)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 15.64 $ 13.88 $ 13.94 $ 14.87 $ 18.12 $ 19.99
Total return (c)(d) 12.90% (0.43)%(e) (4.47)% (10.88)% 12.38% 0.68%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets/Supplemental Data:
Expenses (f) 1.96% 2.11%(g) 2.15% 2.06% 2.06% 2.10%
Net investment income (loss) (f) 0.36% 1.19%(g) 0.08% (0.15)% (0.13)% (0.69)%
Waiver/reimbursement 0.01% 0.05%(g) 0.04% 0.05% 0.03% 0.10%
Portfolio turnover rate 52% 6%(e) 63% 47% 104% 81%
Net assets, end of period (000's) $ 97,226 $113,542 $115,314 $129,661 $ 77,565 $ 29,303
- ----------------------------------------------------------------------------------------------------------------------------------
(a) The Fund changed its fiscal year end from June 30 to July 31.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(d) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(g) Annualized.
23
- --------------------------------------------------------------------------------
Columbia Growth & Income Fund
Selected data for a share outstanding throughout each period is as follows:
Year Period Period
Ended Ended Year Ended June 30, Ended
July 31, July 31, ------------------------------------------ June 30,
Class Z Shares 2004 2003 (a) 2003 (b) 2002 2001 (c)
================================================================================================================================
Net Asset Value, Beginning of Period $ 14.71 $ 14.76 $ 15.68 $ 19.00 $ 19.64
- -------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income (d) 0.22 0.03 0.16 0.16 0.06
Net realized and unrealized
gain (loss) on investments 1.84 (0.08) (0.74) (1.88) (0.70)
-------- -------- -------- -------- --------
Total from Investment Operations 2.06 (0.05) (0.58) (1.72) (0.64)
- -------------------------------------------------------------------------------------------------------------------------------
Less Distributions Declared to Shareholders:
From net investment income (0.18) -- (0.09) (0.17) --
From net realized gains -- -- (0.25) (1.43) --
-------- -------- -------- -------- --------
Total Distributions Declared
to Shareholders (0.18) -- (0.34) (1.60) --
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 16.59 $ 14.71 $ 14.76 $ 15.68 $ 19.00
Total return (e)(f) 14.08% (0.34)%(g) (3.52)% (9.94)% (3.26)%(g)
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets/Supplemental Data:
Expenses (h) 0.96% 1.11%(i) 1.15% 1.06% 1.08%(i)
Net investment income (h) 1.38% 2.18%(i) 1.13% 0.85% 0.86%(i)
Waiver/reimbursement 0.01% 0.05%(i) 0.04% 0.05% 0.03%(i)
Portfolio turnover rate 52% 6%(g) 63% 47% 104%
Net assets, end of period (000's) $471,803 $384,438 $383,150 $200,908 $264,425
- -------------------------------------------------------------------------------------------------------------------------------
(a) The Fund changed its fiscal year end from June 30 to July 31.
(b) On July 29, 2002, the Fund's existing Class Z shares were combined into the
Fund's Class S shares, which were subsequently redesignated as Class Z
shares.
(c) Class Z shares were initially offered on February 7, 2001. Per share data
and total return reflect activity from that date.
(d) Per share data was calculated using average shares outstanding during the
period.
(e) Total return at net asset value assuming all distributions reinvested.
(f) Had the Investment Advisor not waived or reimbursed a portion of expenses,
total return would have been reduced.
(g) Not annualized.
(h) The benefits derived from custody credits and directed brokerage
arrangements, if applicable, had an impact of less than 0.01%.
(i) Annualized.
24
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
------------------------------------------------
Columbia Growth & Income Fund
To the Trustees of Columbia Funds Trust VI
and the Shareholders of Columbia Growth
& Income 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 Growth & Income Fund (the
"Fund") (formerly Liberty Growth & Income Fund) (a series of Columbia Funds
Trust VI, formerly Liberty Funds Trust VI) at July 31, 2004, and the results of
its operations, the changes in its net assets and the 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 July 31, 2004 by correspondence with the custodian and brokers,
provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
September 16, 2004
25
UNAUDITED INFORMATION
----------------------------------------------------------
Columbia Growth & Income Fund
Federal Income Tax Information
100% of the ordinary income distributed by the Fund, in the year ended July 31,
2004, qualifies for the corporate dividends received deduction.
For non-corporate shareholders 100%, or the maximum amount allowable under the
Jobs and Growth Tax Relief Reconciliation Act of 2003, of income earned by the
Fund for the period August 1, 2003 to July 31, 2004 may represent qualified
dividend income. Final information will be provided in your 2004 1099-Div Form.
26
Trustees
-----------------------------------------------------------------------
Columbia Growth & Income 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. Each Officer listed below held such office
for the period ended July 31, 2004. The Statement of Additional Information
(SAI) contains additional information about the Trustees and is available
without charge upon request by calling the fund's distributor at 800-345-6611.
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 120 3, 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 121 3,4, Saucony, Inc. (athletic footwear and apparel)
Trustee (since 1985)
--------------------------------------------------------------------------------------
27
- --------------------------------------------------------------------------------
Columbia Growth & Income 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 Board 5
(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 119 4, 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. MAYER 2 (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.
28
OFFICERS
-----------------------------------------------------------------------
Columbia Growth & Income 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 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.
-------------------------------------------------------------------------------
29
COLUMBIA FUNDS
------------------------------------------------------------------
Columbia Growth & Income Fund
---------------------------------------------
Large Growth Columbia Common Stock
Columbia Growth
Columbia Growth Stock
Columbia Large Cap Growth
Columbia Tax-Managed Growth
Columbia Tax-Managed Growth II
Columbia Young Investor
---------------------------------------------
Large Value Columbia Disciplined Value
Columbia Growth & Income
Columbia Large Cap Core
Columbia Tax-Managed Value
---------------------------------------------
Midcap Growth Columbia Acorn Select
Columbia Mid Cap Growth
Columbia Tax-Managed Aggressive Growth
---------------------------------------------
Midcap Value Columbia Dividend Income
Columbia Mid Cap
Columbia Strategic Investor
---------------------------------------------
Small Growth Columbia Acorn
Columbia Acorn USA
Columbia Small Company Equity
---------------------------------------------
Small Value Columbia Small Cap
Columbia Small Cap Value
---------------------------------------------
Balanced Columbia Asset Allocation
Columbia Balanced
Columbia Liberty Fund
---------------------------------------------
Specialty Columbia Real Estate Equity
Columbia Technology
Columbia Utilities
---------------------------------------------
Taxable Fixed-Income Columbia Contrarian Income
Columbia Corporate Bond
Columbia Federal Securities
Columbia Fixed Income Securities
Columbia High Yield
Columbia High Yield Opportunities
Columbia Income
Columbia Intermediate Bond
Columbia Intermediate Government Income
Columbia Quality Plus Bond
Columbia Short Term Bond
Columbia Strategic Income
---------------------------------------------
Floating Rate Columbia Floating Rate
Columbia Floating Rate Advantage
---------------------------------------------
Tax Exempt Columbia High Yield Municipal
Columbia Intermediate Tax-Exempt Bond
Columbia Managed Municipals
Columbia National Municipal Bond
Columbia Tax-Exempt
Columbia Tax-Exempt Insured
30
- --------------------------------------------------------------------------------
Columbia Growth & Income Fund
---------------------------------------------
Single State Tax Exempt Columbia California Tax-Exempt
Columbia Connecticut Intermediate Municipal Bond
Columbia Connecticut Tax-Exempt
Columbia Florida Intermediate Municipal Bond
Columbia Massachusetts Intermediate Municipal Bond
Columbia Massachusetts Tax-Exempt
Columbia New Jersey Intermediate Municipal Bond
Columbia New York Intermediate Municipal Bond
Columbia New York Tax-Exempt
Columbia Oregon Municipal Bond
Columbia Pennsylvania Intermediate Municipal Bond
Columbia Rhode Island Intermediate Municipal Bond
---------------------------------------------
Money Market Columbia Money Market
Columbia Municipal Money Market
---------------------------------------------
International/Global Columbia Acorn International
Columbia Acorn International Select
Columbia Europe
Columbia Global Equity
Columbia International Equity
Columbia International Stock
Columbia Newport Asia Pacific
Columbia Newport Greater China
Columbia Newport Tiger
---------------------------------------------
Index Columbia Large Company Index
Columbia Small Company Index
Columbia U.S. Treasury Index
Please consider the investment objectives, risks, charges
and expenses of a mutual fund carefully before investing.
Contact us at 800-345-6611 for a prospectus which contains
this and other important information about the fund. Read it
carefully before you invest.
For complete product information on any Columbia fund, visit
our website at www.columbiafunds.com.
Columbia Management Group and Columbia Management refer
collectively to the various investment advisory subsidiaries
of Columbia Management Group, including Columbia Management
Advisors, Inc., the registered investment advisor, and
Columbia Funds Distributor, Inc.
31
IMPORTANT INFORMATION ABOUT THIS REPORT
-----------------------------------------
Columbia Growth & Income 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 Growth
& Income 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 the fund uses 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 800-345-6611.
32
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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 Growth & Income Fund Annual Report, July 31, 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
779-02/525S-0804 (09/04) 2616
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. Effective July
31, 2003, this series of the registrant changed its fiscal year-end from June
30. Fee information for the fiscal year ended June 30, 2003 is also included
below.
(a) Aggregate Audit Fees billed by the principal accountant for professional
services rendered during the fiscal years/periods ended July 31, 2004, July 31,
2003 and June 30, 2003 are approximately as follows:
2004 July 2003 June 2003
$30,000 $16,000 $32,000
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/periods ended July 31,
2004, July 31, 2003 and June 30, 2003 are approximately as follows:
2004 July 2003 June 2003
$4,000 $0 $6,000
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/periods July 31, 2004 and July 31, 2003,
Audit-Related Fees include certain agreed-upon procedures performed for
semi-annual shareholder reports. Fiscal year June 30, 2003 also includes fees
for agreed-upon procedures conducted during the conversion of the fund's
accounting system.
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/periods ended July 31, 2004, July 31, 2003 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/periods ended July 31, 2004, July 31, 2003 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/periods ended July 31, 2004, July 31,
2003 and June 30, 2003 was zero.
(c) Aggregate Tax Fees billed by the principal accountant for professional
services rendered during the fiscal years/periods ended July 31, 2004, July 31,
2003 and June 30, 2003 are approximately as follows:
2004 July 2003 June 2003
$2,400 $2,300 $2,300
Tax Fees include amounts for professional services by the principal accountant
for tax compliance, tax advice and tax planning. Tax Fees during the fiscal
years/periods ended July 31, 2004, July 31, 2003 and June 30, 2003 primarily
consist of the review of annual tax returns.
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/periods ended during the fiscal years ended July 31,
2004, July 31, 2003 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 during the fiscal years/periods ended July 31, 2004, July 31, 2003 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 during the fiscal years/periods ended July 31,
2004, July 31, 2003 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 during the fiscal years/periods
ended July 31, 2004, July 31, 2003 and June 30, 2003 are as follows:
2004 July 2003 June 2003
$0 $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 during the fiscal years/periods ended July 31,
2004, July 31, 2003 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/periods ended July 31, 2004 and July 31, 2003, All Other
Fees that were approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X were approximately $95,000 and $0, respectively. 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/periods July 31, 2004 and June 30, 2003, 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/periods ended July 31, 2004, July 31,
2003 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/periods ended July 31, 2004,
July 31, 2003 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/periods ended July 31, 2004, July 31, 2003 and June 30,
2003 are also disclosed in (b)-(d) above. Such fees were approximately $95,000,
$0 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
The registrant's "Schedule I - Investments in securities of unaffiliated
issuers" (as set forth in 17 CFR 210.12-12) is included in Item 1 of this Form
N-CSR.
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 27, 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 27, 2004
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